Originally posted by Parihaka
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Europe, After the Euro collapse
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Those who know don't speak
He said to them, "But now if you have a purse, take it, and also a bag; and if you don't have a sword, sell your cloak and buy one. Luke 22:36
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Originally posted by Parihaka View PostI wonder what value of assets is automatically regarded as a crime now when border crossing in Europe? Were I to attempt to drive a Bugatti Veyron across the border for instance? Or a truckload of valuable paintings and antique furniture? Perhaps a valise stuffed with €500 notes?
Oh and I believe most countries have limit on notes you can put in valise and cross the border ;)No such thing as a good tax - Churchill
To make mistakes is human. To blame someone else for your mistake, is strategic.
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Originally posted by Parihaka View PostSince when is transporting your own gold a crime?sigpic
Win nervously lose tragically - Reds C C
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Actually, there are laws for everything you can think of bringing with you - gold, jewelry, arts, money...
Don't think cars are on the list, but good luck finding a full price buyer for Veyron or Rolls.
But then, you guys are blessed with a lot of Balcan immigrants who will bring you out whatever you need for a small fee. And on time, of course.No such thing as a good tax - Churchill
To make mistakes is human. To blame someone else for your mistake, is strategic.
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Originally posted by Bigfella View PostI think you are missing the important bit here Chogy. Embattled Italians are now being forced to smuggle their gold bars out of the country in order to keep them safe. This is unprecedented! That poor, honest Italians have been reduced to such criminality is a savage indictment of the eurodictatorship & its devastating impact on a nation where such criminaity was previously unknown.
No doubt they are trying to get the gold out before those troops Snapper keeps talking about arrive to seal the border & prevent Italy leaving the single currency. Having previously assured us that drachmas had already been printed ahead of the 'Grexit' & predicted that the Greek army would be deployed to stop Greeks from fleeing the country her insights into such matters are not to be scoffed at in the manner you have just done.
On the Greek Drachma; From June 1 2012 "We're looking into this, but we can confirm: There's something called the 'Greek Drachma (post Euro)' that's shown up on the Bloomberg terminal."
See; XGD Greek Drachma Bloomberg - Business Insider and links there.
As to the Greek army I recall only noting that some senior Officers had been retired early. I also pointed out that if Greece did leave the euro some form of capital controls (like Cyprus) would have to be imposed.
The point about Italy is should they vote to leave the euro - and a second election looks increasingly likely - there is NOTHING the EU could do.
Originally posted by astralis View Postas i said, the optimal scenario at this point in time is to let go of the small nations with weak balance sheets, because they create a ripple of instability across the rest of the euro zone.Attached Files
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Originally posted by snapper View PostI never claimed that Italy was crime free but if we are to 'tax' bank accounts in any country on the suspicion of 'organised crime' many honest people would be hurt.
On the Greek Drachma; From June 1 2012 "We're looking into this, but we can confirm: There's something called the 'Greek Drachma (post Euro)' that's shown up on the Bloomberg terminal."
[ATTACH=CONFIG]32603[/ATTACH] See; XGD Greek Drachma Bloomberg - Business Insider and links there.
As to the Greek army I recall only noting that some senior Officers had been retired early. I also pointed out that if Greece did leave the euro some form of capital controls (like Cyprus) would have to be imposed.
The point about Italy is should they vote to leave the euro - and a second election looks increasingly likely - there is NOTHING the EU could do.
Anyways, keep up the good work. it encourages Astralis to use his debating skills (until he follows Tarek & tires of it) and you give me a laugh. I have no doubt some of what you say is true. Given the amount you post & the scattergun apporach it would have to be. I'm simpy not patient enough to double & triple check every one of your assertions to work out which are actually true. Absent that, as I said, I'm treating it as a form of performance art.sigpic
Win nervously lose tragically - Reds C C
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Originally posted by Bigfella View PostYou explicitly linked Italians being caught carrying gold bars across the border with the current crisis. I don't know how many 'honest people' in Italy transport large gold ingots in cars across borders, but I'm betting that they are few & far between. The most sensible assumption would be that it was some sort of criminal activity, but if you always plumped for 'sensible' you wouldn't be half as much fun.
Originally posted by Bigfella View Post....and this was the basis for you claiming that drachmas had already been printed? Looks like a bit of short-lived speculation to me. Any tips on the printing company involved? The country they were being printed in? Designs? .......didn't think so. Well, at least you are consistent.
Originally posted by Bigfella View PostYou recall wrong.....again. You talked very specifically about the Greek army being used to keep Greeks from leaving. This was yet another of your predictions, though probably not one of the ones on which you based your claim to be a 'Euro Cassandra' (for the record, you are only half way there at best).
Originally posted by Bigfella View PostDidn't you say in one of your Cyprus rambles tha tther is no mechanism for leaving the Euro? Isn't that just one more thing that makes the evilsocialisteurodictatorship such a horrible thing - there is no way out?
Originally posted by Bigfella View PostAnyways, keep up the good work. it encourages Astralis to use his debating skills (until he follows Tarek & tires of it) and you give me a laugh. I have no doubt some of what you say is true. Given the amount you post & the scattergun apporach it would have to be. I'm simpy not patient enough to double & triple check every one of your assertions to work out which are actually true. Absent that, as I said, I'm treating it as a form of performance art.
Originally posted by astralis View Postperhaps you'll be surprised, but i agree with you fully here. the EU is essentially an anti-democratic project. at its core, it's an attempt by european elites to turn a common currency union into a political union...all with very, very shallow support (at best) of the people in the nationalities involved.
and now we see what happens when economic/political priorities become mismatched.
The good thing is that Cypriots are going to have another vote, much to the horror no doubt of the EU. Cyprus bail-out vote stirs fresh jitters as slump fears grow in Europe - Telegraph
Perhaps though you would care to explain why you seek to act as an apologist for this insanity? It's all very easy to snipe from the sidelines but I would be interested a decent defence of their economic and political policy should you care to give one.
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Good discussion going on here, folks. Mind if I jump in?
The assumptions are crucial, so start there.
1. If exiting the euro is a no-go, the alternative is to reduce wages and prices to the extent necessary to restore competitiveness. Since the two move together, relative domestic purchasing power is broadly maintained. And, since wages become internationally competitive, employment improves. The main losers are companies that import for the domestic market.
The problem is that this only works if the economy has low levels of debt; otherwise, the increased debt servicing costs lead to default or further depression. That’s why it worked for Hong Kong in 1997-2004: no debt.
2. If exiting the euro is an option, there is an entire world of transactions that will need to be revised. Auto-pay, insurance policies, letters of credit and of course all kinds of debt from household and credit card to commercial paper and mortgages. One option is to convert everything at once, at the same rate. That works for some instruments, but not for others where the repayment is cross-border.
Very complex, and expensive. Future transactions of all kinds will have built in to the price some sort of hedging against future exchange rate adjustments. And, of course, you need to establish what the new regime will be: link, float, manipulated basket, etc.
3. Defaulting is a well-worn option, and one that doesn’t get nearly enough attention. Companies do it all the time (Chapter 11), households less often. When governments do it, the main disincentive is that future borrowing will be either unavailable or very expensive.
In the current situation, that’s not much of a threat.
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Options 2. and 3. above run a serious risk of contagion. If one goes (exit or default), perhaps not Cyprus but a larger economy such as Greece, the risk of others following suit will rise dramatically. Markets will react accordingly, complicating any hope of preventing what will be the sovereign equivalent of a run on one bank leading to runs on others.
The best bet might be for 1-3 economies to be allowed to default or exit as a group, with credible guarantees of (a) further funding to help them back on their feet; and (b) very firm assurances backed by stacks of hard cash to convince the markets that this isn’t going to be the start of a wholesale collapse of the EuroZone.
Next, the remaining EuroZone economies reclaim sovereignty from the markets by installing a EZ-wide Finance Ministry with powers to reject or amend national budgets.
Note that this sovereignty was abandon long ago, but the story needs to be carefully understood (told to politicians and voters) for the EZ-Finance (catchy, no?) to be accepted. As we’ve seen, monetary union without fiscal union is an accident waiting to happen. Understanding that takes immense political courage.
IMHO, of course.
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Parihaka,
Moving more than a certain amount ($10,000 or maybe €10,000) across borders without proper documentation is a crime in most places. Do the paperwork, and everything’s fine.Trust me?
I'm an economist!
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Originally posted by DOR View PostGood discussion going on here, folks. Mind if I jump in?
The assumptions are crucial, so start there.
1. If exiting the euro is a no-go, the alternative is to reduce wages and prices to the extent necessary to restore competitiveness. Since the two move together, relative domestic purchasing power is broadly maintained. And, since wages become internationally competitive, employment improves. The main losers are companies that import for the domestic market.
The problem is that this only works if the economy has low levels of debt; otherwise, the increased debt servicing costs lead to default or further depression. That’s why it worked for Hong Kong in 1997-2004: no debt.
2. If exiting the euro is an option, there is an entire world of transactions that will need to be revised. Auto-pay, insurance policies, letters of credit and of course all kinds of debt from household and credit card to commercial paper and mortgages. One option is to convert everything at once, at the same rate. That works for some instruments, but not for others where the repayment is cross-border.
Very complex, and expensive. Future transactions of all kinds will have built in to the price some sort of hedging against future exchange rate adjustments. And, of course, you need to establish what the new regime will be: link, float, manipulated basket, etc.
3. Defaulting is a well-worn option, and one that doesn’t get nearly enough attention. Companies do it all the time (Chapter 11), households less often. When governments do it, the main disincentive is that future borrowing will be either unavailable or very expensive.
In the current situation, that’s not much of a threat.
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Options 2. and 3. above run a serious risk of contagion. If one goes (exit or default), perhaps not Cyprus but a larger economy such as Greece, the risk of others following suit will rise dramatically. Markets will react accordingly, complicating any hope of preventing what will be the sovereign equivalent of a run on one bank leading to runs on others.
The best bet might be for 1-3 economies to be allowed to default or exit as a group, with credible guarantees of (a) further funding to help them back on their feet; and (b) very firm assurances backed by stacks of hard cash to convince the markets that this isn’t going to be the start of a wholesale collapse of the EuroZone.
Next, the remaining EuroZone economies reclaim sovereignty from the markets by installing a EZ-wide Finance Ministry with powers to reject or amend national budgets.
Note that this sovereignty was abandon long ago, but the story needs to be carefully understood (told to politicians and voters) for the EZ-Finance (catchy, no?) to be accepted. As we’ve seen, monetary union without fiscal union is an accident waiting to happen. Understanding that takes immense political courage.
IMHO, of course.
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Parihaka,
Moving more than a certain amount ($10,000 or maybe €10,000) across borders without proper documentation is a crime in most places. Do the paperwork, and everything’s fine.
David, I may not always agree 100% (or even 1%) with you but I always value your opinions.
So let me start from the bottom up as historically you end where the euro started;
Originally posted by DOR View PostAs we’ve seen, monetary union without fiscal union is an accident waiting to happen.
As for the rest of your comments they depend on the vital question; can you leave the euro or not? In euro - theory you cannot leave; the "process" (as it's referred to) is "irreversible". Only under Article 50 of the Lisbon Treaty can you negotiate an exit from the EU (see Article 50). It is a moot point as to whether leaving the euro necessarily entails leaving the EU. Since the euro is supposed to be "irreversible" some suggest that leaving the euro would neccessarily entail leaving the EU via Article 50. The simple fact is that we don't know the legal implications because it hasn't been done yet. That is about where the legal ideas end and of course they can be broken or ignored or changed anyway as they have been repeatedly.
Economically let us suppose your "best bet";
Originally posted by DOR View PostThe best bet might be for 1-3 economies to be allowed to default or exit as a group, with credible guarantees of (a) further funding to help them back on their feet; and (b) very firm assurances backed by stacks of hard cash to convince the markets that this isn’t going to be the start of a wholesale collapse of the EuroZone.
Firstly ONLY if they in some way remain 'members' can we expect your suggestion "(a) further funding to help them back on their feet." In effect they would have to promise to return to euro to make it worthwhile for the remaining members, who would be losing their markets and taking a loss due to their devalued exports into the EU, to continue funding them.
Secondly your condition (b) "very firm assurances backed by stacks of hard cash to convince the markets that this isn’t going to be the start of a wholesale collapse of the EuroZone" - the threat of 'contagion' is really what you are referring to. This is a very real problem since it is obvious that should one country (say Greece) leave the euro and even the EU the benefits would very soon outweigh any downside (just imagine their tourist trade increase). Since you cannot stop other countries following suit should they chose to would it be wise to provide "further funding to help them back on their feet" as you may well find yourself creating an incentive to leave? "Stacks of money" won't stop a determined Italian, Portuguese or even French electorate wishing to enjoy the benefits of those 1-3 economies of your "best bet".
Thirdly what happens to loans already made? How are they repayed or are they 'written off'? Let's say the debts still have to be payed in euros; well clearly the repayment schedule would have to be revised so who makes up the difference in the meantime? The ECB monetises it? Against the rules but possible I suppose... The more that leave the greater this problem becomes.
Fourthly to return to problem of a future relationship with EU should '1-3 economies leave'; if they can continue to trade freely within the EU the other remaining members make losses. Presumably then some tariff would be insisted on their exports to the EU proper. But any tariff on their trade would be counter defeating and merely act to devalue their currency further thereby negating the value of the tariff. 'Contagion' would long term become inevitable as this became apparent.
Roger Bootle of Capital Economics won the Wolfson Prize for his 'Leaving the euro: A practical guide' which you can find on pdf with a google search or a short 'summary' here How to Leave the Euro: A Guide (Part I) You will note that one of the problems he foresaw was the necessary imposition of capital controls "troops stopping Greeks leaving with money" in BigFellas exaggerated mistatement of what I previously said some time before Bootle. Since capital controls are now imposed in Cyprus in contravention of the rules presumably this problem would no longer apply. In many ways Bootles guide was that used in the Cyprus 'bail in'. It's unlikely that he'll get - or want - any credit for that though.
In the greater scheme of things many have said that 'best bet' to deconstruct the euro would be for Germany or perhaps a 'German bloc' of say Germany, Holland and Austria to leave the euro and then let the others devalue. The exports of the 'Northern Bloc' would continue and pick up and some form fiscal restraint could be imposed on the devalued euro zone. However that naturally defeats the political objective of the euro... and therein lies the real problem: The euro is not an economic project in essence but a political one. The French thought they could control a re-unified Germany through a currency union that ultimately leads to 'pooled sovereignty'. Well it turns out that 'pooled sovereignty' in a currency union means only the principle creditors get a say. Of course to tell the French and the UK FCO that all their well applied theories and -isms on which they have been banking for years have proved worthless meets with the same rejection as was shown to those who said that "monetary union without fiscal union is an accident waiting to happen", though this they now accept. Ergo the ONLY option left is that you mention first:
Originally posted by DOR View Post1. If exiting the euro is a no-go, the alternative is to reduce wages and prices to the extent necessary to restore competitiveness. Since the two move together, relative domestic purchasing power is broadly maintained. And, since wages become internationally competitive, employment improves. The main losers are companies that import for the domestic market.
Originally posted by DOR View PostThe problem is that this only works if the economy has low levels of debt; otherwise, the increased debt servicing costs lead to default or further depression. That’s why it worked for Hong Kong in 1997-2004: no debt.
In my view it is almost inevitable that sooner or later one country will see the benefit of unilateral default - Chapter 11 in your terms. World markets have a short memory and if the devaluation is managed effectively - and let's face it a devaluation of a currency you control is long term far more profitable than the 'internal devaluation' being imposed by a supposed 'troika' - the prospects at the end are far better is what I mean, then there is no reason that markets should reject them. If Greece left today and returned to drachma with capital controls etc a la Bootle it could rely on IMF loans alone rather than 'troika' for another 1-3 years before it could borrow on the markets again on the strength of the drachma itself. It would regain sovereignty (or the appreciation of the vote) and face a far brighter future in my view. As for the loans... well the Greeks are preparing a case against Germany for war reparations - strange but apparently true. The Germans might also remember the London Agreement of 1953 Agreement on German External Debts - Wikipedia, the free encyclopedia In my opinion any country that leaves would have a fair case to make for repudiating any debts incurred/loans made since they became insolvent since they were made under duress. I'd be more than happy than happy to fight the case for years as my debt devalued. Once they leave the problem isn't theirs basically; if you owe the bank £1 it's your problem. If you owe the bank £1m it's the banks problem... I assume you know that saying.
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snapper,
Nations are sovereign; declaring the euro no longer legal tender, and replacing it with post-it notes is within their rights. Yes, it violates treaty obligations, but that’s not unprecedented.
The EU provides billions in annual aid to, say, Africa. Why in the world would they balk at prevent state failure on their own border? OK, Bosnia . . . it has happened before. But, twice? And, three states at once? Worst possible response if the EU wants those states to become productive once again.
The French won’t exit unless the Germans do. Surely you understand that.
I dealt with private repayments in my post: huge problems. As for sovereign debt, default is the best option.
Continued free trade shouldn’t be a problem, as implementing customs restrictions would be both expensive to the importers and counterproductive for the objective of getting your neighbors back on their feet.
I’ve read Bootle; writing that gets people’s attention generally involved over-the-top “troops stopping people” sort of comment. Still, good stuff.
The IMF disagrees with my analysis? I must be on to something!Trust me?
I'm an economist!
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Originally posted by DOR View Postsnapper,
Nations are sovereign; declaring the euro no longer legal tender, and replacing it with post-it notes is within their rights. Yes, it violates treaty obligations, but that’s not unprecedented.
The EU provides billions in annual aid to, say, Africa. Why in the world would they balk at prevent state failure on their own border? OK, Bosnia . . . it has happened before. But, twice? And, three states at once? Worst possible response if the EU wants those states to become productive once again.
The French won’t exit unless the Germans do. Surely you understand that.
I dealt with private repayments in my post: huge problems. As for sovereign debt, default is the best option.
Continued free trade shouldn’t be a problem, as implementing customs restrictions would be both expensive to the importers and counterproductive for the objective of getting your neighbors back on their feet.
I’ve read Bootle; writing that gets people’s attention generally involved over-the-top “troops stopping people” sort of comment. Still, good stuff.
The IMF disagrees with my analysis? I must be on to something!
I agree that default is by far the best option... Iceland basically did it and Greece didn't. Who's better off now? I wonder why you don't propose this option for the US or Japan?
As for the IMF... A total shower of diverging opinions at any one time. They remind of the Roman God Janus (from whom we get January) who had two heads; one looking into the past and one looking into the future and ne'er the twain shall meet. The only decent thing they have done is admit that they got the fiscal multiplier wrong. Did anyone resign? Get prosecuted perhaps? Not a hope...
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Originally posted by snapper View PostThere was a Greek Prime Minister who suggested that the Greeks hold a referendum on 'troika' terms... Within less than a month he was out and former EU Official was appointed 'technocrat' Prime Minister of Greece. So much for 'sovereignty' in post democratic Europe. The 'political class' (of which Cameron is a prime example) and the bankers have basically done a deal; forget democracy or sovereignty. Exactly the same in the US...
Yes yes, I know, bad old BF & his ad hominems strikes again. Poor Snapper.
The impression you are trying to create with this curious version of events is that the EU is somehow interfering directly in the political process to remove national leaders & is then effectively suspending democracy. That must be why your account is so sparse on detail....like the election that soon followed. Allow me to fill out some of the detail.
Papandreou did indeed propose a referendum in late October 2011. It was strongly opposed by a number of people and groups - not least senior figures within his own party. You left the distinct impression that him being 'out' was somehow connected to some EU diktat because he threatened the 'troika'. In fact, it was quite the reverse. His decision to resign was part of a bargain to call an election, form a government of national unity with the opposition and thus force the opposition to agree to the terms of the bailout. he knew he was going to lose the election anyway, so he used what little power he had left to achieve what he thought best for Greece.
At the time I posited that the threat of a referendum that would produce a result exactly opposite to what Papandreou wanted was actually an attempt to force the opposition to unequivocally back the bailout rather than have them posture against it at the next election. Given what followed I'm backing my analysis ahead of yours, especially given that you have just tried to sell us an account that gives an impression strongly at odds with events. That Greek PM favoured the troika's plan rather than opposing it. He left office in order to guarantee that the bailout got done rather than being outed because he posed a threat.
The former EU official - Lucas Papademos - took the role of PM of a national unity government of both major parties on the understanding that it would be a short term position. It was. He stepped down at the scheduled election in May 2012 and did not return to the post even when the election produced no clear result. After a further election the opposition was able to form a majority and Greece had a new government. Greeks had the opportunity to elect an anti-bailout government. They did not. Neither did Italians at elections a few months ago. Polls in Greece at the time repeatedly showed strong majorities in favour of staying in the Euro. 'Post democratic Europe' actually looks an awful lot like 'democratic Europe'. Of course, if you are the sort of person who equates 'democracy' with 'getting the result I want' then you might disagree.
Now, I know that you observed these events closely, because at the time you were favouring us with a heady mix of bizarre observations & wild predictions. Beyond the aforementioned Greek troops keeping their people inside their borders there was talk of impending military coups; wild swings between telling us that there was no way nations could leave the Euro & then excited claims that Greece was about to do just that; the infamous claim that new Drachmas had already been printed; a prediction that the Euro would be finished by Christmas....2011 and one particularly pertinent to your 'end of democracy' claims. At one point you predicted that the governments in Athens & Rome with their technocratic PMs would be 'Long Parliaments' - a subversion of democracy by the EU. Of course, they were nothing of the sort. Both parliaments were dissolved, elections were held & the technocrats were replaced.....as you should be aware. The problem is that those elections didn't produce the result you wanted, so I imagine they don't really count.
I'm not expecting you to accept any of this. I imagine you have carefully constructed and very lengthy arguments prepared for just such an unwelcome intrusion of facts into your reality. Much as I suspect DOR has long since stopped trying to convince you that he is correct, so have I. It is useful, however, to remind others just how shaky the foundations of your analysis are. Far from 'adding nothing to the debate' I am adding a bunch of really meaty - and inconvenient - facts, in their proper context.Last edited by Bigfella; 19 May 13,, 13:52.sigpic
Win nervously lose tragically - Reds C C
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