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  #41  
Old 12.05.2011, 12:39
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Re: Greece discussing leaving the Euro Zone (Spiegel Online)

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Good thoughts but "kick you out of the Euro" is not a valid threat.
It would destroy people's confidence in the other weak countries & cause a run on the euro.
It can work both ways.
Argentina for example, caused a lot of hurt by devaluing the peso, but in view of the situation they were facing it was probably the best option as it kick started exports and so brought a lot of fresh cash into the country.
The financial sector doesn't have a long memory and confidence can rebound if the country gets a good grip on its economy post devaluation.
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Old 12.05.2011, 12:43
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Re: Greece discussing leaving the Euro Zone (Spiegel Online)

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Anybody who has a good answer to that question could command a huge reward from the eurozone
I just feel very uncomfortable about this, because the finance ministers do not seem to me the most knowledgeable people on the matter. I fear they are digging a hole we won't be able to get out of anymore...
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  #43  
Old 12.05.2011, 13:29
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Re: Greece discussing leaving the Euro Zone (Spiegel Online)

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Using the euro as your country's currency is quite different from linking your currency to another currency.
If your major debts are in, for example, drachma then you could devalue the drachma & suddenly your debts are more manageable.
If your debts are in euro then even if you leave the eurozone you cannot devalue the euro to make your debts are more manageable.
You could say that you will only pay, for example, 50% of your debts but that would lead to a huge loss of confidence in the other PIGs when they try to sell euro denominated bonds.
There is also the question of what happens to the physical currency in circulation (notes & coins) - are the ones from Greece no longer valuable/acceptable?
but such a currency switcharoo would likely be accompanied by a debt restructuring which would unilaterally re-denominate euro debts into drachma debts.
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  #44  
Old 12.05.2011, 13:38
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Re: Greece discussing leaving the Euro Zone (Spiegel Online)

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but such a currency switcharoo would likely be accompanied by a debt restructuring which would unilaterally re-denominate euro debts into drachma debts.
I think they should call the new currency "Gyros" instead. It will crumble into little pieces and the last one gets a stick...
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  #45  
Old 12.05.2011, 13:56
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Re: Greece discussing leaving the Euro Zone (Spiegel Online)

If only this were solely about Greece & Ireland then the problem could be fixed much more easily. You cannot talk about the problems facing the Euro without acknowledging other countries facing huge difficulties most notable among them in terms of economic size and population being Spain.

The Spanish banking system has managed through smoke and mirrors to hide the true extent of their woes. This will not be sustainable. The property debts there are immense. Unemployment remains over 20% in Spain. When the true picture of the Spanish banking system emerges I expect Greece will look like a cheap stag weekend next to Spain's royal wedding in terms of the black hole. Many of Spain's (and indeed Europe's) banks are far from safe and any road to recovery they might say they are on may soon turn out to be a dead-end.

In the meantime German businesses are thanking the stars for giving them the artificially low export prices (if Germany still had the DM it would likely have appreciated in line with the CHF) and Audi/BMW/Mercedes et al are doing very nicely indeed out of this mess. What is the solution? Impossible to tell as long as Europe's ruling elite stick doggedly with the notion of maintaining the Euro at ALL costs. Perhaps a face saving way out would be a northern Euro and a southern Euro?
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Old 12.05.2011, 13:56
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Re: Greece discussing leaving the Euro Zone (Spiegel Online)

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If your debts are in euro then even if you leave the eurozone you cannot devalue the euro to make your debts are more manageable.
yes, but the drachma could be reintroduced at parity with the euro, then allowed to float.
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  #47  
Old 12.05.2011, 14:01
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Re: Greece discussing leaving the Euro Zone (Spiegel Online)

I went to the island of Kos last year and I lost count of the number of abandoned buildings and closed shops. But I don't think it is everywhere. The nearby island of Kalymnos was just the opposite.

I think the Greece problem raises many questions. How has the introduction of the EU and the Euro impacted each of the member countries ability to manage their own monetary policy like they used to?

To throw the cat amongst the pigeons in this debate, I can see two options for the EU:
  1. define the EU more by economy than geography (cut off the poor performers and welcome higher performers); or
  2. federate.
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  #48  
Old 12.05.2011, 14:14
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Re: Greece discussing leaving the Euro Zone (Spiegel Online)

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but such a currency switcharoo would likely be accompanied by a debt restructuring which would unilaterally re-denominate euro debts into drachma debts.

"unilaterally re-denominate euro debts into drachma debts" - I doubt they have a sound legal basis on which to do this change.
But how debtors could pursue a remedy in the courts I have no idea?

Anyway probably many of the debtors are banks & this debt restructuring could start a domino effect on the banks.
Plus everybody would start selling their Irish & Portugese bonds before they made the same change which would really pull the rug out from under the euro.
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  #49  
Old 12.05.2011, 14:19
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Re: Greece discussing leaving the Euro Zone (Spiegel Online)

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"unilaterally re-denominate euro debts into drachma debts" - I doubt they have a sound legal basis on which to do this change.
But how debtors could pursue a remedy in the courts I have no idea?

Anyway probably many of the debtors are banks & this debt restructuring could start a domino effect on the banks.
Plus everybody would start selling their Irish & Portugese bonds before they made the same change which would really pull the rug out from under the euro.
Looks like many Greek by now move their money to foreign banks or hide it in Euro cash in fear of whatever might happen:
http://www.20min.ch/finance/news/sto...rheit-16810090
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  #50  
Old 12.05.2011, 16:33
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Re: Greece discussing leaving the Euro Zone (Spiegel Online)

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"unilaterally re-denominate euro debts into drachma debts" - I doubt they have a sound legal basis on which to do this change.
But how debtors could pursue a remedy in the courts I have no idea?
as a sovereign nation they can do what they like. what normally happens is a bunch of lawyers buys up the debt at distressed rates and then make a nuisance of themselves until they are paid off e.g. petitioning foreign countries to seize overseas assets (airplanes, ships etc.) of the defaulting nation.
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  #51  
Old 12.05.2011, 18:15
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Re: Greece discussing leaving the Euro Zone (Spiegel Online)

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as a sovereign nation they can do what they like. what normally happens is a bunch of lawyers buys up the debt at distressed rates and then make a nuisance of themselves until they are paid off e.g. petitioning foreign countries to seize overseas assets (airplanes, ships etc.) of the defaulting nation.
sovereign nation?

No they are a paid up member of the EU with all that implies.
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  #52  
Old 12.05.2011, 18:22
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Re: Greece discussing leaving the Euro Zone (Spiegel Online)

Euro was introduced as a competitor currency to Dollar, and they can no way compete with Dollar until Oil and Commodities are traded in Euros.

One by one countries will default, starting from the weaker ones, Euro will collapse in practical terms (failing the original purpose) and then will be a deja vu of WW1.
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  #53  
Old 12.05.2011, 20:00
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Re: Greece discussing leaving the Euro Zone (Spiegel Online)

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Euro was introduced as a competitor currency to Dollar, and they can no way compete with Dollar until Oil and Commodities are traded in Euros.

One by one countries will default, starting from the weaker ones, Euro will collapse in practical terms (failing the original purpose) and then will be a deja vu of WW1.
Uhm....total and utter rubbish. The dollar is losing it's super power status. When the Chinese sell all the dollars they have the USA won't exist anymore. In fact if it wasn't for the Chinese buying USD for all these years it would already be long gone.
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  #54  
Old 12.05.2011, 21:47
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Re: Greece discussing leaving the Euro Zone (Spiegel Online)

I think I agree with most of what has been posted. It appears Greece is in a terrible state...

The only realistic solutions involve the Greek standard of living crashing - for my part I think it boils down to the question of the time period that is allowed to happen over. Introducing and floating a new currency could remove plenty of public sector liabilities nearly overnight; if your pension is denominated in Drachma for instance it would quickly become worthless... what would happen on the streets might get truly ugly though.

If prices become more reasonable I might try and holiday there in solidarity; it's a beautiful place - but they can't live on that forever.

I have no idea if this is economically feasible, but I would attempt to leave the Euro and introduce a new currency, but attempt to set some agreement with Germany who would agree, in the same way the Chinese do, to prop the Drachma up at auction on a sliding scale over the next 5-10 years. I have no idea what the hell Germany gets in return. An island; free holidays?

Hopefully you could allow the standard of living, debt to decrease, inflation increase over a longer time period without some kind of horrible shock. With luck it would also provide incentive without destroying national morale.
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Old 12.05.2011, 21:55
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Re: Greece discussing leaving the Euro Zone (Spiegel Online)

P.S agree dollar is on life support

The Chinese are getting nervious about American national debt... mostly because they own a non-trivial proportion of it. If they start selling things will get ugly.

Also, having been to America, the lifestlye is simply unsustainable. In Europe people are less reliant on cars; there are pavements for instance. To cross the road in an American suburb you more or less need to get into a car an do a u-turn.

Along with everything having the hell air conditioned out of it (where I went) it means it's nearly impossible to wean themselves off consuming vast quantities of energy; this is the single commodity which, in my opinion is going to go up, and up and up... and for them, there is no plan B. Their productivity is not high, comparitively to the far East... they do some good engineering... but that requires a small number of smart folk... who get seriously rich. What the hell does everyone else do?!?

The actual work is now all done abroad. So basically if the smart people were to move, for any reason, it'll go to hell. Of course, they also have massive natural rescouse and the ability to grow their own food. Hard to call!!!
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  #56  
Old 12.05.2011, 22:05
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Re: Greece discussing leaving the Euro Zone (Spiegel Online)

just offer a couple of islands for china or russia to set up a military base on and i'm sure the US or rest of europe will step in to outbid them
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  #57  
Old 12.05.2011, 23:16
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Re: Greece discussing leaving the Euro Zone (Spiegel Online)

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Uhm....total and utter rubbish. The dollar is losing it's super power status. When the Chinese sell all the dollars they have the USA won't exist anymore. In fact if it wasn't for the Chinese buying USD for all these years it would already be long gone.
Dollar currency union will always be stronger then the so-called EU currency union. The dollar has a strong political union behind it, and the FED like the BOE can control it's own rates for their own countries. Countries like Ireland and Greece probably wished they could have done this, so the theory that countries will start to leave the EU is not really that far off.
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Old 12.05.2011, 23:31
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Re: Greece discussing leaving the Euro Zone (Spiegel Online)

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P.S agree dollar is on life support

The Chinese are getting nervious about American national debt... mostly because they own a non-trivial proportion of it. If they start selling things will get ugly.

Also, having been to America, the lifestlye is simply unsustainable. In Europe people are less reliant on cars; there are pavements for instance. To cross the road in an American suburb you more or less need to get into a car an do a u-turn.

Along with everything having the hell air conditioned out of it (where I went) it means it's nearly impossible to wean themselves off consuming vast quantities of energy; this is the single commodity which, in my opinion is going to go up, and up and up... and for them, there is no plan B. Their productivity is not high, comparitively to the far East... they do some good engineering... but that requires a small number of smart folk... who get seriously rich. What the hell does everyone else do?!?

The actual work is now all done abroad. So basically if the smart people were to move, for any reason, it'll go to hell. Of course, they also have massive natural rescouse and the ability to grow their own food. Hard to call!!!
Where did you go? Florida? The US is a bit bigger then countries like the UK. The US and the EU are the biggest consumers of energy in the world, and alternate solutions need to be found. The US is still more productive then the EU zone and the far east, though the far east has caught up quite a bit.
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Old 13.05.2011, 09:44
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Re: Greece discussing leaving the Euro Zone (Spiegel Online)

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Regard your good name as the richest jewel you can possibly be possessed of - for credit is like fire; when once you have kindled it you may easily preserve it, but if you once extinguish it, you will find it an arduous task to rekindle it again. The way to gain a good reputation is to endeavor to be what you desire to appear.
Some Greek bloke said that.
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Old 13.05.2011, 10:21
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Re: Greece discussing leaving the Euro Zone (Spiegel Online)

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Uhm....total and utter rubbish. The dollar is losing it's super power status. When the Chinese sell all the dollars they have the USA won't exist anymore. In fact if it wasn't for the Chinese buying USD for all these years it would already be long gone.
Total Utter rubbish!

If Chinese sell the dollars and Americans stop buying Chinese products, where would China be?

If China does not have enough Dollar Reserves, what would its own currency be worth?

If China does not have Dollars, how will they buy Crude for their energy needs?

Its not that simple.
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