Greece and euro Crunch

**snapper** · 17 May 12,, 15:46

Well I have long been a 'euro-Cassandra' and guess what's happening? I have used only public sources and articles as reference but as David Cameron says it's 'make or break' time for the euro; the public articles pretty much reflect the private opinion of not only HMG but also other European Governments.

Well it has been confirmed now that Greece will have another election on June 17th (the 10th was ruled out due to school exams and schools are used as polling stations). Not unexpected; as DE kindly pointed out I predicted as much on May 12 (Marine Le Pen 'would beat Nicolas Sarkozy' in presidential election). Currently the Party poised to benefit most from this is Syria who recent polls suggest will get between 20-25% of the vote. See; Greece's anti-bailout SYRIZA leftists lead in poll | Reuters

The Political Side

This leads to a minor problem in Greek law. In Greece the largest Party gets a bonus of another 50 'free' votes/MPs. This is done (ironicaly) to promote stability. The problem is that Syriza is not a party as such but a coalition of Parties; Coalition of the Radical Left - Wikipedia, the free encyclopedia They do not as such qualify for the extra 50 'free' seats. The leader of the Coalition, Alexis Tsipras, has already mentioned that the law is unbalanced against coalitions but he would not have enough MPs to change it. There are alternative solutions - dissolve the 'coalition' and make a Party but this would take a Conference and there is not enough time to do this before June 17th. So the first problem is that in order to form a coalition Government the 'anti memorandum' Parties (excluding the 'neofascist' Golden Dawn who nobody will touch) need very close to 50% or more of the vote, which in effect means Syriza needs 28-30%. This they are unlikely to get.

Having said that Syriza have to stood gain most from the second election which naturaly has proved an obstacle in forming a Government this time around; basicly Mr Tsipiras and Syriza blocked any attempt to form a Government as they know they will benefit from another election - a dangerous game. This will NOT be the case after June 17th and Syriza's attitude will be more conciliatory as a third election would almost certainly turn against them. So around June 19th expect to see Syriza lead Government formed in Greece who's first moves will be toward changing the law so that Syriza may benefit from the extra 50 seats/MPs.

When Mr Tsipiras eventualy forms a Government he will claim, as he did on 10th May, that "The vote of the the Greek people on Sunday May 6th, (June 17th) delegitimizes politically the Memorandum of Understanding / Memorandum of Economic and Financial Policy...". HISTOLOGION: SYRIZA leader's second letter to Barroso et al. I did warn about this some time ago when the 'troika' first started talking about agreeing to the bailout memorandum before the elections; Has the Eurozone crisis been solved ? Presumably some form of renegotiation may be possible but the time for this would be limited as Greece will effectively run out of money in July. Also it is not at all clear that Syriza or IMF/EU/ECB will alow a softening of the targets. Greece is due to get another 30bn euro of bailout money in June but before this is payed they must make an additional 11.5bn euros of cuts... Impasse. Before the elections Syriza MP Theodoros Dritsas said "If we achieve a Left-dominated government, we will politely tell the Troika to leave the country, and we may need to discuss an orderly return to the Drachma".

Economic Aspects

Firstly Greece is now is a legal difficulty. During the talks about the second bailout in March one of the conditions for additional troika loans was that private investors take a 'haircut' amounting to a write off about 70% of their investments. Most investors accepted as they were told that this was the only option. Some however did not accept the 'haircut'. Some of these 'non haircut' investors were due a payment of 413m euros on May 15. Well of course Greece had no Government at the time but this bond was payed in full (aprox 450m with interest). This of course raises the question of whether the haircut was the 'only option' as the 'haircut investors' were informed. Legal cases are pending and interestingly the 'haircut bonds' were reconstituted in English law. Some rich lawyers in London soon.

Due to the French, German, British and everyone else's banks basicly getting their money out of Greece over the last year should Greece refuse the terms of the bailout and further troika funding be witheld leading to a second Greek default (and return to drachma) the face value of the losses would be relatively small. If the new Greek drachma devalued 50% against the euro the ECB/IMF/EU troika would be the biggest losers as the loans already made would, on the face it, devalue 50%. Realisticly they would have to be written off. When you hear that it would cost "the French taxpayer up to 66.4 billion euros and saddle the country's banking system with 20 billion euros in lost loans" (Cost to France of Greek euro exit 80 bn euro: Study - Economic Times) THIS is what they are talking about - the direct losses. Evidently such losses would depend on the value of a new drachma; should it devalue 75% the losses are greater.

There is another part to these calculations though that is unquantifyable and these losses are what might be called 'known unknowns'. The problem is that the euro is 'irreverseable'. There is not even a clause in any of the Treaties that covers leaving the euro; it is "uncharted territory" as David Cameron calls it. All we can say legaly speaking is that leaving the euro means leaving the EU under the Lisbon Treaty Article 50 (Article 50). This is first 'known unknown'.

The second is far more serious and this is 'contagion'. IF Greece does the impossible and leaves the euro then it is evidently NOT 'impossible' and may happen again elsewhere. Many investors believed the 'impossible' line and when this is this proved false they may very well look for safer places to invest than in Spain and Italy. Evidently we cannot know how many people will react in this way but we can be sure that some will. The result of this would be that Spain, Italy etc will find it increasingly expensive to borrow. Todays Spanish bond sale was successful but not sustainable long term. (Bonds due in January 2015 carried an average yield of 4.375pc, up massively from the last comparable auction in April, which saw an average of 2.89pc.Bonds due in July 2015 were even higher, at 4.876pc, compared with 4.037pc at an auction in May. Bonds due in April 2016 reached 5.106pc). Spanish 10yr bonds stand at 6.3 - 6.5%. If Greece leaves the euro in June/July the dam may well burst leaving Spain and others unable to borrow. When you hear estimates of 1 trillion euros as the cost of a Greece exist like "Euroland's €1 trillion question: after Greece goes, can Spain stay in?" Euroland's €1 trillion question: after Greece goes, can Spain stay in? - Telegraph etc will find it increasingly expensive to borrow. Todays Spanish bond sale was successful but not sustainable long term. (Bonds due in January 2015 carried an average yield of 4.375pc, up massively from the last comparable auction in April, which saw an average of 2.89pc.Bonds due in July 2015 were even higher, at 4.876pc, compared with 4.037pc at an auction in May. Bonds due in April 2016 reached 5.106pc). Spanish 10yr bonds stand at 6.3 - 6.5%. If Greece leaves the euro in June/July the dam may well burst leaving Spain and others unable to borrow. When you hear estimates of 1 trillion euros as the cost of a Greece exist like "Euroland's €1 trillion question: after Greece goes, can Spain stay in?" Euroland's €1 trillion question: after Greece goes, can Spain stay in? - Telegraph they are estimating the costs of 'contagion'. These estimates are unquantifyable; we cannot know how many investors will run in advance.

Against this the 'contagion' threat the EU/IMF/ECB has aprox 1.25 trillion euro to shore up any leaks. This 'contagion fund' is made up from 445bn euros set aside for EFSF/ESM use - that is european money for european bailout use. They can probably get the 'La Francaise' at the IMF to stump up another 250-300bn euros so say the IMF pay 300bn we have aprox 3/4trn euros to work with so far. They can also ask the ECB to intervene directly in the markets but only to lend to banks so add another 500bn and we have grand total of aprox 1.25trn euros to deal with 'contagion'. The IMF generaly will add 1 euro for every 2 that the EU can raise based on previous bailouts. Will this cover Spain and Italy? Certainly not; it would cover Spain just about fully or Spain a little and Italy a little - to buy time for more LTRO (ECB loans to banks) but a massive flight of capital at once it could not support. Of course we do not KNOW what the 'contagion cost' will be. This is gamble in 'Grexit'.

An additional problem that is 'built into' the euro system is what is known as 'Target 2 payments' (see TARGET2 - Wikipedia, the free encyclopedia). Here's the problem described by the BBC; "Here is a slightly simplified account of how this works: when someone takes 100 euros from a Greek bank and transfers it to the perceived safety of a German bank (which has been happening quite a lot), that Greek bank gets the 100 euros from the Greek central bank, which in turn borrows the money from the Bundesbank.Here is the thing. As of March of this year, the German central bank had 644bn euros of claims on other central banks, equivalent to a quarter of German GDP. These are euros owed to the Bundesbank by the central banks of the economies where there has been the greatest capital flight, names those of Greece, Italy and Spain.So if all of a sudden, Greece and Italy and Spain decided to revert to their national currencies, it is an interesting question how much (if any) of the 644bn euros the Bundesbank could get back." BBC News - Could the euro survive a Greek exit?

Now suppose 'Grexit' causes 'contagion' the flight of capital, be it large or small, heads north. The UK can already borrow more cheaply than at any time in history but is not bound by Target2 (it applies only within the Eurozone), German borrowing rate continues to decline both which indicate that capital flight to the north is under way. Likewise the euro has fallen against the $ and £ (which is not good for the UK). The worry is that Target2 payments may well collapse the system if Greece leaves the euro and a large 'contagion' occur. Essentialy the 'contagion fund' would be swallowed up correcting the capital flight in Target2 payments. Again this is part of the 'Grexit' gamble.

There are clear signs that this flight of capital has already begun; not only from the bond rates but on what amounts to a 'run on the banks' in Greece and Spain. Greek bank deposits "already down from €244bn (£195bn) at December 2009 to €171bn at the end of March, are now being withdrawn at the rate of around €3bn a week." Euroland's €1 trillion question: after Greece goes, can Spain stay in? - Telegraph This is an estimate and others estimate both lower and higher, all we can say is that people are taking money out of the banks.

The same is happening in Spain; "Spain denied a report in the El Mundo newspaper that customers had taken more than 1bn euros ($1.3bn; £800m) out of the bank, which is set to be part-nationalised, over the past week." BBC News - Bankia shares plunge again on worries over finances Of course if wasn't true when it was reported it probably is now and Bankia shares, a bank was that only last week part nationalised are down meaning losses for the Spanish Government. Alberto Gallo, head of credit research at Royal Bank of Scotland, told the BBC: "The problem is Spanish banks are too large for the government to bear all of their weight. You [the Spanish government] need to make a choice and just protect stronger banks, otherwise Spain will go the way of Ireland - having to do a lot of austerity and potentially incurring losses for bank bondholders." BBC News - Bankia shares plunge again on worries over finances Of course the more Spanish absorbs of the Spanish banks bad debts the greater the strain on the Governments borrowing... nor is Bankia the only Spanish bank with bad debt. Spain is having it's own 'sub prime' bubble burst and France will follow: "However rougher weather lies ahead: nationally French property prices could drop by 5% to 6% in 2012, forecasts Credit Agricole, which also predicts an 8% decline in sales. The pace of house price rises softened in the latest quarter." House Prices in France | French Real Estate Prices

To say that the future is uncertain would be an understatement. One estimate that has been leaked from the UK Government is for -5% growth in the event of euro breakup, it will be worse inside the eurozone. If this were true for all of the EU countries world trade and bank 'contagion' is inevitable.

For what it's worth I believe 'Grexit' in now inevitable, even if the terms of the bailout are relaxed you cannot get blood from a stone. We must then await the 'contagion' and pray that these foolish dreamers in Brussels who have lead us to this point divert all their resources not to saving their euro dream world but to decoupling the euro nations who they have undemocraticaly, unwisely and at times illegaly lead to this point. Sadly there is little hope of that.

Sorry it's so long...

**Double Edge** · 17 May 12,, 20:47

Originally Posted by snapper

When Mr Tsipiras eventualy forms a Government he will claim, as he did on 10th May, that "The vote of the the Greek people on Sunday May 6th, (June 17th) delegitimizes politically the Memorandum of Understanding / Memorandum of Economic and Financial Policy...". HISTOLOGION: SYRIZA leader's second letter to Barroso et al. I did warn about this some time ago when the 'troika' first started talking about agreeing to the bailout memorandum before the elections; http://www.worldaffairsboard.com/int...-solved-2.html Presumably some form of renegotiation may be possible but the time for this would be limited as Greece will effectively run out of money in July. Also it is not at all clear that Syriza or IMF/EU/ECB will alow a softening of the targets. Greece is due to get another 30bn euro of bailout money in June but before this is payed they must make an additional 11.5bn euros of cuts... Impasse.

I take it you predict that SYRIZA will win ?

Originally Posted by snapper

Before the elections Syriza MP Theodoros Dritsas said "If we achieve a Left-dominated government, we will politely tell the Troika to leave the country, and we may need to discuss an orderly return to the Drachma".

Heh, yeah right this is a veiled threat to the EU to acquiese or else...

We will see who blinks first

At best SYRIZA might get a concession on the austerity package.

Originally Posted by snapper

Due to the French, German, British and everyone else's banks basicly getting their money out of Greece over the last year should Greece refuse the terms of the bailout and further troika funding be witheld leading to a second Greek default (and return to drachma) the face value of the losses would be relatively small.

Why would a second default entail Greece returning to the Drachma ?

Michael Portillo went to Greece in the last show of 'This world', he interviewed a few Greeks and offered them a choice two money bills, Drachmas or Euros, all the Greeks chose the Euro.

You might have read this before but it points to the problems associated with leaving the Euro

What happens if Greece leaves the euro? | Guardian | Nov 03 2011

Verdict

There is no formal way for any country to leave the euro without amending the Maastricht treaty requiring national referendums in several member states. Greece could default and leave, or other members could withhold funds to force it out. Neither method is strictly legal and both are very messy.

Once out, Greece would convert its euros to a new currency, which would immediately and rapidly devalue as the central bank printed money to service its loans and pay its workers' wages and other bills. Preceding that there would almost certainly be a run on the Greek banks as people attempted to take their money out in euros to prevent them losing out through inevitable devaluation. One estimate by economists at UBS suggests a country such as Greece could lose 50% of its GDP in the first year of leaving the euro.

Economists argue that there is a scenario where a cheap new currency would give Greece an economic edge on its competitors. However, others point out that it could also be treated as a pariah state by its neighbours who might reject a fast buck on principle. Others argue that Greece has nothing to export, and its capacity for tourism is limited.

Across Europe, banks exposed to Greek debt face the risk of its defaulting on its payments to them. France and Germany are particularly exposed and could be forced to bail out their banks more than in 2008.

In the worst-case scenario, there is a threat of contagion prompting other weak countries (Italy, Spain, Portugal and Ireland) to leave the eurozone, meaning the euro would collapse. Exports across the eurozone would decrease and there would be a recession that could spread across the world to the US and China. However, there is also an argument that if Greece leaves unilaterally, rather than being forced out, it will be seen as the failure instead of the eurozone, which would also have more money to put into protecting Italy, the bigger economy and therefore risk.

Originally Posted by snapper

If the new Greek drachma devalued 50% against the euro the ECB/IMF/EU troika would be the biggest losers as the loans already made would, on the face it, devalue 50%.

I have a doubt about this, if ever there was a hint that Greece would go ahead their banks would face a run. That money will leave Greece. Greece will be the biggest loser (and is the primary reason to me why Greece will not quit the Euro).

See Dawn Holland's comment in the above mentioned Guradian link

The euros that are already out there in cash will remain in euros if Greece leaves the EMU. People will hold on to their euros as long as possible fearing devaluation of a new currency.

So ECB/IMF/Eu Euros are going to remain as euros. They won't lose their value, maybe a little hit but not more. That money will then be used to firewall other vulnerable countries like Italy.

Those that stand to lose with a Greece exit are those banks that have Greek exposure, see the spreadsheet in the guardian link. But of course they will quit before, this in itself should be reason enough for Greece to stick to the euro. because out of the euro they will be a pariah state. Who is going to lend to them. What do they make that gives them an advantage to survive if not thrive on the drachma. Tourism isn't enough.

Greece has suffered a massive no confidence vote, changing that perception in drachma land is going to be very difficult. A lot harder than sticking with austerity, at least that's the devil they know.

**snapper** · 18 May 12,, 00:30

Originally Posted by Double Edge

I take it you predict that SYRIZA will win ?

I predict a Syriza lead coalition; so do the opinion polls.

Originally Posted by Double Edge

Heh, yeah right this is a veiled threat to the EU to acquiese or else... We will see who blinks first

The 'Grexit gamble'... No indication of Germany 'blinking' nor Syriza; impasse.

Originally Posted by Double Edge

Why would a second default entail Greece returning to the Drachma ?

Because any second Greek default occurs after Syriza and 'troika' refuse to 'blink', the euro funding is cut off and in order to pay their army and other internal bills they must create a new currency - call it whatever you wish. The second default would occur because the bailout terms have not been adhered to and euro funding is stopped.

Originally Posted by Double Edge

I have a doubt about this, if ever there was a hint that Greece would go ahead their banks would face a run. That money will leave Greece. Greece will be the biggest loser (and is the primary reason to me why Greece will not quit the Euro).

Sir you are not listening/reading; the Greek bank run is ON. This is clear not only from the interest rates rising in southern europe and decreasing in the north but also in banks withdrawals in Greece and Spain; Greek bank deposits "already down from €244bn (£195bn) at December 2009 to €171bn at the end of March, are now being withdrawn at the rate of around €3bn a week."

Originally Posted by Double Edge

So ECB/IMF/Eu Euros are going to remain as euros. They won't lose their value, maybe a little hit but not more. That money will then be used to firewall other vulnerable countries like Italy.

You are correct with 'ECB/IMF/Eu Euros are going to remain' ; they are keeping Greece running at present. It remains to see if ANY repayment of the bailout funds will be possible and should it be so it certainly will not be a 'little hit' but more akin to the 'haircut' losses of 70% value of the orgional loans. When Greece goes bankrupt, which is what it would amount to, the investments, including the troika loans, become worthless. There is simply no way that the troika loans to Greece can be re-distributed to 'firewall other vulnerable countries' as a. the debts could not be 'called in' and b. the money cannot be in two places at the same time. Sure you can rob Peter to pay Paul, so to speak, some of the time but when both ask for their money you are left with a hole.

Originally Posted by Double Edge

Those that stand to lose with a Greece exit are those banks that have Greek exposure, see the spreadsheet in the guardian link. But of course they will quit before, this in itself should be reason enough for Greece to stick to the euro. because out of the euro they will be a pariah state. Who is going to lend to them. What do they make that gives them an advantage to survive if not thrive on the drachma. Tourism isn't enough.

The estimates for 'direct loss' from 'Grexit' vary. Many serious German and European bankers and politicians would agree that 'direct losses' could be sustained; thus the 80bn euro costs that some cite. This is the total capital investment remaining in Greece and keeping them going. If it were this alone everyone would wave goodbye to Greece and count themselves lucky. The problem is the unforseeable 'contagion costs'. Who will lend to them should they leave the euro? Guess who! Plans are already in place to give 'apres euro' funding to Greece which some wish all EU nations to contribute to and not just the eurozone. Many banks already have emergency mechanisms in place (Schaeuble Dares Greece Exit as Contingency Plans Start - Bloomberg) and the drachma is already listed on some traders books.

Originally Posted by Double Edge

Greece has suffered a massive no confidence vote, changing that perception in drachma land is going to be very difficult. A lot harder than sticking with austerity, at least that's the devil they know.

The euro 'has suffered a massive no confidence vote' and the perception is nigh on irreversable; the confidence is lost and the dam is close to breaking. We live in interesting times...

**Doktor** · 18 May 12,, 05:51

Originally Posted by snapper

I predict a Syriza lead coalition; so do the opinion polls.

The polls are changing. Greek poll shows pro-bailout conservatives leading | Reuters

The 'Grexit gamble'... No indication of Germany 'blinking' nor Syriza; impasse.

Because any second Greek default occurs after Syriza and 'troika' refuse to 'blink', the euro funding is cut off and in order to pay their army and other internal bills they must create a new currency - call it whatever you wish. The second default would occur because the bailout terms have not been adhered to and euro funding is stopped.

There might be no Syriza to blink in the first place.

Sir you are not listening/reading; the Greek bank run is ON. This is clear not only from the interest rates rising in southern europe and decreasing in the north but also in banks withdrawals in Greece and Spain; Greek bank deposits "already down from €244bn (£195bn) at December 2009 to €171bn at the end of March, are now being withdrawn at the rate of around €3bn a week."

Have you or anyone else thought that majority of the 'withdrawers' might be people who are jobless now, but have some savings?

You are correct with 'ECB/IMF/Eu Euros are going to remain' ; they are keeping Greece running at present. It remains to see if ANY repayment of the bailout funds will be possible and should it be so it certainly will not be a 'little hit' but more akin to the 'haircut' losses of 70% value of the orgional loans. When Greece goes bankrupt, which is what it would amount to, the investments, including the troika loans, become worthless. There is simply no way that the troika loans to Greece can be re-distributed to 'firewall other vulnerable countries' as a. the debts could not be 'called in' and b. the money cannot be in two places at the same time. Sure you can rob Peter to pay Paul, so to speak, some of the time but when both ask for their money you are left with a hole.

You still think there wont be any Euros printing. Either that or massive borrowings from elsewhere (Generally, BRICS and USA) - should it come to more troubles in Italy or Spain.

The estimates for 'direct loss' from 'Grexit' vary. Many serious German and European bankers and politicians would agree that 'direct losses' could be sustained; thus the 80bn euro costs that some cite. This is the total capital investment remaining in Greece and keeping them going. If it were this alone everyone would wave goodbye to Greece and count themselves lucky. The problem is the unforseeable 'contagion costs'. Who will lend to them should they leave the euro? Guess who! Plans are already in place to give 'apres euro' funding to Greece which some wish all EU nations to contribute to and not just the eurozone. Many banks already have emergency mechanisms in place (Schaeuble Dares Greece Exit as Contingency Plans Start - Bloomberg) and the drachma is already listed on some traders books.

Some traders never deleted the Drachma from their books, so it is impossible to list it now, so to speak.

The euro 'has suffered a massive no confidence vote' and the perception is nigh on irreversable; the confidence is lost and the dam is close to breaking. We live in interesting times...

After the dollar and the pound the euro will also face a correction of the price.
Well since Chinese wouldn't adopt the value of the juan, this is another way to do it

**Double Edge** · 18 May 12,, 12:17

Originally Posted by snapper

Sir you are not listening/reading; the Greek bank run is ON. This is clear not only from the interest rates rising in southern europe and decreasing in the north but also in banks withdrawals in Greece and Spain; Greek bank deposits "already down from €244bn (£195bn) at December 2009 to €171bn at the end of March, are now being withdrawn at the rate of around €3bn a week."

Does a drop by 40% of deposits over the course of two & a half years qualify as a run ?

Shouldn't the time period be much shorter than that.

It shows decreasing confidence sure, but what more than that.

**snapper** · 19 May 12,, 09:34

Originally Posted by Doktor

The polls are changing. Greek poll shows pro-bailout conservatives leading | Reuters There might be no Syriza to blink in the first place.

Originally Posted by Double Edge

Does a drop by 40% of deposits over the course of two & a half years qualify as a run ?

Sure we cannot know in advance the outcome of the next elections but if the money keeps leaving it matters not; the money will run out. Does it qualify as a 'bank run'? Well at the end of March there was €171bn in Greek banks (by some estimates). When this is decreasing at the rate of €3bn per week... Let's put it this way; there is no inward investment only money leaving so depending on how fast it is leaving and how long this continues is how long they have left.

Originally Posted by Doktor

Have you or anyone else thought that majority of the 'withdrawers' might be people who are jobless now, but have some savings?

Unemployed people do not have alot of money. I don't know how much they get payed in Greece but say €55 per week where unemployment is aprox 21% of a population of 11m... Of course the chances are that the unemployed do not have any 'savings' anyway bearing in mind that this is now 5th year of recession.

Originally Posted by Doktor

You still think there wont be any Euros printing. Either that or massive borrowings from elsewhere (Generally, BRICS and USA) - should it come to more troubles in Italy or Spain.

Euro printing is done by the ECB. Under the rules of the ECB it cannot lend directly to Governments, only to banks. This is has done under the LTRO plan where €1 trillion was lent (when DE believed the problem had been solved). This actualy enhanced the problem as the individual banks then invested in their Government bonds. Should they need to cash these in now the banks would face losses and the sovereigns collapse. Borrowing more to cover a bad debt and investing the money borrowed in declining stocks leaves more debt. In theory though yes the ECB could rerun the LTRO programme and 'buy more time'.

Borrowing from elsewhere, BRICS/USA etc, carries the same risk of leaving banks with greater losses as in the LTRO above. Nor is it clear other countries will wish to lend money. China has stopped buying European bonds (Chinese sovereign wealth fund stops buying European government debt - Telegraph) and although Obama has done alot of 'growth packages' the next few years on his fiscal plan is focused on reducing the deficit ('austerity'). They are discussing this at present at the G8 meeting but expect them to point the finger at Germany who they will argue should be 'doing more' etc... But again why should the Germans lend more money to Greece when they may not get the money back?

Originally Posted by Doktor

Some traders never deleted the Drachma from their books, so it is impossible to list it now, so to speak.

Correct. At present 1 drachma = $0, £0, €0 etc so IF Greece were to return to the drachma it would at least mathematicly appreciate in value!

Originally Posted by Doktor

After the dollar and the pound the euro will also face a correction of the price.

The value of the £ is increasing against the € which is not good at all for our exports.

More recently Moody's credit rating agency downgraded 16 Spanish banks; http://www.telegraph.co.uk/finance/f...t-in-full.html This makes it more expensive for Spanish banks to borrow. Also Ireland may need another bailout; http://www.telegraph.co.uk/finance/f...d-bailout.html

Remember when they said the euro was going to create wealth? It clearly is not doing and falling apart wherever you look. The system was faulty from the start and should NEVER have been alowed to go forward. Now it is clearly broken and there are two choices; continue to throw more good money after bad or scrap it, accept the pain and spend what money is left on something that does work. Apparently De La Rue are now preparing new dracma notes; http://uk.reuters.com/article/2012/0...84H0DH20120518

**Bigfella** · 19 May 12,, 11:48

Originally Posted by snapper

Apparently De La Rue are now preparing new dracma notes; UK banknote printer readies for Greek call - source | Reuters

Wow Snapper, this is thin even for the English press Well, not as thin as the Times claiming Greek soldiers would be patrolling the borders to kep Greeks in the country...but I digress. A company that prints money has a contingency plan in case Greece exits the Euro. And?.... The US military probably has contingency plans to invade Canada, Mexico & perhaps even the UK. We are still a ways away yet. Take another valium.

**snapper** · 19 May 12,, 12:10

Originally Posted by Bigfella

Wow Snapper, this is thin even for the English press Well, not as thin as the Times claiming Greek soldiers would be patrolling the borders to kep Greeks in the country...but I digress. A company that prints money has a contingency plan in case Greece exits the Euro. And?.... The US military probably has contingency plans to invade Canada, Mexico & perhaps even the UK. We are still a ways away yet. Take another valium.

With all due respect even the EU has now admitted it has plans for 'Grexit' (BBC News - EU plans for possible Greek exit from euro - official) and publicly admits it. In reality I am reliably informed new drachma notes already exist. As for the reports that 'Greek soldiers would be patrolling the borders to keep Greeks in the country' they would NOT be keeping Greeks in but keeping euros in and all 'Grexit' plans have this as a priority. You don't need me to explain why this would be necessary.

I do not take valium but if you wish to dream on... The rest of Europe has been dreaming for years which is why this wonderful new currency now poses a real risk to the world economy.

**Bigfella** · 19 May 12,, 13:09

Originally Posted by snapper

With all due respect even the EU has now admitted it has plans for 'Grexit' (BBC News - EU plans for possible Greek exit from euro - official) and publicly admits it.

Of course they do....and?

In reality I am reliably informed new drachma notes already exist.

Is that as reliable as your claims that Greece would be a military dictatorship by the end of the year?

As for the reports that 'Greek soldiers would be patrolling the borders to keep Greeks in the country' they would NOT be keeping Greeks in but keeping euros in and all 'Grexit' plans have this as a priority. You don't need me to explain why this would be necessary.

Not according to the Times - the soldiers were going to be stopping young Greeks from fleeing to the rest of Europe. Typically sober English media speculation. I guess if you make enough predictions about enough stuff you eventually get you claim you were right.

I do not take valium

Pity. Might help.

but if you wish to dream on...

I perfer to observe rather than engage in serial prediction.

The rest of Europe has been dreaming for years which is why this wonderful new currency now poses a real risk to the world economy.

There has been a lot of it about all over the world. Not least among the pro-austerity crowd who seem determined to purge us of our profligate ways with a cleansing double dip recession. Good for the soul & all that. No point getting excited until we actually know what is going to happen.

**Doktor** · 19 May 12,, 13:29

Originally Posted by Bigfella

Of course they do....and?

It's not good from psychological point of view, it shows it is a possibility, despite what everyone said that there is no legal way for it to happen.

Is that as reliable as your claims that Greece would be a military dictatorship by the end of the year?

When she said that? I remember she said the Euro was about to collapse till Christmas, but a junta?

Not according to the Times - the soldiers were going to be stopping young Greeks from fleeing to the rest of Europe. Typically sober English media speculation. I guess if you make enough predictions about enough stuff you eventually get you claim you were right.

Wasn't it The Guardian?
Anyway, on which border would the soldier stop the young people from fleeing? Turkish, Albanian, Macedonian or Bulgarian? We are still economically in worse situation then Greece.

Pity. Might help.

How? Will just postpone any possible problems.

I perfer to observe rather than engage in serial prediction.

You are on a safe distance. We have the same comfort when observing Chinese military expansion.

There has been a lot of it about all over the world. Not least among the pro-austerity crowd who seem determined to purge us of our profligate ways with a cleansing double dip recession. Good for the soul & all that. No point getting excited until we actually know what is going to happen.

Like the Jews in Germany during the '30s? Maybe I exaggerate, but being passive in a turbulent times was never a good option.

**snapper** · 19 May 12,, 15:09

Originally Posted by Bigfella

Of course they do....and?

Originally Posted by Doktor

It's not good from psychological point of view, it shows it is a possibility, despite what everyone said that there is no legal way for it to happen.

Thankyou Dok. BF it is one thing to have a plan but for the EU to admit it is a radical alteration of ground. There is no legal method to leave the euro. It was never imagined by the dreamers who planned it. Under Article 50 of the Lisbon Treaty only withdrawal is limited to EU withdrawal thus leaving the euro means leaving the eu. Well as it is now clear that the 'impossible' can happen (otherwise why are they making plans for such a thing?) then who else isn't safe?

Originally Posted by Bigfella

Is that as reliable as your claims that Greece would be a military dictatorship by the end of the year?

It's not a prediction, it's either correct or incorrect. I have yet to see a 'new drachma' so cannot confirm nor deny.

Originally Posted by Bigfella

I perfer to observe rather than engage in serial prediction.

Not a wise strategy for winning anything but it must be amusing to play you at pool. More seriously ALL planning (even in a pool game) is based on a series of predictions. If you were to 'univeralise' your 'observer only' along Kantian lines we would all starve.

Originally Posted by Bigfella

There has been a lot of it about all over the world. Not least among the pro-austerity crowd who seem determined to purge us of our profligate ways with a cleansing double dip recession. Good for the soul & all that. No point getting excited until we actually know what is going to happen.

I never argued that Greece should be forced into such extreme austerity. On the contrary had they let Greece go at the time of the first bailout it may by now be on a path to recovery - look at Iceland. The idiocy of the system is that structure makes this legaly impossible and so we have continued to invest more and more money in Greece and other nations and impose such stringent fiscal tightening that they can NEVER repay the debts. There is a town in Spain that is would require 7,058 years to repay its debts! (Spain's most indebted village pays the price of its profligacy - Telegraph) Greece and others all suffer from the same basic problem; a trade imbalance. Normaly this would be rectified by currency fluctuations but within the prison of the euro this is impossible. Let them go!

**BD1** · 19 May 12,, 18:20

the GREXIT noise from Brussels is IMO a ´leak´ meant for greek voters, and for those politicians, who hope to renogotiate the deals...

but, to be honest, i´m tempted to through snapper´s post´s, get ALLpredictions together and see, if i could ask her advice on lotto numbers or not. will have to wait till vacation though....

**snapper** · 19 May 12,, 19:12

More chance of profit on Greek bonds than lottery.

**Mihais** · 19 May 12,, 19:54

Originally Posted by BD1

the GREXIT noise from Brussels is IMO a ´leak´ meant for greek voters, and for those politicians, who hope to renogotiate the deals...

but, to be honest, i´m tempted to through snapper´s post´s, get ALLpredictions together and see, if i could ask her advice on lotto numbers or not. will have to wait till vacation though....

Bro,Grexit was a blasphemy until not so long ago.The high priests of eurocratian religion talking like this sound like Estonian SSR in 1990.

Predictions are like plans,they don't survive the first contact with the enemy.But the overall trend is what matters,IMHO.Individual events depend on too many variables and even the big boys can't ''predict'',but only make contingency planning for as many variables as possible.

**BD1** · 19 May 12,, 20:32

there has been lots of talk how the Brussels is conteplating sending a message to the greeks before the next election and how hard it is to keep it, so to speak, polite. this here fits this scenario perfectly.