Morbyd
Moderator
Dollars, Euros, Rubles, Pounds
I try to keep a ratio of 2-2-2-1 but since I get paid in rubles it tends to fluctuate (esp. when the ruble dips and I'm hesitant to exchange money until it strengthens)
Greece debt farce - the end of the Euro?
- Thread starter WeLuvIbiza
- Start date
I try to keep a ratio of 2-2-2-1 but since I get paid in rubles it tends to fluctuate (esp. when the ruble dips and I'm hesitant to exchange money until it strengthens)
This is could be very bad if they are not just bluffing.
http://www.bbc.co.uk/news/world-europe-17986065
http://www.bbc.co.uk/news/world-europe-17986065
Add in a No Vote to the EU Fiscal Conpact Referendum here in Ireland and the perfect storm is brewing....
I doubt it.
but the more people that stand up to austerity the better. Its killing economies and is not delivering any growth. Its a mad policy to be pursuing especially as its proven not to work.
The Germans are the ones who are insisting on it. If people can stand up to the Austerity policy and demand a writedown of the massive private debt that has the Euro in this state then the euro can be saved.
But that would mean a loss for private investors and bondholders and thats a Golden Child that cant be touched according to Mrs Merkel and Sarcozy. Hopefully the new french president will do what he campaigned for....
I'm pro stimulus versus austerity, because as you state austerity doesn't work. Corporate profits are up they should take some hits instead of cutting benefits and services for the poor and weak. The euro zone as a whole will have to decide to all move in the same direction. If Greece, Spain, England, or France does a stimulus alone it will be like a see saw. Private sector money will run to the growing economy leaving the weaker one behind. The games should give the UK a short term boost.
Johnny Vodka
Well-Known Member
Does anyone see massive civil unrest, perhaps a country breaking down, as people fall further into poverty?
Greece is very close to it.
Here is a bit more of a storm cloud. I think the Spanish bank bankia, that went public last year and has all this bad debt seems a bit dodgy?
http://www.bbc.co.uk/news/business-18014077
http://www.bbc.co.uk/news/business-18014077
WeLuvIbiza
Active Member
If a country doesn't take austerity measures, the cost of borrowing will ultimately sky rocket leading to the never ending downward spiral. To an extent the UK is in a better place to go it alone with regards more money printing etc..
You have to tackle debt but if you do it during a down turn, it only worsens the economy not improve it. Financial markets don't care along as you have a plan to tackle the debt. During a recession inflation and unemployment are the main concerns. When th economy improves you take steps to tackle the debt. When unemployment is below 6% then you can take austerity measure because it won't have a drag on the economy.
WeLuvIbiza
Active Member
On August 20, a €3.2bn Greek bond held by the ECB matures. Greece that doesn't have money to pay suppliers for basic social services obviously doesn't have the money to pay the ECB back. If Greece openly defaults then, despite the assurances from the euro area technocrats, mayhem would ensue both economically and politically. So the ECB covertly prints and the Germans and their "hard money" satellite proponents all stay quiet.
Greece sold a little over €4bn in 13-week treasury's earlier today at 4.43pc.
Here's the mechanics: The ECB allowed Greece to sell (worthless) treasury bills with short maturities to………..drum roll please……it's own bankrupt and bailed out banks. The Greek banks now only function because of ECB largesse, with liquidity provided through an Emergency Liquidity Assistance (ELA) routed through the Greek central bank. So the Greek banks take the ELA funds with relaxed collateral requirements (there simply is not any money good collateral left), convert them into worthless Greek bonds, pledge those bonds back to the Greek central bank as collateral in exchange for……..another drum roll please…….freshly printed euros……..which the central bank of Greece prints with permission from the ECB to complete the circle jerk. So in essence the ECB, through the Greek central bank, is funding the Greek sovereign and it allows it to pay back the 3.2bn euro maturing bond.
(from another forum)
Greece sold a little over €4bn in 13-week treasury's earlier today at 4.43pc.
Here's the mechanics: The ECB allowed Greece to sell (worthless) treasury bills with short maturities to………..drum roll please……it's own bankrupt and bailed out banks. The Greek banks now only function because of ECB largesse, with liquidity provided through an Emergency Liquidity Assistance (ELA) routed through the Greek central bank. So the Greek banks take the ELA funds with relaxed collateral requirements (there simply is not any money good collateral left), convert them into worthless Greek bonds, pledge those bonds back to the Greek central bank as collateral in exchange for……..another drum roll please…….freshly printed euros……..which the central bank of Greece prints with permission from the ECB to complete the circle jerk. So in essence the ECB, through the Greek central bank, is funding the Greek sovereign and it allows it to pay back the 3.2bn euro maturing bond.
(from another forum)
Well, it keeps everyone happy I suppose.
I might try this with my bank.
"Look I can't pay my mortgage this month, but I've got a loads of fresh air which you can have. I'll invoice you for it, pay me in cash and I'll pay my mortgage."
Genius
Morbyd
Moderator
Well, it keeps everyone happy I suppose.
I might try this with my bank.
"Look I can't pay my mortgage this month, but I've got a loads of fresh air which you can have. I'll invoice you for it, pay me in cash and I'll pay my mortgage."
Genius
it is all hope and promise anyway
WeLuvIbiza
Active Member
As long as it doesn't happen before September, I go to Kos with the o.h next Saturday and have my Euros in hand already haha
The Euro won't collapse in the immediate future, but as Bez says it will happen as sure as night follows day. Like Robder alludes to on another thread, the world is bankrupt, there will become a point when the spinning plates cannot be kept up, sad but true.
WeLuvIbiza
Active Member
Yesterday (12-12-2012), the Federal Reserve increased its monthly asset purchases (QE4/money printing) from $40 billion to $85 billion. Federal Reserve Chairman Ben Bernanke's thoughts on money printing. The following excerpt was taken from a speech he gave in 2002 to the National Economists Club in Washington DC:
The conclusion that deflation is always reversible under a fiat money system follows from basic economic reasoning. A little parable may prove useful: Today an ounce of gold sells for $300, more or less. Now suppose that a modern alchemist solves his subject's oldest problem by finding a way to produce unlimited amounts of new gold at essentially no cost. Moreover, his invention is widely publicized and scientifically verified, and he announces his intention to begin massive production of gold within days. What would happen to the price of gold? Presumably, the potentially unlimited supply of cheap gold would cause the market price of gold to plummet. Indeed, if the market for gold is to any degree efficient, the price of gold would collapse immediately after the announcement of the invention, before the alchemist had produced and marketed a single ounce of yellow metal.
What has this got to do with monetary policy? Like gold, U.S. dollars have value only to the extent that they are strictly limited in supply. But the U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost. By increasing the number of U.S. dollars in circulation, or even by credibly threatening to do so, the U.S. government can also reduce the value of a dollar in terms of goods and services, which is equivalent to raising the prices in dollars of those goods and services. We conclude that, under a paper-money system, a determined government can always generate higher spending and hence positive inflation.
The graph below charts US base money supply since 1918. Obviously dollars are not “strictly limited in supply.†Consider Bernanke's words above and notice the massive increase in money supply since 2008 with the expected future growth in red. We agree with Mr. Bernanke. Printing money reduces the value of goods and services, or put in simple terms creates inflation.
If the Fed continues printing money at the stated $85 billion/month pace, the money supply will be over $5 trillion by mid 2015.This projection is based on the Fed's unemployment forecast coupled with its newly announced target of printing until unemployment drops to 6.5%. Money supply is currently over three times greater than what it was in 2008 and will double from here if they live up to their words.
Without starting a world war, how on earth is this going to be resolved?
The conclusion that deflation is always reversible under a fiat money system follows from basic economic reasoning. A little parable may prove useful: Today an ounce of gold sells for $300, more or less. Now suppose that a modern alchemist solves his subject's oldest problem by finding a way to produce unlimited amounts of new gold at essentially no cost. Moreover, his invention is widely publicized and scientifically verified, and he announces his intention to begin massive production of gold within days. What would happen to the price of gold? Presumably, the potentially unlimited supply of cheap gold would cause the market price of gold to plummet. Indeed, if the market for gold is to any degree efficient, the price of gold would collapse immediately after the announcement of the invention, before the alchemist had produced and marketed a single ounce of yellow metal.
What has this got to do with monetary policy? Like gold, U.S. dollars have value only to the extent that they are strictly limited in supply. But the U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost. By increasing the number of U.S. dollars in circulation, or even by credibly threatening to do so, the U.S. government can also reduce the value of a dollar in terms of goods and services, which is equivalent to raising the prices in dollars of those goods and services. We conclude that, under a paper-money system, a determined government can always generate higher spending and hence positive inflation.
The graph below charts US base money supply since 1918. Obviously dollars are not “strictly limited in supply.†Consider Bernanke's words above and notice the massive increase in money supply since 2008 with the expected future growth in red. We agree with Mr. Bernanke. Printing money reduces the value of goods and services, or put in simple terms creates inflation.
If the Fed continues printing money at the stated $85 billion/month pace, the money supply will be over $5 trillion by mid 2015.This projection is based on the Fed's unemployment forecast coupled with its newly announced target of printing until unemployment drops to 6.5%. Money supply is currently over three times greater than what it was in 2008 and will double from here if they live up to their words.
Without starting a world war, how on earth is this going to be resolved?
Morbyd
Moderator
jeezes... I knew we'd been printing money, but I hadn't seen it quantified like that before. Insane!
And still, the dollar holds its value. It hasn't weakened at all, and certainly not enough to boost US economic growth.
It's like the world has given the Fed carte blanche to print all it wants!
And still, the dollar holds its value. It hasn't weakened at all, and certainly not enough to boost US economic growth.
It's like the world has given the Fed carte blanche to print all it wants!