Greece debt farce - the end of the Euro?

tclubber said:
But why would a default by Greece cause trouble for the Euro? Is there an explanation understandable to a non-economist like me?

Sure people will suffer, will possibly lose their savings. There will be riots in Greece causing death and destruction. Some Greek voters may even die of hunger (and it's the voters who are responsible for the irresponsible fiscal policy!).

But why would a default damage the Euro as a currency? When Argentina went bankrupt in the 1990s (with the currency pegged to the US dollar), there was no damage to the dollar - in fact it had a much higher value than today!
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The problem in itself is not Greece but the banks that have given money to Greece and if Greece default, so will the banks most likely.

Argentina was one country. EU is not one country but bunch of countrys that some of them are econimically viable and then there are countries like Greece, Portugal and maybe Spain that are not economically viable. EURO has that problem that when you are trying to have one policy and interest rates etc, it effects different economical areas differently and will cause problems elsewhere if it corrects something here.

Greece could "easily" correct it's economy by just jumping off the EURO-wagon and have their own currency and having their own economical policy just like Argentina did. But as they will not do this they don't have any possibilities to effect their own affairs as most of the things that are essential tools for economical policy because all of these things are controlled by the EU and EURO. Greece should not be part of Euro nor should Portugal and some other countries.

Euro was a nice concept and a dream and now it's evident that it doesn't work and it causes problems to so many country that it's just ridigilous to have the system anymore. Countries that have the same currency should be almost in the identical economical situation for the system to work.
 
opmdevil said:
The problem in itself is not Greece but the banks that have given money to Greece and if Greece default, so will the banks most likely.

Argentina was one country. EU is not one country but bunch of countrys that some of them are econimically viable and then there are countries like Greece, Portugal and maybe Spain that are not economically viable. EURO has that problem that when you are trying to have one policy and interest rates etc, it effects different economical areas differently and will cause problems elsewhere if it corrects something here.

Greece could "easily" correct it's economy by just jumping off the EURO-wagon and have their own currency and having their own economical policy just like Argentina did. But as they will not do this they don't have any possibilities to effect their own affairs as most of the things that are essential tools for economical policy because all of these things are controlled by the EU and EURO. Greece should not be part of Euro nor should Portugal and some other countries.

Euro was a nice concept and a dream and now it's evident that it doesn't work and it causes problems to so many country that it's just ridigilous to have the system anymore. Countries that have the same currency should be almost in the identical economical situation for the system to work.
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The reason the EU was developed was to compete with the USA, If they go back to the old way it will be a bigger disaster than working through the trouble today. This was done for business not for the people.
 
djjaycool said:
The reason the EU was developed was to compete with the USA, If they go back to the old way it will be a bigger disaster than working through the trouble today. This was done for business not for the people.
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Don't mix EU and EURO together. EU can still exists and work without EURO as we would have similar laws, free travel of goods and people and services and more unified europe etc. With EURO all countries are forces under to ride the same train and it has caused crysis all over the place.

Just today the European central bank rose interest rate to fight the inflation in some countries but this move is the worst thing to greece, portugal and other countries that are in trouble. Basically inflation in finland is rising fast and we should have higher interest rates but they are controlled by the european bank and as the currency is the same for all euro countries, it is not done.

Greece should just disconnect from EURO, agree that they are default and then start doing work to build their economy and get their contry competetive again. Now, as they are forced to stay in EURO for the wishes of european political elite, they are truly fracked. And portugal and spain are following. When some of the most valued economical master minds and anylyzits say that it's not gonna work, it's propably not gonna work and this political elite should start to make desicions that make sense - not just force their way towards the one country that would be EU with EURO.
 
opmdevil said:
Don't mix EU and EURO together. EU can still exists and work without EURO as we would have similar laws, free travel of goods and people and services and more unified europe etc. With EURO all countries are forces under to ride the same train and it has caused crysis all over the place.

Just today the European central bank rose interest rate to fight the inflation in some countries but this move is the worst thing to greece, portugal and other countries that are in trouble. Basically inflation in finland is rising fast and we should have higher interest rates but they are controlled by the european bank and as the currency is the same for all euro countries, it is not done.

Greece should just disconnect from EURO, agree that they are default and then start doing work to build their economy and get their contry competetive again. Now, as they are forced to stay in EURO for the wishes of european political elite, they are truly fracked. And portugal and spain are following. When some of the most valued economical master minds and anylyzits say that it's not gonna work, it's propably not gonna work and this political elite should start to make desicions that make sense - not just force their way towards the one country that would be EU with EURO.
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You have misunderstood my posts. I know the EU and euro are not one in the same same. Britain belongs to EU which is a trade block, but not the euro the currency. The EU was developed to help the business compete on a level playing field in the countries across the EU zone. This was also suppose to create the same standard of living for all member countries but it does not.
 
fascinating comments in this thread, there are some really knowledgable people posting here. please keep on topic.
 
ben said:
my thoughts:

we will have this kind of saga with various other european countries for the next 2 years or so, so get used to it. i don't know what the future holds for the euro, but the credibility of a single currency has been hammered and won't recover for a long time.

in terms of global markets, remarkably our main index the ftse 100 has recovered to above 6000 points on the back of a greek bailout, with the dow doing the same. this won't last. volatility will be the order of the day for some time yet, volumes are at record low levels and investors are scared. you could argue the case that 'every bull run climbs a wall of fear', but we are running out of steam and there are far too many banana skins for my liking. most equities look overbought at these levels - the greek's weren't the only reason we had 7 straight weeks of losses!

on top of the eurozone problems, we have china raising interest rates to calm inflationary pressures. this is important and another factor weighing on sentiment due to the size and growth of the country.

ecb and boe rate decision tomorrow. euro plus 25 basis points, we won't change.

us nfp's on friday.

let's see where we are after that lot.

:evil:
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I would have generally agreed with this, the ftse 6,000+ seems crazy considering the potential downside we could be facing up to. It was very surprising to read on the front of the Sunday Times money section a piece suggesting the ftse is in for a third quarter rally as equities are massively undersold!! I would rather be short the ftse than long but the experts know a zillion times more than me:confused:
 
WeLuvIbiza said:
I would have generally agreed with this, the ftse 6,000+ seems crazy considering the potential downside we could be facing up to. It was very surprising to read on the front of the Sunday Times money section a piece suggesting the ftse is in for a third quarter rally as equities are massively undersold!! I would rather be short the ftse than long but the experts know a zillion times more than me:confused:
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If you look at inflation in the UK, EU and the USA are low. The stock market feeds on cheap money ie low interest debt. The economies are not on the brink of collapse they will bounce back.
 
WeLuvIbiza said:
I would have generally agreed with this, the ftse 6,000+ seems crazy considering the potential downside we could be facing up to. It was very surprising to read on the front of the Sunday Times money section a piece suggesting the ftse is in for a third quarter rally as equities are massively undersold!! I would rather be short the ftse than long but the experts know a zillion times more than me:confused:
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your post is contradicting weluv, do you mean underbought?

a rally in the third quarter is a safe call- most of the big boys go on holiday for it.

anyway, those so called experts are writing articles in newspapers in wapping- not supping cocktails in the bahamas.

all eyes on inflationary measures this week.
 
djjaycool said:
If you look at inflation in the UK, EU and the USA are low. The stock market feeds on cheap money ie low interest debt. The economies are not on the brink of collapse they will bounce back.
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i'd love to write back to this but i'm too tired and drunk.

you've managed to turn a complex subject into a simple equation, but got the wrong answer.
 
ffs, yup, 'dope' a fair tag. "under-owned" being the actual quote.

You accuse Jay of turning a "complex subject into a simple equation", are you not doing the same by suggesting a third quarter rally is a safe call? Are you happy to steam in and buy the ftse @ 5900 ish? How many live factors are we facing that could signal a fair decline from where we are now?

The Greece situation might have been brushed under the carpet for the time being, it won't go away so easily. Bernake might think he can control the world economy, but the wheels are wobbling at an alarming rate.

For the record, my interest is mainly aim based. Financial predictions kick the arse out of picking six home wins on a Saturday :)

be lucky.
 
ben said:
i'd love to write back to this but i'm too tired and drunk.

you've managed to turn a complex subject into a simple equation, but got the wrong answer.
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All precedence have been set in the financial markets as well as other areas such as safety. You can look at two economist Adam Smith and Kondratiev who predicted wave theory long ago.
 
ben had the sense not to post further comment when under the influence, I didn't exercise the same restraint!

Saw an interesting programme a while back that basically made the case the markets wouldn't be anything like so volatile if more women were involved, something to do with testosterone!
 
WeLuvIbiza said:
ben had the sense not to post further comment when under the influence, I didn't exercise the same restraint!

Saw an interesting programme a while back that basically made the case the markets wouldn't be anything like so volatile if more women were involved, something to do with testosterone!
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That may be true, guys are b0llocks first in a lot of things. Most corporations are run with agency theory were quarterly profits and stock price drive the company in the western world. The five year plan has gone the way of VCR and Walkman. Carl Marx predicted this would happen with goods produced from material with the community having no owner ship of the finished product.
 
WeLuvIbiza said:
ffs, yup, 'dope' a fair tag. "under-owned" being the actual quote.

You accuse Jay of turning a "complex subject into a simple equation", are you not doing the same by suggesting a third quarter rally is a safe call? Are you happy to steam in and buy the ftse @ 5900 ish? How many live factors are we facing that could signal a fair decline from where we are now?

The Greece situation might have been brushed under the carpet for the time being, it won't go away so easily. Bernake might think he can control the world economy, but the wheels are wobbling at an alarming rate.

For the record, my interest is mainly aim based. Financial predictions kick the arse out of picking six home wins on a Saturday :)

be lucky.
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er, no. i said it was a safe call, not my call.

edit, i thought i wrote this yesterday but must have been too smashed and deleted it: above 6000 i'd be short, below 5600 i'd be long. i suspect a swing between those 2 levels is likely for 6 or so months, mainly due to what has happened globally this year so far and how the market has priced it up to now.

factors i'd say at the moment: china's growth and further monetary policy tightening there (what was that about low inflation and equity markets djjaycool?); eurozone worries continue (italy today, the third largest bond market in the world, under pressure. berlusconi is an utter monkey too so seeing him get anything behind him should be fun); carbon tax in australia(miners = large chunk of the ftse); us earnings starts tonight; home economic data due this week.

:arrow:aim is a punters market! who doesn't love it?

djjaycool, i've lost track of the point you were trying to make. names and theories has confused the issue.
 
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ben said:
er, no. i said it was a safe call, not my call.

edit, i thought i wrote this yesterday but must have been too smashed and deleted it: above 6000 i'd be short, below 5600 i'd be long. i suspect a swing between those 2 levels is likely for 6 or so months, mainly due to what has happened globally this year so far and how the market has priced it up to now.

factors i'd say at the moment: china's growth and further monetary policy tightening there (what was that about low inflation and equity markets djjaycool?); eurozone worries continue (italy today, the third largest bond market in the world, under pressure. berlusconi is an utter monkey too so seeing him get anything behind him should be fun); carbon tax in australia(miners = large chunk of the ftse); us earnings starts tonight; home economic data due this week.

:arrow:aim is a punters market! who doesn't love it?

djjaycool, i've lost track of the point you were trying to make. names and theories has confused the issue.
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You stated I over simplified the economy, and was off base with my optimism. I was just pointing out that this is nothing new that the economy rides a wave of ups and downs predicted by economist as far back as the 1800's. If you panic that is what causes a crisis, that is why deposits are insured now up to a certain limit.
 
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