Eurozone debt crisis

[Iron]

Maggie had the right idea on the Euro and the EU - http://www.youtube.com/watch?v=U2f8nYMC ... r_embedded

Jeff

[Iron]

I wish I'd traded EUR/USD earlier today - there have been some beautiful moves!

Jeff

[Iron]

William Hill's odds on the next country to need a bail-out:

5/4 Italy, 2/1 Spain, 4/1 Greece, 4/1 Portugal, 4/1 Montenegro, 6/1 Cyprus, 7/1 Belgium, 10/1 Slovenia, 12/1 Slovakia, 12/1 Estonia, 20/1 Malta, 40/1 Holland, 50/1 Luxembourg, 66/1 Austria, 100/1 France, 150/1 Finland, 500/1 Germany

Jeff

[Euler]

I like the idea of a Eurobond, that would solve a lot of problems and sweep individual issues out of the way. It would have to underwritten and funded centrally but makes perfect sense.

[superfrank]

I like the idea of a Eurobond, that would solve a lot of problems and sweep individual issues out of the way. It would have to underwritten and funded centrally but makes perfect sense.

It makes perfect sense if you live in southern Europe or Ireland, not so attractive for the successful nations ('just a bailout by different means). Also difficult to sell politically for the Germans because the ultimate underwriter would be Germany (and a few others).

The 'solution' they've come up with is more 'extend and pretend'.

And they've decided to be less reliant on credit rating agencies in future - classic European nonsense... we don't like the market ratings so we're gonna do our own.

[Iron]

From http://blogs.telegraph.co.uk/news/peter ... reamed-of/:

"In many ways, the euro bears comparison to the gold standard. Back in 1929, politicians and central bankers assumed that the convertibility of national currencies into gold (defined by the economist John Maynard Keynes as a “barbaric relic”) was a law of nature, like gravity. European politicians have developed the same superstitious attachment to the single currency. They are determined to persist with it, no matter what suffering it causes, or however brutal its economic and social consequences."

Sums it up nicely IMHO. In some quarters, it seems that the Euro isn't merely a currency: it's almost a religion...

Jeff

[CaerMyrddin]

if Greece or any other of the troubled countries do look like they are on the way out of the Euro then if the people haven’t already I’m sure we would see huge withdraws of cash from banks, similar to Argentina a few years back.

Argentina managed to forbid withdrawals for a long time, something that would be impossible to do under the EU laws. So, if you want to kick a country from the Euro you would have to kick it out of the Union?

In a certain way yes, it's the only way but is it possible? I wouldn't back it! So, the richer coutries have to make a choice, kick the problematic countries and face whatever the consequences or help them.

And they've decided to be less reliant on credit rating agencies in future - classic European nonsense... we don't like the market ratings so we're gonna do our own.

If if think the subprime crap was rated AAA it's really hard to sustain that you like the agencies work.

There is a lot of nonsense in the agencies. If you think that if Apple was based in Greece their bonds were junk it just makes you think... Doesn't it?

[superfrank]

If if think the subprime crap was rated AAA it's really hard to sustain that you like the agencies work.

But that's my point... no one complains when things are overrated, only when things are 'underrated'. To be fair to the agencies they admitted they got things badly wrong and are at least trying to operate in the real world now. The EU are still in la la land.

There is a lot of nonsense in the agencies. If you think that if Apple was based in Greece their bonds were junk it just makes you think... Doesn't it?

I don't understand this, can you explain?

[superfrank]

In some quarters, it seems that the Euro isn't merely a currency: it's almost a religion...

That's true. There are so many personal vested interests in the European project that they won't change course - it would be like turkeys voting for Christmas.

The Euro is doomed to failure without political union - it was obvious from the start, and they can't say they weren't warned.

[Iron]

If countries had wanted to form a common currency with each other for sound economic reasons, that would be one thing.

But having a common currency with someone just because you're geographically near to them is a bit like marrying your neighbour just because she lives a few doors away from you!

Jeff

The Euro is doomed to failure without political union - it was obvious from the start, and they can't say they weren't warned.

[superfrank]

But having a common currency with someone just because you're geographically near to them is a bit like marrying your neighbour just because she lives a few doors away from you!

And it turns out she's an old dog!

[Iron]

I'm not sure yesterday achieved much.

It might have staved off an imminent meltdown, but the underlying issues still remain. IMHO, it might have been better to lance the boil than let it grow.

And if I were a German taxpayer, I'd want Frau Merkel to be tried for treason for taking on billions of Euros of toxic debt!

Jeff

The EU are still in la la land.

[superfrank]

Greece aid package boosts stock markets
http://www.bbc.co.uk/news/business-14246787

* A 109bn-euro loan to help Greece meet its debt repayment obligations
* Various options to extend Greece's repayment terms and reduce the amount it repays
* Voluntary private sector participation in these options, so that banks share taxpayers' burden
* Doubling the length of repayment terms for the Irish Republic and Portugal, both of which have received financial assistance previously
* Additional powers granted to the European Financial Stability Facility to buy up bonds and to make credit available to countries such as Spain and Italy that are not at immediate risk of insolvency.

The key point is the last one. Monetising debt. What a surprise.

[Iron]

Let's just hope they don't engage in any money printing...

Jeff

The key point is the last one. Monetising debt. What a surprise.

[CaerMyrddin]

CaerMyrddin wrote:
There is a lot of nonsense in the agencies. If you think that if Apple was based in Greece their bonds were junk it just makes you think... Doesn't it?
I don't understand this, can you explain?

A company or a public company or whatever can't have a better rating than the republic it belongs to. Two major companies here in Portugal now pay their taxes inthe Netherlands. How on earth...