Deckard Posted March 23, 2010 Share Posted March 23, 2010 Headline just out on Bloomberg, no article yet. Updates will follow. March 23 (Bloomberg) -- Germany and France have agreed to back International Monetary Fund aid to Greece, a German Finance Ministry official told reporters in Berlin today. He spoke on condition of anonymity. IMO this will turn out to be a major embarassment and loss of credibility for the Eurozone and EMU. Basically, they are admitting that they are incapable of sorting out their own mess, or unwilling to stand by the rules broken by Greece to get in, and bear the cost of their complacency and arrogance. Watch this space Quote Link to comment Share on other sites More sharing options...
Sour Mash Posted March 23, 2010 Share Posted March 23, 2010 The richer Eurozone members not caving in and bailing out a basket-case single-currency country is longer-term good news for the Euro IMO. If you start with the bailouts and money printing to rescue the feckless and undisciplined you might as well start making bogroll with your currency. Frankly, if I were the Germans I'd be looking to kick the Greeks out of the Eurozone right now. They are a liability. Quote Link to comment Share on other sites More sharing options...
BalancedBear Posted March 23, 2010 Share Posted March 23, 2010 (edited) Headline just out on Bloomberg, no article yet. Updates will follow. IMO this will turn out to be a major embarassment and loss of credibility for the Eurozone and EMU. Basically, they are admitting that they are incapable of sorting out their own mess, or unwilling to stand by the rules broken by Greece to get in, and bear the cost of their complacency and arrogance. Watch this space I don't see it this way. Greece is a sovereign nation that uses a shared currency. It is not a state in the United States of Europe. It broke the rules, so nobody else can be made responsible for that, and nor should they. Ireland has taken steps to sort itself, and so should Greece. If Greece is not capable, then the IMF is the answer. Bailouts are not the answer and I applaud the EU for not going down the bailout route. This will hopefully send a message to other feckless euro zone nations contemplating the use of more debt to think again. They knew what was expected of them when they joined the club. They cannot expect low interest rates that go with good discipline to be combined with excessive public sector debt that can no longer be serviced. I don't see it as arrogant to expect rules to be followed. Only the US and UK could see things that way. Edited March 23, 2010 by BalancedBear Quote Link to comment Share on other sites More sharing options...
nixy Posted March 23, 2010 Share Posted March 23, 2010 Headline just out on Bloomberg, no article yet. Updates will follow. IMO this will turn out to be a major embarassment and loss of credibility for the Eurozone and EMU. Basically, they are admitting that they are incapable of sorting out their own mess, or unwilling to stand by the rules broken by Greece to get in, and bear the cost of their complacency and arrogance. Watch this space Why bother with rules?? Quote Link to comment Share on other sites More sharing options...
Deckard Posted March 23, 2010 Author Share Posted March 23, 2010 (edited) This will hopefully send a message to other feckless euro zone nations contemplating the use of more debt to think again. They knew what was expected of them when they joined the club. They cannot expect low interest rates that go with good discipline to be combined with excessive public sector debt that can no longer be serviced. I'm afraid Italy, Spain and Portugal are well beyond the point of no return with excessive public sector debt. The hedgies will descend on them like vultures, one by one, until the IMF has to rescue all of them. I doubt the US, Japan and China will just bend over and fork out the money, just because Germany and France don't want to foot the bill of the Euro folly. Edited March 23, 2010 by VoteWithYourFeet Quote Link to comment Share on other sites More sharing options...
BalancedBear Posted March 23, 2010 Share Posted March 23, 2010 I'm afraid Italy, Spain and Portugal are well beyond the point of no return with excessive public sector debt. The hedgies will descend on them like vultures, one by one, until the IMF has to rescue all of them. I doubt the US, Japan and China will just bend over and fork out the money, just because Germany and France don't want to foot the bill of the Euro folly. But it is not really the fault of the Euro. It comes down to these nations borrowing too much, and also assuming the previous benign economic environment would go on forever. They would all have the same trouble with their old currencies too, probably even more so, as they have still been gaining from lower interest rates of being in the Eurozone, compared with being outside of it. Quote Link to comment Share on other sites More sharing options...
R K Posted March 23, 2010 Share Posted March 23, 2010 Headline just out on Bloomberg, no article yet. Updates will follow. IMO this will turn out to be a major embarassment and loss of credibility for the Eurozone and EMU. Basically, they are admitting that they are incapable of sorting out their own mess, or unwilling to stand by the rules broken by Greece to get in, and bear the cost of their complacency and arrogance. Watch this space Merkel gone native. She can't help herself and it appears Sarkozy can't persuade her otherwise. Euro is now officially the DM and the EU is officially now Germany. They blew it. Quote Link to comment Share on other sites More sharing options...
mnkybusiness Posted March 23, 2010 Share Posted March 23, 2010 I suspect this is Germany playing hard-ball with the Greeks, sending a clear message that unless Greece starts down the road to fiscal discipline it can expect no help from the EU. It makes sense because really the EU has no alternative in the short term; it doesn't possess the tools and mandate that the IMF does or would have if the Greeks seek its help. Quote Link to comment Share on other sites More sharing options...
Deckard Posted March 23, 2010 Author Share Posted March 23, 2010 But it is not really the fault of the Euro. It comes down to these nations borrowing too much, and also assuming the previous benign economic environment would go on forever. They would all have the same trouble with their old currencies too, probably even more so, as they have still been gaining from lower interest rates of being in the Eurozone, compared with being outside of it. We've done this before - many times (Yelims, where art thou? ). No point in discussing what-if scenarios in the past. The Euro as it is now does not work, or rahter - it only works for Germany. Period. Greece is exposing that for all to see, and for all to judge, and it's just the beginning. Quote Link to comment Share on other sites More sharing options...
BalancedBear Posted March 23, 2010 Share Posted March 23, 2010 Merkel gone native. She can't help herself and it appears Sarkozy can't persuade her otherwise. Euro is now officially the DM and the EU is officially now Germany. They blew it. Greece accounts for apparently 2% of Eurozone GDP - not exactly the a country the Eurozon actually needs. Don't worry, the UK too will be heading to the IMF if Labour come to power again, even though we don't have the Euro. Quote Link to comment Share on other sites More sharing options...
izzy Posted March 23, 2010 Share Posted March 23, 2010 I wonder if the revelation that the Hellenic Post bank profited from the worsening Greek fiscal situation - and very likely from insider knowlege - had anything to do with tipping the balance in favour of IMF? There is a prevalent belief in Greece that foreigners are stupid. Lookslike that one backfired. The parasitic ruling class in Greece are close to killing the host. Quote Link to comment Share on other sites More sharing options...
R K Posted March 23, 2010 Share Posted March 23, 2010 (edited) Greece accounts for apparently 2% of Eurozone GDP - not exactly the a country the Eurozon actually needs. Don't worry, the UK too will be heading to the IMF if Labour come to power again, even though we don't have the Euro. Germany doesn't need anyone else. Yes, we've done that German Nationalism argument to death. It usually doesn't end too well. 2% of Eurozone and we're talking about something in the region of a 3% (??) spread over German bonds for their financing and they have a plan which may or may not be credible or implementable. We're talking such piffling amounts it's embarassing. Yet Merkel would rather have the Americans lending them the money (or support) than doing it herself. It's a monumental error of judgment and one that will ultimately kill the Euro. It's not Greece that should be out it's Germany for god's sake! http://blogs.ft.com/money-supply/2010/03/23/mr-trichet-speaks-french/ Edited March 23, 2010 by Red Kharma Quote Link to comment Share on other sites More sharing options...
yellerkat Posted March 23, 2010 Share Posted March 23, 2010 Germany doesn't need anyone else. Yes, we've done that German Nationalism argument to death. It usually doesn't end too well. Don't Godwin the thread like Greece Godwinned itself. Quote Link to comment Share on other sites More sharing options...
Injin Posted March 23, 2010 Share Posted March 23, 2010 I wonder if the revelation that the Hellenic Post bank profited from the worsening Greek fiscal situation - and very likely from insider knowlege - had anything to do with tipping the balance in favour of IMF? There is a prevalent belief in Greece that foreigners are stupid. Lookslike that one backfired. The parasitic ruling class in Greece are close to killing the host. The trojan bank? Someone has a sense of humour at least. Quote Link to comment Share on other sites More sharing options...
South Lorne Posted March 23, 2010 Share Posted March 23, 2010 Headline just out on Bloomberg, no article yet. Updates will follow. IMO this will turn out to be a major embarassment and loss of credibility for the Eurozone and EMU. Basically, they are admitting that they are incapable of sorting out their own mess, or unwilling to stand by the rules broken by Greece to get in, and bear the cost of their complacency and arrogance. Watch this space ...the base headline is 'The IMF to save the Euro'....simple ...no..?.... Quote Link to comment Share on other sites More sharing options...
BalancedBear Posted March 23, 2010 Share Posted March 23, 2010 We've done this before - many times (Yelims, where art thou? ). No point in discussing what-if scenarios in the past. The Euro as it is now does not work, or rahter - it only works for Germany. Period. Greece is exposing that for all to see, and for all to judge, and it's just the beginning. It seems to work well for all Eurozone countries. The problem is some Eurozone countries have governments that don't know when to stop borrowing. Quote Link to comment Share on other sites More sharing options...
LiveAndLetBuy Posted March 23, 2010 Share Posted March 23, 2010 But it is not really the fault of the Euro. It comes down to these nations borrowing too much, and also assuming the previous benign economic environment would go on forever. They would all have the same trouble with their old currencies too, probably even more so, as they have still been gaining from lower interest rates of being in the Eurozone, compared with being outside of it. Spain didn't borrow too much. It's economy overheated because it had negative real interest rates from 2002 to 2006 as a direct result of having the euro. Spain now suddenly finds itself running up huge debts because the collapse in its economy has been so sudden and so immense that it can't really avoid it. A situation made worse of course by the fact that Spain still has the euro. Quote Link to comment Share on other sites More sharing options...
LiveAndLetBuy Posted March 23, 2010 Share Posted March 23, 2010 It seems to work well for all Eurozone countries. The problem is some Eurozone countries have governments that don't know when to stop borrowing. ...and governments that don't know when to stop lending Quote Link to comment Share on other sites More sharing options...
libspero Posted March 23, 2010 Share Posted March 23, 2010 Yet Merkel would rather have the Americans lending them the money (or support) than doing it herself. My understanding was that that was entirely the point. The Greeks don't like the idea of the Germans telling them what they can and can't do (imagine if the EU imposed sanctions on us.. there'd be riots!). It seems that the political way around the confrontation is to call in the IMF who are not allied to anyone (sort of). They do the dirty work and the Greeks don't march on Germany. Quote Link to comment Share on other sites More sharing options...
lets get it right Posted March 23, 2010 Share Posted March 23, 2010 Where does the IMF get the money from to bail out a country where no fecker pays tax? And, can I have some? Quote Link to comment Share on other sites More sharing options...
BalancedBear Posted March 23, 2010 Share Posted March 23, 2010 Spain didn't borrow too much. It's economy overheated because it had negative real interest rates from 2002 to 2006 as a direct result of having the euro. Spain now suddenly finds itself running up huge debts because the collapse in its economy has been so sudden and so immense that it can't really avoid it. A situation made worse of course by the fact that Spain still has the euro. That may be true, although allowing a massive building boom to take place without any clear demand was proabably also a big factor. Nobody forced Spain to build lots, just like nobody forced the UK to become the BTL capital of the world. Quote Link to comment Share on other sites More sharing options...
Injin Posted March 23, 2010 Share Posted March 23, 2010 Where does the IMF get the money from to bail out a country where no fecker pays tax? They print it, which is why the IMF can't really help with this crsis. And, can I have some? Probably not. Quote Link to comment Share on other sites More sharing options...
LiveAndLetBuy Posted March 23, 2010 Share Posted March 23, 2010 Headline just out on Bloomberg, no article yet. Updates will follow. IMO this will turn out to be a major embarassment and loss of credibility for the Eurozone and EMU. Basically, they are admitting that they are incapable of sorting out their own mess, or unwilling to stand by the rules broken by Greece to get in, and bear the cost of their complacency and arrogance. Watch this space I think this might be good for the euro as a currency (it's looking more deutschmark-like by the day) but not so good for the euro as the pan-european economic glue that it was intended to be. Quote Link to comment Share on other sites More sharing options...
R K Posted March 23, 2010 Share Posted March 23, 2010 My understanding was that that was entirely the point. The Greeks don't like the idea of the Germans telling them what they can and can't do (imagine if the EU imposed sanctions on us.. there'd be riots!). It seems that the political way around the confrontation is to call in the IMF who are not allied to anyone (sort of). They do the dirty work and the Greeks don't march on Germany. Oh I wish Greece would get out of the Euro and certainly not be 'indebted' to a nationalistic Deutscheland, but it tells us something about the predicament the Eurozone is in I think and the attitude of Germany when they have to call on what is effectively US finance 'cause they can't resolve their issues internally. I dare say the IMF will be selling off the Greek shipping industry to Asia before the saga has run its course too. Assuming all this is true of course. It may just be to see how the markets react. Quote Link to comment Share on other sites More sharing options...
lets get it right Posted March 23, 2010 Share Posted March 23, 2010 They print it, which is why the IMF can't really help with this crsis. Why don't they just print enough for all of us? If they print it, presumably it doesn't have to be paid back? I mean, if they just print it, why would anyone think it has any value? Quote Link to comment Share on other sites More sharing options...
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