Jump to content

Great Euro Crisis - again


just john
 Share

Recommended Posts

The sad truth is that European Monetary Union was born because politicians wanted a united Europe and the desires of Germany and France to avoid any chance of future wars. With the decent in to Eurozone fragmentation, there is a horrible chance that internalised rioting and protests become cross border via terrorism. I pray it doesn't happen but when you have 17 countries disagreeing on how to deal with the credit crisis, and the weaker countries starting to baulk at fiscal consolidation, anything can happen. Greece will leave the EURO most likely. There is a good chance that one or two could follow unless the ECB monetise. Germany refuse to let that happen.
Link to comment
Share on other sites

The Eurozone needs fiscal union and to become a federation. The biggest obstacle is we don't have an elected EU President nor do we have European political parties. Politicians have carved a pretty good living in their respective countries and governments and will want to be protected. The EU would need to have European political parties that you can vote for and a president you can vote for before any fiscal union takes place. In many ways we need to go down the same route as the USA which is effectively a federation with a lot more states than the EU. What we don't want to do is pick up on some of the bad habits of the American system, just take the good bits. I believe this will happen at some stage as the EU won't have any other option. The question is will it be in my lifetime or the five years some have predicted. As for the Euro, well it's already too well established to get rid off and even if you wanted to your looking at five to seven years before it could be done. It's not quite as simple as printing a shed load of new money.
Link to comment
Share on other sites

[quote user="idun"]

[:'(][:'(][:'(]

 

No option? Hit ler wanted it and apart from this island got it, the Cesars had it. and do you know what, 'we' the people did not and this 'person' does not.

[/quote]

Nor did I !

But by choice I live in france where the chances of sabotaging the "disunion" are greater.

Link to comment
Share on other sites

I don't think you can use the word 'we' as that implies every single person does not want it. On the other hand of course there are people, like you, who don't want it.

Germans and Romans invaded, a federalised Europe can only be attained by the people wanting it (by voting) and that depends on what newspaper you read in the UK and what you choose to believe as being true. Even an intelligent person such as yourself must know, from living in France for so many years, that they do print a load of rubbish and untruths at times about the goings on in Europe and even France.

A federalised Europe would work along similar lines as the USA. Tax's collected as a federal tax and then local or state tax's. There would be federal laws and state laws (which for instance why some US states still have the death penalty as an extreme example). If your going to have a proper ECB then you must have a unified fiscal policy.

The first step towards this will be public voting for a European President which I have read may happen in the next five to ten years. At present the President is on a rotation basis and currently it's Denmark I believe which really is not good enough as each President only has his or hers own countries interest at heart. We need a President who has the whole of Europe's interest at heart.

Link to comment
Share on other sites

The EU admin already costs unbelieveable amounts, and if regulated properly may even be able to bail out the euro all by itself.

As a general rule I do not trust politicans. However, On a scale of 1-20 I trust most EU politicans well below 5, 20 being the most trustworthy. WHY would I and an awful lot of people like me want a federal europe? And we all speak different languages, how on earth could we get to 'know' who we were going to vote for. I doubt I'll ever learn magyar,or uralic. OR will we have another language inflicted on us all, like say, german?!!!

I never voted for us to join the EEC, such was my trust in what it really meant and as it turns out, I was right about it. Friends who did, will say, 'but I never voted for what we have now, I just voted for us to make trading easier'........ and I don't mind making trading easy, I never did.

 

Getting out of the euro means leaving the EU? Well, I suppose that that is how the euro countries view those that chose not to join the euro in the first place, sort of parent-pauvre........ heretics? who don't believe in the universal nature of an ever expanding EU.

 

And if the euro crumbles, as it could.......... what will all the commentators in France say...........well, personally, I doubt that they would say it was a good idea to get into bed with the greeks, italians, spannish etc in the first place. In fact I'm sure that every one will say that they were always against it.

 

Link to comment
Share on other sites

[quote user="Rabbie"]According to this article on the BBC website any country wishing to leave the Eurozone would also have to leave the EU. So perhaps in that case it is not so an attractive option for Greece to revert to the Drachma[/quote]

I liked the comment about it couldn't be done in less than four months, printing the notes and stamping the coins that is. What they don't take in to account all the machines etc that have to be changed or software updated from parking meters, toilets through to money dispensers, cash machines, bank computer systems, etc, etc. Hopefully somebody may have kept the original software but it might have been deleted ages ago. You can just see 'Nick the Greek' trying to get his money out the hole in the wall. [;-)]

Link to comment
Share on other sites

Quillan wrote .....You can just see 'Nick the Greek' trying to get his money out the hole in the wall. Wink [;-)]

Not so long ago we  provided accomodation  in the UK for a young lady visiting from Athens who was on a youth exchange . .

 Her father  is a doctor    One of the first things she requested we assist her with was finding a UK bank to open an account  at so her father could move his money . .So  I know of  one " Nick the Greek " who will find a working hole in the wall  .No doubt there will be thousands like him who have been swifting  cash out of the Euro .zone   for some time ..

Link to comment
Share on other sites

Strange isn't it, she can open an account when not a UK citizen and only on holiday (so obviously not resident) yet if you try and open a UK account being a UK citizen but resident in France the banks won't let you. Seems to me it's a bit discriminatory towards UK citizens living elsewhere in the world.

Never mind perhaps her dad is one of the Onassis's and has the odd few mega oil tankers etc hanging around and boot full of gold bullion (sold to him on the cheap by Gordon Brown a few years back). [;-)]

Link to comment
Share on other sites

[quote user="Quillan"]

Strange isn't it, she can open an account when not a UK citizen and only on holiday (so obviously not resident) yet if you try and open a UK account being a UK citizen but resident in France the banks won't let you. Seems to me it's a bit discriminatory towards UK citizens living elsewhere in the world.

Never mind perhaps her dad is one of the Onassis's and has the odd few mega oil tankers etc hanging around and boot full of gold bullion (sold to him on the cheap by Gordon Brown a few years back). [;-)]

[/quote]

Ah, but did she succeed?

All conditions I have ever seen stgate that the person must be UK resident.

Paul

Link to comment
Share on other sites

I always assumed the process to switch away from the EURO would take months but in fact it is not necessarily the case.

If Latin America is an example, it could be done over a long weekend, with banks closed for a week.

The premise on which it works is that 'bad' money chases out 'good'.

Greek government would issue in note form, tax credits with a maturity of say 3 years. These would be used to pay civil servants and goods and services. Retail outlets such as supermarkets would be forced to accept these notes, and they could be used to settle tax demands etc.

Euros would continue to circulate in Greece, but because anyone who received the tax credit notes wouldn't want to hold them, they would rush to spend them. This creates money velocity and helps to reflate the economy. Euros would be retained as a store of wealth (euroisation like dolarisation) with the newly created currency only becoming the accepted currency when stability returns after many years.

Link to comment
Share on other sites

The theory is correct but the practicability is a different matter. Reprogramming every credit/debit card machine at every retail outlet from the corner shop through to hypermarket and petrol station ( remember it was ages before they would accept foreign cards in France (pin and chip type) even those from other Euro countries). It's a mine field when you come to western countries. We are also talking about 100M less people living in the whole of South America (compared to the 17 Eurozone countries) where only a third of the population has any type of bank account, you can't really go like for like. Delarue who print the bulk of European currencies are talking a minimum of four weeks just to print Greek bank notes then there are the coins to mint as well and they should know as it's them that would be printing the new Greek currency.

Just as a matter of interest who has decided that if Greece defaulted or opted out of the Euro they would revert to the Drachma, is that just an assumption because that's what they had before? Could they create a totally new currency or opt for another existing currency like sterling or the USD dollar and if not why not?

Link to comment
Share on other sites

As far as paper money goes I think the simplest thing would be to start by overprinting all the notes held by banks with 'New Drachma' or the like. On day one it would start at parity with the Euro and presumably be rapidly readjusted by the markets to whatever the perceived real exchange rate should be.

The trouble with any sort of exit from the Euro is that everybody who can will draw as much Euro cash as possible as soon as they see it coming -- in other words, a run on the banks.

It doesn't really make much sense to go back to the pre-Euro currency at the old exchange rate, which by now is just history. If it happened in France what would be the point of having a Franc worth about 15 Euro-cents?

Link to comment
Share on other sites

The things I have read in the news and this thread even made me do a bit of research on bank note production. One think that surprised me way that the B of E print Euro banknotes for a start although I don't know why seeing as the UK is not in the Euro.

T protect banknotes from being counterfeited there are loads and loads of security features built in many of which can be seen by the naked eye. There are also electronic 'micro chips' added to the cotton fibres that identify the notes (one reason why now you can put Euro notes in to a hole in the wall any way round, you used to have to put them in at a specific orientation before) this system is called RFID (Radio Frequency Identity Device). The actual ink used is also special and that's why Delarue provide the ink and printing process for bank notes. The serial number for instance uses magnetic ink.

So basically it's very high tech these days printing banknotes which is why it would take a while to get new ones in to circulation and why you couldn't 'over print' one currency note with another. I didn't realise how complicated it all is these days an if your interested you can google bank note production, strangely enough it is quite an interesting read.

As to Greece, well I think we can all see now where it's going and quite frankly rather than drag it all out causing pain and uncertainty it might be better to 'push' them rather than wait for them to 'jump'. The sooner this happens the quicker we can all move on. There will be some initial pain but many of the 'experts' (who I admit often get it wrong) seem to believe it won't be the end of the Euros if Greece left.

Link to comment
Share on other sites

In my opinion, based on very little International high finance knowledge ( approaching zero ), there really is no choice. Unless the EU ( ECB ) pour immense amounts of money into Greece, thus propping up the 'failed' system, then Greece must leave the Euro.

As most of the money required will be from Germany it will create a serious problem for the German electorate and hence for the German Govt. If however, the money is not forthcoming and the Merkel led EU continue to insist on dramatic reductions of Greek spending, then I can see the volatile Greek population on the streets in ever increasing numbers and violence escalating. This will IMHO lead to a coup by the Greek military, who will then unilaterally declare independence from the EU.

Greece has a large, well equipped Military and, given the historical feelings towards Germany, particularly by the older generation, I feel there will be an unstoppable move to resist what will be seen as German interference in the life of Greece.

What this will mean to the rest of the EU I have no idea, but I suspect it will lead to other EU members leaving the club, possibly Spain, Italy and Portugal.

Will this be a bad thing?
Link to comment
Share on other sites

[quote user="Quillan"]

 There are also electronic 'micro chips' added to the cotton fibres that identify the notes (one reason why now you can put Euro notes in to a hole in the wall any way round, you used to have to put them in at a specific orientation before) this system is called RFID (Radio Frequency Identity Device).[/quote]

Mmm [Www]

Perhaps someone is pulling your chain? I have been out of the game a few years and would be delighted to be proved wrong but I dont think that RFID tags have yet been miniaturised to fibre level, yes the chip and recieving loop is now quite thin and also cheap, look at the one in the new passports, if you have bought any T shirts etc from Decathlon you are likely to be wearing a RFID unless you have removed the sewn on tags (they do tell you to do so) but at bank note level I would be surprised, although as I said happy to be proved wrong.

Link to comment
Share on other sites

At 1 level it comes down to it being cheaper for the Germans to provide the funds required by Greece to continue to meet it's domestic and international commitments. The private French and Germans banks have sold all their Greek debt to the ECB, roughly EUR 250billion, TARGET2 transfers (Google it!) due from Greece, about EUR150billion, funds already committed EUR128billion, chuck in a few ad hoc loans, etc...............call it EUR600billion. That will ALL be lost by the EUR taxpayers if Greece goes bust. Therefore cheaper to bail them out!!!!

At a political level. Looks like Merkel is a dead duck after the RW-P State result. German taxpayers are tutored by Bild, which makes The Sun look bipartisan. Any funds slipped to Greece have to go under Dietmann's radar!

If Grrece leaves EZ, that leaves Italy, Spain, Portugal, and probably France to dangle in the wind. France finances itself almost entirely from foreign funds, funds which completely evaporate if Greece goes. The ECB will have to print EUR3-5trillion, on top of the EUR1.5trillion. This is starting to make QE looking pathetic!!

So many parts of the EZ financial system are interlinked. At levels that UK media completely misses, that this is way, way beyond moral hazard, punishing the Greeks, or want's fair.

Like every other big company in Europe, we planned a potential break up of EZ last year. We, like just about everyone one in EZ, cashpool (Google it!) in the UK. Software rewritten. T&Cs rewritten. Contracts tendered in USD/GBP., etc, etc...........

Personally, I don't think it will happen. However, looking at the current share prices, I doubt PSA/CA/Commerzbank shareholders agree!

Another guess. If it all goes t*t's up. I bet the Brits will use their AAA rating to bail out Ireland. Like Greece and Germany...........

Link to comment
Share on other sites

[quote user="powerdesal"]In my opinion, based on very little International high finance knowledge ( approaching zero ), there really is no choice. Unless the EU ( ECB ) pour immense amounts of money into Greece, thus propping up the 'failed' system, then Greece must leave the Euro. As most of the money required will be from Germany it will create a serious problem for the German electorate and hence for the German Govt. If however, the money is not forthcoming and the Merkel led EU continue to insist on dramatic reductions of Greek spending, then I can see the volatile Greek population on the streets in ever increasing numbers and violence escalating. This will IMHO lead to a coup by the Greek military, who will then unilaterally declare independence from the EU. Greece has a large, well equipped Military and, given the historical feelings towards Germany, particularly by the older generation, I feel there will be an unstoppable move to resist what will be seen as German interference in the life of Greece. What this will mean to the rest of the EU I have no idea, but I suspect it will lead to other EU members leaving the club, possibly Spain, Italy and Portugal. Will this be a bad thing?[/quote]This article by Robert Peston suggests that leaving the euro would be painful for Greece. Link is http://www.bbc.co.uk/news/business-18058270. Forum won't let me embed a link in the usual way[:(]
Link to comment
Share on other sites

Oh well. Nice of Mr Peston to explain cashpooling and TARGET2.

Biggest elephants in the romm, which the usual Media Studies graduates seem to have completely missed. Never agree with his conclusions though.

Link to comment
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
 Share

×
×
  • Create New...