Jump to content
House Price Crash Forum

Breaking News - Greece Threatens To Leave The Euro


Recommended Posts

Black Monday?

Whatever.....

No no. Just the tipping point for the next leg down in a 20 year zig zag pattern in the markets. So I assume higher highs are out of the question, and the only question is whether we'll see a sequence of lower lows.

US jobs news wasn't foreseen by people supporting loose monetary policy. But it was predictable last autumn, when price rises began to feed through.

Link to post
Share on other sites
  • Replies 178
  • Created
  • Last Reply

Top Posters In This Topic

This kind of claptrap is the same as what is always trotted of here in the UK. However if the Greeks wanted to, they could charge far fewer Euros than they do and drive up tourism, but they don't, as they feel they can charge what they do. The Greeks need to import many things as they don't make much, compared with their consumption just like us in the UK. The German's don't need the Greek market, but they do want a stable Euro, hence why they want to avoid countries leaving.

If Greece left the Euro, they would need to charge even more for what they sell in whatever new weak currency they introduced, as they would need to pay for imports with a currency very few people would want. It would take years for many home grown industries to return.

Umm no your post is the true claptrap.

They dont charge some amount from 'feeling' but the amount that is forced on to them through the monetary system. Their debts are fixed in value and do not change. Thus to drop their prices and thus incomes by 1/3 means an increase in their relative debt burdens by the same amount. Roll on mass bankruptcies...

They import as much as they do because they are in a fixed currency peg with merchantist germany. The euro for germany relative to its economy is signifiantly undervalued making its exports much much cheaper thaan they should be. For greece the inverse is true. Greek companies cannot in any way shape or form be competitive vs germanies without massive internal devaluation. Whats more even if greece was competitive given the two countries differences in productivity growth the only way it could remain competitive was through non-stop devaluation, that is they would be stuck in eternal deflation and depression.

If greece left the euro they would have an extremely hard time of it for a few years then start to recover, a la iceland. As compared to now where they are stuck in a decade+ grinding self-destruction of their economy. Even worse their is and will be no end in sight. Greece never can be in a currency peg (the euro) with germany under german rules and remain a viable nation-state.

Edited by alexw
Link to post
Share on other sites

Umm no your post is the true claptrap.

They dont charge some amount from 'feeling' but the amount that is forced on to them through the monetary system. Their debts are fixed in value and do not change. Thus to drop their prices and thus incomes by 1/3 means an increase in their relative debt burdens by the same amount. Roll on mass bankruptcies...

They import as much as they do because they are in a fixed currency peg with merchantist germany. The euro for germany relative to its economy is signifiantly undervalued making its exports much much cheaper thaan they should be. For greece the inverse is true. Greek companies cannot in any way shape or form be competitive vs germanies without massive internal devaluation. Whats more even if greece was competitive given the two countries differences in productivity growth the only way it could remain competitive was through non-stop devaluation, that is they would be stuck in eternal deflation and depression.

If greece left the euro they would have an extremely hard time of it for a few years then start to recover, a la iceland. As compared to now where they are stuck in a decade+ grinding self-destruction of their economy. Even worse their is and will be no end in sight. Greece never can be in a currency peg (the euro) with germany under german rules and remain a viable nation-state.

The EU is designed to destroy nation states.

Link to post
Share on other sites

The EU is designed to destroy nation states.

Even if it is the aim, it won't happen. Too many cultural and linguistic differences built up over millennia.

In the beginning a free trade area seemed a good idea, however the the super bureaucracy we have is something different, more sinister.

Link to post
Share on other sites

Even if it is the aim, it won't happen. Too many cultural and linguistic differences built up over millennia.

In the beginning a free trade area seemed a good idea, however the the super bureaucracy we have is something different, more sinister.

The germans nearly managed it, probably would have worked if they'd left russia alone.

Link to post
Share on other sites

Exactly,

Only the French want to challenge America because they have a massive inferiority complex to get over.

Why would we want to challenge America? - they are 'us' to a far greater degree than anyone else is.

:blink:

Lloyds of London Insurance started life insuring African slave transporter ships.

Obama and 100's millions of others might have a chip on their shoulder

Link to post
Share on other sites

Lloyds of London Insurance started life insuring African slave transporter ships.

Obama and 100's millions of others might have a chip on their shoulder

So if Obama was now given the chance for his forefathers to have remained in Africa do you think he would take up that offer?

I don't think so.

:blink:

Link to post
Share on other sites

So if Obama was now given the chance for his forefathers to have remained in Africa do you think he would take up that offer?

I don't think so.

Whatever the historical injustices upon which Obama rose to power, he is not personally a descendent of the slave trade. His black "forefathers" never did leave Africa. His father was Kenyan, born and bred and went to America to study. So no direct links with the slave trade there. Obama's mother was white as was the grandmother who largely raised him and so not permanently linked to the slave trade, or to Africa.

Chances are that, Obama's link to the slave trade moving west Africans over the Atlantic is more to do with the an inherent racism which still plagues the US towards anyone with a non-white skin.

db

Link to post
Share on other sites

Well, for starters we share a common language with the US

US law is based on English common law

The state religion of the UK is Protestant and for most of its history the US has been a protestant country.

Half the TV shows in the UK are American.

We have been on the same side in virtually every war fought in the last century or so.

I can think of literally hundreds of similarites and no differences.

:blink:

Religion: the UK is officially a country with a state religion with a state church, and until recently had to teach Christianity to all pupils in the state schools (unless their parents opted out). It is also one with a substantially secular mindset.

The US is different

The Establishment Clause is the first of several pronouncements in the First Amendment to the United States Constitution, stating, "Congress shall make no law respecting an establishment of religion". Together with the Free Exercise Clause ("... or prohibiting the free exercise thereof"), these two clauses make up what are called the "religion clauses" of the First Amendment.[1]

The establishment clause has generally been interpreted to prohibit 1) the establishment of a national religion by Congress, or 2) the preference by the U.S. government of one religion over another. The first approach is called the "separation" or "no aid" interpretation, while the second approach is called the "non-preferential" or "accommodation" interpretation. The accommodation interpretation prohibits Congress from preferring one religion over another, but does not prohibit the government's entry into religious domain to make accommodations in order to achieve the purposes of the Free Exercise Clause.

The clause itself was seen as a reaction to the Church of England, established as the official church of England and some of the colonies, during the colonial era. It possibly could have been thought up of as a consensus to the diversity of religions in the U.S. at the time of the Constitution's creation.

(http://en.wikipedia.org/wiki/Establishment_Clause cited: 08 May 2011 covered by Creative Commons Licence)

However, the Americans have a much more religious society. When something goes wrong, the President (any president) says, "Our prayers are with you," and sounds confident that such a phrase will not sound nearly as silly as if (say) George Osborne or Nick Clegg produced it (even the Queen, who is head of the church doesn't do God). There are annual "prayer breakfasts" in the White House, but not I think in Downing St. Only in Northern Ireland are such things still live in British politics.

The US has a written constitution, which is very hard to change, and upon which all other law relies. The UK has a tradition of common law which has not single fixed reference point.

The US is a federation, and the attachment of many Americans to their home state is way beyond what most Brits feel, and they are aware of those things which are different to their state to those in others. The only parallels here are the pride of the Scots (which may lead them to secession) and that of the Yorkshire folk, who are not likely to want secession for Yorkshire any time soon.

Americans still have that feel that, honestly, truly, deep down God intended them to rule an empire. We lost that a few decades ago.

A start - could produce more yut not now.

db

Link to post
Share on other sites

Umm no your post is the true claptrap.

They dont charge some amount from 'feeling' but the amount that is forced on to them through the monetary system. Their debts are fixed in value and do not change. Thus to drop their prices and thus incomes by 1/3 means an increase in their relative debt burdens by the same amount. Roll on mass bankruptcies...

They import as much as they do because they are in a fixed currency peg with merchantist germany. The euro for germany relative to its economy is signifiantly undervalued making its exports much much cheaper thaan they should be. For greece the inverse is true. Greek companies cannot in any way shape or form be competitive vs germanies without massive internal devaluation. Whats more even if greece was competitive given the two countries differences in productivity growth the only way it could remain competitive was through non-stop devaluation, that is they would be stuck in eternal deflation and depression.

If greece left the euro they would have an extremely hard time of it for a few years then start to recover, a la iceland. As compared to now where they are stuck in a decade+ grinding self-destruction of their economy. Even worse their is and will be no end in sight. Greece never can be in a currency peg (the euro) with germany under german rules and remain a viable nation-state.

Their debts are not fixed. They expanded their debt to reckless levels in the last few years, and now find they took on too much debt. Presumably they expanded their debts to a level they thought they could get away with. They were not forced to borrow money. If they had borrowed the equivalent in any other currency they would be in just as bad a position, just perhaps a different position.

There is no reason why Greek companies cannot compete even with the Euro. In theory Greek workers should need to be paid fewer Euros to live than German workers.

Adopting a model of using a weak currency that is constantly devalued does not work either, as has been shown to be the case before the Euro was adopted.

Edited by BalancedBear
Link to post
Share on other sites

Religion: the UK is officially a country with a state religion with a state church, and until recently had to teach Christianity to all pupils in the state schools (unless their parents opted out). It is also one with a substantially secular mindset.

The US is different

(http://en.wikipedia.org/wiki/Establishment_Clause cited: 08 May 2011 covered by Creative Commons Licence)

However, the Americans have a much more religious society. When something goes wrong, the President (any president) says, "Our prayers are with you," and sounds confident that such a phrase will not sound nearly as silly as if (say) George Osborne or Nick Clegg produced it (even the Queen, who is head of the church doesn't do God). There are annual "prayer breakfasts" in the White House, but not I think in Downing St. Only in Northern Ireland are such things still live in British politics.

The US has a written constitution, which is very hard to change, and upon which all other law relies. The UK has a tradition of common law which has not single fixed reference point.

The US is a federation, and the attachment of many Americans to their home state is way beyond what most Brits feel, and they are aware of those things which are different to their state to those in others. The only parallels here are the pride of the Scots (which may lead them to secession) and that of the Yorkshire folk, who are not likely to want secession for Yorkshire any time soon.

Americans still have that feel that, honestly, truly, deep down God intended them to rule an empire. We lost that a few decades ago.

A start - could produce more yut not now.

db

I cited fundamental similarities

and you are listing superficial differences.

You can't get any more fundamental than sharing a common language and a common religion or that fact that we fought on the same side in the last three major conflicts in World history.

The EU and the Euro are just the latest misguided attempt to create a totalitarian European superstate.

It is not surprising that the Europeans hate us and the US - beacuse we keep preventing them from achieving this goal.

But why anyone in this country thinks it would be a good idea - given Europe's track record is frankly beyond me.

:blink:

Link to post
Share on other sites

Compared to the rest of Europe, Greece is further down the road to fiscal collapse. To a greater or lesser extent, all advanced economies are all following behind Greece, with large fiscal deficits, rising debt levels and collapsing pensions systems.

This is how a recent IMF report put it. Fiscal risks are "elevated for advanced economies, reflecting unfavorable medium-term debt dynamics and aging-related spending pressures. In emerging economies, solvency risks are lower, but the composition of public debt remains a source of risk and the fiscal position is weaker than before the crisis."

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1826547

Read more: http://businessetc.thejournal.ie/greece-denies-plan-to-leave-eurozone-and-bring-drachma-back-132626-May2011/?utm_source=shortlink#ixzz1LmA7Ly7l

Link to post
Share on other sites

Bond markets seem to suggest Greece holding on another year but not two.

1 year bond rate = 9.989 % (Which is pretty bad) link

2 year bond rate = 25.339 % (No way ) link

Anyone explain to me why we don't see the same difference betwwen our 3 yr and 10 year bond rate s (currently 1.419 % and 3.383% respectively)?

Edited by man o' the year
Link to post
Share on other sites

Just to clear this up.

If Greece dump the euro, their debts are still in euros. You can't tell your bank you are re-denominating you debt into zimbabwe dollars, then wait for the zimbabwe dollar to inflate 1000% (After a few days) then pay of your debt with worthless zimbabwe dolars.

If Greece "default" on their debts, it doesn't mean the debts "disappear". Just like if you miss a credit card payment, if you don't pay, the debt is still their, you just get charged late payment fees.

Only the creditor can choose to wipe out the debts of re-doniminate them.

Dumping the euro won't solve anything. Neither will default.

There is NO MAGIC BULLET.

Debts have to be paid. The alternative, eventually, is war.

Link to post
Share on other sites

Just to clear this up.

If Greece dump the euro, their debts are still in euros. You can't tell your bank you are re-denominating you debt into zimbabwe dollars, then wait for the zimbabwe dollar to inflate 1000% (After a few days) then pay of your debt with worthless zimbabwe dolars.

If Greece "default" on their debts, it doesn't mean the debts "disappear". Just like if you miss a credit card payment, if you don't pay, the debt is still their, you just get charged late payment fees.

Only the creditor can choose to wipe out the debts of re-doniminate them.

Dumping the euro won't solve anything. Neither will default.

There is NO MAGIC BULLET.

Debts have to be paid. The alternative, eventually, is war.

There is another alternative.

Point out the debts where fraudlently conveyed and jail the bankers.

Link to post
Share on other sites

Just to clear this up.

If Greece dump the euro, their debts are still in euros. You can't tell your bank you are re-denominating you debt into zimbabwe dollars, then wait for the zimbabwe dollar to inflate 1000% (After a few days) then pay of your debt with worthless zimbabwe dolars.

If Greece "default" on their debts, it doesn't mean the debts "disappear". Just like if you miss a credit card payment, if you don't pay, the debt is still their, you just get charged late payment fees.

Only the creditor can choose to wipe out the debts of re-doniminate them.

Dumping the euro won't solve anything. Neither will default.

There is NO MAGIC BULLET.

Debts have to be paid. The alternative, eventually, is war.

orly_owl.jpg

Perhaps I can direct you here: Government of Iceland

How many UK pounds are they going to pay back?

Edited by cashinmattress
Link to post
Share on other sites

Just to clear this up.

If Greece dump the euro, their debts are still in euros. You can't tell your bank you are re-denominating you debt into zimbabwe dollars, then wait for the zimbabwe dollar to inflate 1000% (After a few days) then pay of your debt with worthless zimbabwe dolars.

If Greece "default" on their debts, it doesn't mean the debts "disappear". Just like if you miss a credit card payment, if you don't pay, the debt is still their, you just get charged late payment fees.

Only the creditor can choose to wipe out the debts of re-doniminate them.

Dumping the euro won't solve anything. Neither will default.

There is NO MAGIC BULLET.

Debts have to be paid. The alternative, eventually, is war.

Rubbish. When you talk about national debts you talk about the debts of sovereign nations. That is a nation which governs itself and has the right to decide on matters pertaining to itself. No other nation can tell it what to do unless it aquiesce's or that other nation is willing to use force.

Thus when a nation defaults (as happened in argentina) the debts do 'disappear'. Creditors cannot force a nation to pay debts it is unwilling to pay. If greece says we will not pay the debts are wiped out no matter what the creditor wants. The creditors can keep them on their books but it means nothing unless greece agrees that it will honor those debts. If they won't what will Deutsche bank do, ask their government to send the tanks in?

Nations generally do not default because the economic consequences are so severe. And they are so severe because when you come right down to it, thats the only real hold creditors have over nations to make them pay back what they owe.

Edited by alexw
Link to post
Share on other sites

Just like if you miss a credit card payment, if you don't pay, the debt is still their, you just get charged late payment fees.

Only the creditor can choose to wipe out the debts or re-doniminate them.

Debts have to be paid. The alternative, eventually, is war.

As others have pointed out this argument is false.

If you miss a credit card payment, then that debt remains on the books. However, if you get the courts to declare you bankrupt, then the debt becomes a "bad debt" and no expects you to pay it back.

There are, in the case of the individual, some serious consequences. Firstly you are supposed to sell anything you have that might raise money (with a few exceptions - you can't make a craftsman sell his tools, for example) and secondly no one respectable will lend you any money. If you got into debt from a habit of spending more money than you had, this will be a very severe blow. If you become bankrupt from a couple of sudden serious events, say redundancy followed by terminal illness in the family, then you may be able to re-build from there.

Countries - and sovereigns - have "repudiated their debts" throughout history. I thought of Philip II of Spain, googled his debt and discovered that the FT was there before me (April 2010):

If you want to go back to the roots of Greece’s financial crisis, you could always start with Philip II of Spain. Born in 1527; acceded to the Spanish throne in 1556; defaulted on the national debt in 1557, 1560, 1575 and 1596; died in 1598. Now there’s a sovereign who knew how to renounce sovereign debt. Philip would leave an Argentine finance minister standing.
(http://www.ft.com/cms/s/0/e71596d2-5482-11df-8bef-00144feab49a.html#ixzz1LnB31hAI)

It really can be done!

db

Edit: there's a lot else of real interest in the article on the default of sovereign debt

Edited by deeplyblue
Link to post
Share on other sites
orly_owl.jpg

Perhaps I can direct you here: Government of Iceland

How many UK pounds are they going to pay back?

Icelands government didn't owe the money... it's banks did.

Rubbish. When you talk about national debts you talk about the debts of sovereign nations. That is a nation which governs itself and has the right to decide on matters pertaining to itself. No other nation can tell it what to do unless it aquiesce's or that other nation is willing to use force.

Thus when a nation defaults (as happened in argentina) the debts do 'disappear'. Creditors cannot force a nation to pay debts it is unwilling to pay. If greece says we will not pay the debts are wiped out no matter what the creditor wants. The creditors can keep them on their books but it means nothing unless greece agrees that it will honor those debts. If they won't what will Deutsche bank do, ask their government to send the tanks in?

Nations generally do not default because the economic consequences are so severe. And they are so severe because when you come right down to it, thats the only real hold creditors have over nations to make them pay back what they owe.

You're close. Really close. You see you ignore that fact that WESTERN NATIONS are dependant on international trade. Argentina have relatively limited public services and public dependancy on government services.

Lets see how well Greece survives without Oil. Or Gas. Or Medicine. All of this are brough in from abroad and buying them is impossible if every time you try to buy something the goods/funds get seized for payment of debts.

If you miss a credit card payment, then that debt remains on the books. However, if you get the courts to declare you bankrupt, then the debt becomes a "bad debt" and no expects you to pay it back.

There are, in the case of the individual, some serious consequences. Firstly you are supposed to sell anything you have that might raise money (with a few exceptions - you can't make a craftsman sell his tools, for example) and secondly no one respectable will lend you any money. If you got into debt from a habit of spending more money than you had, this will be a very severe blow. If you become bankrupt from a couple of sudden serious events, say redundancy followed by terminal illness in the family, then you may be able to re-build from there.

On the first part you're close. Firstly there is no method for a country to declare itself bankrupt. Then, even if a country tried passing a law to allow it, such bankrupcies would not be recognised by other countries.

Secondly, and such attemp at bankrupcy, as pointed out in your second point, wouldn't be bankrupcy as such unless the country sold ALL it's assets to try to pay it debts... technically this should include land ownership, and possibly even territorial rights or the right to levy taxation.

Link to post
Share on other sites

....wonder if GS will be around to advise on the exit....?.... :rolleyes:

In 2001, Greece entered the European Monetary Union, swapped the drachma for the euro, and acquired for its debt an implicit European (read German) guarantee. Greeks could now borrow long-term funds at roughly the same rate as Germans—not 18 percent but 5 percent. To remain in the euro zone, they were meant, in theory, to maintain budget deficits below 3 percent of G.D.P.; in practice, all they had to do was cook the books to show that they were hitting the targets. Here, in 2001, entered Goldman Sachs, which engaged in a series of apparently legal but nonetheless repellent deals designed to hide the Greek government’s true level of indebtedness. For these trades Goldman Sachs—which, in effect, handed Greece a $1 billion loan—carved out a reported $300 million in fees. The machine that enabled Greece to borrow and spend at will was analogous to the machine created to launder the credit of the American subprime borrower—and the role of the American investment banker in the machine was the same. The investment bankers also taught the Greek-government officials how to securitize future receipts from the national lottery, highway tolls, airport landing fees, and even funds granted to the country by the European Union. Any future stream of income that could be identified was sold for cash up front, and spent. As anyone with a brain must have known, the Greeks would be able to disguise their true financial state for only as long as (a) lenders assumed that a loan to Greece was as good as guaranteed by the European Union (read Germany), and (B) no one outside of Greece paid very much attention. Inside Greece there was no market for whistle-blowing, as basically everyone was in on the racket.

http://www.vanityfair.com/business/features/2010/10/greeks-bearing-bonds-201010?currentPage=4

Link to post
Share on other sites

Alas, bith this delightful possibility and the other one today (Scottish independence) both highly unlikely, more's the pity :(

Greece leaving the Euro and Scottish independence both seem highly likely to me.

Not this year, but in the next 2-3 for Greece, 5-10 for Scotland.

Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...
  • Recently Browsing   0 members

    No registered users viewing this page.





×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.