Whither the euro?

[Huguenot]

You're probably drunk acm judging by the time of the post, but that kind of abuse is unnecessary. If you don't think that agrressive swearing counts as loud mouth dross, then there's no helping you.

Can I suggest you do a quick edit and cut the foul language?

Regards your points, all international trade policies have unforeseen or unwanted consequences - and the fact that you bring in the IMF and the World Bank is evidence of this fact. These are not EU bodies.

There is no more justification for this attack on the EU than there is for an attack on any other international trade body, including the UK government.

[TwisttBllen]

HAPPY NEW YEAR EVERYONE

YES WE ALL HOPE TO MAKE NEW FRIENDS ESPECIALLY THE ONES DON'T HACK THEIR FRIENDS

COMPUTERS AND PHONE LINES.

I REALLY HOPE A PEACEFULL YEAR AND LESS STRESSFUL 2012 IF I FIND OUT

ANYTHING TO DO WITH ME THIS YEAR IN THIS FORUM THEN THINGS WILL GET VERY SERIOUS

I AM AFRAID. HA,HA,HA SOMEBODY WILL HAVE TO DEAL NEXT TIME.

THANKS FOR YOUR COOPERATION IN RESPECTING MY PRIVACY FOR 2012 WAS GIVING THE LAST CHANCE

FOR THIS THINGS TO BE FOUND OUT BUT MR IAIN MACKENZIE NEVER TURN UP TO FACE OUT HIS REASONS.

[silverfox]

Interesting times.

Francois Hollande wins the French Presidency.

Early projections in Greece's parliamentary election suggest the two main parties that back austerity measures have suffered dramatic losses.

[????]

The economics won't work and then the politics won't work.... as the realists have been saying for ever.

[HAL9000]

Euro FX reactions to elections:-

 

[New Nexus]

Yesterday it was Fitch setting the groundwork. Today the natural escalation has arrived, with a Handelsblatt report that German coalition lawmakers saying they are open to a Greek farewell. To wit: "Politicians of the CDU-FDP coalition will no longer look on the goings on passively. Given the uncertain political situation in Greece are advocating for a withdrawal of the crisis-Mediterranean Heads of State from the euro zone. "We should offer Greece, leaving the euro zone controlled, without withdrawing from the European Union." For now this is merely posturing, as Greek is doing all it can to make it clear it does not need Germany. Of course, Germany has no other choice but to reply the way it has. The only problem is that the Nash equilibrium is now of mutual defection, which is the worst possible outcome for Europe, and even worse for US taxpayers, whose cash via the FRBNY's FX swaps will be used to rescue Europe when the dominoes finally tumble. But at this point, this it is pretty much a given.

Zerohedge 05/09/2012

[Marmora Man]

Nice pasting NN - what do YOU think of the situation?

[New Nexus]

Doomed from the start.

?Once A Liar, Always A Liar": The Incredible (Un)Truth About Italy, Greece, And The Birth Of The Euro

In response to a request by Germany's SPIEGEL, the German government has, for the first time, released hundreds of pages of documents from 1994 to 1998 on the introduction of the euro and the inclusion of Italy in the euro zone. They include reports from the German embassy in Rome, internal government memos and letters, and hand-written minutes of the chancellor's meetings. The documents prove what was only assumed until now: Italy should never have been accepted into the common currency zone. The decision to invite Rome to join was based almost exclusively on political considerations at the expense of economic criteria. It also created a precedent for a much bigger mistake two years later, namely Greece's acceptance into the euro zone. Many of the euro's problems can be traced to its birth defects. For political reasons, countries were included that weren't ready at the time. Operation "self-deception" began in December 1991, and culminated with a plausibly deniable comment of 'not without the Italians' by Kohl who needed them to bring the French along to the Euro party to ensure his successful re-election. A few weeks before the launch of the common European currency, Stenglin's assessment of the situation took on a dramatic undertone, when he wrote: "The question arises as to whether a country with an extremely high debt ratio doesn't risk gambling away the success of its consolidation efforts to date, thereby harming not only itself, but also the monetary union." It was a prophetic remark. Of course, financial data doesn't play much of a role when it comes to war and peace. Italy became a perfect example of the steadfast belief of politicians that economic development would eventually conform to the visions of national leaders.?

ZeroHedge 05/09/2012

[Huguenot]

Does that make any sense at all? I don't think NN understands it anyway.

I admire the resolute jingoist flag waving, that claims that the US is going to bail out Europe! Does this guy have ANY clue who launched the last financial crisis?

More importantly does he have any idea of the $4.6 trillion the US currently owes foreign governments who bail them out year after year?

To suggest the US taxpayers would be bailing out foreign governments, when US taxpayers actually refuse to pay enough tax to pay for their own administration, and need to borrow from foreign governments every day just to run the country?

Are they aware that a huge proportion of that is owed to the members of the European Union, and over $1.1 trillion to China?

It would be hilarious were it not for the fact the NN reads this garbage and actually believes it.

[New Nexus]

Please do stop this H, your damaging the bovine excrement meter.

http://whatreallyhappened.com/IMAGES/animbovine.gif

[El Pibe]

Obviously he thinks the whole thing is a "we have always been at war with Eastasia" ploy by Mossad to control the world, so irreleveant really.

This was a rather interesting blog post about the political impasse in Greece.

http://paulmasonnews.tumblr.com/post/22662269568/greekonomics-blog-preview-8-may-2012

He spells out three possible scenarios none of which seem too popular politically with the Greeks, which leaves one wondering if something more dramatic is likely.

Given Greece's turbulent and not so very distant political history, could some sort of coup, whether a soft one as suggested, by increasingly active polical extremists or even the army, be possible?

I dunno. What does seem likely to me is that an indefinite austerity in a vain hope that things will turn around soon (which is I guess our plan here) doesn't look like it'll wash for much longer in Greece and something's going to give.

Hence "Greece, leaving the euro zone controlled, without withdrawing from the European Union." actually looks quite plausible, at which point Quids will doubtless pitch in with a teeny weeny "i told you so" ;)

[Huguenot]

NN, describing my comments as bullshit implies that I have been deliberately misleading or used incorrect information.

This is clearly not the case - those are all verifiable facts.

So I can only assume that you saw that GIF and thought it was so smart and clever that you used it in completely the wrong context. This only adds to the impression that you're not all there.

BTW I always wanted to know: are you British, An Amercian living in Britain, on an American living in America?

[New Nexus]

Hey, tweedle dee and tweedle dum, Chillax.

Or CIA may fit you with a special pair of underpants.

[El Pibe]

I'm actually quite curious to know the answer. Any chance you could answer just one teeny ickle direct question asked of you...just once...pretty please :-)

[New Nexus]

I am a stranger in these lands, as are we all.

[????]

Spain wobbling again, just had to nationalise a bank

Its Bond rate at above 6%

The Guardian's new love, Hollande, now saying he won't ratify the agreement that Cameron alone didn't in October - will the Guardian et al be screaming 'little froglander' at him?

10% of Greeks voted for a real, propa, nazi saluting bunch of thugs

Euro now at E1.25 to the ? from about 1.13 a year ago (great for us whi get paid in Euros...er not)

ECB witholding Greeces next bunch of bail out dosh

Dutch govt gone

Irish referendum upcoming...I wonder if they'll make them vote twice this time if they don't ike the first result?

When are the Italian elections?

Idealistic, visionary idiots...doncha just love them

[Huguenot]

You may have noticed that Britain is also undergoing 'austerity' and isn't part of the Euro.

We also have strikes, riots, wobbling coalitions and partially nationalise banks, and we are not part of the Euro.

Greece is undergoing financial meltdown because the government spent far more than it raised in taxes. Whether this is European austerity or a devaluation of the Drachma the outcome would be the same: a drastic reduction in the spending power of Greek citizens and a collapse of government spending.

Spain is predictably under attack because the markets are trying to roll these countries to make a fast buck.

We are watching the redistribution of global wealth and power, not some sort of salutary lesson on common currencies.

The economists know that, and the financiers are trying to capitalise on the misery.

[????]

Canute's back. You're staring to sound a bit like a CT nutter with "the markets are trying to roll these countries rubbish", didn't have you down as a Marxist Today reader? You really believe the Euro's in trouvble because of a few Gordon Gekkos in braces in Mayfair? The reality is that Spain is being charged a premium to borrow money as no-one wants to lend it at standard rates as they are worried they won't get paid back. We are in austerity because we borrowed too much to pay for things we couldn't afford too but it would have been twice as bad if we'd been in the Euro (the boom and the property bubble/bust). We can still borrow at a touch over 1% and our unemployent rate is about 7%ish - Spain's having to get the money it needs at a touch over 6% and its current unemployment rate is touching 25%. Ireland and Greece are being propped up by the ECB and IMF and Italy/Spain and Portugal don't look that far off it. Giving countries without Germany's prudence its cheap credit via the Euro at the same time as decompetivising(?) their workforces and products via parity exchange rates with Germany has been a disaster - and now, because of the Euro, they have less flexibility to try and get out of austerity. Which is why growing numbers of their voters are rejecting Euro friendly parties, embracing extremism and my concern is they will reject the EU per se.

Some of our banks were nationalised back in 2008 along with many others globally - Spain nationalised one yesterday.

The economist know the Euro's a mess as do the financers. No one with money - Sovreign Wealth funds, the Chinese, Pension funds, banks wiith strong balance sheets, wants to lend to these countries as they think they are too higher risk. Would you put your cash in Spain for a non gauranteed 6% return? If my Finacial advisor tried to sell that to me I'd be looking elsewhere.

[Huguenot]

Whether I put my money in Spain or not has nothing to do with the Euro.

There is no basis for the idea that everything for the UK would have been twice as bad if we were in the Euro.

You contradict yourself when you say people are investing or not in Spain based on the local conditions, but that the problems were brought about by cheap credit based on Germany.

What's it to be? Local or Euro? You want to have it every way.

We're all aware of the challenges, some of us recognise that it's not all down to the Euro.

[????]

So. If interest rates had been as lower as in the Eurozone durung the boom you think UK companies and consumers ( and Gordon) wouldn't have borrowed even more cash? You think we'd be in a better place now if we'd been in the Euro unable to set our own interest rates?

I scratch my head if you don't understand the concept that the Euro initially provided countries with German level interest rates and some of these individual countries then failed to behave like Germany with this cheap (but alas not free) money. There's no contradiction at all in that. Spain issues bonds and they are now not being bought except at a premium...a true fiscal union would ONLY have Eurobonds and THEN the local isse would be largely irrelevant. The Germans so far won't underwrite that as their politicians are looking to the German electorate NOT the european one (see also France/Holland?etc etc etc)

The point is the Euro's made the situation much worse and is turning many of its citizens against the EU (which I have always agreed with you would be a bad thing)and detaching them from mainstream, modertae politics., which is a very bad thing. It's not bought unity and there's little evidence that it will anytime soon. The uncertainty the Eurozone crisis has caused is hampering all of us in Europe's recovery is certainly threatening the EU and some fear even democracy. This is the exact opposite of the vision of its enthusiasts!

I've never said that it's all down to the Euro - the credit crunch etc is not the fault of the Euro but, as it's critcs pointed out, the Credit Crunch and global recession has exposed the fundamental contradictions behind the Euro that you can't have fiscal union without political union.

[El Pibe]

actually by and large agree with most of that quids.

Some minor quibbles, UK interest rates have been rock botom for ages and (thank god) haven't gone up today.

Sovereign debt can be sustainably higher than most EU countries currently have them at.

Some of the smaller less diversified economies were more fragile than they appeared during the boom and debt reduction realities are having to be faced up to, but if you take the bailouts out of the equation then Brown's spending boon turns out to be something of a myth.*

I think worse than sovereign debt has been, to paraphrase you, 'individuals in countries' who's spending has been fuelled by cheap debt. This is certainly the case in Spain where sovereign debt remains markedly lower than the UK's.

This has been facilitaed by membership of the Eurozone in places like Greece and Ireland, but I think has also been down to other factors such as deregulation, globalisation and is simultaneously symptom and contributory factor to all those lovely bubbles we've seen rise so high, only, like my dreams to fade and....oh hang on wrong thread.

*although all those damn pfi contracts means he single handedly made much of the public sector pricier and worse but that's a whinge for another thread.

[New Nexus]

Euro and Europe project is on life support but the Electroencephalography (EEG) has flat lined.

Person/s unknown at some point will have to pull the plug or events will force collapse, my bets are on the events.

U.S. out of control both fiscally and politically, not good when you have food stamp ghettos and lots of guns.

U.S. DHS acquiring 450 million rounds of .40 caliber hollow point ammo.

U.K. is a big part if not the main player of the Ponzi scheme and money junky thinking; the U.K. will take a big hit when the ponzi collapses.

[El Pibe]

Does NN pass the Turing Test?

Thinking about it I'm not sure it does.

[the-e-dealer]

No its a machine!

[????]

Just on the small points El Pibe.

UK interset rates are rock bootom now and have been for some time agreed becuase we are not in the Euro -where Gernmany has been reluctant to lower rates - and so our central banks can have a choice and chose to cut hard and fast. BUT In the period prior to the bust Euro interest rates were lower than the UKs.

I think you are also largely talking about sovreaigh debt when the relevance for the markets in Spain's case is the Budget Defeceit (and ours). And yes our Sovreaighn Debt can be sustainably higher with low interest rates but if our budget defeciet carries on growing then the markerts start to spook. Gordon was pushing our BD up higher and higher during times of plenty rather than reducing it - that was unsustaibnable and the BD figures that are quoted exclude bail out money. The 'horrible cutting con-dems' have mangaed to only cut 10% of our overspending (defeciet) which means our sovreaign debt is still mounting significantly year on year and makes you realise just how horrible the next few years are going to be, even under the scenario we don't go bust.

Of course the two are related and so for instance I think in Italy's case the issue is largely SD as there's massive and their long term economic growth feeble, given demographic trends this is worrying the 'markets'.

For huges consumption, There's no hedgie conspiracy, institutions with money are looking at european nations and going hang on a minute they've got all sorts of liabilities stacking up (vis avis demographics), piss poor growth, huge debts and largely their year on year defeceits are growing, mmm not sure If i'm buying debt off them". We've reached a tipping point.

If countries get their budgets back in balance or surplus they are still going to have to keep it that way for a while before markets (the money) feels ok about their SD again.