Greece may exit the Euro ?

[counter_violent]

Now the IMF weighs in saying the Greek debt is unsustainable.

http://www.bbc.co.uk/news/business-33531845

Who needs lulz !

Europe, the gift that just keeps on giving

 

[Luc.Chase]

If Greece were to remain within EZ and EU, but will have debts cancelled (or payments on them put on long-term hold). What would be the effect on the value of the EURO ? I expect that would make the EURO go up in value.
Up because, there would be less supply of it, Greece would be able to prosper and get inward investment and EZ would have found the will and creativity to solve a problem. As for what other debtor countries would then do; I don't know. But in our economic system, occasional debt default is part of the system, so EZ needs to accept that fact, or snap.

 

[chriswells]

Greece and Eurogroup brinkmanship game has finally ended ? Not sure, but deal or not, this game of catfight is not going to end. Greece deal won’t be an end to the problems, the fate of euro group as a union remains in shambles. Third bailout? Looking at Greece, they’ll require a 4th or 5th bailout until sense knocks in those EU biggies. Grexit? An entire EUxit is likely.

 

[Pat494]

Greece is undoubtably a Eurozone problem, so let them sort it out. If Greece were to leave the Euro then they would be around the usual countries with their lies and begging bowl.
Only today in Parlt. that fool Cameron said he would be giving our taxpayer's money to them in a handout should they leave the EU. Probably hasn't noticed they waste it all and are back for more before you can say Jack Rabbit.

Politicians should really take some sort of sanity test before they meddle imho.

 

[Luc.Chase]

Greece is undoubtably a Eurozone problem, so let them sort it out. If Greece were to leave the Euro then they would be around the usual countries with their lies and begging bowl.
Only today in Parlt. that fool Cameron said he would be giving our taxpayer's money to them in a handout should they leave the EU. Probably hasn't noticed they waste it all and are back for more before you can say Jack Rabbit.

Politicians should really take some sort of sanity test before they meddle imho.

OK, but from a trading point of view ( since we happen to be on t2w ), would you say a loan default is bullish for the EURO? And a Grexit, bearish? And what if Germany were to exit ( making the rest of Eurozone more uniform economically ); I guess that would be bearish for EURO, yes?

 

[Pat494]

OK, but from a trading point of view ( since we happen to be on t2w ), would you say a loan default is bullish for the EURO? And a Grexit, bearish? And what if Germany were to exit ( making the rest of Eurozone more uniform economically ); I guess that would be bearish for EURO, yes?

Germany is the euro in reality. The deadbeat southern countries might try to go it alone but in my view they are all in a difficult position. Being more in debt to the EU making the EU look more fragile and thus bearish on the Euro or what ? They are too timid to get back to their original currencies. Too much freedom, sunshine and socialist handouts has softened any morale they once had as they are dragged into the net of the EU. The EU might vomit the weaker ones forth I suppose.

 

[Atilla]

OK, but from a trading point of view ( since we happen to be on t2w ), would you say a loan default is bullish for the EURO? And a Grexit, bearish? And what if Germany were to exit ( making the rest of Eurozone more uniform economically ); I guess that would be bearish for EURO, yes?

Grexit is bearish on Euro for the short term.
ECB's QE program and verbal support for all other banks will quickly change that and it will revert in medium to long term.

Why would Germany exit? Euro is here to stay and I am optimistic about it. Other smaller countries may leave if Greece exit outcome turns out to be a positive experience.

fwiw - I see stronger consolidated union up ahead. Not a weakened one.

 

[Pat494]

Greece needs someone in charge who can produce jobs and get everyone there up and working.

 

[Splitlink]

Grexit is bearish on Euro for the short term.
ECB's QE program and verbal support for all other banks will quickly change that and it will revert in medium to long term.

Why would Germany exit? Euro is here to stay and I am optimistic about it. Other smaller countries may leave if Greece exit outcome turns out to be a positive experience.

fwiw - I see stronger consolidated union up ahead. Not a weakened one.

To be truthful, I'm not sure what I see. In Cataluña, the governing CIU has broken up. It was two parties that joined up several decades ago. Now one half wants independence and has joined ERC, the leftish Independence party, while the other wants a re-written constitution rather than break away.

Apart from that we have a very leftish, brand new Spanish national party, Podemos, lead by, what I can only decribe as a bunch of creeps. Creeps, or not, they are becoming worryingly popular. The leader is easily identified by his shirtsleeves and pony-tail. Tsiprus has identified this party as a great ally of Greece.

Then, you guys have a referendum coming, with your possible exit from the UK. Junckers has not helped that by suggesting that non-Euro members be made to pay towards bail-outs That is not fair and I say that, having lived in a country, that is a Euro member, since 1965. UKIP must be jumping for joy!

I can see some very serious problems, not coming up, but here already.

 

[counter_violent]

To be truthful, I'm not sure what I see. In Cataluña, the governing CIU has broken up. It was two parties that joined up several decades ago. Now one half wants independence and has joined ERC, the leftish Independence party, while the other wants a re-written constitution rather than break away.

Apart from that we have a very leftish, brand new Spanish national party, Podemos, lead by, what I can only decribe as a bunch of creeps. Creeps, or not, they are becoming worryingly popular. The leader is easily identified by his shirtsleeves and pony-tail. Tsiprus has identified this party as a great ally of Greece.

Then, you guys have a referendum coming, with your possible exit from the UK. Junckers has not helped that by suggesting that non-Euro members be made to pay towards bail-outs That is not fair and I say that, having lived in a country, that is a Euro member, since 1965. UKIP must be jumping for joy!

I can see some very serious problems, not coming up, but here already.

Yes, I'd like to exit the UK too. Thinking of digging a moat around my house and setting myself up as an independent country.

CeeVeeria.....whaddya think, it has a ring !!!!

 

[Atilla]

To be truthful, I'm not sure what I see. In Cataluña, the governing CIU has broken up. It was two parties that joined up several decades ago. Now one half wants independence and has joined ERC, the leftish Independence party, while the other wants a re-written constitution rather than break away.

Apart from that we have a very leftish, brand new Spanish national party, Podemos, lead by, what I can only decribe as a bunch of creeps. Creeps, or not, they are becoming worryingly popular. The leader is easily identified by his shirtsleeves and pony-tail. Tsiprus has identified this party as a great ally of Greece.

Then, you guys have a referendum coming, with your possible exit from the UK. Junckers has not helped that by suggesting that non-Euro members be made to pay towards bail-outs That is not fair and I say that, having lived in a country, that is a Euro member, since 1965. UKIP must be jumping for joy!

I can see some very serious problems, not coming up, but here already.

I think the Spanish people are probably witnessing what a tail coat Tsipras is and bunch of lies and deceits dished out to the Greek people by their leaders.

Doubt the left will get much joy as UKIP did here. Don't believe the hype. Have faith in the people.

Moreover, Ireland, Porgtugal and Spain are not on their 3rd bailout. I think they've only had one. Ireland is held out as a model recovery apparently.


I was thinking even Ireland - despite taking criticism has 12% corporation tax.

The largest global merchant fleet that Greece has with annual earnings of €100+ bn pays no tax on international earnings. Beggars belief.

Even at 12% that's €12bn leaving Greece every year being invested in foreign assets all over the world by the rich tycoons.


Wouldn't worry, rest of the EU is strong and on road to recovery and have a much bigger economies to be able to pay back.


EU will come out stronger either way imo. I don't see the German's failing. I'd be looking to join them and compete with them.

 

[Splitlink]

Yes, I'd like to exit the UK too. Thinking of digging a moat around my house and setting myself up as an independent country.

CeeVeeria.....whaddya think, it has a ring !!!!

Reminds me of a book I read long ago--.-before your time, Junior I think a film was made, too. "Passport to Pimlico".

 

[jsc]

The weakness of southern Europe keeps the Euro depressed and this boosts the exports of stronger manufacturing countries within the group, such as Germany.

So...If your economy relied more on services or tourism for example, then a weak Euro would simply mean you are getting less income in real terms as other countries visiting you have a stronger currency and you are importing goods from some of these as well. This would have the effect of slowing your countries ability to bounce back from a recession or depression. However, if the necessary reforms were put in place and the country in question did start to recover on a stable footing, then pressure on prices (i.e inflation) would soon begin to outstrip the amount of real income the people were receiving and, ultimately, that the government was receiving. Rather than counter the effects of inflation (by keeping wages depressed), this is not what happens as the world economy improves at a faster rate and prices on commodities continue to accelerate as stronger economies start to increase demand. This has the effect of further pressure on inflation and this in turn feeds through into the bond yields, pushing down prices (which have an inverse relationship with yield within bonds). It is now harder for countries to raise finance and they are having to pay more to do so, whilst their existing debt payments are also increasing. As the Euro starts to become a stronger currency (as money comes in to take advantage of the increase in yields and stability), Germany parachutes to a soft landing with a gradual slowdown, whilst the weaker economies are left struggling with the inevitable shifting landscape - Inflation outstripping real wage increases within economies that are constantly trying to meet their next repayments, crippled by debt.

The sooner the entire experiment of the Euro is ended, the better as far as I can see. Weaker economies have created a rod for their own back and, having borrowed so much money in the past, it is the next generation that are going to be beaten with it. I wonder, for how long they will this generation accept their role as the whipping boy?

 

[Splitlink]

I wonder, for how long they will this generation accept their role as the whipping boy?

The young will be taking one of the few advantages available to them that the EU offers. The free movement of Europeans within the Union. They are voting with their feet--the same as they are in Spain.

 

[Pat494]

A major flaw in democracy has been exposed in the EU. The politicians have taken the easy option of borrowing more and more money. Now the time has come to repay, countries cannot do so. Their politicians should never have borrowed so much and the lenders should never have lent so much.

 

[barjon]

..................The sooner the entire experiment of the Euro is ended, the better as far as I can see.......................?

I don't think you can really have a common currency without fiscal union.

Without fiscal union you can paper over the cracks with "rules" and the transfer of money here and there between states. The cracks, however, get ever wider as the individual economies become more disparate. Even though they gain advantage (primarily Germany) one wonders how long the stronger economies will be prepared to support the weaker before they cry "enough".

It's difficult to see a future that doesn't lead eventually to fiscal union or abandonment of the common currency.

 

[2be]

A major flaw in democracy has been exposed in the EU. The politicians have taken the easy option of borrowing more and more money. Now the time has come to repay, countries cannot do so. Their politicians should never have borrowed so much and the lenders should never have lent so much.

All of this is set up on different "programs" so the overall debt is pushed well into the future when another "program" will push it even further. Of course this time around that approach has been well entrenched over the pond.
The problem with Greece is that they have been so ruthlessly irresponsible and corrupted, being overseen by even more corrupted Brussels Mafia.
In Monopoly Greece would hope for the "get out of jail free" card, however so far all the "get out of jail free" cards have been reserved for Brussels. By the way, have you ever heard of any of Brussels high ranking "official" to be made responsible for anything they have messed up?

Looks that Schaeuble and Varoufakis agree at least on one thing, Grexit!
http://www.bloomberg.com/news/artic...hrugs-off-greek-vote-saying-euro-exit-is-best

 

[2be]

I don't think you can really have a common currency without fiscal union.

Without fiscal union you can paper over the cracks with "rules" and the transfer of money here and there between states. The cracks, however, get ever wider as the individual economies become more disparate. Even though they gain advantage (primarily Germany) one wonders how long the stronger economies will be prepared to support the weaker before they cry "enough".

It's difficult to see a future that doesn't lead eventually to fiscal union or abandonment of the common currency.

Do we want fiscal union with Greece or even with France?

 

[Splitlink]

I should say that even more is needed. A truly federated union must come before, or with, a common currency. Brussels sold the Eurozone to a dreamy electorate ie that with one currency we would all be equal and "Hey! No more passport or travellers cheques"! I admit, I was as smitten with that idea as much as anyone. But it was learning to run before one can walk.

If Europe cannot federalise then we must give up hope of a stable common currency.

 

[Atilla]

The weakness of southern Europe keeps the Euro depressed and this boosts the exports of stronger manufacturing countries within the group, such as Germany.

So...If your economy relied more on services or tourism for example, then a weak Euro would simply mean you are getting less income in real terms as other countries visiting you have a stronger currency and you are importing goods from some of these as well. This would have the effect of slowing your countries ability to bounce back from a recession or depression. However, if the necessary reforms were put in place and the country in question did start to recover on a stable footing, then pressure on prices (i.e inflation) would soon begin to outstrip the amount of real income the people were receiving and, ultimately, that the government was receiving. Rather than counter the effects of inflation (by keeping wages depressed), this is not what happens as the world economy improves at a faster rate and prices on commodities continue to accelerate as stronger economies start to increase demand. This has the effect of further pressure on inflation and this in turn feeds through into the bond yields, pushing down prices (which have an inverse relationship with yield within bonds). It is now harder for countries to raise finance and they are having to pay more to do so, whilst their existing debt payments are also increasing. As the Euro starts to become a stronger currency (as money comes in to take advantage of the increase in yields and stability), Germany parachutes to a soft landing with a gradual slowdown, whilst the weaker economies are left struggling with the inevitable shifting landscape - Inflation outstripping real wage increases within economies that are constantly trying to meet their next repayments, crippled by debt.

The sooner the entire experiment of the Euro is ended, the better as far as I can see. Weaker economies have created a rod for their own back and, having borrowed so much money in the past, it is the next generation that are going to be beaten with it. I wonder, for how long they will this generation accept their role as the whipping boy?

Agree with what you say on the whole but falling euro is good for service sector. which does not need to import inputs as per manufacturing sector.

Weak Euro benefits all members equally even more so those with service based industries like tourism. This is because one is not importing to export goods as in manufacturing based industries. Food, sun and accommodation are endogenous, the inflationary impact of lower Euro is likely to be limited to energy and fuel impact.

Agree with deflation increasing debt burden and relationship between bonds, commodities and equities etc.


I still feel the key culprit for all the EU troubles are the countries experiencing troubles. They may have lost important tools in dealing with the challenges such as interest rates and currency fluctuations but these are no different to politicians lies and deceit to manipulate out of trouble.

Germany's discipline of one off hard pain is the way rather than excessive non-balanced spending.

All these countries would still be in pain whether they were in the EU or not but obviously this is impossible to quantify.


As Barjon points out fiscal union and/or harmonisation of budget deficits are KEY missing ingredients.