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cyppok
07 Sep 11,, 03:42
I was thinking what happens after.

Assuming the Euro melts down due to Italy or some other country going insolvent while trying to rollover debts that are clearly unsustainable and the whole currency goes insolvent (due to banks holding overvalued paper assets etc...)
Help for Poorer Neighbors: Designing a Transfer Union to Save the Euro - SPIEGEL ONLINE - News - International (http://www.spiegel.de/international/europe/0,1518,784612,00.html){this will not fly and melt down, "transfer" union lol}

Perhaps a re-invigorated Europe?

I think a few regional currencies or simply trade associations would be better than the currency union is now. Everyone would be responsible for their own fiscal house while trade competition would be based on competency instead of access to capital and the ability to finance yourself buy buying up competitors ergo deeper pockets rather than more efficient productive capacity and ability to serve the consumer.

"Radicalization" of Northern Europe ergo Scandinavia/England/Netherlands seems likely to be more assertive. If by radicalization people simply assert how they want to exercise sovereignty within their countries.

Certain small but incremental things...
Denmark reintroduces border controls with Germany etc...
Denmark reinstates border controls | euronews, world news (http://www.euronews.net/2011/07/01/denmark-reinstates-border-controls/)
video from earlier
Denmark border plans | euronews, Europe (http://www.euronews.net/2011/05/11/denmark-border-plans/)

Gert Wilders wins the case for Free Speech in Netherlands btw
BBC News - Geert Wilders cleared of hate charges by Dutch court (http://www.bbc.co.uk/news/world-europe-13883331)
Geert Wilders Wins a Retrial in Dutch Anti-Islam Case :: Hudson New York (http://www.hudson-ny.org/1626/geert-wilders-wins-retrial)

snapper
07 Sep 11,, 13:50
I envisage a 3, or possible 4 'bloc' Europe: The Southern (PIGS) Bloc being Greece, Italy, Spain and Portugal. As Eastern Bloc (sometimes called 'New Europe'); Poland, Czech Republic, Slovakia, the Baltic States, Slovenia and possibly Hingary and Romania (perhaps later Ukraine too). A Franco-German Bloc; including Belgium, Luxembourg for sure. The question is where will UK, Holland, Sweden, Denmark and Finland go? (Ireland will stay with the UK as their economies are too tightly entwined). In theory they could form a bloc of their own. There again they might all join the Franco German Bloc. Or they may go some to the Eastern Bloc and some to the Franco German Bloc, for example Finlands economic ties wih the Baltic States may induce then Eastward, while Denmark may be wise to maintain it's trade with Germany etc. In terms of NOBODY keeping the Euro these are plausible scenarios.

However the real answer to your question lies in predicting precisely how the Euro falls apart. For those who were never in the Eurozone, UK, Poland, Sweden, Romania etc, if a core Eurozone remains (for example Franco-German countries) then not much changes and free trade continues. The 'never were Eurozone' as well as the remaining Eurozone menbers could in theory still keep trading with those who had left the Euro (in this scenario the PIGS). However those who had left the Euro would certainly devalue, which long term would undermine the competitveness of the remaining Eurozone countries, particularly the French agricultural sector. So presumable the remaining Eurzone countries would PIGS access to their markets and we are then in an anything goes situation, where the solution above is one of the more likely.

Also should the PIGS withdraw from the Euro and devalue alot of German, French and British banks (and the the ECB) must substabtialy devalue their assets. Currently such 'assets' are held in Euros - if, for example, Greece left the Euro and returned to the Drachma do the Greek debts become drachmas? If so they will be substantialy devalued. Currently Germany is holding aprox 200 billion Euros worth of debt.

I cannot say how I know but I can assure you that HMG is currently studying the 'what if' scenarios. Currently the UK supports fiscal union as shown from this exchange of 11 August:

William Cash (Stone, Conservative)

"The Chancellor will know that our trade balance between 2002 and 2009-10 with the other 26 member states has gone up from minus £14 billion to minus £53 billion in one year? Does he not agree that even Edward Heath would have repudiated and vetoed a fiscal union with a hard-core Europe with such an incredible trade deficit against us? The coalition agreement, according to the latest answer I got from the Prime Minister, determines our relationship with the European Union. Does the Chancellor disagree with the Deputy Prime Minister, because we must have radical renegotiation of the treaties and the repatriation of powers so that we can achieve growth for all our businesses?"

George Osborne (Chancellor of the Exchequer, HM Treasury; Tatton, Conservative)

"My hon. Friend and I will have to agree to disagree on this issue. The remorseless logic of monetary union leads towards fiscal union, and that was one of the reasons that I opposed joining the single currency. However, it is now in our interests to allow that to happen more in the eurozone, because it is in our absolute national economic interest that the eurozone is more stable. It is clear that that means that they need to have more fiscal powers to reduce instability. That means, of course, that Britain must fight hard to ensure that its interests are represented and that we are not part of this fiscal integration. Important decisions, such as on financial services, must continue to be taken at the level of 27. He talks about treaty changes and so on, but the prospect of a major treaty change to bring about eurozone fiscal integration is not imminent, although I imagine that there will be a lively debate if and when it comes about."

Could some moderator maybe put this bit with the other bit, or vice versa?

kato
07 Sep 11,, 15:50
The question is where will UK, Holland, Sweden, Denmark and Finland go?
Not really a question. UK forming its own very loose bloc with Ireland and Denmark (don't forget: Denmark is the one who's got the most opt-outs from the EU after the UK), Holland absolutely making sure it stays with Germany for economic reasons because otherwise it'll starve, Sweden and Finland possibly forming a loose neutral Scandinavian bloc of their own (keeping the Euro of course).


if, for example, Greece left the Euro and returned to the Drachma do the Greek debts become drachmas?
As long as the debt isn't held with a Greek bank Greece has zero influence on this.

snapper
07 Sep 11,, 15:53
"As long as the debt isn't held with a Greek bank Greece has zero influence on this." How does the bail out get repayed?

kato
07 Sep 11,, 15:54
In Euro, of course.

zraver
07 Sep 11,, 17:39
Not really a question. UK forming its own very loose bloc with Ireland and Denmark

Ireland is a given, but why does the UK need to be part of a bloc? Over exposure to international finance and debt is part of the problem for central banks. Why wouldn't the UK step back and let Europe do as it will and then look for opportunities as they arise. This is the historical model and seems to have worked well for them for centuries.

snapper
07 Sep 11,, 18:56
A. kato; if the Greek bailout is repayed in Euros after the Greeks have returned to the drachma then essentialy the German creditors (who keep the Euro) are paying themselves. If it is repated from a new drachma Greek economy (worth perhaps 1/3rd of their Euro) then the value of the debt must either be reduced by a 1/3rd or it will take 3 times longer to repay (same thing).

B. zraver; about 75% of UK trade is with Europe, and we have by some way the largest financial sector in Europe as well having Banks with 'assets' worth 500% of our GNP. Until we restructure our economy to repair the last Governments policies of just creating more Government jobs, we need our recovering private sector to have an export market. Realisticly this means retaining our markets in Europe though I have heard some wierd suggestions recently... union with Canada etc. Thus, for now, HMG regards fiscal union for Euroland the lesser evil (see Mr Osbournes statement above).

However the fiscal union 'solution' seems likely to be too late. The Financial Times summarises what I have been arguing thus:

"Italy is the hinge of the eurozone. The 17-member bloc can survive a crisis engulfing Greece, Portugal, Ireland, and maybe even Spain. If Italy becomes infected, however, the eurozone has neither the financial nor the political resources to go to Rome’s rescue. Italy must inoculate itself against the sovereign debt virus. Yet an incompetent political system has left it paralysed in the face of an abrupt re-pricing of Italian risk by increasingly nervous investors. A new bout of fiscal temporising will not solve Italy’s problem this time.

Since the start of July, Italy has been hit by a double collapse – of global economic growth predictions and of the credibility of its policy-making. In that time, the yield on 10-year Italian bonds has risen by 65 basis points, and on two-year bonds by 100bp. If the European Central Bank had not been an active buyer of Italian bonds over the past few days – market gossip suggests around four times as much as Spanish bonds – the yields would be even higher. A €45bn fiscal package has been watered down so much that it represents no more than sleight of hand. And the collapse in the bond market has devastated the share prices of Italian banks – UniCredit has fallen by 42 per cent since July 1 – partly because of the collapse in the value of their bond portfolios.

The austerity package on offer is likely to worsen the Italian economy rather than accelerate growth. This has been the experience in Greece and Portugal; there is no reason for Italy to be different, especially with key export markets in Europe and the US heading into a recession. The government has ducked, once again, any structural reform that might actually boost the underlying growth rate, which is likely to be no more than 0.7 per cent this year and 0.4 per cent in 2012, Deutsche Bank notes, below the official targets of 1.1 and 1.3 per cent.

With a credit rating downgrade looming – one reason European equities fell sharply on Monday – Italy’s risk premium may well rise further. Italy, not Spain, will decide the fate of the eurozone."

http://www.ft.com/cms/s/3/79b39db8-d7d6-11e0-a5d9-00144feabdc0.html#axzz1XBbXBleD

It is time to start hoarding food!

Mihais
07 Sep 11,, 19:19
It is time to start hoarding food!

Big brother produces it.Me&friends kill would be robbers(and there will be).The rebirth of capitalism.Or is it feudalism.Whatever the ''ism'',I'll spare a crate or two for a fellow wabbit in need.:biggrin::biggrin:

zraver
07 Sep 11,, 20:28
B. zraver; about 75% of UK trade is with Europe, and we have by some way the largest financial sector in Europe as well having Banks with 'assets' worth 500% of our GNP. Until we restructure our economy to repair the last Governments policies of just creating more Government jobs, we need our recovering private sector to have an export market. Realisticly this means retaining our markets in Europe though I have heard some wierd suggestions recently... union with Canada etc. Thus, for now, HMG regards fiscal union for Euroland the lesser evil (see Mr Osbournes statement above).


Being in a bloc reduces rather than increases that access.

Doktor
07 Sep 11,, 22:11
"As long as the debt isn't held with a Greek bank Greece has zero influence on this." How does the bail out get repayed?


In Euro, of course.

In whatever currency it is in the contract (in this case Euro). If the Euro seize to exist it will be the creditor's choice and I doubt it will be in Drachmas.

cyppok
08 Sep 11,, 03:28
The problem with all of us is that we are still thinking in "financial" terms.

Currency is a facilitator to some degree but it is not the actual derivative of demand.

I think if the Euro falls, we get into a goods mind set. People are looking down on their ever declining purchasing power created by the financial inflation machinations of governments and are simply starting to equate what they can get with what they have. Loaves of bread or barrels of oil, it matters not.

My feeling is the blocs will be formed more on historical/ethnic/goods necessity and trade gravity rather than on fiscal ties. Scandinavians among themselves perhaps including the three small Baltic states due to trade in commodity goods and a lot of direct investment, (basically Scandinavian businessmen owning/operating assets that generate goods for cross border trade).

The Visehrad 4 Poland/Hungary/Czechs/Slovakia also seem more likely to create a trade area if the Euro falls.

I actually think that some countries in Europe like Spain/Portugal would be better off with the collapse and a currency change the new world ties might reinvigorate themselves more strongly if they are separated from the Franco-German axis trade-wise. Italy to some degree could play the role of Britain in Southern Europe and/or Mediteranian trade wise at least. The problem is they are not competing due to beuracratic malaise due to Eu/Sovergnty issues similar can be said of Iberia. Balkan state are more interesting since they are smaller and could specialize in a certain aspect.

The problem to some degree is value added most cannot compete with German in efficiency nor quality and due to currency constraints their commodity produced goods are not competitive with others outside the Eu. So you have a trapped market that is slowly constrained from supplying itself commodity wise (unless subsidized and trade barriers make it impossible for outsiders to compete) which simply gets walked around by big firms who can skirt regulations and play by different rules. Anyhow normalization of commodity production post collapse might be a good thing that reinvigorates inter and outer european trade.

P.S. you are ignoring that the Greeks could simply throw their hands in the air and say we are stopping payments and default.
Ergo simply good old sovereign default be it euro or whatever else. The reality is if that happens and French/German banks end up eating most if not all of the debt held as loss due to non-recovery (or renegotiation to 1/3rd or less of former value etc...) Debt is not meant to be paid forever but that is in fact what is attempted here with Sovereign debt being cross collaterlized among nation states to have a super nation states forcing them to guarantee it beyond their cash flow payability. Which is impossible, can't force a dead person to pay you. If you can't pay no matter how much you play with the numbers it doesn't change that fact.

snapper
09 Sep 11,, 18:07
I would cetrainly agree with you regarding the Visegrad Group. It seems nothing less than a post EU Eastern Bloc.

cyppok
11 Sep 11,, 20:49
Mish's Global Economic Trend Analysis: "Euro Death Wish" and Global Finger-Pointing: U.S. Senior Official Blames Eurozone for "75% of the Dark Things Happening in the World" (http://globaleconomicanalysis.blogspot.com/2011/09/euro-death-wish-and-glogal-finger.html)

My guess is after Greece the great unraveling happens. The tender for exchange right now is a joke and my guess won't solve the insolvency, sure the payments are constant or smaller but the principal is unpayable either way, ergo collapse of debt repayment sooner or later with sooner coming sooner every day.

snapper
13 Sep 11,, 15:39
Saw some other choices today: "does the eurozone end up as a D-Mark bloc (Germany/Austria/Finland/Netherlands)? Or a shrunken eurozone (same plus France, Slovakia, Estonia)?" BBC News - Could there be a German 'Marshall Plan' for Europe? (http://www.bbc.co.uk/news/business-14897596)

I do not believe Finland, Estonia or Slovakia will go for either of those options.

Currently is seems the Germans are increasingly unwilling to fund the next part of the Greek bailout; "At the weekend, German Economy Minister Philipp Roesler suggested that Greece would need an "orderly default" on its debts" despite Mrs Merkels protestations that "Everything I hear from Greece is that the Greek government has hopefully seen the writing on the wall and is now doing some of the things that are required,".

Greek 10 year bonds rose to 24% yesterday and without a further loan they will inevitably default before next month. Italian also "raised 3.85bn euros (£3.3bn) in five-year bonds - but the interest rate rose to 5.6%, up from 4.93%." http://www.bbc.co.uk/news/business-14894779 This would put Italian 10 year bonds in a new issue about 6% yield (currently trading at 5.6%) http://www.bloomberg.com/apps/quote?ticker=GBTPGR10:IND Above 6% yield on Italian 10 year bonds and they must institute heavier cuts, above 7% yield and it's over.

Mrs Merkel says: "I have made my position very clear that everything must be done to keep the eurozone together politically. Because we would soon have a domino effect". She is possibly correct but not necessarily.

Lets make this crystal clear: IF Germany and/or others refuse to the second part of the Greek bail out Greece will leave the Euro within 17-19 days. We shall then see if Chancellor Merkels 'domino effect' theory is correct. What WILL happen then however without any doubt, as I predicted in the other thread, is that the banks in Germany, France and Britain will have to downgrade their 'assets' and may need further Government support... What we delayed from 2008 will have caught us up.

Banks and Greek exposure interview: http://news.bbc.co.uk/today/hi/today/newsid_9589000/9589399.stm Sir Howard Davies, former deputy governor of the Bank of England "I think it's all over for Greece".

Double Edge
13 Sep 11,, 22:29
Currently is seems the Germans are increasingly unwilling to fund the next part of the Greek bailout; "At the weekend, German Economy Minister Philipp Roesler suggested that Greece would need an "orderly default" on its debts" despite Mrs Merkels protestations that "Everything I hear from Greece is that the Greek government has hopefully seen the writing on the wall and is now doing some of the things that are required,".
Deja vu the last time as well.


Lets make this crystal clear: IF Germany and/or others refuse to the second part of the Greek bail out Greece will leave the Euro within 17-19 days. We shall then see if Chancellor Merkels 'domino effect' theory is correct.
That puts showtime in the first week of October. You say Germans & others refuse second bailout then Greece has to exit.

I think they will make the bailout so the above isn't necessary. As this domino theory was used as the basis for the first bailout. Which when you think about it must be true. If there is no unity here then what does that say about the euro ? Not much and then confidence drops.


What WILL happen then however without any doubt, as I predicted in the other thread, is that the banks in Germany, France and Britain will have to downgrade their 'assets' and may need further Government support... What we delayed from 2008 will have caught us up.
IOW a bad situation. Idea is to hold that away for as long as possible in the hope of overcoming the smaller problems. Otherwise there is a bigger problem to deal with.

kato
13 Sep 11,, 23:28
Currently is seems the Germans are increasingly unwilling to fund the next part of the Greek bailout; "At the weekend, German Economy Minister Philipp Roesler suggested that Greece would need an "orderly default" on its debts" despite Mrs Merkels protestations that "Everything I hear from Greece is that the Greek government has hopefully seen the writing on the wall and is now doing some of the things that are required,".
Any statements from the two chancellors (Merkel and Roesler as her deputy) should be taken with a grain of salt right now.

There's a split in the German government coalition over the Euro bailout. Merkel is pretending that she gets a safe majority for it among her own people, while Roesler is basically preparing for the coalition's representatives to not wholeheartedly support it. In test votings among her coalition's representatives so far (to gauge the mood of her own people) Merkel did not achieve the necessary 311 out of 330 votes. Merkel's statement above is aimed at those 25 representatives of the CDU and FDP who do not support her, and at the other 305 to keep them in line.

ESFS will be passed in the federal parliament anyway, as the SPD does support it.

However, the opposition in the Bundestag has already declared that if Merkel does not get those 311 votes from her coalition in the "real" vote on ESFS on the 29th they will try to get a vote of confidence on Merkel and try to go for early new elections. This is something Roesler and the FDP want to avoid at all cost, as with current surveys the FDP wouldn't just be kicked out of the government but also out of parliament.

Doktor
13 Sep 11,, 23:36
Erm, so that means Merkel will push her project anyway?

kato
13 Sep 11,, 23:41
What project? ESFS?

Doktor
13 Sep 11,, 23:51
Yep, ESFS Bailout.

kato
14 Sep 11,, 00:05
It's not really just Merkel's project...

ESFS will get a huge majority in the Bundestag - it's very widely supported. I'd expect minimum 500 out of 620 in favour.

Merkel's problem of not getting her chancellor's majority is completely separate from that, and is basically just the opposition seeing a very good opportunity to call for her to step down, something they have been waiting for for the past 18 months or so.

snapper
14 Sep 11,, 00:26
The question is then will they resolve this 'domestic' problem in time to save Greece?

I think it's time the fat Lady was warming up.

Tarek Morgen
14 Sep 11,, 00:39
That is not really an issue, even if Merkel would fall, the new government would be far more willing to take measures to support the euro. Merkel is not unpopular because of this crisis but because she (and her government) are seen as incompetent and indecisive.

snapper
14 Sep 11,, 00:55
19 days for Greece (at best estimates) and counting...

snapper
14 Sep 11,, 02:41
Lol: It never stops: Now the 'Third World' or BRICS are going to bail us out: BRICS nations eye rescue plan for EU - The Globe and Mail (http://www.theglobeandmail.com/report-on-business/international-news/brics-nations-eye-rescue-plan-for-eu/article2163780/)

I quote a small part:

"On Tuesday, the Italian Treasury was forced to pay a record-high yield to sell five-year bonds, reflecting growing concerns about the country’s debt burden. Meanwhile, German Chancellor Angela Merkel pleaded for the euro zone’s survival, attempting to defuse growing expectations that Greece is on the brink of defaulting on its debt obligations as the country’s cash reserves rapidly deplete and its bond yields skyrocket to unsustainable levels."

Check your watches soon as this is about to go under big time.

Double Edge
14 Sep 11,, 11:54
ESFS will get a huge majority in the Bundestag - it's very widely supported. I'd expect minimum 500 out of 620 in favour.

That is not really an issue, even if Merkel would fall, the new government would be far more willing to take measures to support the euro.
Bingo!

exactly what i wanted to hear from the Germans :biggrin:

Doktor
14 Sep 11,, 12:02
Bingo!

exactly what i wanted to hear from the Germans :biggrin:

Care to share the joy with us?

Versus
14 Sep 11,, 13:14
Germany can only postpone the inevitable for a year or two, but one way or another the end of Eurozone is near.

snapper
14 Sep 11,, 13:18
How the Germans squabble about blame (and that's all they doing realy) is now largely irrelevant. On 12th August I warned: "If or when the Eurozone falls apart the French and German banks will be hit worst as they have the most invested in 'PIGS' bonds" (http://www.worldaffairsboard.com/international-politics/61120-post-eu.html).

Today I see this: "Credit rating agency Moody's has downgraded two French banks after reviewing their exposure to Greek debt." (BBC News - French bank ratings downgraded by Moody's (http://www.bbc.co.uk/news/business-14910485)). The French Government must TODAY refinance these two banks (aprox 10 billion Euros), thus exposing the French Government to soveriegn debt fears. The Frog Government must therefore soon institute it's own 'austerity programme'. Growth is out of the window, we can now discount that hope, but without growth Italy is doomed before Christmas.

Roesler and Merkel can argue away until they both blue in the face, unless the Germans are willing to mortgage their future to the hilt on a cause that is already lost (not wise in my opinion), which would save matters short term only, the game is already over.

Will Germany now stump for Greece? To do so is long term higher taxes for them to stave off the inevitable a little longer. To not do so risks the French economy and short term European, possibly world, recession. It may be wiser to call it a day now and cut your losses while you still can. The Chinese/Italian deal now also looks less rosy I am informed.

Too long we have lived and committed good money after bad for some Eurotopian ideal, even threatening our very democratic and sovereign rights. To all the Europhiles this must now look grim, but the dream was only a dream - a mist blown away by a gust of the markets. Perhaps now we can get back to free trade and a competitive Europe!

Doktor
14 Sep 11,, 14:08
Just today the major French bank's ratings went down. Only BNP Paribas skipped the downgrade.

French banks downgraded by Moody’s - The Washington Post (http://www.washingtonpost.com/world/french-banks-downgraded-by-moodys/2011/09/14/gIQAWLumRK_story.html)

crooks
14 Sep 11,, 15:10
Seriously good news for Ireland and Portugal today:

Ireland is to receive better terms on another tranche of the loans it is receiving as part of the IMF-EU rescue package.

Under proposals adopted by the European Commission today, reduced interest rate margins and extended loan maturities are to apply to funds provided by the EU under the European Financial Stabilisation Mechanism (EFSM) .

The EFSM is contributing around €22.5 billion to the €85 billion Irish bailout deal, with the IMF and European Financial Stability Facility (EFSF) also providing around €22.5 billion each. The remainder of the bailout fund is provided mainly through bilateral agreements.

The changes, which will be applied retrospectively, are separate to the interest rate reduction achieved in July which related to the EFSF loans, though changes to the EFSM rates had also been expected.

The proposals, which are expected to be approved by the council in the coming weeks, also apply to Portugal.

Under the proposal, the current margin of 2.925 per cent which applies to Ireland will be reduced to zero, while the maximum payback timeframe will double from 15 to 30 years.

In effect, this means that the EC will now only charge Ireland what it costs them to borrow the monies it uses to fund the loan. Both the EFSF and the EFSM, which have triple A ratings, fund their loans by issuing debt instruments in the capital markets.

The changes will apply to already-dispersed tranches as well as future tranches.

A spokeswoman for the European Commission said that the new financial terms will bring enhanced sustainability and improved liquidity outlooks to Ireland. It will also generate indirect confidence effects through the enhanced credibility of programme implementation which should result in improved borrowing conditions for the sovereign as well as the private sector, the commission added.

Irish bailout terms changed - The Irish Times - Wed, Sep 14, 2011 (http://www.irishtimes.com/newspaper/breaking/2011/0914/breaking27.html)

Methinks the Greeks have scared them so much they'll do anything to make sure Ireland and Portugal don't default. It's funny though, while welcome people are calling it a major victory when all it means is that we will just be repaying the total amount of money on this tranche sans interest.....in other words we only:rolleyes: have to pick up the tab for the tens of billions of socialized private debt created by idiot bankers, their bought and paid for right-wingers and other technocratic elites in both Ireland and Europe, not the Irish people who are being robbed to pay them back. Oh joy, what an equitable, wise and 'free market' solution.

Double Edge
14 Sep 11,, 15:22
Care to share the joy with us?
The euro isn't going to go away :)

..there ain't gonna be a 'euro crash' as the thread title suggests.

You're gonna pull your socks up and keep it afloat.

snapper
14 Sep 11,, 16:01
Latest attempts at solving the unsolvable: "Commission president Barroso to put forward eurobonds"

I give you a snippet: "Eurobonds have been backed by Italian Finance Minister Giulio Tremonti and investor George Soros.However, Germany has repeatedly expressed its opposition to the idea." See: BBC News - Commission president Barroso to put forward eurobonds (http://www.bbc.co.uk/news/business-14913517)

DE the Euro is over already barring Divine intervention. It is just a matter of when the politicians will admit it.

PS Moodys report: http://www.moodys.com/research/Moodys-downgrades-long-term-ratings-to-Aa2-on-Greek-exposures?lang=en&cy=global&docid=PR_225834

Parihaka
14 Sep 11,, 19:11
I wonder how much Soros stands to loose if the Euro goes down....

Mihais
14 Sep 11,, 19:46
I wonder how much Soros stands to loose if the Euro goes down....

I wonder how much he gains.He kinda smells living corpses.And if Soros(or anyone in this league)says something,usually they do the opposite.

kato
14 Sep 11,, 19:55
On 12th August I warned: "If or when the Eurozone falls apart the French and German banks will be hit worst as they have the most invested in 'PIGS' bonds" (http://www.worldaffairsboard.com/international-politics/61120-post-eu.html).
You have to separate the banks from the governments though*. Even if German banks sit on say 250 billion of debts Greece can't pay back there's a bank rescue fonds already in place to cover that if necessary (leftover guarantees are for about 300 billion iirc). Don't even need ESFS for it. ESFS is about Germany paying off banks in other countries.

* the German federal bank never bought any bonds of other governments on principle. This is one thing currently being criticized in Germany about the ECB, as they are planning to do that.

kato
14 Sep 11,, 19:57
"However, Germany has repeatedly expressed its opposition to the idea."
Actually, that's a rather mild expression for it.

See Another 'Nein': Merkel Renews Euro Bond Rejection - SPIEGEL ONLINE - News - International (http://www.spiegel.de/international/europe/0,1518,781566,00.html)

Double Edge
14 Sep 11,, 20:06
I wonder how much Soros stands to loose if the Euro goes down....
Hmm, all this FUD makes the euro cheap to buy.

He made a billion by shorting the pound, isn't this the same game with the euro.

All this euro gonna crash talk is bunk, its just propaganda by the short sellers.

kato
14 Sep 11,, 20:13
The Euro is still worth more than it was at least two-thirds of the time in the past 10 years. Compared to its low point in those 10 years against the USD it currently stands at 162% (!), compared to its initial trading against the USD in January 1999 it still stands at 115%.

It's only cheap to buy if you have a ton of Yen or CHF sitting around.

Double Edge
14 Sep 11,, 20:19
katao, so you say there is no way to profit from the euro with all this FUD for a large currency speculator.

Doktor
14 Sep 11,, 22:23
The euro isn't going to go away :)

..there ain't gonna be a 'euro crash' as the thread title suggests.

You're gonna pull your socks up and keep it afloat.

We have our own currency over here, but it's win-win situation if the euro survives.

snapper
15 Sep 11,, 00:22
You have to separate the banks from the governments though*. Even if German banks sit on say 250 billion of debts Greece can't pay back there's a bank rescue fonds already in place to cover that if necessary (leftover guarantees are for about 300 billion iirc). Don't even need ESFS for it. ESFS is about Germany paying off banks in other countries.

* the German federal bank never bought any bonds of other governments on principle. This is one thing currently being criticized in Germany about the ECB, as they are planning to do that.

German banks have 3-4 billion Euros in Greek bonds alone, don't be mistaken - you are in - not as badly as the Frogs but in more than the UK to Greek debt and far more in Italian debt (aprox 17 bln Euros from my amateur calculations).

Currently we have, it seems, a German arguement. Merkel and the Frogs say 'Greece is integral to Eurozone' etc (BBC News - Greece 'integral' to the eurozone, say European leaders (http://www.bbc.co.uk/news/business-14924089)), then we have Herr Roesler saying 'nah let them fry'/'orderly default' (or words to that effect). In the meantime we have the President of the Commission (Mr Barruso) saying he's going to propose Eurobonds and take away everyones vote.. (but Merkel rejects this plan). Meanwhile we have the Polish Finance Minister saying 'war in Europe in 10 years' (Polish Finance Minister Warns of European War within 10 Years | What Do You Believe? (http://brianakira.wordpress.com/2011/09/15/polish-finance-minister-warns-of-european-war-within-10-years/)). Who should we believe?????

I shall try to take a breath from giggling and work this out with a bottle of fine Frog plonk.

The tragedy keeps unfolding:

"The calm at the start of the week on the markets has given way to renewed turmoil. Currency strategist Simon Derrick argues this may not just be a short-term hiatus, but could mark a tipping point for the eurozone and the single currency."

"We've been negative about the outlook for the eurozone for some time and have struggled to explain the euro's relative strength in the face of rapidly mounting concerns.

Indeed, there have been times, particularly over the past week, when the euro's performance has reminded us of the point where Wile E Coyote runs off the edge of the cliff and fails to fall simply because it does not occur to him to look down.

Of course, all this changes the moment his forward momentum runs out, he finally glances into the chasm below and then falls to his fate.
Tightening the screws
Chancellor Angela Merkel and President Nicolas Sarkozy Markets were disappointed with the outcome of the Merkel-Sarkozy meeting this week

Perhaps the point at which we felt that solid ground ran out for the euro to be replaced by thin air was at the end of Chancellor Angela Merkel and President Nicolas Sarkozy's press conference on Tuesday evening.

By rejecting the idea of eurobonds or an increase in the size of the 440bn-euro rescue fund, the European Financial Stability Facility, and, in addition, promoting the idea of balanced budgets, it seemed that France and Germany were pushing for extremely tight fiscal conditions for the periphery at a point where confidence in local markets was already ebbing away rapidly.

If this were not enough, they also proposed to remove any comparative advantage that nations such as the Irish Republic might enjoy by looking to harmonise corporate tax rates.

The message was clear enough: Germany and France have scant interest at this point in doing anything other than protecting the credibility of their own markets and therefore have little to offer their weaker non-core partners such as Portugal and Greece, except even more austerity whether they like it or not.

Despite this, it seemed that for a brief moment markets were convinced that this represented a genuine breakthrough.

The day after the press conference, the Italian stock market hit its highest level in a week (a good 12% above the trough seen the previous Thursday), while the yield gap between Italian 2-year paper and its German equivalent reached its narrowest point since 25 July (i.e. just after the Greek bailout was announced).

In line with this, the euro briefly traded back above US$1.45.

Although it might have seemed that the reaction had been sanguine, there was one small sign that something was wrong.

In particular, it was apparent that the yield gaps between Greek and German debt were starting to move out again in the aftermath of the comments from Chancellor Merkel and President Sarkozy.

This was telling. It seemed to us that the press conference had left peripheral nations with a stark choice: They either accepted the harsh economic conditions that the press conference implied would be prevalent or decide that it is simply too much of a burden to bear.

This price movement suggested that others might be thinking the same thing.
Fragile recovery over

Yesterday seemed to be the point that when the eurozone finally looked down.

The catalyst appeared to be a combination of the report in the Wall Street Journal that Federal Reserve officials were "very concerned" about European banks facing potential funding difficulties in the US and a rising wave of demands from Northern European nations for collateral from Greece.

Whatever the case, the heavy losses seen on European bourses suggested that the fragile recovery in confidence was well and truly over.

Particularly telling was the heavy losses seen in the stock prices of a number of high-profile European banks.

Given that this occurred after the imposition of the short selling ban, this seemed to indicate that this was something more than just a speculative attack.

Tellingly, the euro began to come under pressure as well.

With gold now at $1,849 an ounce and the Italian stock market under renewed pressure this morning it feels that we are not the only ones that have concluded that we are at (or very close to) the tipping point." http://www.bbc.co.uk/news/business-14588326

cyppok
15 Sep 11,, 04:37
Deja vu the last time as well.


That puts showtime in the first week of October. You say Germans & others refuse second bailout then Greece has to exit.

I think they will make the bailout so the above isn't necessary. As this domino theory was used as the basis for the first bailout. Which when you think about it must be true. If there is no unity here then what does that say about the euro ? Not much and then confidence drops.


IOW a bad situation. Idea is to hold that away for as long as possible in the hope of overcoming the smaller problems. Otherwise there is a bigger problem to deal with.

Oh contrare, the euro is based on solvency of the currency, if it becomes insolvent the currency dies. That's what is happening with all these bailouts.

The reality is if the insolvent countries are not bailed out the solvent countries move on, yes they will suffer some small downturns with those partners due to their fiscal problems but those will roll over fairly quickly (within a year or two if total wipe out of debt occurs). The problem is that French and German banks hold Greek debt and their own fiscal systems may become insolvent by a few (Greek/Portuguese etc... defaults) the proper thing would be to backstop the deposits of the local population and let the institutions fail (ergo: not nationalizing the private debt but letting it get wiped out).

Double Edge
15 Sep 11,, 10:20
Oh contrare, the euro is based on solvency of the currency, if it becomes insolvent the currency dies. That's what is happening with all these bailouts.
Insolvent is a strong term to use, devalued might be more appropriate.


The reality is if the insolvent countries are not bailed out the solvent countries move on, yes they will suffer some small downturns with those partners due to their fiscal problems but those will roll over fairly quickly (within a year or two if total wipe out of debt occurs).
Then why did the EU offer the first bailout instead of letting Greece default ?


The problem is that French and German banks hold Greek debt and their own fiscal systems may become insolvent by a few (Greek/Portuguese etc... defaults)
We're talking about Greece alone for now so 'may' is 50-50.


the proper thing would be to backstop the deposits of the local population and let the institutions fail (ergo: not nationalizing the private debt but letting it get wiped out).
And that's what was said here before the first Greek bailout. That the IMF should do it alone, well the EU stepped in with 3:1. I think they have to do it to maintain confidence in the euro.

tankie
15 Sep 11,, 13:48
So, does Greece actually exist now, or is it Eurozone holdings PLC :whome:

kato
15 Sep 11,, 14:36
German banks have 3-4 billion Euros in Greek bonds alone, don't be mistaken
German banks hold roughly 24 billion in Greek bonds, not "3-4".

about 8 billion - private banks in Germany
about 8 billion - federal-owned/state-owned bad banks (HRE and WestLB)
about 8 billion - Federal Reconstruction Bank (KfW)

The 8 billion held by bad banks are write-offs anyway, the 8 billion held by the KfW were intentionally bought as financial assistance to Greece and are write-offs too. The private banks are steadily selling (and cashing) Greek bonds, about 20 million Euro worth per day over the past year or so. By the end of the year they're probably down to around 6 billion.

And honestly, whether 3, 6 or 24 billion? Peanuts. The German bank rescue fonds can hand out guarantees for 480 billion total.

Tarek Morgen
15 Sep 11,, 14:51
Of all the euro-members Greece is pretty much the one we can most easily write off (from a German perspective). Hardly any other country (Slovenia for example) has less bonds hold by German bank

kato
15 Sep 11,, 15:25
Italy and Ireland iirc are only around 35 billion too.

snapper
16 Sep 11,, 20:41
http://www.youtube.com/watch?v=nnH9cFA9Eks&feature=related

I personaly want free trade and am a payed up member of the British Consevative Party but he has a point about the sovereign issues involved.

kato
16 Sep 11,, 20:47
The Eurozone finance ministers pretty much gave US finance minister Geithner the finger today.

He suggested stimulus packages. They told him to **** off considering the US has higher debts and higher deficits than the entire Eurozone combined. He then suggested enlarging ESFS. They told him to **** off as the Eurozone will not discuss such questions with non-members. That goes for the UK too of course.

And UKIP? Does anyone outside the UK actually take them seriously in Europe? Or any other EFD member party, of which the only remotely known one is the Partito Nazionale Fascista err Lega Nord?

Doktor
16 Sep 11,, 21:31
German banks hold roughly 24 billion in Greek bonds, not "3-4".

about 8 billion - private banks in Germany
about 8 billion - federal-owned/state-owned bad banks (HRE and WestLB)
about 8 billion - Federal Reconstruction Bank (KfW)

The 8 billion held by bad banks are write-offs anyway, the 8 billion held by the KfW were intentionally bought as financial assistance to Greece and are write-offs too. The private banks are steadily selling (and cashing) Greek bonds, about 20 million Euro worth per day over the past year or so. By the end of the year they're probably down to around 6 billion.

And honestly, whether 3, 6 or 24 billion? Peanuts. The German bank rescue fonds can hand out guarantees for 480 billion total.

According to BIS

France $57bn, Germany $34bn, UK $15bn, US $7bn, Italy $4bn or

Europe $340bn, rest of the world $145, for a total of $485bn.

cyppok
16 Sep 11,, 22:34
Mish's Global Economic Trend Analysis: Eurozone Breakup Logistics (Never Believe Anything Until It's Officially Denied) (http://globaleconomicanalysis.blogspot.com/2011/09/eurozone-breakup-logistics-never.html)

good thoughts by mish btw... notice the quote from the former head of German Federation of Industry.

Currency is a medium of exchange if it cannot be used for trade clearance it is insolvent... It is getting to that point in the Euro zone btw. Them having to resort to expanding dollar funding through Federal Reserve, ECB and IMF because the money market funds decided to stop(curtail) lending to European banks is an issue of Insolvency... Ergo a question of possibility of not simply paying back but even servicing the amount. (but you are free to disagree)...

Doktor in addition we are also in the dark as to what kind of derivatives those banks issued either for or against the debts they hold which could magnify the skrwage they face.

kato
16 Sep 11,, 22:42
Germany $34bn
34 billion USD = 24.7 billion Euro by today's exchange rate.

So yeah, about right.

snapper
17 Sep 11,, 00:08
So right now, apres Wroclaw meeting, we stand at this:

Greece is integral to the Eurozone. No decision will yet be taken over Greece as the German Finance Minister (Roesler) will not pay. Barusso (President of the Commission) will try to introduce Eurobonds but Merkel and Sarkozy will refuse to pay these. The Central Banks spend $ to support the Banks and the Euro... The contradictions are endless.

IF Germany bails out Greece Part 2 there no gurantee that this time next year we shall not be at Greece Part 4 as their deficit is increasing not decreasing. Are the viable countries willing to go on forever? Perhaps but without economic growth in their countries they will simply not be able to keep funding bailouts and the growth rates are heading downward.

Let me make a radicalist view: Of course Greece is small and as kato says the Germans alone could absorb their debt and dictate what measures they must take; instead of the Wehrmacht we have the Bundesgeld. But this would be regarded as financial dictatorship, instead of the Whermacht we have the Bundesgeld. Instead we have the EU who have 'bought' Greece and dictate terms but who is central to the decision? If the German will not support Greece Part 2 then nobody else will and they must default, if they do go with it then for how long? Merkel says yes, Roesler says no. The fate of the Greek nation depends on German political infighting???? How on earth did we ever get this?

I very rarely swear but "**** this!". I would happily tear down all the banks and Euro and EUs and all the rest if this ever became the case for the UK or Poland, yes, even if it means war to restore democracy again.


Geithner kato was invited as was Osbourne as we spent $ yesterday propping up Euroland banks. However your comment "the Eurozone will not discuss such questions with non-members" which you saw fit to embolden merely unlines the basic problem. "This is a problem between Germany and Greece...". Oh dear.

Doktor
17 Sep 11,, 00:45
But, but you don't have EURO, nor you fund Greece, or am I wrong?

cyppok
17 Sep 11,, 00:50
But, but you don't have EURO, nor you fund Greece, or am I wrong?

swap lines = yes the US is loaning money to euro banks and probably Greece.

and share pro rata of IMF loans

Doktor
17 Sep 11,, 00:53
swap lines = yes the US is loaning money to euro banks and probably Greece.

and share pro rata of IMF loans

Doesn't euro banks loan money to the US treasury? The point?

snapper
17 Sep 11,, 00:55
Bank interdependency will kill the UK economy.

"Perhaps I was wrong, after all. I thought Europe's governments would spend any amount of money and impose any amount of austerity to rescue any number of banks from their recklessness and folly. All banks were too big to fail. No debt was too big to bail. Europe was in the grip of a classic banker's ramp.

Yet Greece's bluffing of the high priests of the eurozone may, after all, be called. The unthinkable may be unavoidable. The priests are suddenly talking of "when, not if," Greece defaults. Greeks themselves seem to regard devaluation as a less painful discipline than state-imposed austerity, and are probably right. Their partial default and de facto departure from the euro would be a truly seismic moment, requiring the instant restructuring of debts and possibly currencies across the periphery of the eurozone, covering Greece, Ireland, Portugal, Spain and Italy. It would be drastic, but since it has been predicted ever since Maastricht in 1992, it can hardly be regarded as unimaginable.

At this point "pro-Europeans" have to stop talking rubbish and start on realpolitik. Alaric is not at the gates of Rome. Washington has not crossed the Delaware. Napoleon has not returned from Elba. All that may happen is that Europe's democracies, disregarded, distorted and corrupted for a quarter century by the oligarchs of Brussels, will crawl out from the shadow of the very Acropolis where democracy was born. For all sceptics of grand federations, gilded alliances, and upmarket mafias hatched down the ages in Europe's cloud-capped spas, this could be an exhilarating moment.

There is nothing wrong in a currency zone of compatible political entities. There is a dollar union between the American states, and there have been attempts at using currencies to cohere earlier empires, with crowns, roubles and pounds sterling. But a union must reflect an underlying economic reality, with political institutions that can relate voting to taxing and spending, and borrowing to repaying.

Where, as in Europe, this has become far from the case, the disciplines of a complex modern economy become unenforcible. Those in charge merely demand "ever closer union", which means ever more power over subordinate democracy.

A good history of the euro was supplied by the Nobel economist, Paul Krugman, in the New York Times in January. He contrasted the US dollar area, with its federal government, common language and political culture, with the eurozone, which has none of these things. Krugman concluded that "this, from the beginning, made the prospects of the single currency dubious". Worse, it had floated up to "grip the imagination of European elites". The single currency became a passport to a bureaucratic utopia, a means to ever more glorious union. Practicalities were for nerds.

I regard myself as a "good" European, but as far as the EU was concerned, that idealism was dented as each advance of Brussels power took ever greater liberties with Europe's taxpayers and legislators: regulating, subsidising and corrupting all it touched. A recent report showed the EU casually overpaying almost a billion euros to Greek farmers. It continues to throw more dead fish back in the sea than it takes out. It defaces Europe's countryside by subsidising half-built houses. It is still building itself a stupendous £280m palace in Brussels. The place is obscene.

Because being "pro-Europe" is a faith cult rather than a policy, its adherents dare not raise a peep of protest at its outrages. Not for the first time in Europe's history, a centralised superstate stalks the continent with a retinue of uncritical appeasers unable to see the wood for the tax-free salaries. Sceptics are treated like Rhett Butler in Gone with the Wind – traitors to the great confederacy who should be shot for speaking home truths.

That Germany should be the one country that can sensibly stage the euro bailout is doubly ironic. It is the one country that did not indulge in the housing bubble, most of its workers living happily in rented accommodation. Meanwhile, its constitution was crafted by the postwar allies to make its leadership of Europe near impossible. The German government is meant to be weak, at the mercy of its provinces and their electorates. If, as seems likely, Angela Merkel's voters grow fed up with bailing out Greece, or with bailing out banks, that will be an end to it.

The euro lobby is now pleading, begging, goading Germany to brandish its old muscles and flash its old sword. It calls on Germans to tell Greece to knuckle under, slash spending and sack its workers. If this fails then Greece's benighted politicians should be stripped of power and made subject to fiscal union, with public spending controlled and political oversight to enforce it. Greece and the other weakened states of Europe should be put in hock to the gods of the euro.

The postwar settlement was meant to liberate the smaller countries of Europe from this sort of overbearing treatment. It was meant to free their diverse histories, cultures and identities from centuries of great power victimisation. The symbol of such independence is the right to fix one's taxes, determine one's social security and value one's currency. There was no need for the euro. Even in the boom years, the best estimate is it may have boosted trade by 10-15%, but its bailout will more than wipe that out.

The euro rescue packages now being mooted are eerily reminiscent of the reparations imposed so disastrously on Germany after the first world war. It may all be "just", but the forced impoverishment of Greeks, Portuguese and Italians to honour the paper value of German and French debts must be as close to revolutionary incitement as modern policy can get. Does nobody in Brussels read history?

The former Tory chancellor, Lord Lawson, called the euro "among the most irresponsible political initiatives of the postwar era". Gordon Brown's most creditable epitaph is that he stopped the economically illiterate Tony Blair from joining it. Britain is free of its constraints, though not of its backwash. This is a true reformation moment in Europe's history, when a centralised and authoritarian Holy Roman Empire, grown fat and arrogant on the tithes of subject peoples, suddenly overreaches its power and faces a crisis of legitimacy.

David Cameron here has a historic opportunity to draft a new European dispensation. This would involve a managed devaluation of the debts of the peripheral states, backed by rescue packages for individual banks that then find themselves in trouble. Their depositor arms should be bailed out, but not their casino operations. Alongside would be a managed restructuring of a eurozone of convergent northern economies, in which it is conceivable the UK might even take part.

That may lead on to Cameron's ambition for a genuinely reformed Lisbon treaty, one that, unlike its predecessor, could pass the test of a referendum. Europe is clearly at a turning point, turning against the single-statism of the European movement, with its straitjacketed currency, its flows of economic migrants and counterflows of subsidies, its everlasting crises and its humiliation of democratic governments. It is turning back to national identity, and there is nothing the EU can do to stop it."

Europe is turning back to national identity (http://www.guardian.co.uk/commentisfree/2011/sep/15/europe-national-identity-debt-crisis)

BD1
17 Sep 11,, 09:10
why is it that most (if not everybody) in this board that foresees downfall of euro and EU comes from a failed empire - british and soviet, yugoslav ? all who have seen their countries taking a peg or two or three down on scale of influence are foreseeing the total collapse of EU, europe, and in Versus´s case , practically the whole world (peak oil). same thing with my russian co-workers - they are much more pessimistic about everything and quite frankly sometimes seem to expect it, even hope for it. is it really ´it´s just not us who fail, but you too´-glee?

not flame bait, but honest question.

Mihais
17 Sep 11,, 09:28
Hey,between you and me,you're the Soviet:biggrin: But about the ....ed up state,you're right.
Dunno about the British,but the main point is that this whole concept is wrong.You can't have a currency without political unity and you can't have that either.And even if political unity is achieved,the downsides are way bigger than the advantages.

Pessimism is informed realism :tongue:

BD1
17 Sep 11,, 09:33
we like to think of ourselves as FSE , former swedish empire, not FSU, thank you very much. :tongue:

Doktor
17 Sep 11,, 09:37
BD1,

Maybe it is because people see certain things repeating?


Mihais,

Political unity? What is that?

I mean I can't have a unonymous decision at home about what will be for lunch.

Mihais
17 Sep 11,, 09:42
See,Dok,we don't have a democratic culture :redface: .You need to vote,pal.No more unanimity :pari:.My master plan for the future family is to indoctrinate the kids before she does,so that's I'll win every debate.

Doktor
17 Sep 11,, 09:50
See,Dok,we don't have a democratic culture :redface: .You need to vote,pal.No more unanimity :pari:.My master plan for the future family is to indoctrinate the kids before she does,so that's I'll win every debate.

The kid is minor, therefor no right to vote, tho he sides with me (done that part good so far), meaning we (me and mewife) vote 1:1 when we have to vote 2:0.

Edit: I am not sure you are authorized to use the shaking-head bird without prior authorization of a certain God, pardon mod.

Double Edge
17 Sep 11,, 22:28
You can't have a currency without political unity
Why ? Where is it written that this must necessarily be the case ?

Currency is just a means of exchange, it has value only if ppl attribute value to it. Just like gold. Gold only has value if ppl attribute value to it. Gold along with silver was the currency used all over the world. That is to say their paper currency was backed by it until 1931 when the Brits were the first to introduce a fiat model.

Your country certainly accepts euros even though they are not part of the euro. You would also accept $ like anywhere else.

cyppok
17 Sep 11,, 23:04
not sure the former empire is relevant we are all part of it somehow to a degree, French, German, American empires did exist as well as Spanish most failed and revived more or less in a different form.

The Euro already failed once under the EMU mechanism or was it the ERM whichever so failing again should not be a big deal. The reality is contrasting interests, economies, fiscal needs and developments do create a necessary distortion for varying degrees of currency growth or decline instead of uniform one.

If the Northern countries leave the Euro and form a different currency to let the other nations devalue in order to stay solvent in their ability to pay debt my guess it will not solve the debt problem. Default through devaluation is only partial they need a full blown write off to reset their economies.

Double Edge
17 Sep 11,, 23:51
The Euro already failed once under the EMU mechanism or was it the ERM whichever so failing again should not be a big deal.
Eh ?

cyppok
18 Sep 11,, 02:36
European Exchange Rate Mechanism - Wikipedia, the free encyclopedia (http://en.wikipedia.org/wiki/European_Exchange_Rate_Mechanism)

current system is ERM 2...

kato
18 Sep 11,, 07:46
Ummm, that wasn't a "fail", that was just reorganizing the conditions. ERM 1 was simply too lax. The Ecu's non-fixed exchange rates against the member state currencies were frozen on Dec 31st '98 and the currency renamed Euro.

The one crash it had in '92 (didn't kill it either) had a single reason, and that's the UK becoming the target of currency speculation two years after it joined ERM. That destabilized the whole system for a bit until we kicked the UK out of ERM again. Should never have let them in.

snapper
18 Sep 11,, 20:38
Perhpas it is because those who have seen their Empires fall apart that they see more clearly the sign of a fall.

I see that the lastest meeting has come up with a “six-pack” of tougher budget rules. Everyone was also told to 'shut-up', "verbal discipline" according to Luxembourg prime minister Jean-Claude Juncker. What a joke.

The budget rules will have to be kept by exactly the same people that the Germans allege have not been keeping their previous budget rules. If indeed they were not keeping the previous rules these new 'rules' are not worth the paper they are written on. Trouble is that Italy, for example, WAS pretty much keeping the rules so the problem is actualy more systemic than simply breaching the rules and no attempt was made enlarge the European Financial Stability Facility - which probably needs another 2 trillion Euros short term. Eurobonds are ruled out and a decision on Greece postponed (meaning that Greece will need more money IF bailed out as their interest rates will continue to rise).

I like Wroclaw (Breslau in German) but if they want to visit Poland again I recommend Krakow. Is far better for tourism and I can think of no other reason why they had to meet so urgently.

PS. My Sister is benefiting just fine from all this: She works in Swirzerland and earns in Swiss Francs but lives in France and spends in Euros, 20% pay increase due to currency fluctuation.

kato
29 Sep 11,, 10:02
The German parliament will be voting on ESFS in 30 minutes.

Speeches so far concentrated on other topics really, with the opposition ridiculing the government coalition, the CDU and the Left arguing about which ways of German state intervention in Europe-wide currency politics are the best, the FDP clamoring for the free market (and getting laughed at for both that and for its recent election results), the CSU being painted as (quote) "the Bavarian enemies of Europe".

There'll still be two representatives speaking for the - non-party - groups opposing ESFS.

kato
29 Sep 11,, 11:21
ESFS will get a huge majority in the Bundestag - it's very widely supported. I'd expect minimum 500 out of 620 in favour.
And as predicted, the result: 523 in favour, 85 against, 12 abstentions

Of the abstentions 3 were active (voted), 9 passive (didn't vote or not present).

They're still counting who exactly voted for what. That's the actually interesting part - the four parties nominally in favour have 544 seats, meaning up to 21 voted against or abstained. If those 21 are all in CDU, CSU and FDP (i.e. SPD and Greens voted en-bloc in favour) then Merkel only got 309 seats votes in support from her government coalition - two less than the absolute majority in parliament, the exact result the opposition was trying for.

Edit: Government coalition claims they got 315 votes among themselves.

The Left is using the opportunity to have about one third of their representatives give "personal comments" in the plenum, i.e. hold speeches. Anything to get air time, so to say.

cyppok
29 Sep 11,, 18:49
The constitutional court weighed in and said its a no go without a referendum, which is the proper thing to do if your going to indebt someone(citizenry) to payoff someone(bankers).

German turmoil over EU bail-outs as top judge calls for referendum - Telegraph (http://www.telegraph.co.uk/finance/financialcrisis/8790785/German-turmoil-over-EU-bail-outs-as-top-judge-calls-for-referendum.html)

Right now I am wondering whom leaves the Euro first actually. I think its going to be someone unexpected that can manage the seperation with the least amount of damage. Finland comes to mind actually.
Break the euro to save Europe | Hans-Olaf Henkel, Financial Times | Commentary | Business Spectator (http://www.businessspectator.com.au/bs.nsf/Article/euro-eurozone-sovereign-debt-crisis-austerity-infl-pd20110830-L83CC?OpenDocument)


That is why we need a plan C: for Austria, Finland, Germany and the Netherlands to leave the eurozone and create a new currency leaving the euro where it is. If planned and executed carefully it could do the trick: a lower valued euro would improve the competitiveness of the remaining countries and stimulate their growth.
This sounds interesting kinda.

(my opinion on the ESFS increase)
The increase in ESFS to 400 bill and German share to 211 billion does not cut it to be honest. It only saves the losses(banks suffer) on Greek bonds but does not help afterwrds when other countries need "liquidity" rollover their maturities. Recently Italy had troubling "rolling" stuff over so if more and more debt needs to be rolled by more and more countries sooner or later one of those "sums" does not pass mustard and you get clearance stopage, ergo the 2nd or 3rd failiure. At that point the currency does not serve its' function ergo a failure. Failing for a second or for a year is irrelevant when commerce clearance stops.

kato
29 Sep 11,, 23:54
The constitutional court weighed in and said its a no go without a referendum, which is the proper thing to do if your going to indebt someone(citizenry) to payoff someone(bankers).
Background:

Vosskuhle can say a lot, without anyone actually appealing to the court it has zero repercussions on actual politics
The constitutional court recently (three weeks ago) ruled in favour of the laws regarding financial assistance for Greece and ESFS, ruling them constitutional. Vosskuhle was the one who had to announce that ruling in fact.
The judicial majority on those rulings was rather large: 7 to 1. It's not publicly known who the one voting against was, but considering interviews with Vosskuhle since then it's not unlikely it was him.
As for Vosskuhle's person: He is from Baden-Württemberg, a state currently governed by direct-democracy-conscious Green NIMBYs (he used to be the president of the university of Freiburg, a Green-dominated university). He is generally regarded as (too) young and inexperienced for his office, and basically often "needs" the "helpful guidance" of other judges.

Summary: No referendum. And it's not "the constitutional court" who said it.

As for Hans-Olaf Henkel, he's a neoliberal capitalist who has publicly supported Thilo Sarrazin's racist ideologies and who has for the past year or so been rallying in favour of splitting the Eurozone into a (German-dominated) North and a (French-Dominated) South. The linked commentary is just a... less ideological variant of that scheme he's been pushing.

Double Edge
11 Oct 11,, 01:52
Lets make this crystal clear: IF Germany and/or others refuse to the second part of the Greek bail out Greece will leave the Euro within 17-19 days.
We're past your deadline, Greece is still in the EU.

When's this second bailout going to happen ?

BD1
11 Oct 11,, 05:30
We're past your deadline, Greece is still in the EU.

When's this second bailout going to happen ?

The Doomsday Duo (cyppok & snapper) prophesies have not been fulfilled....again

snapper
11 Oct 11,, 14:46
Starving Greeks is a success? Basicly they have agreed that Greece will have a 'structured default'. The origional default write off limit is being rescheduled:

"A lot has happened since July. Greece has fallen back on its commitments, so we have to assume that the 21pc cut is no longer enough," said one source.

Finance minister Wolfgang Schäuble told the Frankfurter Allgemeine that the original haircuts were "probably" too low, saying banks must have "sufficient capital" to cover greater losses if need be. Estimates near 60pc have been circulating in Berlin.

German push for Greek default risks EMU-wide 'snowball' - Telegraph (http://www.telegraph.co.uk/finance/financialcrisis/8819195/German-push-for-Greek-default-risks-EMU-wide-snowball.html)

In the meantime the banks with investment have to re-financed or nationalised as with Dexia. Then, if the Slovaks pass the the vote (they are very reluctant: Slovakia looks set to reject bailout fund vote - Telegraph (http://www.telegraph.co.uk/finance/financialcrisis/8819766/Slovakia-looks-set-to-reject-bailout-fund-vote.html)) today Greece should receive anout 8bln Euros before the end of the month. Next EU summit has been postponed a week (to 23rd Oct) while Germany and France argue where the EFSF fund can be used to support banks (Germans say no).

So it is possible that Greece may have a debt write off of between 40-60% and then get an early Christmas preasent. This means that lending to Ireland, Portugal, Spain and Italy is also potentialy liable to be written off and they will subsequently have to pay more to borrow (Portuguese 2 yr bonds are already at 17%). Further pressure on Italian 10yr bond rates (currently about 5.5%) could drive the yield above 7% at which point Italy must be 'restructured' a la Greek model. More banks get refinanced/nationalised but on a scale x 9 that of Greece. All the countries with 'restructured debt' then basicly become 'troika' administered and democracy is gone, the long term implications of this is dark indeed. The massive bank bailouts needed to support this debt write off plan will undermine all EU Governments debts, France, Germany and UK included and their sovereign debt levels will rise and borrowing become more expensive. Basicly writing off say 50%, even 30%, of all PIIGS debts will break France for sure... In the meantime the whole EU goes into recession/depression and debts become increasingly harder to pay off. Finaly one of the Euro countries will elect a nationalist Government and unilateraly withdraw from the shambles.

8 billion Euros and 50% debt write for Greece is 'doable' financialy, though insane in my opinion: 'I'll give you £100, write of 50% of your debt - pay me back £50 when you can' I then become less able to pay MY debts. It is only a matter of time after that before others follow suit amd long term this is 'not doable' financialy.

We were told that the first Greek bailout was a 'one off' and no doubt they will spout the same lies about a 'restructuring'. Far from this going away they are digging themselves into a bigger hole.

Latest on Slovak vote:

When is a no not a no? When the question involves Slovakia and a certain EFSF.

Suitably refreshed from her pot of brew, PM Radičová says the vote will be repeated until EFSF bill is passed.

Democracy rules, then.

http://www.telegraph.co.uk/finance/financialcrisis/8782663/Debt-crisis-live.html

Haven't we seen that before?

dave lukins
11 Oct 11,, 17:39
We're past your deadline, Greece is still in the EU.

When's this second bailout going to happen ?


The EU, IMF and European Central Bank say Greece is now likely to get 8bn euros ($11bn; £7bn) more bailout cash.
It came as they said Greece's fiscal target for 2011 was not achievable.


http://www.bbc.co.uk/news/business-15259796

FJV
11 Oct 11,, 18:03
My hunch is that this is more about French and German banks, than Greece.

I would not be suprised that the moment these banks are safe, Greec will default.

Doktor
11 Oct 11,, 18:49
Why would it be about Greece?

Mihais
11 Oct 11,, 19:27
It's always been about Euro banks and the Eurocrats.

To be fair,I welcome this delay.I have enough time to prepare properly.But there is no way this doesn't end badly.Remembering very recent history,when the US subprime crisis started,EU and euro were considered safe havens.Didn't took long for the smart boys to figure something was rotten in Greece and the EU by extension.Now the Germans sacrifice good money on the altar of EU.The market will probably figure in about a year or two that EU core is rotten.The doomsday is only slightly delayed.
And yeah,damn democracy.Who the heck needs it anyway?There's however a double edged sword(no hint).There will be no time wasted with trials,since there are enough trees in the parks.

Btw,if what Kato says above(the no referendum part) there's nothing to impede leveraging the ESSF.More fuel into the fire.Burn ,baby burn.Now or in 5 years,it doesn't matter.History has patience. :Dancing-Banana:

cyppok
11 Oct 11,, 19:46
If we get really 'lucky' Ukraine goes bankrupt before Greece and it sets off a chain.

Imf(october 24th they visit) tranche 3.5bil is somewhat necessary. About 2 billion to pay Gazprom 2-3 weeks or so after they "should" get the tranche. Early next year one of those earlier bil tranches comes due I think. Also, to service the interest payments.

If Ukraine and Russia lock horns and there is fallout the following could happen...
Russia is between 25-37 billion of their 50+ billion trade, 50% of GDP is trade in essence, if they get locked out of the market which is sort of happening right default may happen sooner.

1) Imagine they join the Customs Union with Russia what has to happen, instantly... WTO exit... (the terms are crappy so its not really a big loss)
2) Ramifications for those whom export to Ukraine to have instant barriers go up in an "existing" market would be far more painful than for Ukraine. The Oligarchs inside would expand while external trade becomes uncompetitive, and most likely would hit administrative barriers more than tariff ones.
2010 (http://www.ukrexport.gov.ua/eng/economy/trade/ukr/5343.html)
I think Hungary and Lithuania would be most hurt relatively speaking, if those exports (imports on graph) fell by half or so. Those car tarrifs would go back to 50%+ from 20-30 today shifting the car market.

Double Edge
11 Oct 11,, 21:11
The EU, IMF and European Central Bank say Greece is now likely to get 8bn euros ($11bn; £7bn) more bailout cash.
It came as they said Greece's fiscal target for 2011 was not achievable.


http://www.bbc.co.uk/news/business-15259796
Heh, only 8bn euros !!!

It was 110 bn last time.

Doktor
11 Oct 11,, 21:12
This is monthly installment ;)

Double Edge
11 Oct 11,, 21:13
To be fair,I welcome this delay.I have enough time to prepare properly.
For what ?


But there is no way this doesn't end badly.Remembering very recent history,when the US subprime crisis started,EU and euro were considered safe havens.
Not to the extent the dollar was. Saw the same flight towards the dollar again last week.

And, the US is still around, bruised but alive so why won't the EU come out the same too.

So I'm sceptical that the EU is going to go away. For that to happen things would get a lot worse and if EU breaks up things become worse still. Its not an option.


Didn't took long for the smart boys to figure something was rotten in Greece and the EU by extension.Now the Germans sacrifice good money on the altar of EU.The market will probably figure in about a year or two that EU core is rotten.The doomsday is only slightly delayed.
Very good Mihais :)

That means there is time to influence that opinion from now until then.


And yeah,damn democracy.Who the heck needs it anyway?There's however a double edged sword(no hint).There will be no time wasted with trials,since there are enough trees in the parks.

Btw,if what Kato says above(the no referendum part) there's nothing to impede leveraging the ESSF.More fuel into the fire.Burn ,baby burn.Now or in 5 years,it doesn't matter.History has patience. :Dancing-Banana:
I'm surprised at how small that last bailout was, if i recall correctly there's 400bn plus in the fund. That's still a lot of firepower left.

BD1
11 Oct 11,, 21:34
Mihais, if you and enough other people start preparing for breakdown, your bulk purchases of toilet paper and machetes and flour will bring the consumption to rise and pump monet into circulation, therefore you are defeating your own purpose:pari:

anyway - i come from a broken-down empire, i´ve seen poverty in my land, i´ve seen ´analysts´ proclaim that my country(and lately Europe, nay- the whole world!1!!) will fail by 1993, (no? - then surely by 1995/98/99/2007/8/9/ 9 &1/2 /2011/2013, usually by our lovely eastern neighbours). am i really the only one who thinks that this current glitch is just a mere bump in the road? FFs i´ve seen my land go through basically bankrupcy and start from zero. this here is just a bump, a big one, but no more. for FFS, you people really think that Germany and France will cut off their own buyers and markets?

the only thing that i could propose is for UK to withdraw from EU. i like UK, more than many other EU members, but they just don´t belong there, they seem to be there just not to be left out and to keep their centuries old balancing-the-continent act going.

Mihais
11 Oct 11,, 22:21
For the record,I'm not gonna buy machetes.I enjoy having a bit of distance.:biggrin:

Haven't lived through the 90's,at least the aware me.And we aren't talking about the likes of us,that can eat an apple from the tree without getting heart palpitations about food safety.We're in a perpetual crisis,so this one is just same ole,same ole.The real estate will remain,BMW will still make fine cars and Ibiza will still be sought by tourists.
However,the EU idea will take a big hit and it's about time.I'm not saying we'll get back in 1910's.A European idea will survive.But I hope for a Europe of nations,not a European nation.

DE,if it wasn't for this Greek debacle,Euro would likely be ~3USD.Max. was 1.6 Fundamentally both suck.I'm not an economist by any means,so I can't really make a case beyond the most rudimentary analysis,but usd has strength vs Euro because it will still be around 20 years from now.Better to have less than nothing.
See above what I'd like to see.US is alive because just is.EU is a Frankenstein without popular legitimacy.We can of course go into semantics about the public that votes politicians that support the EU.But the crux of the matter nobody asked anyone about fundamental shifts in the way EU works.Call it a flaw of the representative democracy.

About the preparations.What the rest of the nations do,it's their bussiness.But the beloved motherland is so badly mismanaged that it fired policemen at the first hiccup.The army doesn't enlist new men even if units are badly understrength.You might call this cutting costs.Elsewhere it might be.But here it means the state is cutting its support.It's a sign of desperation.The economy,ahhm,what economy.The bubble will burst.And for us it won't be pretty.To be fair,we asked for it.Nobody else's fault.

kato
11 Oct 11,, 23:23
So, who here is in favour of throwing Slovakia out of the Eurozone first?

dave lukins
11 Oct 11,, 23:29
Heh, only 8bn euros !!!

It was 110 bn last time.

Mean I know. I remember when 8bn€ was a lot of money:biggrin:

Doktor
11 Oct 11,, 23:29
Why Slovakia?

kato
11 Oct 11,, 23:38
But the crux of the matter nobody asked anyone about fundamental shifts in the way EU works.Call it a flaw of the representative democracy.
Oh, there are people asking that question. German weekly Zeit polled Germans, French and British last week on the question of whether the EU should move towards a "USE" and form a full confederation as a single nation. In Germany this resulted in a rather easily overcomable minority of 35:41, in France a majority (!) of 44:35, and in the UK it was of course denied at 13:64. Basically we just need to throw the UK out of the union and then convince the other two dozen nations. The poll was prompted by a certain section of the German government forming around Labour Minister Ursula von der Leyen that is currently calling for such a move for full integration as opposed to the official government line in Germany and France that only wants a common "financial government".

Otherwise, i fully agree with BD1. The Union has been around for 60 years in various iterations and it's here to stay. Same for the Euro. Even if Greece runs off, so what? Their GDP is merely contributing €312 billion to the overall whole. That's only 3.4% of the Eurozone GDP - and less than the German government has as a budget.


Why Slovakia?
They just voted no on ESFS. Only country in the Eurozone to do so. That's what you get for allowing neoliberal capitalist scum to govern a country.

Doktor
11 Oct 11,, 23:40
They should be kicked out for playing by the rules, but Greece will stay in for forging papers and not obeying the rules? huh?

kato
12 Oct 11,, 00:02
We can get rid of both. Would make the Eurozone look better on the map too, although for that we'd also have to kick out Sweden, Finland, Estonia and Ireland...

Doktor
12 Oct 11,, 00:08
For the map or for forgery?

dave lukins
12 Oct 11,, 00:14
We can get rid of both. Would make the Eurozone look better on the map too, although for that we'd also have to kick out Sweden, Finland, Estonia and Ireland...

And the reason for kicking out the UK is...what precisely? So you can have your United States of Europe? And who would you like to run this United States of Europe..precisely? ;)

Doktor
12 Oct 11,, 00:16
Arnold!

BD1
12 Oct 11,, 05:33
We can get rid of both. Would make the Eurozone look better on the map too, although for that we'd also have to kick out Sweden, Finland, Estonia and Ireland...

???
why? what have i missed? we take great pride in our bureucracy - estonian bureaucracy is russian idiocy, and with german punctuality- worst of both worlds!

Mihais
12 Oct 11,, 07:58
Oh, there are people asking that question. German weekly Zeit polled Germans, French and British last week on the question of whether the EU should move towards a "USE" and form a full confederation as a single nation. In Germany this resulted in a rather easily overcomable minority of 35:41, in France a majority (!) of 44:35, and in the UK it was of course denied at 13:64. Basically we just need to throw the UK out of the union and then convince the other two dozen nations. The poll was prompted by a certain section of the German government forming around Labour Minister Ursula von der Leyen that is currently calling for such a move for full integration as opposed to the official government line in Germany and France that only wants a common "financial government".

Otherwise, i fully agree with BD1. The Union has been around for 60 years in various iterations and it's here to stay. Same for the Euro. Even if Greece runs off, so what? Their GDP is merely contributing €312 billion to the overall whole. That's only 3.4% of the Eurozone GDP - and less than the German government has as a budget.


They just voted no on ESFS. Only country in the Eurozone to do so. That's what you get for allowing neoliberal capitalist scum to govern a country.

Way too many scums over there.Thilo Sarazzin,scum.Capitalists,scum.Btw,what's a neo-capitalist?

Polls aren't voting.Also,near there is not there.And you still have about 2 dozens nations to convince.Oops,I forgot you don't have to do that.The marvel of USE is so in everybody's face that a mere signature on a paper will solve the problem.

You want too much,too fast and you still have o give a reason on why do we need USE.Let's see a bit.Defense-Article 5 is still there.If you need a EU specific one,just make it.Offense-Libya showed that individual nations can go and serve their interests.France and UK(and a few others)wanted in,the rest wanted no part in it.There is the problem of efficiency of force projection RIGHT NOW,but that's a mere issue of money and time.You also wanted out and got out.You want a nation,but one in which the interests are so divergent that can't decide on whether it goes to war or not. Free trade-it's there.Free movement of people-basically its there.Whatever restrictions still apply to some are a piece of cake compared to what it was decades ago.
What more does one needs at a practical level?

Double Edge
12 Oct 11,, 08:18
DE,if it wasn't for this Greek debacle,Euro would likely be ~3USD.Max. was 1.6 Fundamentally both suck.I'm not an economist by any means,so I can't really make a case beyond the most rudimentary analysis,but usd has strength vs Euro because it will still be around 20 years from now.Better to have less than nothing.
If euro was max $1.6, you don't have to be an economist to see euro cannot become $3 without something major happening. The 2008 crisis was very revealing, people would rather put their money in the currency of the originating source of said crisis than elsewhere.


See above what I'd like to see.US is alive because just is.EU is a Frankenstein without popular legitimacy.We can of course go into semantics about the public that votes politicians that support the EU.But the crux of the matter nobody asked anyone about fundamental shifts in the way EU works.Call it a flaw of the representative democracy.
I was listening to a debate the other day and it was said you cannot have a monetary union without a fiscal union. It does not exist anywhere. And that the EU was a political project disguised as an economic one.

So you cannot continue to go on as you have before. You are going to get closer ie fiscal union not break away if you hope to prevent similar crises happening in the future.

cyppok
12 Oct 11,, 09:24
So you cannot continue to go on as you have before. You are going to get closer ie fiscal union not break away if you hope to prevent similar crises happening in the future.

UK has an out for not joining the Euro, Danes sort of have an out and Sweden is not in a hurry either to join euro. All three have their own currency.

EU was a good trade union, and even a defensive treaty organization to some degree. Both do not compromise internal/external governance and foreign politics other than those related to the above mentioned spheres.

Fiscal union robs the EU of efficiency look at the notion of 'harmonizing' tax rates etc... this simply makes every incentive difference that exists and pushes competition on lowering burdens on the populous to go away.
http://www.lowtax.net/asp/story/front/Semeta_To_Propose_Common_EU_Tax_Base47726.html

Interest rates (already harmonize return rates) to a large degree, ergo by having the same currency financing costs exclude forex risk and thus compress and become comparable, especially in light of constant bailouts that reduce risk on a EURO platform rather than a national one.

snapper
12 Oct 11,, 14:07
The Slovaks rejected the rise of EFSF (bailout fund) to 440 billion Euros and their Government has now fallen. Their point is: How can there be any justification for a state of affairs where a poor but rule-abiding EMU state (Slovakia) must bail out a serial violator with twice the per capita income, and triple the level of the pensions – a country which is in any case irretrievably bankrupt (Greece)? How can it be that the no-bail clause of the Lisbon treaty has been ripped up?

You want to kick them out kato for asking a valid question kato? You are asking a country that is poorer than Greece to guarentee 7 billion Euros of EFSF funding. Personaly I think they have a fairly good point.

So for now the EFSF fund is NOT 440 billion Euros and won't be until the Slovaks say so.

All this is irrelevant though. The 440 billion Euro fund was agreed at European level in July - before Italy and Spain became danger zones. It is NOW estimated that the fund must be 2-2.5 trillion Euros! (Willem Buiter at Citigroup has called for €2.5 trillion, RBS and the European Parliament have called for $2 trillion). The German Constitutional Court has blocked off any possibility of eurobonds so this idea can be dismissed... nor can the 440 billion EFSF fund be 'leveraged' (used to borrow more money). Thus any further enlargement of the fund will require another round on national Parliaments voting yes...

How much more will this cost the Slovaks and others? Not a hope.

I tend to agree with the venerable cyppok that the best scenario would have been for the French and Germans to leave the Euro so that the others could devalue. Problem is of course that Germanys current relative economic strength is built from exploiting the Euro to export their machinery and cars etc all over Euroland... The French have done the same thing with subsidised agricultural exports. In many ways these two want their cake and to eat it! If the others devalue the Franco German exports become too expensive and their relative strength declines. Thus Greece can't leave as this would set a dangerous precedent to their other European export markets. So bailing out Greece is a relatively small price for them to pay to keep their markets open. Not so for Slovakia sadly but so what (is a rather large price for them) - they benefit too and although France and Germany benefit most of course small Slovakia can be 'strong armed' - 'diplomaticly persuaded that it's in their best interests' into paying up too.

Can they bail out Spain and Italy for the same reasons? I am sure they would love to make Slovakia and others pay more again to do so but the simple facts are:

A. An Italian bail out would bankrupt France and Germany.
B. There is not a hope in hell that the EFSF will get enlarged to 2 -2.5 trillion Euros.

Is it therefore wise to bail out Greece? Short term they can waste more money and we can prepare better - re-finance banks etc... Mid to long term it's digging a depper hole.

I read an analysis recently that predicts, among other political implications, the split up of Italy. Northern Italy is relatively prosperous whereas the south is, for various reasons, less prosperous. Why then should the North be saddled with the debts and corruption of the South? There is already a political Party that advocates more automony under a federalist structure (Lega Nord - Wikipedia, the free encyclopedia (http://en.wikipedia.org/wiki/Lega_Nord)), a crisis might see them secesseed.


If euro was max $1.6, you don't have to be an economist to see euro cannot become $3 without something major happening. The 2008 crisis was very revealing, people would rather put their money in the currency of the originating source of said crisis than elsewhere.


I was listening to a debate the other day and it was said you cannot have a monetary union without a fiscal union. It does not exist anywhere. And that the EU was a political project disguised as an economic one.

So you cannot continue to go on as you have before. You are going to get closer ie fiscal union not break away if you hope to prevent similar crises happening in the future.

Loys of people knew this when they started the Euro, but if they had SAID that they wanted an USE the cyrrency would have been rejected. So they lied and emphasised the supposed 'economic benefits' - they also guaranteed that no bailouts would ever happen! The idea was to move 'incrementaly' towards full union so they never had to face a real public vote. So off they went on the lunacy of a single currency without fiscal union, which is partly why we are here now.

Those who see the dark plots at every corner argue that this crisis, which was kind of bound to happen, was precisely what the 'Politeuro' was waiting for in order to force through this 'fiscal union'. Personaly I don't buy this 'conspiracy theory' and think they are just stupid.

The point is that fiscal union right now, as even kato conceeds, would entail total loss of sovereignty and no democratric accountability. To force this through without referendums is likely to cause massive rise of right wing/national support. To reform the European institutions and pass a new Treaty in each country by public vote would take 5-10 years.

kato
12 Oct 11,, 14:39
You are asking a country that is poorer than Greece to guarentee 7 billion Euros of EFSF funding.
7 billion are peanuts. That's only one quarter of the annual tax income generated in Slovakia. For comparison the German guarantee is at approximately three quarters of annual tax income. We should therefore demand that Slovakia guarantee at least 20 billion to bring them somewhat in line with those that really have to spend money for this.


There is already a political Party that advocates more automony under a federalist structure
Lega Nord gets around 8-10%, mostly from protest transfer votes (people who don't want to vote for Berlusconi directly). Even in the region they score best (Venetia) they don't exceed 26%. They're not in any position to call for any secessions from Italy. The only reason they're politically significant at all is because they are the ones giving Berlusconi his majority.


Why then should the North be saddled with the debts and corruption of the South?
1943 comes to mind.

editec
12 Oct 11,, 14:49
Fascinating discussion, folks.

Much thanks.

I'm so focused on the US economic scene that I haven't time to get up tp speed in the even more complex EURO economic mightmare.

Reading this thread has been enlightening.

snapper
12 Oct 11,, 14:52
7 billion are peanuts. That's only one quarter of the annual tax income generated in Slovakia. For comparison the German guarantee is at approximately three quarters of annual tax income. We should therefore demand that Slovakia guarantee at least 20 billion to bring them somewhat in line with those that really have to spend money for this.


Lega Nord gets around 8-10%, mostly from protest transfer votes (people who don't want to vote for Berlusconi directly). Even in the region they score best (Venetia) they don't exceed 26%. They're not in any position to call for any secessions from Italy. The only reason they're politically significant at all is because they are the ones giving Berlusconi his majority.


1943 comes to mind.

Neverthless kato Greece twice the per capita income and triple the level of the pensions of Slovakia.

snapper
12 Oct 11,, 15:29
It just gets funnier! Mr Barroso's (President of the European Commission) due to delivered on 23rd October has been published now.

A roadmap for stability and growth

Brussels, 12 October 2011 - Today, the Commission has presented a roadmap outlining the comprehensive response that is needed to restore confidence in the Euro area and the European Union as a whole. This response is designed to break the vicious circle between doubts over the sustainability of sovereign debt, the stability of the banking system and the European Union's growth prospects'.

Delivering on the commitments made in President Barroso's State of the Union Address, the Commission outlines five areas of action that are interdependent and need to be implemented together and as quickly as possible. The five areas are: a decisive response to the problems in Greece; enhancing the euro area's backstops against the crisis; a coordinated approach to strengthen Europe's banks; frontloading stability and growth enhancing policies, and building robust and integrated economic governance for the future.

President Barroso said, "This roadmap charts Europe's way out of the economic crisis. Reactive and piecemeal responses to different aspects of the crisis are no longer sufficient. We now need to get ahead of the curve. Confidence can be restored through an immediate deployment of all the elements needed to solve the crisis. Only in this way we will be able to convince our citizens, our global partners and the markets that we have the solutions that measure up to the challenges all economies are facing. We need to reach agreement at the European Council on the 23rd October".

The roadmap calls for:

*

Decisive action on Greece – so that all doubt is removed about Greece's economic sustainability. This must include disbursement of the sixth tranche, a second adjustment programme, based on adequate financing through public sector and private sector involvement and continued support from the Commission Task Force.
*

Completing Euro area intervention – including making the decisions agreed on 21 July 2011 operational, maximising the effectiveness of the EFSF, accelerating the launch of the European Stability Mechanism to mid 2012 and the provision of sufficient liquidity by the European Central Bank.
*

A fully coordinated approach to strengthen Europe's banks - this should be based on a reassessment by the supervising authorities using a temporary significantly higher capital ratio of highest quality capital after accounting for exposure. Banks should first use private sources of capital, with national governments providing support if necessary. If this support is not available, recapitalisation should be funded via a loan from the EFSF. Pending this recapitalisation, these banks would be prevented by national supervisors from distributing dividends or bonuses.
*

Speeding up stability and growth-enhancing policies – including rapid implementation of existing commitments on services, energy and free trade agreements; swift adoption of pending proposals to enhance growth such as tax initiatives, fast-tracking forthcoming proposals, especially those that extend the benefits of the Single Market and targeted investment at the European Union level, including through project bonds.
*

Building robust and integrated economic governance for the future, based on the existing treaties (Article 136), reinforcing the Community approach. Building on the reinforced "six pack" on economic governance and the European semester already adopted, the proposals seek to integrate the European Stability Mechanism and the Stability & Growth Pact into the same fully integrated governance system to increase coherence and efficiency. This would provide new powers for the Commission/Council to intervene in the preparation of national budgets and monitor their execution. Enhanced cooperation should be envisaged in all cases where otherwise decisive action would be held back.

EUROPA - Press Releases - A roadmap for stability and growth (http://europa.eu/rapid/pressReleasesAction.do?reference=IP/11/1180&format=HTML&aged=0&language=EN&guiLanguage=en)

This man realy is a Class A Plonker with Hons. He can't even save his speeches for the day... Most worryingly he says "This would provide new powers for the Commission/Council to intervene in the preparation of national budgets and monitor their execution." It seems he's also an insane megolomaniac that thinks he has the RIGHT to tell elected Governments what to do with their budgets! Hold on... Can I vote him out? Not a hope sadly. Perhaps the Europhiles should come clean and tell us their plans for democratic accountability?

tantalus
12 Oct 11,, 15:45
Originally posted by Snapper
You want to kick them out kato for asking a valid question kato?
The reality is the slovaks will pass the new fund. My understanding is their will be another vote by the end of the week, in which the main socialist party, which abstained in the last vote, to bring down the government, will vote and will vote in favour. Nevertheless I agree with snapper that this is only another stop gap and more money will be needed.

I also think that any Greek default will be followed by ireland and portugal. Polictical pressure will dictate so, even if we can technically afford to limp along. With worries regarding spain, Italy et al., and potential refinacing of many european banks, what would be the impact of the hits, if the bailout countries went down the route of partial default/debt restructuring...

edit. this is the scenario that is being desparately avoided all along, and with stagnating growth figures in the west, the desparation seems to have only increased and so will the continued folly of increasing sovereign debt to keep banks afloat. Obviously its different with Greece as there governments were incredibly stupid, an they truly have dug their own hole entirely. I wonder if this really is all posturing, buying time to refinance vulnerable banks, before the default domino....

independent economists have hinted at defaults and euro exits for some time now...

kato
12 Oct 11,, 17:11
The reality is the slovaks will pass the new fund. My understanding is their will be another vote by the end of the week, in which the main socialist party, which abstained in the last vote, to bring down the government, will vote and will vote in favour.
Iveta Radivoca and Robert Fico just announced their parties will jointly pass ESFS in a new vote before friday. Radivoca's paying for it through new elections in march. We can technically blame solely her for Slovakia not passing it in the first go, since she combined it with a motion of confidence which of course no opposition party would vote in favour of.

BD1
12 Oct 11,, 18:32
Neverthless kato Greece twice the per capita income and triple the level of the pensions of Slovakia.

but snapper, estonia, who is poorer than Slovakia, passed it because if we get 3x more money from EU than we give, and still would decline it,how would we be different from greece?

numbers being numbers, but you don´t take or decline obligations because you don´t like it or not in the mood to pay

Mihais
12 Oct 11,, 18:49
What Slovakia did(or rather did not) is meaningless. ESSF will pass this week.That was just more dramatization,in the good ole soap opera style that passes for long term vision these days.Nothing to see here folks,let's move.

BD1
12 Oct 11,, 18:58
lets move ? i´m getting those ´´Mad Max V Thunderd... Eurozone´´ vibes again? assless leather chaps, mohawks, crossbows and heavily modded Dacia Dusters for the win! :Dancing-Banana: :biggrin:

Mihais
12 Oct 11,, 19:13
Who needs Dusters when there will be plenty BMW X6's for those with crossbows?:biggrin:

cyppok
12 Oct 11,, 23:11
ultimately ESSF does not matter, refinancing Greek, or any other debt that cannot be paid from current cash flow does not solve the inability to pay. It only post-pones the inevitable and makes it more likely in the future since even more debt is piled on.

It also does not remove the system insolvency that can effectively paralyze the financial system because all liquidity is in a "fund"/or directed by financials to refinance sovereign while actual solvent commercial transactions cannot have their funds clear for international and other transactions through the bank clearinghouse system.

Growing Greek debt from 400 to 500 to 600 bil Euro won't change the ability to pay, sooner or later it has to be paid back from current cash flow, when that stops the game ends.

At this point Ukraine is closer since it needs the end of October tranche of 3.5 bil to pay mid December bill for gas and interest on current debt loads. In addition early next year lots of debt is due... Unlike Greece they have no access to overnight euro funds...

Double Edge
13 Oct 11,, 23:54
UK has an out for not joining the Euro, Danes sort of have an out and Sweden is not in a hurry either to join euro. All three have their own currency.

EU was a good trade union, and even a defensive treaty organization to some degree. Both do not compromise internal/external governance and foreign politics other than those related to the above mentioned spheres.

Fiscal union robs the EU of efficiency look at the notion of 'harmonizing' tax rates etc... this simply makes every incentive difference that exists and pushes competition on lowering burdens on the populous to go away.
http://www.lowtax.net/asp/story/front/Semeta_To_Propose_Common_EU_Tax_Base47726.html

Interest rates (already harmonize return rates) to a large degree, ergo by having the same currency financing costs exclude forex risk and thus compress and become comparable, especially in light of constant bailouts that reduce risk on a EURO platform rather than a national one.
Sure, but the time has come to ask what does the euro mean.

What you are saying makes fine economic sense but how much political sense ?

What you mentioned turns the clock back pre-1992. How much does this cost vs maintaining the current unsustainable path ? It isn't sustainable there will have to be changes, tighter fiscal controls.

I guess the larger question to ask is does the EU without the euro command the same respect, relevance or collective bargaining power. The underlying idea was to become a more powerful entity.

Double Edge
13 Oct 11,, 23:55
I tend to agree with the venerable cyppok that the best scenario would have been for the French and Germans to leave the Euro so that the others could devalue. Problem is of course that Germanys current relative economic strength is built from exploiting the Euro to export their machinery and cars etc all over Euroland... The French have done the same thing with subsidised agricultural exports. In many ways these two want their cake and to eat it! If the others devalue the Franco German exports become too expensive and their relative strength declines. Thus Greece can't leave as this would set a dangerous precedent to their other European export markets. So bailing out Greece is a relatively small price for them to pay to keep their markets open.
Agree, so France & Germany will defend the euro as much as possible.


Loys of people knew this when they started the Euro, but if they had SAID that they wanted an USE the cyrrency would have been rejected. So they lied and emphasised the supposed 'economic benefits' - they also guaranteed that no bailouts would ever happen! The idea was to move 'incrementaly' towards full union so they never had to face a real public vote. So off they went on the lunacy of a single currency without fiscal union, which is partly why we are here now.
If there was no crisis then there is no need for anything approaching USE. So far you've had a gentleman's agreement.


Those who see the dark plots at every corner argue that this crisis, which was kind of bound to happen, was precisely what the 'Politeuro' was waiting for in order to force through this 'fiscal union'. Personaly I don't buy this 'conspiracy theory' and think they are just stupid.
Agreed, it sounds like one world govt conspiracy but the statements i mentioned came from EU ministers on a BBC world debate. The fiscal union bit was from an Italian.


The point is that fiscal union right now, as even kato conceeds, would entail total loss of sovereignty and no democratric accountability. To force this through without referendums is likely to cause massive rise of right wing/national support. To reform the European institutions and pass a new Treaty in each country by public vote would take 5-10 years.
yes, that will happen but how much does it cost to dump the euro ?

cyppok
14 Oct 11,, 13:59
EU as a trade union (which is what it was designed to be) and to a lesser degree defense/security treaty (ESDP and United armaments market nowadays)

Has the same political leverage and weight as now without the united currency and fiscal union.

It will remain an integrated market if the currency collapses, yes the overall arbitrage of goods across borders will have to be done due to forex effects, but most likely the firms that expanded across EU will adapt to the new reality and it won't be the end of the world it is portrayed by the banks holding debts out to be.

The cost to dump the euro will be enjoyed by each nation individually just like the benefits to join it were. Thus far the financial transaction tax and other gimmicks to hold up the euro are not tallied against its' benefits, nor is the cost of euro bureaucracy, and lower premium risk that helps sovereign but hurts overall investment into a country. UBS report about 50% costs of leaving Euro has quiet a few assumptions and is very biased.

I'll list some costs of leaving it.
1)~1%-2% is the forex transaction cost on other currencies for trade clearance

2)sovereign spreads will be higher so the sustainable national debt limit is lower (which is a good thing) but because those spreads are higher private investment from inside and outside will be larger since risk premiums on investments will induce more investment. Ergo if the building costs 10 million euro and gives a 5% return and it costs 10 million drachma and provides a 10% return. The cost of sovereign premiums is actually carried by both internal population (higher unemployment due to lower investment) and external population (Germany etc... lower unemployment and higher investment since risk-adjusted returns vis-a-vis the other country are higher)
The problem with this is that the benefits are stratified not only between sectors inside the country (government/private) but between countries.
ergo there is probably an 8% benefit (4% to greek gov't debt and 4% that would have been invested in Greece going to a different country due to risk adjusted returns, and an implicit -4% cost to greek business underinvestment.
~4% cost for risk premium carry

3) shock costs... these are variable and will probably last 1-2 years due to adjustments necessary. Different for everyone for some positive for some negative, ergo if Germany leaves and the mark appreciates while German debt denominated in Euro depreciates they effectively would owe less money and Greece would have this in reverse. The reality is Greece would default and not carry this cost into the future (weather it leaves the euro or not).
a) trade shock which would force enterprises to re-evaluate their costs based on new non euro prices would be most likely positive but the problem would be having a free-trade re-established with the other European countries.
b) fiscal/monetary shock insolvency of the Greek financial system, savings losses. Probably a percentage of what is in the system gets lost while what is out of it is spared some pain but not all of it.

cost of a
~ -5% to - 10% (50% private gdp going up by 10-20% due to) labor and other costs would collapse in a defaulted environment. Imports would also fall hurting both people inside the country but majority of the losses would be by other countries whom export to Greece. (yes this is actually a benefit because Greece has a huge fleet of ships and shipping costs would fall [labor component], also tourism would be more competitive since their currency would probably rapidly fall against the euro

~20-25% would be the gdp collapse due to 50% or so of the public sector getting fired. Since their public sector is 40-50% of economy loosing half would translate to 20-25% of gdp. (but these people would find something productive to do... in the non-government area) I also think that counting 'public service' as gdp growth is BS so in my reality this would simply eliminate dead weight costs in the country. But for the sake of argument lets say a fifth of gdp is "temporarily lost".

Ergo the honest cost of leaving euro is somewhere between.
15% to 26% for the first year and probably lower the year after that.
Most likely benefiting the country in the third year and some years after that as adjustments would have been made and investment pours more rapidly seeking returns.

P.S. (assumptions)
Greece would benefit from three things almost instantly in my view [tourism, shipping, and higher investment]

snapper
14 Oct 11,, 15:04
DE the underlying fallacy is, and has always been, the usage of financial arrangements and political goals and the interplay between the realism of the markets and the ideology of the political ambition... In a way it's the same old European views (the 'Anglosaxon' and 'French' models) again competing within a conjoined system. Let me explain what I mean and pls forgive the brief history.

The vert start of the 'European Project' and todays Europhiles was a political ambition; to stop another war between France and Germany basicly. If these two go to war then inevitably others get drawn in. Best way to do this is to tie their economies together. The logical extension is to bring others in and so tie ALL the economies together so closely that war becomes self defeating economicly. A very worthy goal but from the start it was using a financial means to achieve a political end. Granted this may cost a little more with subsidies for CAP etc but it's cheaper than war.

The 'Common Market' and free trade between member states is part of the old 'Anglosaxon' model (Britain has always been regarded in Europe as the 'champion' of free trade) which was seen to add to the integration mechanism and also the booast in trade should, in theory, offset the politicaly inspired subsidies that were needed to keep farmers and others happy (the UK rebate could be added). So far so good...

Then we got what I call the 'extremist Euro ideologues' who want to go far further (Mr Barroso is an example) and create a form of USE. Of course this was NEVER mentioned at the start as nobody would have got involved. Slowly the political ideologues of this 'New Europe' naturaly gravitated to the Commission - if you were an aspiring politician that believed in sovereign integrity then you wouldn't regard the EC as particularly relevant. Within the Commision the political goals therefore became the over-riding objectives, regardless of the economic or democratic consequences. Hence all the underhanded methods of getting a new Treaty passed; you can keep voting until you say 'yes' and then you can never vote again etc... The European Constitution gets redraughted as the 'Lisbon Treaty' so nobody can vote etc... It's a typical example 'French model' political 'top down' ideology, as if a new Napoleon were spreading a new enlightenment and is presented in much the same way. The politcal goal became all important.

For this form of extremist European the single currency is taking the 'Anglosaxon' free trade model into their own hands since it encourages free trade even more and logicaly ends with a centralisation of power within the Commission itself. Of course, because the goal is more 'sacred' than the means there is no need to tell people that this must be done in small stages. Thus they used the single currency as a financial means to their politcal goal.

Because of the primacy of the goal/ideology the Commission conspired in many instances if what can only be called financial FRAUD. Greece should never have been alowed to join the Euro, but the books were stamped as 'ok' as the goal is more important. The latest fraud was the 'stress test' of European Banks in July (http://stress-test.eba.europa.eu/pdf/EBA_ST_2011_Summary_Report_v6.pdf) according to which Dexia was safe... I believe they are now doing a 'revised' version but who is going to believe the next one?

When the Euro was launched nobody foresaw the 2008 credit crunch and the 'subprime' mortgage problem in the US was unknown. This cost alot of banks money but in Europe it's the banks that buy the Governments debts (more so in some than others) so they couldn't let the banks go and invested Government money in them on the promise of tomorrows revenue. Thus the 'sovereign funds'; the Government debts went up to cover the banks losses. Like having two balloons (that should slowly expand) linked, one suddenly loses air so the bigger one sends air to the one that might deflate. In theory they should both slowly start inflating again. In European terms 2008 hit UK Iceland and Ireland hardest but as all banks are interlinked all took losses and stop lending leading to recession. This brought on the soverign debt problem earlier than perhaps it might have been.

When others than the previously fraudulent Commission inspectors started looking at the Greek and others Banks they found they had large amounts of Government bonds (highest banks to Government debt holding is said to be Italy). Now if the banks aren't doing well we look at their assets, so their assets are Governments bonds - then how is the Government doing? Then the truth started to come out... the books that Greece and others had produced were nothing less than fraudulent. Strangely the Commission (who's own accounts haven't been 'signed off' for 16 years) never noticed! Of course not, they were in collusion of what ammounts to the single biggest fraud ever for polical reasons.

So then we get the bailouts, the 'one offs', the need to keep political ideal no matter what the financial problem. The idealism that this would be a 'one off' and the need for censoring those who say different... in the name of 'united front' they created a form of 'economic political correctness' where doubting the system or 'downtalking' is regarded as dangerous. It was damn obvious Greece 1 wasn't going to be the end of it but nobody was alowed to be honest, they all had to lie. Thus speech became a mechanism for the political agenda. I quote a part of a leaked letter: "I should stress it is not helpful for senior UK Ministers to make public statements setting timetables for us to “sort out” Euro and banking issues..." (John Redwood's Diary | Incisive and topical campaigns and commentary on today's issues and tomorrow's problems (http://www.johnredwoodsdiary.com/)).

So the political agenda has evolved from it's first worthy aims into a new form of dogmatic imperialism where the poorer nations such as Slovakia have lend to Greece etc who with the Commission collusion have broken all the rules. The markets have cottoned on to the frauds perpetrated for the ideology and the public picks up the bill for the frauds? Certainly the Borroso's of this world would have it this way.

Now they wish to borrow on the 440 billion Euro EFSF fund to raise 2 trillion Euros? Are they seriously insane? How can you attract lenders to give to a fund that will bail out precisely what they do NOT trust? The Commission wishes to tell Govenments what and how they can spend their money on? I prophecy rebellion will come from that. 'Protectionsm' is a word now openly spoken by politicians in France and elsewhere and unless the ideologues get off their high horses and revert to actualy making Europe profitable it is bound to happen. Finland and others (probably Slovakia) could profit from leaving the Euro... (for Finland see: Will Finland be the mouse that roars and be the first to leave the euro? - Telegraph (http://www.telegraph.co.uk/finance/comment/damianreece/8823138/Will-Finland-be-the-mouse-that-roars-and-be-the-first-to-leave-the-euro.html)). They couldn't admit their ideal of a fiscal union at the start of the Euro but now have to implement it or fail.

The problem is that the ideology overcame practicality, the Commission became unaccountable to the public and lived in an ideological dreamland because it was unaccountable. They defrauded the markets time and time again and are essentialy corrupt to the core, like an old version of the Soviet Union where you only 'get on' if you speak the 'Party line'. Free trade and the 'Anglosaxon model' became lost in a deluge of central dictacts - how many pigs can inhabit a certain space and the curve of a banana - and increasing subsidies - to farmers NOT to grow and to fishermen to throw their (now dead) catch back into the sea etc...

The insanity cannot last and yet they will try. It will not be long before the right wing nationalists start calling for protectionism and to be honest they will have a point. The political ideologues for the European project have defrauded markets and electorates. I hope they now back down before we all pay the cost of nationalist politics, but hey, we're already living under one form of dictatorship anyway. Can I vote now please?

DOR
15 Oct 11,, 04:11
In the last decade (or two), European (and other) MNCs built structures designed to take full advantage of the euro. The next decade (or two) will be spent dismantling those structures.

New financing.
New cash management.
New pricing.
New accounting.
New pension plans.
And, most of all, new risks.

tbm3fan
17 Oct 11,, 22:44
I've enjoyed reading this and have not participated since international finance is not my forte. However, there was an interesting person in my office today. Him and his wife are Greek. Him born in Romania and she in Greece. I asked him what he thought about what is happening over there and he just laughed. He said the place is SO corrupt that nothing will ever change. Reminds me that the Greeks taught the rest of the world how to be corrupt at all levels in society. Says that if Germany wants to give Greece more money they will gladly take it and siphon it off to their foreign bank accounts like all the other money. Assuming he speaks from some knowledge then why doesn't the EU just let Greece default and get on with it? It is not as though they will ever really bail Greece out anyway.

Double Edge
09 Nov 11,, 02:18
Apparently, there's a 250,000 pound prize up for grabs to anybody that can answer the question of how to manage the orderly exit of one or more member states from the European Monetary Union.


The prize is targeted at top academic economists from around the world by Policy Exchange, the London-based think-tank. Neil O’Brien, Director of Policy Exchange, said.

It is funded by Lord Wolfson of Aspley Guise, who is sponsoring the prize. He explained the motives behind the initiative:-

“There is now a real possibility that political or economic pressure may force one or more states to leave the euro. If this process is mismanaged it could threaten European savings, employment and the stability of the international banking system. This prize aims to ensure that high quality economic thought is given to how the euro might be restructured into more stable currencies.

Consideration will need to be given to what a post-euro Eurozone would look like, how transition could be achieved and how the interests of employment, savers, and debtors would be balanced. Importantly, careful consideration must also be given to managing the potential impact on the international banking system.”

The deadline for submissions will be January 31st, 2012. Entrants will be judged by a panel of leading academic economists.

Since its launch in 1999, the European Monetary Union has become the second most important currency in the world, with 15-20 per cent more euros than dollars in global circulation. The euro has major significance for market transactions, central bank holdings, pension funds, insurance companies and government agencies around the world.

Lord Wolfson said:

“The stakes are enormous. The future of the world economy will, in large part, be governed by what happens over the next few years in Europe. I, along with most European businessmen, hope that the Eurozone will stabilise, but in the event it does not Europe must not sleepwalk into a policy vacuum. This prize aims to incentivise the world’s brightest economic minds to help fill that policy void: their endeavours may well prevent Europe from descending into a financial chaos that would destroy savings, jobs, and social cohesion."

Launch of the £250000 Wolfson Economics Prize | Oct 18 2011 (http://www.policyexchange.org.uk/assets/Wolfson_PR_EN.pdf)

snapper
09 Nov 11,, 02:49
I have submitted my answer.

Doktor
09 Nov 11,, 13:18
Zeuro, the Euro for those who need devaluation ;)

27185
27186
27187
27188

dave lukins
09 Nov 11,, 13:27
I take it you are on the European side of Georgia. Do tell us why you are kicking sand castles over and a little more on Mikho. Then go to the Intro thread and kindly introduce yourself to the rest of our Members. :)

Doktor
09 Nov 11,, 13:32
Dave you can't be serious rofl

tankie
09 Nov 11,, 13:41
I have submitted my answer.

Me too , but im not expecting to win :whome:

snapper
11 Nov 11,, 14:06
The end of democracy?

Yesterday Greece had a new Prime Minister 'appointed'; Lucas Papademos. He's a banker (surprise surprise!); head of Greece's central bank from 1994 to 2002 and Vice President to Jean-Claude Trichet at the European Central Bank from 2002 to 2010. So much for referendums and democracy.

It seems a similar arrangement is likely to be implemented soon in Italy where a Mr Mario Monti ('super Mario' to his pals) is likey to take over from Berlusconi; "Mr Monti was made a life senator on Wednesday by Giorgio Napolitano, Italy's president, meaning that he will be able to vote in the Senate today for the first time." He served as a member of the European Commission between 1994 and 2004 and is the president of Bruegel, a European think tank he established in 2005.

The current phrase being used for this form of Government is a 'technocratic' Government. Seems pretty clear that both are firmly pro Euro; one a former ECB VP and the other a member of the Commission so perhaps they could also be described as 'Eurocrats'.

One thing is absolutely clear: Neither was elected!

What then is this new form of Eurocratic Government likely to be like? Well presumably the sole purpose of these new apponted men will be to make the cuts that their countries need to stay in the Euro so they will be Prime Ministers AND Finance Ministers. They may as not pay another salary to any finance minister as this is their sole raison d'etre. What about other Departments? It seems pretty clear that they have NO mandate for a new foreign policy for example, or housing, or energy, or transport, or military... Lets just take foreign policy: Suppose NATO committed a Syria no fly zone or a strike on Iran? Where would Greece and Italy stand? Well their Prime Ministers have no mandate to agree to disagree, to support or not to support any such action. Effectively their decision would dictated by the Commission and Baroness Ashton (the EU 'High Representative' who "in conjunction with the President of the European Council, speaks on behalf of the EU in agreed foreign policy matters and can have the task of articulating ambiguous policy positions created by disagreements among member states." (Wikipedea)). May as also sack the Foreign Affairs Minsters too then!

Given that these Gentlemen are NOT elected one obvious question is how can they be removed? Presumably NOT by election! They do not have a constituency nor do they sit in Parliament (although Monti is the equivalent of a Lord now). How can address their equivalent of the House of Commons? They can't! Would a vote of 'no confidence' therefore result in their removal? Presumably not since their authority derives not from the elected representatives of the people. How then can they be removed? I suppose in theory their authority derives from the Presidents of the Republics and they could remove them but it is quite clear that their authority is derived from the EU. I am tempted to ask if General Elections will now be cancelled and a 'state of emergency' imposed to prolong these fundama entaly dangerous Eurocracies but this may well be the future.

There is a name for this form of Government and it is NOT 'technocratic'. It is Imperialistic/'Viceroy' in its old form, 'Quisling' when applied to pro Nazi Goverments and Soviet/Commiterm when applied to the USSR. Undoubtedly each system claimed it was doing the best thing for the countries involved and the same claim is made now. Make no mistake though, democracy it is NOT. 71+ million people in Greece and Italy have effectively fallen to a new form of dictatorship within a week.

The question then becomes: Will the Eurocracies succeed where the democracies failed? I shall answer that later.

Doktor
11 Nov 11,, 14:20
Snapper,

IIRC there were no direct elections for Papandreou to be a PM. People usually vote for MPs, then those MPs vote the PM.

You wanna say there was no vote in the Greek parliament for the new PM?

snapper
11 Nov 11,, 14:25
He's NOT an MP!

Doktor
11 Nov 11,, 14:26
It has to be?

snapper
11 Nov 11,, 14:30
I cannot recall a Prime Minister of Britain who did not sit in Parliament, Lords or Commons. The last Lord was Lord Douglas Home in 1963.

Doktor
11 Nov 11,, 14:40
That would be less then 10 PM's in a row ;)

With the setting of the new Greek PM I don't see any breech in the procedures.

I got the feeling you have objections on that, that's my rant about.

snapper
11 Nov 11,, 14:48
There is even a name for the real rulers:

"It has been dubbed Europe's Politburo: a "self-appointed body of powerful individuals prepared to topple national governments if they fail to toe the line."

The so-called Groupe de Francfort came together last month at a party for the retiring chief of the European Central Bank, Jean-Claude Trichet.

They met four times at the margins of the G20 summit - and marked themselves out by sporting GdF lapel badges. But who are the "Groupe de Francfort"?


Angela Merkel
57, Germany
Position: German Chancellor since November 2005, re-elected in 2009 for another four years.
Democratically elected? Yes.
Qualifications: Elected to Bundestag in 1990, minister twice. President of the European Council and lead the G8 in 2007. Now the de facto leader of the EU.

Quote: It is time for a breakthrough to a new Europe. A community that says, 'Regardless of what happens in the rest of the world, it can never again change its ground rules’, that simply can’t survive. I’m convinced of this. Because the world is changing so much, we must be prepared to answer the challenges. That will mean more Europe, not less Europe.

Friends say: Europe's Iron Lady
Foes say: "La Boche" (Nicolas Sarkozy)

Nicolas Sarkozy
56, France
Position: President of the French Republic since May 2007, serving a five-year term
Democratically elected? Yes
Qualifications: Mayor of Neuilly-sur-Seine, Minister of Budget, Minister of Finance and Interior Minister. EU president during the 2008 financial crisis, pushing for G20 summits and financial regulation in the eurozone. Sent the first fighter jets to back Libyan rebels.

Quote: The consequences of a failure of the euro would be so cataclysmic that we could not possibly entertain the idea. We couldn't even play with the idea of entertaining the idea... Mrs. Merkel and I will never, never allow the euro to fail. Never will we allow the euro to be destroyed... The euro is Europe. Germany and France have known three barbaric wars. Now Europe is the most stable continent in the world.

Friends say: "The best man in the world" - Sameh Mahmoud, Libyan rebel fighter.
Foes say: "The King of bling bling" - the French press, for his love of exotic holidays and Rolex watches.

Christine Lagarde
55, France.
Position: Managing Director of the International Monetary Fund since July, for a five year term. Replaced Dominic Strauss Strauss-Kahn following rape allegations, of which he was later cleared.
Democratically elected? No.
Qualifications: Lawyer, chair of international law firm Baker and McKenzie, French Minister of Economic Affairs.

Quote: If we do not act, and act together, we could enter a downward spiral of uncertainty, financial instability, and a collapse in global demand. Ultimately, we could face a lost decade of low growth and high unemployment.

Friends say: "Is this the world's sexiest woman?" (The Guardian newspaper.)
Foes say: "Farcical" (Oxfam, because of lack of transparency in her IMF selection.)

Mario Draghi
64, Italy
Position: President of the European Central Bank since November, for an eight-year term
Democratically elected? No.
Qualifications: Economist with a PhD from MIT; lead the privatisation drive from the Italian Treasury and pushed the country into the euro. A vice president of Goldman Sachs, before being named head of Italy's central bank after the incumbant resigned in a corruption scandal.

Quote: It would be pointless to think that sovereign bond rates can stably be brought down for a protracted period by outside intervention. The first and foremost responsibility lies with national economic policies. Put your public finances in order.

Friends say: "Super Mario" (The Italian press)
Foes say: "Mama Mia! For Italians, inflation is a way of life, like tomato sauce with spaghetti." (Germany's Bild tabloid, on the idea of Draghi running the ECB.)


José Manuel Barroso
55, Portugal
Position: President of the European Commission since 2004, re-appointed for five years in 2009
Democratically elected? No
Qualifications: Portuguese MP since 1985, Foreign Minister, Prime Minister in 2002-04. Holds 21 honourary degrees.

Quote: All the European Union members should have the euro as their currency. The idea that we have two unions in Europe means disunion... It was an illusion to think that we could have a common currency and single market with national approaches to economic and budgetary policy.

Friends say: "Lots of ability, but no strong convictions on anything, and he's driven not by money, but by power." (Ana Gomes, Portuguese MEP.)
Foes say: "An unelected bureaucrat who is overseeing a system that is falling apart." (Douglas Carswell, Tory backbencher).

Herman Van Rompuy
64, Belgium
Position: President of the European Council since 2009, serving a 30-month term.
Democratically elected? No.
Qualifications: Belgian Senator, 1988-95, Representative 1995-2009. Prime Minister, 2008-09. Keen blogger and haiku writer. Opposed Turkish entry into the EU.

Quote: We have together to fight the danger of a new Euroscepticism... In every member state, there are people who believe their country can survive alone in the globalised world. It is more than an illusion: it is a lie... The biggest enemy of Europe today is fear. Fear leads to egoism, egoism leads to nationalism, and nationalism leads to war.

Friends say: "Furiously intelligent" (An EU diplomat)
Foes say: "An overpaid catastrophe" (Nigel Farage, Ukip leader.)


Olli Rehn
49, Finland
Position: European Commissioner for Economic and Monetary Affairs since 2010, serving a five year term.
Democratically elected? No
Qualifications: DPhil, Oxford; European Commissioner for Enlargement 2004-10; economic adviser to the Finnish PM 2003-04.

Quote: Let me be very blunt on this: It's either the EU institutions, according to our own rules, procedures and democratic accountability, or the market forces that will do the job. For me, as a committed European and a committed democrat, the choices are clear.

Friends say: "Purposeful. Serious. Not at all a typical glad-handling politician" (An EC official)
Foes say: "Low profile" (The Economist)


Jean-Claude Juncker
56, Luxembourg
Position: Chairman of the European Finance Ministers since 2005, reappointed four times
Democratically elected: Yes, as PM of Luxembourg
Qualifications: Prime Minister of Luxembourg since 1995. Minister of Finance 1989-2009. Owns a pinball machine.

Quote: Monetary policy is a serious issue. We should discuss this in secret, in the Eurogroup. I'm ready to be insulted as being insufficiently democratic, but I want to be serious... I am for secret, dark debates.

Friends say: "Highly regarded... he is a deep-dyed fanatical federalist" (The Economist)
Foes say: "Master of lies" (Austria's Der Standard)"

Eurozone crisis: who is pulling the strings in Europe? - Telegraph (http://www.telegraph.co.uk/finance/financialcrisis/8880766/Eurozone-crisis-who-is-pulling-the-strings-in-Europe.html)

snapper
11 Nov 11,, 14:52
That would be less then 10 PM's in a row ;)

With the setting of the new Greek PM I don't see any breech in the procedures.

I got the feeling you have objections on that, that's my rant about.

How do you unelect a non elected Prime Minister? Riddle me this...

Doktor
11 Nov 11,, 14:59
With a vote in the parliament. Same as usual.

This PM is "elected" as Papandreou was ;)

snapper
11 Nov 11,, 15:33
I cannot see how a person who is unelected by the public - is NOT an MP - can derive authority from a Parliament of MPs. It's a if the UK House of Commons voted for say Mitt Romney as Prime Minister - presuming ANYONE is elegible. In your Constitutional Theory they may as well have elected Barruso himself - or the Grand Patriarch of Bananaland. I suppose in theory ANYONE can command a majority within a Parliament. Normaly though we elect our MPs because they belong to a Party and the leader of that Party is candidate for Prime Minister. They therefore have a 'mandate'. If a similar procedure were to happen in the UK and the HoC suddenly go stark raving mad and elect 'John Smith of Nowhereinparticular' I think the Queen would constitutionaly be forced to call elections.

The very simple fact is that these MPs who have been more or less forced into this have NO MANDATE for their actions, nor do the new Governments have any public legimitacy.

I stupidly voted for Laura because she stood for the Party I belong to. I expected her to support David Cameron as Prime Minister and they said in advance (some of) what they would do. By and large my MP has done her job (sometimes too well for my liking!). If she suddenly went beserk and decided to elect 'John Smith of Nowhereinparticular' she would face a byelection within weeks as we'd deselect her. You elect your MPs because you have some idea of what they will support in Parliament - they have a mandate to this from you. Not so any longer in Greece and Italy. The link to democracy is lost when you defer from your mandate.

You say they can be ousted by a vote in Parliament? Who calls an election? The Prime Minister!

I predict 'Long Parliaments' for both these effective Dictatorships.

snapper
11 Nov 11,, 15:43
"Far-right politicians were given posts in Greece's new unity government on Friday, a first since democracy was restored in 1974 after the fall of an army dictatorship, an official statement said."

Makis Voridis, 47, the former leader of the Hellenic Front, was named infrastructure minister and will be joined by another three fellow members of the Popular Orthodox Rally (also known as the Laos party) who were given junior ministerial positions in the new cabinet formed under interim prime minister Lucas Papademos to save the country from bankruptcy.

BD1
11 Nov 11,, 18:44
does UK have a head of state that is elected on free, democratic elections, or even by members of parliament?

see, the way it looks like is that UK is quite far from any democracy as such, especially when one looks at british election system - you cannot claim that this is clear and well-understandable system

Presently, six electoral systems are used: the single member plurality system (First Past the Post), the multi member plurality system, party list PR, the single transferable vote, the Additional Member System and the Supplementary Vote.

people, rocks, glass houses, etc . etc.
:biggrin:

Doktor
11 Nov 11,, 19:09
I cannot see how a person who is unelected by the public - is NOT an MP - can derive authority from a Parliament of MPs. It's a if the UK House of Commons voted for say Mitt Romney as Prime Minister - presuming ANYONE is elegible. In your Constitutional Theory they may as well have elected Barruso himself - or the Grand Patriarch of Bananaland. I suppose in theory ANYONE can command a majority within a Parliament. Normaly though we elect our MPs because they belong to a Party and the leader of that Party is candidate for Prime Minister. They therefore have a 'mandate'. If a similar procedure were to happen in the UK and the HoC suddenly go stark raving mad and elect 'John Smith of Nowhereinparticular' I think the Queen would constitutionaly be forced to call elections.

The very simple fact is that these MPs who have been more or less forced into this have NO MANDATE for their actions, nor do the new Governments have any public legimitacy.

I stupidly voted for Laura because she stood for the Party I belong to. I expected her to support David Cameron as Prime Minister and they said in advance (some of) what they would do. By and large my MP has done her job (sometimes too well for my liking!). If she suddenly went beserk and decided to elect 'John Smith of Nowhereinparticular' she would face a byelection within weeks as we'd deselect her. You elect your MPs because you have some idea of what they will support in Parliament - they have a mandate to this from you. Not so any longer in Greece and Italy. The link to democracy is lost when you defer from your mandate.

You say they can be ousted by a vote in Parliament? Who calls an election? The Prime Minister!

I predict 'Long Parliaments' for both these effective Dictatorships.

Erm... isn't that the Speaker of the Parliament, the President of the state or the Queen in your case?

snapper
11 Nov 11,, 19:49
does UK have a head of state that is elected on free, democratic elections, or even by members of parliament?

see, the way it looks like is that UK is quite far from any democracy as such, especially when one looks at british election system - you cannot claim that this is clear and well-understandable system


people, rocks, glass houses, etc . etc.
:biggrin:

BD1: We elect our MPs to the House of Commons on 'first past the post' system. There was a referendum about this 5 May 2011 with the option being the Alternative Vote system. The overwhelming anwer was stay the same: change 6+ million; no change 13+ million. Democracy I call that! What they do in these so called 'Parliaments' and 'Assemblies' essentialy matters as much as Italian foreign policy to the EU. Scotland and Wales etc have NO decision in just the same way. ONLY the House of Commons and Lords can alter national policies and of course their MPs elected there can vote and influence such policies.

Can Italian or Greek MEPs vote and influence the Commission in a similar way? NO! If ALL (100%) of MEPs voted a motion of 'no confidence' in the European Commission they do NOT have to hold elections as they are 'appointed' by the 'European Parliament'. If a 'no confidence' motion is passed in the HoC Dok suggests we should NOT call elections as it's perfectly ok to appoint a dictator if the MPs agree. Is a win win for the MPs and the appointee! He promises them more perks and what have you abd he stays in power... a 'state of emergency' is called and elections 'delayed' and they are all happy changing constitutions (now happening in Italy: A constitutional amendment is foreseen for the elimination of one layer of government, i.e. Provinces.).

You realy want to try to tell me this is democratic? With all due respect if Britain ever goes this way I'd be the second Catholic in our history to try to ignite the Houses of Parliament and I'm sure I wouldn't be tried for treason.


Erm... isn't that the Speaker of the Parliament, the President of the state or the Queen in your case?

The Queen is our Head of State here but she calls elections when the PM says to. I understand the Presidents of Greece and Italy do much the same. A Greek friend of mine though says elections will be called in February... we shall see but I predict some 'emergency' will delay them.

Doktor
11 Nov 11,, 20:07
Snapper,

UK Parliament has this on their site (http://www.parliament.uk/about/faqs/house-of-commons-faqs/elections-faq-page/):


After the Fixed Term Parliament Act was passed on 15 September 2011, the date of the next general election is set at 7 May 2015. The act provides for general elections to be held on the first Thursday in May every five years. There are two provisions that trigger an election other than at five year intervals.

A motion of no confidence is passed in Her Majesty's Government by a simple majority and 14 days elapses without the House passing a confidence motion in any new Government formed
A motion for a general election is agreed by two thirds of the total number of seats in the Commons including vacant seats (currently 434 out of 650)

So it is not MY idea or suggestion. Just saying.

Doktor
11 Nov 11,, 20:22
7 billion are peanuts. That's only one quarter of the annual tax income generated in Slovakia. For comparison the German guarantee is at approximately three quarters of annual tax income. We should therefore demand that Slovakia guarantee at least 20 billion to bring them somewhat in line with those that really have to spend money for this.
Sorry to be one month late on this, just saw it.

kato, why would Slovakia give a dime of their tax income to the country they have no interest in whatsoever. It's mostly German and French banks that are head over feet in Greece. It's Germany and France deciding to "save" the Greeks.

snapper
11 Nov 11,, 21:51
Snapper,

UK Parliament has this on their site (http://www.parliament.uk/about/faqs/house-of-commons-faqs/elections-faq-page/):

So it is not MY idea or suggestion. Just saying.

This is a recent piece of legislation which was put in place essentialy to guarentee our current coalition Government. Should the coalition fall apart the law is repealed easily and should a Party gain an overall majority at the next election it is likely to be ammended anyway to alow the PM choice of when to call an election again.

However my origional point was not about democracy in Britain but in Greece and Italy - whether I am throwing rocks in glass house realy does not alter the arguement I have given: This is NOT about Britain; it's about non elected, and people with no mandate, taking power in Greece and (soon) Italy.

If you DO NOT regard this as dangerous precedent and dangerous for the peace of Europe long term then feel free to explain why.

Doktor
11 Nov 11,, 23:05
This is a recent piece of legislation which was put in place essentialy to guarentee our current coalition Government. Should the coalition fall apart the law is repealed easily and should a Party gain an overall majority at the next election it is likely to be ammended anyway to alow the PM choice of when to call an election again.

However my origional point was not about democracy in Britain but in Greece and Italy - whether I am throwing rocks in glass house realy does not alter the arguement I have given: This is NOT about Britain; it's about non elected, and people with no mandate, taking power in Greece and (soon) Italy.

If you DO NOT regard this as dangerous precedent and dangerous for the peace of Europe long term then feel free to explain why.

I was pointing UK as you were so surprised about what I am saying, that's all.

Let me see where along the path you find the problem...

There are elections.

People come out and vote. (In Greece the ballots are with names of persons, not with political parties), so in this case the citizens vote for a person (in theory).

You get MPs.

The head of state gives a mandate to whomever (s)he is convinced can convince the necessary number of MPs to back a Cabinet they will propose.

Then the mandatary proposes a Cabinet and goes in front of the Parliament for voting. If the prerequired majority of MPs vote "Yes" you get a Government ;)

Now you tell me how is it any different to have the vote after the GE or 2.5 years later? They are the same MPs who are OK to vote for the Government the first time, but not OK to vote for a new Government later.

The Government mandate is over, but the Parliament is still up and running.

What's more important in this case the Greek parliament formed a technical Government to organize free and fair elections and with a clear mandate to accept the austerity measures.

How is this dangerous for peace in Europe?

From what I understand you think people vote for parties and then you are surprised some party members not always vote as the party says.
What's the purpose of Parliament in that way. Once the elections are over there is no need to form a Parliament. The Party with most votes would form a Government and would govern the country in the next 4 (in UK 5) years. Is that a democracy in your view?

BD1
12 Nov 11,, 10:40
this is supposedly from BBC tweet :




Greece is collapsing, Iranians are getting aggressive & Rome is in disarray. Welcome back to 430 BC (BBC)

Doktor
12 Nov 11,, 14:05
It's a good rant, however I fail to connect the year with the events ;)

Mihais
12 Nov 11,, 14:32
Let's not forget the ''Carthaginians'' invading S Italy:cool:

But where are the Celts?

kato
12 Nov 11,, 15:01
kato, why would Slovakia give a dime of their tax income to the country they have no interest in whatsoever. It's mostly German and French banks that are head over feet in Greece. It's Germany and France deciding to "save" the Greeks.
Because Slovakia urgently wanted to join the European Union and the Eurozone. There's a German proverb for this. Mitgegangen, Mitgefangen, Mitgehangen. Hang together, hanged together.

Besides, the guarantee? No ones gonna tap that in full anyway. Perhaps 5%, perhaps 10%. It's not like it matters how much you promise in that regard.

kato
12 Nov 11,, 15:12
There is even a name for the real rulers:
Eurozone crisis: who is pulling the strings in Europe? - Telegraph (http://www.telegraph.co.uk/finance/financialcrisis/8880766/Eurozone-crisis-who-is-pulling-the-strings-in-Europe.html)
The Telegraph claiming that "la boche" is specifically Sarkozy's nickname for Merkel is quite facefault-worthy. Boche has been the derisive nickname for all Germans by all French since at least the 1860s (!). It's used as widely - and with a similar derisive meaning - as "Kraut" or "Fritz" in English.

snapper
13 Nov 11,, 20:02
It is dangerous as the new Prime Ministers were never part of the General Election plans put forward to the populace. They are more or less EU imposed. Will Spain be next I wonder? In essence democracy is becoming a 'luxury' that richer Euro nations only can afford. Basicly it is France/Germany trying to force southern Europe to be 'like them', notwithstanding that the Germans have profited vastly from lending to Greeks etc to buy German goods since the Euro was established. Now they want their loans back having already profited from selling so they are imposing 'loan payback' Governments.

"What you hear in the grandiose speeches of European leaders and the bumptious pronouncements of EU officials is precisely this: we have an ideal system which can guarantee infinite security and wellbeing, provided that everyone behaves in ways that are consistent with the rules of life as we describe them." There’s nothing new about this European folly - Telegraph (http://www.telegraph.co.uk/news/worldnews/europe/8886150/Theres-nothing-new-about-this-European-folly.html)

What if democracy is not consistent? The answer is clear; it must make way. The problem is Greece etc are fundamentaly democratic - they had to be to join the EU! But the EU's priorities have evidently changed so that Germany and others can get their loans repayed, that they freely gave. Now these countries cannot afford democracy, it is reserved for the creditor nations.

How long it will take these subjugated nations (for that is what they are) to repay the loans the EU happily colluded in giving them depends now on the centraly imposed new Governments. Welcome to the EUSSR... The chances are they will impose ever greater austerity and go, like Greece, into a death spiral. Changing people in charge doesn't change facts. Of course the longer the imposed Eurocrats take to repay the loans the more likely is a 'rebellion' - a democracy! Shock horror! So the creditor nations want their money asap which means means deeper cuts and death spiral.

Look there are basic facts underlying ALL this:

A. Some nations should NEVER have been alowed to join the Euro. I believe Sarkozy even said this of this Greece. Why was it? Because the EU and the Greeks colluded in a fraud the like of which has never been seen before. They did this because the Euro IS NOT an economic tool but part of a political idealism. (You kind of have to believe it to see it).

B. As a result of Germany being the biggest single Euro economy (and the French being scared stiff of a re-unified Germany) the Euro was set up along German lines. Thus the ECB is independant and is forbidden to print money to sort the current problems. Essentialy the Euro became 'Deutchemark 2'. Who profits? Naturaly the country most used to the system.

C. The countries that were least used to 'German economics' did well at first - cheap loans which they couldn't realy afford but lenders were happy to collude in this fraud also, after all they stand to gain!

D. Now we have the frauds exposed and still the people that profited from the structure they set up want their loans repayed.

E. In the meantime the EU and it's commission continues sending out 'drectives' (over 100k now!) and 'harmonising' our economies re bananas etc etc etc, paying farmers NOT to grow food and fishermen to put dead fish they have caught back in the sea. This 'Tobin tax' proposal on all stock trades is but the latest on their insane ideas on how the world should be.

The discrepenancy between reality and idealism was ALWAYS going to have crunch at some point and now we are sacrificing democracy for the idealists to continue their insanity and force others along a German inspired model. Hence Germany forbids ECB printing money and refuses more guarantees.

The job of the Eurocrats in Greece and Italy is nothing less than to make their countries into German look alikes - while also repaying the creditors. Otherwise funds are cut! This is continent wide case of having cake and eating it based on the creditors having colluded in the frauds that led them to this position - for an ideal!

Now I dare say there is much corruption and tax evasion etc in the southern countries and they would welcome a Government that deals with such problems. However Greece is expected to reach 120% debt to GNP ratio in 2020 (where they started at the time of first loan) and if Italy is forced the same medicine it is unlikely it too will recover before 2019, although they say 2014. Italian growth is forcast circa 0.5% next year which would mean cuts of another 2-3% at the very least.

These 'pseudo democracies' are unlikely to be short term therefore and may be joined by Spain next (supposed to be 20th this month). The coalition/unity Governments in ALL debtor nations until they realign to the German model can only offer austerity until the debts are secure. The risk of the downward spiral for ALL is clear.

Imposing Eurocrats in whatever guise and their austerity programmes is unlikely to be sustainable that long.

"What's more important in this case the Greek parliament formed a technical Government to organize free and fair elections and with a clear mandate to accept the austerity measures.

How is this dangerous for peace in Europe?

From what I understand you think people vote for parties and then you are surprised some party members not always vote as the party says.
What's the purpose of Parliament in that way. Once the elections are over there is no need to form a Parliament. The Party with most votes would form a Government and would govern the country in the next 4 (in UK 5) years. Is that a democracy in your view?"

I very much hope that the new Greek Government will hold elections in February, as I am told they plan. Otherwise the longer Government continues imposing it's ultra austerity programme (because that's what it's about) without a mandate for the new Prime Minister the greater the chance for civil disturbance/disobedience or even military coup or civil war. Governments and Parliaments acting without consulting the people are dangerous the longer they continue, particlulary when they forced to make cuts.

On your second question: A Parliament is there to act a check on the Executive: They are supposed stop any Government infringing too far on our freedoms. The Greek and Italian Parliaments have, in my opinion, failed in some of their duties. So no that it not my view, indeed as I said before I wish my own MP had voted against the Government in the recent referendum debate.

My point is that ultimately MPs represent the public. The Greek and Italian MPs have NOT asked the public.

Mihais
13 Nov 11,, 21:56
To be fair,Germany is right in not allowing ECB to print.Doing so would ruin theirs and France's AAA rating,meaning they go down as well.Logical solution would be to stop losses and split the EZ,but the eurocrats still have hope this can be avoided.Thus,trying to avert an economic crisis rollback the EU,they took the most comfortable course of action in the short run.The fact that this is the most dangerous in the long run likely never crossed their minds.

It wouldn't be bad for all countries to be run like Germany.But that's unachievable for many reasons.First being that Germany is still inhabited by Germans.

Doktor
13 Nov 11,, 22:07
I have tried to go point by point but gave up.

Mihais summed it up nicely.

snapper
17 Nov 11,, 15:50
"Now that Mario Monti has appointed himself Finance Minister of Italy as well as being Prime Minister (presumably because he couldn't find anyone he trusted for the job other than himself), how about head of the army and the police as well? Now that virtually all constitutional bets are off, what exactly is there to stop one man choosing to occupy all the most powerful governmental posts in that country?

And another question: what precisely are the mechanisms by which this temporary suspension of democracy will be brought to an end? I know that, in principle, the present rulers could be brought down by a vote of "no confidence" in the Italian parliament but that would precipitate chaos (which is why it is most unlikely to happen) not an orderly return to government by the people. I know too that at the moment there is vague talk of elections being held next year but will the present, unelected officials (running as a "technocrat party"?) be able to contest them? Has anybody thought through the next stage? When and how is democracy to be re-instated in the third largest economy of Europe? And if it is not re-instated in the near future, does that make a nonsense of the rule that a country must be a democracy to be eligible for membership of the EU?"

What is the schedule for the return of democracy? – Telegraph Blogs (http://blogs.telegraph.co.uk/news/janetdaley/100118016/what-is-the-schedule-for-the-return-of-democracy/)

Well I predicted that he'd make himself Minister of Finance as well as Prime Minister... next?

Mihais I am not arguing about whether the ECB should print money - that's a German/French arguement. My point is about democratic accountability.

As one of the comments to this blog says 'The lights are going out all over Europe.' (No it wasn't me!)

Doktor
17 Nov 11,, 15:56
"Now that Mario Monti has appointed himself Finance Minister of Italy as well as being Prime Minister (presumably because he couldn't find anyone he trusted for the job other than himself), how about head of the army and the police as well? Now that virtually all constitutional bets are off, what exactly is there to stop one man choosing to occupy all the most powerful governmental posts in that country?

And another question: what precisely are the mechanisms by which this temporary suspension of democracy will be brought to an end? I know that, in principle, the present rulers could be brought down by a vote of "no confidence" in the Italian parliament but that would precipitate chaos (which is why it is most unlikely to happen) not an orderly return to government by the people. I know too that at the moment there is vague talk of elections being held next year but will the present, unelected officials (running as a "technocrat party"?) be able to contest them? Has anybody thought through the next stage? When and how is democracy to be re-instated in the third largest economy of Europe? And if it is not re-instated in the near future, does that make a nonsense of the rule that a country must be a democracy to be eligible for membership of the EU?"

What is the schedule for the return of democracy? – Telegraph Blogs (http://blogs.telegraph.co.uk/news/janetdaley/100118016/what-is-the-schedule-for-the-return-of-democracy/)

Well I predicted that he'd make himself Minister of Finance as well as Prime Minister... next?

Mihais I am not arguing about whether the ECB should print money - that's a German/French arguement. My point is about democratic accountability.

You do realize there is a difference between ministry of economy and ministry of finance right?

Must ask again, what is unconstitutional? Italy AND Greece had technocratic govs in the past, Germany was behind those as well?

snapper
17 Nov 11,, 16:11
I never said that was the case in the past - when they had their own currency; then they had other options. Nor did I say it was necessarily 'unconstitutional', except in that the MPs themselves have no mandate for this.

Well this Monti chap is both PM and Minister of Finance and no I am not sure what the difference may be Dok. In the UK the Chancellor of the Exchequer sets taxes and dictates Civil Service cuts and pay freezes etc. He also 'negotiates' with other Departments over their funding and any cuts he requires them to make... this sets the economy no?

Doktor
17 Nov 11,, 22:36
I never said that was the case in the past - when they had their own currency; then they had other options. Nor did I say it was necessarily 'unconstitutional', except in that the MPs themselves have no mandate for this.
I think we have been inot what's MPs mandate.


Well this Monti chap is both PM and Minister of Finance and no I am not sure what the difference may be Dok. In the UK the Chancellor of the Exchequer sets taxes and dictates Civil Service cuts and pay freezes etc. He also 'negotiates' with other Departments over their funding and any cuts he requires them to make... this sets the economy no?


fi·nance/ˈfīnans/
Noun: The management of large amounts of money, esp. by governments or large companies.
Verb: Provide funding for (a person or enterprise).


e·con·o·my/iˈkänəmē/
Noun: The wealth and resources of a country or region, esp. in terms of the production and consumption of goods and services.


However somewhere in the past Italians merged both into one, you are right.