Euro Is Facing 'inevitable Break Up' Despite Greece Bailout, Leading Bank Warns

[The Masked Tulip]

Well, that was that then.

The European single currency is facing an ‘inevitable break up’ a leading French bank warned yesterday.

Strategists at Paris-based Société Générale said that any bailout of the stricken Greek economy would only provide ‘sticking plasters’ to cover the deep-seated flaws in the Eurozone bloc.

The stark warning came as the Euro slipped further on the currency markets and dire growth figures raised the prospect of a ‘double dip’ recession in the embattled Eurozone.

Read more: http://www.dailymail.co.uk/news/worldnews/article-1250433/Greece-debt-bailout-EU-leaders-split-euro-crisis.html#ixzz0fMTKjQRP

[Guest Noodle]

Well, that was that then.

Read more: http://www.dailymail.co.uk/news/worldnews/article-1250433/Greece-debt-bailout-EU-leaders-split-euro-crisis.html#ixzz0fMTKjQRP

. . . and how much money has been poured down the EU drain . . . and to what end?

If the Euro disintegrates, so must the EU?

[The Masked Tulip]

. . . and how much money has been poured down the EU drain . . . and to what end?

If the Euro disintegrates, so must the EU?

A lot of vested interests have become very rich - look at the Kinnock family as an example.

In fact, the people of the UK have being having a poorer and poorer standard of living in order for the Belgiums, PIIGS, etc, to have shorter working hours, better pay, cheaper goods in shops, better healthcare, better pensions, longer holidays, etc.

The Germans, whose quality of life is superior to our own, now have a choice whether to save the EU gravy train or not and, thankfully, they are begining to realise why should they work and be taxed in order to support the above mentioned countries 'having it easy'.

[Guest tbatst2000]

Well, that was that then.

Read more: http://www.dailymail...l#ixzz0fMTKjQRP

Just like the US Dollar is going to collapse once California defaults on its debt and has to be bailed out by the federal government. I don't buy this 'euro is about to collapse' stuff, it's just wishful thinking by people who see it as a proxy for the European Union unravelling.

[Guest Noodle]

A lot of vested interests have become very rich - look at the Kinnock family as an example.

In fact, the people of the UK have being having a poorer and poorer standard of living in order for the Belgiums, PIIGS, etc, to have shorter working hours, better pay, cheaper goods in shops, better healthcare, better pensions, longer holidays, etc.

The Germans, whose quality of life is superior to our own, now have a choice whether to save the EU gravy train or not and, thankfully, they are begining to realise why should they work and be taxed in order to support the above mentioned countries 'having it easy'.

The Hun of course suffered the reunification with East Germany and associated horrific costs, so they're well used to taking it up the ****.

The organisation that did the best out of the EU . . . has to be the Mafia?

[The Masked Tulip]

The Hun of course suffered the reunification with East Germany and associated horrific costs, so they're well used to taking it up the ****.

The organisation that did the best out of the EU . . . has to be the Mafia?

Did you say Taffia?

[Guest Noodle]

Did you say Taffia?

No. He said he was searching for badgers in that wood, notorious for dogging.

[oracle]

the powers that be trying to federalise it should not have f@cked with us then.

the eurozone WILL continue,but in a vastly different guise to which it is at present.

I suspect the basic currency unit will continue,but it will not be the complete federalised version their engineers had planned.

most likely 4 subsections covering the existing zone,minus turkey and a couple of the baltic states.

...germany will certainly be a part,but there will probably be very distinct regional governships for the:

1: anglo-gaullic-if we decide to stay in,that is by no means a given...I think benelux and france will come under this....anglo-irish may yet defer to an american bloc.TBC.

2)scando-nordic

3)germano-prussian

4)latin

there are certainly some aspects which most countries in the existing unit are well agreed on,like the EHIC healthcare,which is most certainly a good idea,but all-pervasive state intrusion is out of the question.The basic tenet of helping people out in an emergency on a pan-EU basis is to be applauded(frankly I think the same should also be applied to the US,as long as it is kept to an A+E basis.....the yanks really hate big government,and they have pretty good reason to after witnessing how much of a malignant cancer too much state power can grow into)

turkey and some of the islamics are very doubtful,and may well form the "byzantine" union.

shame really,I think there is some mileage in a good cohesive unit,as long as it goes baby steps.

trade deals,free movement of people and strategic defence is a good start..........but getting too hot and heavy on pointless ninnying micromanagenment buggers it al up.

Edited February 12, 2010 by oracle

[huw]

Just like the US Dollar is going to collapse once California defaults on its debt and has to be bailed out by the federal government. I don't buy this 'euro is about to collapse' stuff, it's just wishful thinking by people who see it as a proxy for the European Union unravelling.

The ECB will get burned directly by a PIIGS default, see below. I'm not aware that the Federal Reserve has lent money to California or accepted its bonds as collateral (?) in theory they could let California go bust.

The race is on for Greece before the ECB exits

Back in the autumn of 2008, after the collapse of Lehman Brothers, the ECB loosened the rules which govern how banks can get central bank funds. In particular, it let banks use government bonds rated BBB or above in ECB money market operations, instead of merely accepting bonds rated A-, or more. This was initially presented as a “temporary” policy, slated to last until late 2009. But last year the ECB extended the policy until the end of 2010. Thus, during 2009, banks which were holding Greek bonds have been merrily exchanging these for other assets via the ECB. This, in turn, has helped to support Greek bond prices (and, by extension, Greek banks that hold a large chunk of outstanding Greek bonds).

Until recently, many observers thought – or hoped – that this policy would be extended again, perhaps until 2011 or beyond. For although Greek debt currently has a credit rating that meets the old ECB rules, there is a good chance the debt will be downgraded this year. This creates the risk that Greek bonds will be excluded from any newly tightened ECB regime.

[Charlie The Tramp Returns]

The European single currency is facing an ‘inevitable break up’ a leading French bank warned yesterday.

It was doomed from the time it raised its ugly head in 1999.

No way, if you seriously look at all those countries who joined with their so different economies and cultures.

The Greeks believe it is a great game to avoid and pay taxes, well there you go then.

[TW11]

SocGen link, not for the faint hearted...

[stormymonday_2011]

I don't buy this 'euro is about to collapse' stuff, it's just wishful thinking by people who see it as a proxy for the European Union unravelling.

Agree in part.

Lot of Anglo Saxon wish fulfilment going on here about the future of the EU.

Germany, France, the Benelux countries etc are very unlikely to give up cooperating politically and economically whatever happens to the EURO.

Ironically it was Michael Portillo who made the most telling comment on the crisis last night when he warned against the triumphalism rearing its head amongst some people in the UK. He suggested that within the next year Britain would need 'all the friends it can get'. It wont be long before we get our turn in the tumbril.

Edited February 13, 2010 by whatamisery

[Dubai]

. . . and how much money has been poured down the EU drain . . . and to what end?

If the Euro disintegrates, so must the EU?

No, not really. The EU was doing OK without the Euro. As a block of independent Nations who have agreed to co-operate with each other and reduce bureaucracy between each other, it would have done very well.

Unfortunately it has morphed into an undemocratic superstate with an unelected head.... communism junior. As such it is doomed to fail because it goes against the very spirit of Europeans.

Edited February 13, 2010 by Dubai

[snowflux]

I wish we did have the euro in the UK.

Most of my income is in euros, and I'm fed up with paying my bank to change it into sterling and having to run my accounts in two currencies. :angry: I'd be in bed by now if I didn't have to change all my payments into bloody GBP. ******ing bank-loving, business-hating UKIP arseholes.

Edited February 13, 2010 by snowflux

[Bloo Loo]

EXTRA EXTRA! FRENCH BANK BUYS DOLLARS AND SLAGS THE EURO! READ ALL ABOUT IT!

[Georgia O'Keeffe]

Sensible bloke.

I had nightmares when I saw Brown blatantly pushing the Greek problem away onto the Euro area. Doesn't he know we'll need help? He doesn't think beyond the next step does he?

i think the govts view on Iceland makes that answer pretty clear

[moneyscam]

The ECB will get burned directly by a PIIGS default, see below. I'm not aware that the Federal Reserve has lent money to California or accepted its bonds as collateral (?) in theory they could let California go bust.

The race is on for Greece before the ECB exits

For the member states in the eurozone, the costs of reckless fiscal behavior can also, to some extent, be externalized. Any government whose bonds are accepted as collateral by the ECB can use this printing press to finance its expenditures.[2] The costs of this strategy are partly externalized to other countries when the newly created money bids up prices throughout the monetary union.

Each government has an incentive to accumulate higher deficits than the rest of the eurozone, because its costs can be externalized. Consequently, in the Eurosystem there is an inbuilt tendency toward continual losses in purchasing power. This overexploitation may finally result in the collapse of the euro.

Any tragedy of the commons can be solved by privatizing the specific resource. But instead of privatization, governments generally prefer regulation.

Such a regulation was installed for the European Monetary Union. It is called the Stability and Growth Pact, and it requires that each country's annual budget deficit is below 3% and its gross public debt not higher than 60% of its GDP. Sanctions were defined to enforce these rules.

Yet the sanctions have never been enacted and the pact is generally ignored. For 2010, all but one member state is expected to have a budget deficit higher than 3%; the general European debt ratio is 88%. Germany, the main country that urged these requirements, was among the first to refuse to fulfill them.

What is the future of the euro? As we have seen, the inherent incentives in the eurozone encourage destruction of the currency because deficit costs are externalized. Therefore, there are three main possibilities.

1.The Stability and Growth Pact is finally enforced. Unfortunately, strong political resistance makes this possibility unlikely.

2.The more conservative member states refuse to continue bailing out the more profligate ones. The economically stronger states force the weaker ones to enter bankruptcy and to leave the monetary union.

3.Countries continue to increase their deficits, attempting to externalize the costs. They yield to the incentives and participate in a spending race, leading to a hyperinflation;

http://www.marketoracle.co.uk/Article17177.html

[crouch]

Agree in part.

Lot of Anglo Saxon wish fulfilment going on here about the future of the EU.

Germany, France, the Benelux countries etc are very unlikely to give up cooperating politically and economically whatever happens to the EURO.

Ironically it was Michael Portillo who made the most telling comment on the crisis last night when he warned against the triumphalism rearing its head amongst some people in the UK. He suggested that within the next year Britain would need 'all the friends it can get'. It wont be long before we get our turn in the tumbril.

Agree totally with this. The Euro is a very powerful symbol and they will go to almost any lengths to prevent the breakup of the Eurozone, however ill conceived the project might seem to others. The fact that you have no euro fiscal policy and relatively little free movement of labour to oil the monetary wheels is a considerable disadvantage to say the least but they will still persist with the Euro.

[BalancedBear]

I don't really see why Greece is being seen as a huge problem, but the UK is not. Why should Greece default on its debt, and not the UK? I would say it is more likely that Greece will take teh Austerity measures needed to avoid default, even if it means other Eurozon countries insisiting on it. The UK may be able to print money instead, but it will only delay the problem, until you get Argentina style collapse.

This story has alot to do with deflecting the scrutinty to someone else. However, I'm sure it will not be that long before the UK with an even larger deficit comes under the same scrutinty, especially when even the mediocre deficit reduction targets are missed.

[tim123]

I don't really see why Greece is being seen as a huge problem, but the UK is not. Why should Greece default on its debt, and not the UK?

Because the UK has the option of inflating the debt away, Greece doesn't.

Inflating the debt away will result in the markets giving us a worse deal wrt future dealings so we don't want to do it. But they can't do much about the debt that we already have, and the fact that we can inflat it away means that the markets will give us better terms in the short term.

tim

[Jister1]

I wish we did have the euro in the UK.

Most of my income is in euros, and I'm fed up with paying my bank to change it into sterling and having to run my accounts in two currencies. :angry: I'd be in bed by now if I didn't have to change all my payments into bloody GBP. Fucking bank-loving, business-hating UKIP arseholes.

Nice

[bajista]

EXTRA EXTRA! FRENCH BANK BUYS DOLLARS AND SLAGS THE EURO! READ ALL ABOUT IT!

Yes -the vampire squid is rubbing its tentacles together with glee at this naive publication of this french bank's currency position

[Guest tbatst2000]

The ECB will get burned directly by a PIIGS default, see below. I'm not aware that the Federal Reserve has lent money to California or accepted its bonds as collateral (?) in theory they could let California go bust.

The race is on for Greece before the ECB exits

The Fed certainly has taken California's bonds as collateral (along with a whole load of other munis and assorted junk) and there's no reason why Europe couldn't let Greece go under. The situation really isn't that different from an economic and legal perspective, it's just the politics that differ.

[CokeSnortingTory]

Sensible bloke.

I had nightmares when I saw Brown blatantly pushing the Greek problem away onto the Euro area. Doesn't he know we'll need help? He doesn't think beyond the next step does he?

There will be nobody in Europe who can help us. Unless you believe the cobblers about the German economy being "strong".

[BalancedBear]

Because the UK has the option of inflating the debt away, Greece doesn't.

Inflating the debt away will result in the markets giving us a worse deal wrt future dealings so we don't want to do it. But they can't do much about the debt that we already have, and the fact that we can inflat it away means that the markets will give us better terms in the short term.

tim

Can we really inflate away that much though? Many gilts are index-linked and many other government liabilities such as pensions are also index linked. Inflating further would surely be counter productive. Given that the UK needs foreign investment to keep going, high inflation would put off lots of foreign investment too.