Germany And France Agree On Imf Aid For Greece

[_w_]

Germany does not manage Greek or Spanish money, this is the whole problem at the moment. If Germany managed Greek money how come the Greek Central bank issued bonds to the tune of 120% of GDP?

Anyone can issue IOUs, that doesn't mean everyone manage money does it.

[_w_]

Germany does not manage Greek or Spanish money, this is the whole problem at the moment. If Germany managed Greek money how come the Greek Central bank issued bonds to the tune of 120% of GDP?

Can't edit my posts so here's something else I forgot to add: Germany does indeed manage the euro, whether the Spanish or Greek use it doesn't matter. If anything this piece of news proves that they are the decision makers.

[ralphmalph]

Can't edit my posts so here's something else I forgot to add: Germany does indeed manage the euro, whether the Spanish or Greek use it doesn't matter. If anything this piece of news proves that they are the decision makers.

I do not disagree that the interest rate set by the ECB is set primarily for Germanys benefit.

[South Lorne]

As a Euro holder, what you ideally want is a Eurozone that consists of Germany.

...the reality is ...it doesn't ..it consists of lots of countries which do not follow the German discipline / ethos ...therefore a Euro holder should be dreaming of holding Dmarks...which is not going to happen in the medium term...

[Deckard]

I'll sleep better tonight on the assumption this piece of news is for real.

night night

[_w_]

I do not disagree that the interest rate set by the ECB is set primarily for Germanys benefit.

I don't believe it is just the interest rates. What we are seeing here is a battle between the serial devaluers of Southern Europe (France, Spain, Italy, Greece, etc.) and Germany, loosely supported by Northern Europe (and even Ireland who despite their recent c*ck up tend to be fiscally continent).

The Germans oppose an internal EU bailout because they know that if they didn't it would be supportive of more unrestrained government spending as favoured by the South. That would then lead to the inevitable serial central bank printing and devaluations that were the norm in the South since WW2 but which the Germans reject. It's the printing to support fiscal deficits that they object to. Or so I believe.

[_w_]

night night

I know I know. But I'm planning for the next few decades, not days so on that basis ... I'm not bothered.

[South Lorne]

night night

...great news for German exports to the US ...maybe the Germans will thank Greece in the long run....

[Deckard]

...great news for German exports to the US ...maybe the Germans will thank Greece in the long run....

Nope, they looove a strong Euro, not surprisingly.

[nixy]

It is entirely the fault of the Euro, because it enabled Greece to run up huge debts without markets devaluing their currency or forcing up interest rates on their sovereign debt. Also the Greek government ran up this defecit in the belief knowing that the rest of Europe would be forced to bail them out.

The Euro is a complete and utter disaster.

Fixed, subtle but important.

[nixy]

Precisely - so it does not look like the Euro is the cause.

But it is. It prevents failure. Or was sold as such. Failure should not be supported.

??

[South Lorne]

Nope, they looove a strong Euro, not surprisingly.

....read your old thread ...to summarize the recent strong Euro helped Germany due to it's reliance on quality and renewal thereof for exports ...while it crunched everyone else including the French where perceived quality has not been the theme in the main market of China.

..I don't see that the weaker Euro will harm Germany that much because quality is a philosophy and ethos which has to be in the culture like a virus ....and I still think the weaker Euro will help top end goods like Mercedes BMW and Audi in the US....unless you know a good reason why not....

[RufflesTheGuineaPig]

The problem wasn't with the Germans managing the money, the problem is that for the shared currency to work you have to have legally enforced government debt limits, the rules meaning politicians to to jail or better still, the NOOSE if they try to circumvent the rules by any means including currency trades, PFI and unfunded pension liabilities.

[nixy]

The problem wasn't with the Germans managing the money, the problem is that for the shared currency to work you have to have legally enforced government debt limits, the rules meaning politicians go to jail or better still, the NOOSE if they try to circumvent the rules by any means including currency trades, PFI and unfunded pension liabilities.

Seems right & proper. After all, asking nicely doesn't seem to work.

Actually has anyone thought to ask them nicely?

or even :angry:

[Deckard]

..I don't see that the weaker Euro will harm Germany that much because quality is a philosophy and ethos which has to be in the culture like a virus ....and I still think the weaker Euro will help top end goods like Mercedes BMW and Audi in the US....unless you know a good reason why not....

Dude, I agree with you - but the Germans don't

[South Lorne]

the rules meaning politicians to to jail or better still, the NOOSE if they try to circumvent the rules by any means including currency trades, PFI and unfunded pension liabilities.

....in North Korea it's the firing squad for the finance guy blamed for the country's currency devaluation...

http://technology.sponsorizzati.com/north-korean-finance-official-blamed-for-currency-crisis-executed-by-firing-squad-53049.php

[Sour Mash]

It is entirely the fault of the Euro, because it enabled Greece to run up huge debts without markets devaluing their currency or forcing up interest rates on their sovereign debt. Also the Greek government ran up this defecit in the belief that the rest of Europe would be forced to bail them out.

The Euro is a complete and utter disaster.

Yes, if not for the Euro the Greeks would have run their finances properly and never over-borrowed, just like the non-Euro UK

[Deckard]

Euro falls on Greece IMF bailout concern

The euro weakened against 13 of the 16 major currencies after a German Finance Ministry official told reporters in Berlin that Germany and France agreed to back an IMF role in any aid for Greece. The shift, made before start of a two-day EU summit in Brussels tomorrow, came a week after euro-area finance ministers had agreed to a European framework for a bailout.

“It looks like the eurozone can’t resolve the Greek crisis by themselves so they are going to the IMF for help,” said Tsutomu Soma, a bond and currency dealer at Okasan Securities Co. Ltd. “This casts some doubt over the strength of the European Union. The bias is to sell the euro.”

The IMF rescuing Greece (and inevitably other PIIGS countries further down the line) is bad for the Euro in its present form.

It only becomes good for the Euro if and when countries not meeting the EMU criteria start leaving the single currency.

Until then, the Euro is a sell.

EDIT: full article now out on Bloomy.

Edited March 24, 2010 by VoteWithYourFeet

[ralphmalph]

Yes, if not for the Euro the Greeks would have run their finances properly and never over-borrowed, just like the non-Euro UK

If Greece had been borrowing over the past 10 years at interest rates that were commensurate with the risk of Greece defaulting, not the risk of Germany defaulting, then it definately would have acted as a restrain to amassing such levels of debt.

Greece has been able to borrow vast sums at rates close to Germany, if the rates were double over that period (more realistically pricing the risk of default) you could argue that Greece would have half the ammount of debt today because of the higher interest payments. Or that the problem would have come to a head 5 years earlier when Greece or the market realised that the interest payments were unaffordable with the current tax take.

The problem that Greece has is that they have to refinance all that old debt over the the next few years and the market is currently saying "In the past you paid 3% now we want 6.5% on that old debt to refinance it." Greeces debt interest payments are going to double over the next two years meaning a large debt problem that may have been manageable is now completley unaffordable and so state failure is the only option.

If you listen to the Greek PM all he keeps coming out with is "Greece does not want a bailout we just want to borrow at the rates the Germans can because we are members of the Euro."

[LiveAndLetBuy]

Even if rates had been trippled, construction would have taken place, once the speculative bubble was let loose, it was not going to end well.

Yes I don't deny that that the bubble would have existed anyway - however it is reasonable to assume that if rates had been trippled then the bubble would have been smaller. I'm not saying the euro caused the housing bubble in Spain, but I am suggesting it made it worse.

[Deckard]

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.

It's started.

Portugal’s Debt Rating Lowered by Fitch on Worsening Finances

[mnkybusiness]

Yes, if not for the Euro the Greeks would have run their finances properly and never over-borrowed, just like the non-Euro UK

Or even the French. Did any member state actually abide by the fiscal rules?

[huw]

The IMF rescuing Greece (and inevitably other PIIGS countries further down the line) is bad for the Euro in its present form.

It only becomes good for the Euro if and when countries not meeting the EMU criteria start leaving the single currency.

Which countries would that leave?

In the end, Germany failed to meet the debt limit, while France was left open to charges it fudged the criteria through accounting tricks.