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wonderpup

When You Eliminate The Impossible....

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Greece cannot be bankrupt while the other members of the Eurozone are solvent for the same reason that the northeast of the UK could not be bankrupt so long as the UK as a whole remained solvent- both are subsets of a common currency area in which by definition assets and liabilities are implicitly shared throughout that area- this is what a common currency area means, if it means anything at all. And indeed it was this implicit understanding that underpinned the lending decisions of Banks and other purchasers of Eurozone state debt until recent events made them suspect otherwise.

So if the other member states allow Greece to become bankrupt they are making a clear and unambiguous statement to the world that the Eurozone is not a common currency area but something else- that it is in fact a loose confederation of states of which membership is optional and conditional and could at any time end.

That they seem unable to grasp this fact and it's implications for the future of their common currency is both incredible and dangerous- no wonder Varoufakis looks so often bemused by their antics- he seems to be almost alone in his understanding that the stack of gunpowder is located not just in Athens but across the entire Eurozone area- meanwhile they continue to play with fire by indulging in puerile games of political advantage. It's both comical and tragic.

But as the great man fictitiously said- if you eliminate the impossible then whatever remains, however improbable, must be the truth- and since an insolvent Greece within a solvent Eurozone is impossible the truth must be that the Eurozone is not a common currency area and never was one, despite all assertions to the contrary.

And once this deductive reasoning filters through to the people whose wealth exists in the form of a stateless waif called 'the Euro' who knows where the spinning plates will end up?

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That presupposes that European politicians actually understand the monster they created. I doubt many of them have the intelligence to understand a weather forecast, never mind the Euro and the implications that go with it. The spinning plates will end up smashed.

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The Euro was rushed. All of the countries in the EMU weren't synchronised at the birth of the Euro.

Having fooled the worlds markets the bureaucrats in the EMU could then just roll on believing they could defy economic gravity.

Spool forward to the situation now and they're about to lend a country its payment on its loans which that country can't afford.

In the situation currently it's not the Greece is bankrupt but the EMU.

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The Euro was rushed. All of the countries in the EMU weren't synchronised at the birth of the Euro.

Having fooled the worlds markets the bureaucrats in the EMU could then just roll on believing they could defy economic gravity.

Spool forward to the situation now and they're about to lend a country its payment on its loans which that country can't afford.

In the situation currently it's not the Greece is bankrupt but the EMU.

It was the legacy essentially of two men from WWII, they wanted to achieve something however because it was rushed it seems they will only have infamy of a failed project.

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It was the legacy essentially of two men from WWII, they wanted to achieve something however because it was rushed it seems they will only have infamy of a failed project.

Just reading a book about the politics of France during WW2, they suggested it to the Germans on numerous times.

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Can't individual American states go bankrupt?

It is possible many all ready have done....they still exist and the world has not fallen apart.....life moves on.

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There are countries like Ecuador that accept the US dollar as legal tender.

No reason why Greece can't continue to use the Euro even if they default on debts. The snag would be they would no longer be able to print bank notes, and would have to earn money before it was spent on pensions, schools etc.

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We all know the original intention behind the formation of the EU was a political union. The architects knew that it would take time to form, for peoples from each nation to regard themselves as European, rather then French, German, Polish, Greek, Macedonian...... Perversely more countries exist now as previous groups break up. Look at the Balkans and consider the strengthening swell of Scottish nationalism.

A major step towards the dream of a United Europe was economic union. After all strong trade ties increase mutual dependency. It will take time, if it is to happen and there will be shocks on the way. Even now in the United Kingdom there are those who regard themselves as belonging to their region first, overall though most of us regard ourselves as British.

Eventually those pesky foreigners will come round to our way of thinking.

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Private banks lent to Greece.

not EMU.

not ECB.

not Germany.

not France.

not the EU.

Private banks.

Taking Wonderpups argument to the extreme, there can be no individual entities that are bankrupt without the whole Country being so. I doubt that.

Edited by Bloo Loo

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I take Bloo Loo's point, but it's hard to separate the bank entities from the national government bodies. Does anyone really think RBS would be still going without government props?

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I take Bloo Loo's point, but it's hard to separate the bank entities from the national government bodies. Does anyone really think RBS would be still going without government props?

That's irrelevant. If RBS had been liquidated their loans would have been sold on.

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It's quite likely that the "debate" about Greece's economic problems and it's possible solutions has been magnified and extended intentionally to get the various countries involved to think more immediately about the possibility of fiscal etc union and the reduction of individual countries sovereignty and the consequences as well as the advantages/disadvantages.

As someone else has said they're quibbling over relatively small amounts but at the same time they're printing up massive amounts.

From what I've read and seen so far it seems that those currently running Greece would like more fiscal union as a solution (eventually) even if they haven't make it that clear that it's their preference. Of course there could be bluffs and double bluffs in play etc with nothing being exactly as it seems.

For those that value sovereignty that's why the Greek problem seems a potential Trojan horse leading to the further dilution of sovereignty in all eu countries including the UK (eventually).

Edited by billybong

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if you have a fiat currency, you must have a tax union. If you have a debt free hard currency then you don't need a tax union. That's the euro's flaw.

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Greece cannot be bankrupt while the other members of the Eurozone are solvent for the same reason that the northeast of the UK could not be bankrupt so long as the UK as a whole remained solvent- both are subsets of a common currency area in which by definition assets and liabilities are implicitly shared throughout that area

Not totally sure about this - Detroit has gone bankrupt within the US single currency area - and things like pensions have not been paid as a result. German and Greek bonds are still separate entities denominated in the same currency - so I'm not sure what the reality of a currency union ever was.

But what I am sure about is the moral imperative of the debtor being punished rather than the creditor. If I lend you £1000 and you spend it down the pub and can't pay me back - does that make you immoral, me stupid or both? It's clear that German finance ministers have made up their mind about the answers to that question, and to hell with the consequences of a Greek default.

I still think they will be overridden by politicians and an 11th hour deal will be struck, as can kicking is the only way these people know, but I guess we're fairly close to finding out.

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There may be a common currency but there is no full political and monetary union,

Can a state be said to exist as a separate entity if it has no central bank and cannot issue it's own currency? I'm not sure it can. The Eurozone appears to be a mirage that from a distance looks solid and real but when approached proves to be an illusion without substance. The reality is that the Euro is a political rather than a financial construct and you can almost see the political will that sustains it draining away now as the full implications of this become clear.

The only way to save the Euro is to complete the process and become the super state envisaged by it's creators- but this will never happen. What we are watching in Greece is the unraveling of that dream.

Edited by wonderpup

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Not totally sure about this - Detroit has gone bankrupt within the US single currency area

Institutions can fail of course- but territories can not. At no point was there any doubt that the Dollar would remain the De facto currency of Detroit- no one speculated that it might be forced to issue the 'Detroit dollar' when it went bust- it was understood by all that -come what may- Detroit would forever remain within the Dollar currency 'zone'.

In the case of Greece this is not so clear- the suggestion is that it could be forced to 'exit the Eurozone' but how could this even be possible- unless the Eurozone is a far more flexible construct than the Dollar zone. And who really wants to keep their wealth in a currency that flexible?

If the Eurozone can so easily reorder it's boundaries so as to expel part of it's own territory who knows where this might end? Only Varoufakis seems to fully grasp the import of this question.

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Ultimately I don't think Greece can be forced to give up the euro. However, it comes down to choices. I imagine that, in the USA, if a State becomes bankrupt it can't pay it's employees wages, so no doctors, police, firemen, dustmen etc. I don't think the electorate would put up with this for very long, & politically something would have to happen - the State would be bailed out under conditions, like electing a more responsible state government.

I think this is similar to Greece, in that the extent to which Greece can be bailed out depends on the perceived chaos that may result if it isn't. The difference is that, as a separate country, it has the option of using its own currency. The question then becomes how favourably its trading partners view that currency, thus how willing they are to be repaid in said currency, which sets the exchange rate. That's about where we are at the moment.

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Not totally sure about this - Detroit has gone bankrupt within the US single currency area - and things like pensions have not been paid as a result. German and Greek bonds are still separate entities denominated in the same currency - so I'm not sure what the reality of a currency union ever was.

But what I am sure about is the moral imperative of the debtor being punished rather than the creditor. If I lend you £1000 and you spend it down the pub and can't pay me back - does that make you immoral, me stupid or both? It's clear that German finance ministers have made up their mind about the answers to that question, and to hell with the consequences of a Greek default.

I still think they will be overridden by politicians and an 11th hour deal will be struck, as can kicking is the only way these people know, but I guess we're fairly close to finding out.

I think the Morality question is balanced on both sides here...the Greeks went to "clever" bankers to make their Country looked in good shape and matched the Official criteria.

suddenly, the broken economy looked good...the Euro Administration then did the due diligence required and stress tested the claims, took about 2 minutes to tick all the boxes, and they are in.

Meanwhile, lenders throughout the World were of course oblivious to the miracle of recovery by the laundering of pieces of paper through the Giant Squid.

Everybody knew, it was publicly known, its been in the media, the Olympics were fanfared as a huge money spinner that was going to save the economy...so it was in the shite then, publicy so.

But, as usual, nobody noticed....something about amazing returns I think blinded observers.

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Star Trek (2009)

Spock: If you eliminate the impossible, whatever remains -- however improbable -- must be the truth.

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Oh I see it was Sherlock Holmes before Spock, under Sir A.C Doyle.

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A thread about Greece. A thread about 'TRUTH'. We have to read Plato's 'Doctrine of Truth'. What is truth? What we perceive is not perfect. Plato postulated that the realm of truth, of true knowledge, is outside the physical perceived world. Like mathematics you only get a true circle in the realm of ideas. When it gets to the physical world, there is no such thing. How can we know what is 'true' if our perceptions and minds are imperfect, the physical world itself is imperfect and if not, how can we decide what is truly impossible and therefore what is left over to be included as 'truth' even if it is 'improbable'?

http://religiousstudies.stanford.edu/wp-content/uploads/1942-PLATOS-DOCTRINE-OF-TRUTH.pdf

Plato is assuming that truth about the world lies in mathematical perfection. This is an assumption which may or may not be valid.

This demonstrates the whole problem with the theory of knowledge. If you examine it carefully, all our knowledge is scientific in origin, i.e. it is predicated upon the formation of predictive models. This means that the 'truth' in any absolute sense can never be ascertained, because our knowledge of the external world is always inductive & our models may break down at any moment.

This doesn't apply to mathematics, of course, because there we invent the rules. 'Reality' on the other hand, is not a game of our invention.

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Plato; the original number 1 mystic excuse-giver apologist, with his truth theories. Truth is subjective. We each have our own truths.

One hpcer's truth-'knowledge' was taking a mortgage and sending an email back to bank with as many numbers in it as they wanted to pay off the debt because banks 'create debt with isn't real real' and after email the house rightfully belongs to him. And that's one of the milder ones. There's so many other truths but I won't post them as I'll get in trouble.

Aristotle dealt in honesty, learning and advancement, even where they includes mistakes along the way to further knowledge.

Plato was no math genius as I recall it.

Cultures create their own damaging/lasting truths. This reality-paradigm we're in may be completely flawed in serious ways. Can only work within it best we can.

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