Jump to content
House Price Crash Forum
Sign in to follow this  
exiges

The Euro And The Endgame

Recommended Posts

http://www.bbc.co.uk/news/world-europe-14182856

It has not taken long, but increasingly attention is turning to the endgame of the eurozone crisis.

The scenarios fill the comment columns and seep into conversations, even with EU commissioners.

Everyone seems to accept that "the centre cannot hold, things fall apart". So every idea is in play: a break-up of the eurozone, Greece leaving, fiscal and political union, European bonds, a European treasury etc. It is at last being recognised that papering over and pretending cannot continue.

Firstly, the short term. Greece is in all but name insolvent. The first bail-out delivered in May 2010 did not work. Loans of 110bn euros (£96bn) failed. In the past year Greece's debt mountain has only grown. Its economy has slumped.

European leaders believed they were dealing with a liquidity crisis. They weren't. At its core they faced a sovereign debt crisis. So a second Greek bail-out of 125bn euros is being drawn up.

The funds are available. But that is not the issue. The Germans in particular - but backed by others - have insisted that private investors take some of the pain. Why? Politics.

Avoiding the D-word

The taxpayer, the voters, the people do not see why, once again, they should bail out other countries. It was never supposed to happen. As the Austrian finance minister put it, "you can't leave the profits with the banks and make the taxpayer shoulder the losses".

What has divided officials in the past few weeks is this: how do you get banks and pension funds to take a hit without it being declared a default? For if any rolling over of debt or extending of maturity dates is seen as a default then the fear is that it will spread to other countries and roil Europe's banking system. In one corner have been the Germans, in the other the European Central Bank. The ECB questions why inflicting losses on banks will help.

What has changed is a recognition that Greece needs some debt relief. Almost every economist believes that at some stage Greece will default. It can be now or later. The debt-to-GDP ratio is heading for 170%. There is no way a country can escape that trap, particularly with an economy in recession. So a way has to be found to write off part of the value of the debts.

So a dozen schemes have been on the table. There is now talk of private investors writing off 25-30% of Greek debt, either through a buy-back or a debt swap. It would need to be voluntary and somehow avoid being declared a default.

The ECB remains opposed, but the view in Germany is that it is unavoidable that investors will have to take a hit, forfeiting some repayments. Politically Chancellor Merkel has made private sector involvement in a second bail-out a condition.

If a solution is found a second Greek bail-out will be launched at a eurozone summit on Thursday. Of course the question will be asked: if Greece gets debt relief why shouldn't other countries? Steps may well be taken to extend the period of the bail-out loans already given to Portugal and the Republic of Ireland - as well as Greece - and reduce the interest rates.

Building confidence

All of this may buy some time, some relief, but it won't address the wider issue: how to convince markets and investors that Europe has a plan to address its debt mountains at a time of low growth.

Take Italy. How will it find the growth to reduce its debt-to-GDP, which currently stands at 120%? Italy stands perilously close to the edge. All it takes is a 2% rise in its borrowing costs for it to struggle to pay its way.

Which is why so many people leap forward to the endgame.

Some say there is a choice. Europe could take a giant leap towards integration and so all debt would become European debt. It could only do this with fiscal union - and that almost certainly would need the backing of political union.

Whatever happens German voters will have to be persuaded that it is in their interest to give more money to Greece. It will be a tough call. There is huge resistance in Germany to the idea of joint eurozone bonds - eurobonds. Jens Weidmann, the head of the German central bank (Bundesbank), said would be unfair to Europe's taxpayers.

Or: Greece is shown the door, offering it a sabbatical from the eurozone, allowing it the flexibility to default and devalue. A couple of other countries may have to follow too, but the core of the eurozone would be protected, and ringfenced. All of these countries could rejoin the single currency later. Nobody pretends it would be easy, but it might be preferable to risking the single currency.

Redefining Europe?

Some are now openly advocating political union as the solution to the crisis. The former EU Commissioner Emma Bonino was refreshingly candid when I met her in Rome last week. She believes that a United States of Europe is the answer. She accepted that political union would have to be put to the voters.

The outcome would be uncertain, although the voters no doubt would be told they were voting to save the European Union.

Of course such a move would deepen the chasm between those in the eurozone and those outside. For countries like Britain it would be an immense opportunity to redefine its relationship with Brussels. Almost certainly if other countries were voting on a new relationship within the EU there would be pressure for Britain to hold a referendum too on what the British people want.

Even though the UK Parliament has just passed the European Union Act 2011, giving the people a referendum lock on further powers going to Brussels, there are still many in the Conservative Party who are looking for an in/out vote.

It could just be - with imaginative leaders - that a more flexible European emerges from the eurozone crisis. So much conflict and argument revolves around those seeking closer integration and those resisting.

In reality both integrationists and pragmatists are all pro-European. Their differences are over the role and influence of the EU and its institutions. If there was fiscal/political union for some countries others could adopt a much looser relationship.

The crisis might just be an opportunity for both integrationists and pragmatists to finally accept there are different, equally valid, visions for Europe that can exist side-by-side.

This is a time when what only recently would have been unimaginable is being debated.

Share this post


Link to post
Share on other sites
Some say there is a choice. Europe could take a giant leap towards integration and so all debt would become European debt. It could only do this with fiscal union - and that almost certainly would need the backing of political union.

Was it all engineered for this end result?

Scary stuff.

Share this post


Link to post
Share on other sites

We may be seeing the deaththroes of the Euro but the exchange rate for the £ is still good.

Travelex 1£ = 1.114 Euros.

Which tells us all just how shit the UK is viewed, and that's with the austerity.

Edited by MrFlibble

Share this post


Link to post
Share on other sites

You can't have it one way and the other: on the one hand the BBC is 'Evil' and a propaganda machine' (which it most certainly is) and then the other the source of sensible political commentary. Gavin Hewitt is a pillock with shallow intellect: a typical product of Britain's public school system. Or am I wrong? can someone post a link to one of his articles say 5 years ago where he warned of the financial cataclysm that is today?

Share this post


Link to post
Share on other sites

Which tells us all just how shit the UK is viewed, and that's with the austerity.

Exactly. Someone posted an article up a few days back that had a line in it that read "Sterling is left unwanted on the sidelines". So true.

Share this post


Link to post
Share on other sites

We may be seeing the deaththroes of the Euro but the exchange rate for the £ is still good.

Travelex 1£ = 1.114 Euros.

If some or all of the PIIGS were forced out of the Euro would that not cause the Euro to strengthen?

Presumably a Euro consisting only of Germany, France, Holland etc would be more valuable than one including the various basket cases in there at the moment.

Share this post


Link to post
Share on other sites

Was it all engineered for this end result?

Scary stuff.

(1) Create Problem (=engineer debt crisis with "bailouts")

(2) Wait for Reaction (=bankers and politicians staring at Defaults in many nations)

(3) Bring in Solution (= United States of Europe)

Classic Problem-Reaction-Solution, how could we have been so slow?

Share this post


Link to post
Share on other sites

(1) Create Problem (=engineer debt crisis with "bailouts")

(2) Wait for Reaction (=bankers and politicians staring at Defaults in many nations)

(3) Bring in Solution (= United States of Europe)

Classic Problem-Reaction-Solution, how could we have been so slow?

completely agree. Have been trying to work out what the "solution" was going to be. Let's hope the greek and german people won't want anything to do with it.

Share this post


Link to post
Share on other sites

(1) Create Problem (=engineer debt crisis with "bailouts")

(2) Wait for Reaction (=bankers and politicians staring at Defaults in many nations)

(3) Bring in Solution (= United States of Europe)

Classic Problem-Reaction-Solution, how could we have been so slow?

However the end result is not guaranteed, attempting to do this could trigger off all sorts of nationalist reactions and tear Europe apart.

Share this post


Link to post
Share on other sites

However the end result is not guaranteed, attempting to do this could trigger off all sorts of nationalist reactions and tear Europe apart.

Yep, and I personally think that outcome is the most likely, the countries of Europe have a long history of not getting on with each other.

Share this post


Link to post
Share on other sites

Was it all engineered for this end result?

Scary stuff.

...could be ...the Germans financed reunification out of it....is there any point in them continuing with a load of basket cases....the answer is ...no....but we will all pay the price.... :rolleyes:

Share this post


Link to post
Share on other sites

(1) Create Problem (=engineer debt crisis with "bailouts")

(2) Wait for Reaction (=bankers and politicians staring at Defaults in many nations)

(3) Bring in Solution (= United States of Europe)

Classic Problem-Reaction-Solution, how could we have been so slow?

This has been talked about for a while now by the likes of AEP. Basically the current outcome (or something along the lines thereof) has been pretty bloody obvious since the beginning - and the people who designed the euro weren't that stupid. They knew something like this would happen and they expected that in exchange for bailouts more sovereignty would be passed to Brussels.

As Gorbachev apparently said:

"“The most puzzling development in politics…is the apparent determination of Western leaders to re-create the Soviet Union in Western Europe.”

Share this post


Link to post
Share on other sites

FAIL

why?

the elites have never been so powerful as now.

they're still not all powerful, but they can stop uprising pretty easily, unless x% are prepared to die.

Share this post


Link to post
Share on other sites

why?

the elites have never been so powerful as now.

they're still not all powerful, but they can stop uprising pretty easily, unless x% are prepared to die.

Define "elites" in the context of this discussion, would you?

Share this post


Link to post
Share on other sites

Define "elites" in the context of this discussion, would you?

difficult too, even elites have families etc. but think politico and their influences. #1 is to protect the system.

next level down is the brainwashed forces and army fodder who believe their 'work' will reward them and that the system is infinite.

Share this post


Link to post
Share on other sites

(1) Create Problem (=engineer debt crisis with "bailouts")

(2) Wait for Reaction (=bankers and politicians staring at Defaults in many nations)

(3) Bring in Solution (= United States of Europe)

Classic Problem-Reaction-Solution, how could we have been so slow?

However there is one problem. The British patriot may be an endangered species these days, but the average Brit does seem to have a massive hatred of the EU and distrust of Germans. We buy German cars by their thousands, and flog off our industries to them for peanuts, but the general feeling I get on the ground is that even middle-of-the-road type-people dislike the EU.

Mention "German" to anyone in a banterouus conversation and the outcome will often involve the name "hitler", "jews" and "nazis" somewhere along the line. The memory of the carnage they caused in WWII is still poignant even in the yoof of today.

Share this post


Link to post
Share on other sites

I have been saying this for ages. The current euro "crisis" is manufactured to scare the people into accepting a EU nation state and then further in the future a global currency. I don't have the brain of a psychopath so I can't say how exactly they want to get there, but it has been clear enough that that's the plan of the so called 'elite' (those bozos that meet at the Bilderberger meetings and the even smaller elite of ultra-wealthy banksters, royals and oil barons that is on top of them).

---

Edited by awake_eagle

Share this post


Link to post
Share on other sites

difficult too, even elites have families etc. but think politico and their influences. #1 is to protect the system.

next level down is the brainwashed forces and army fodder who believe their 'work' will reward them and that the system is infinite.

Nah, politicians within individual sovereign states would only lose if a NWO order ever emerges.

Sorry, I don't buy it.

Share this post


Link to post
Share on other sites

Nah, politicians within individual sovereign states would only lose if a NWO order ever emerges.

Politicians are mere disposable servants of the 'elite', the real 'elite' doesn't care about sovereign states.

Share this post


Link to post
Share on other sites

Nah, politicians within individual sovereign states would only lose if a NWO order ever emerges.

Sorry, I don't buy it.

i don't buy 'sovereign states'.

they exist to serve the great god of money.

the nwo is already here imo.

Share this post


Link to post
Share on other sites

Politicians are mere disposable servants of the 'elite', the real 'elite' doesn't care about sovereign states.

I know your views, dude, but I still don't buy it.

If anything, I think protectionism and war are a lot more likely than any NWO :ph34r:

Share this post


Link to post
Share on other sites

i don't buy 'sovereign states'.

they exist to serve the great god of money.

the nwo is already here imo.

Sorry Injin mate, didn't know that was you :lol:

Share this post


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...
Sign in to follow this  

  • Recently Browsing   0 members

    No registered users viewing this page.

  • 296 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



×
×
  • 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.