Euro Area

[Tellos Athenaios]

Well then you have to think who buys Dutch goods is it Germany, France etc or is it someone else. If it is Germany and you pull out but they don't you would have to weaken the currency and this would severely affect your banking sector as it likely owed lots by the PIIGS.

Which would severely piss off direct Dutch competitors, for much the same reason an artificially cheap Yuan annoys the USA (despite the fact that an artificially cheap Yuan means a lower cost of living in the USA as well) so much. As for our banking sector, the real problem for the ING group was the USA/UK (which is part of what they focus on being insurance/securities kinda company), for the Rabobank no problems (being based on domestic accounts & housing finance mainly in the Netherlands itself), the ABN/Amro/Fortis got taken over by the state and the DSB group went bust.

If Germany pulled out and you did too you would have to try to ensure the currency was always below Germany but above the Euro. Thats if the euro existed anymore of course, which it would in some kind of form in order to service the debt.

That is basically what the case was before the Euro, with a brief spell of guilder > mark during the mid 90's when the Netherlands actually ran a budget surplus owing to a boom. Essentially the Netherlands is every bit as solvent as Germany is (possibly more so) but the Netherlands does not have the sheer economic muscle of 80 odd million Germans with a devoted Turkey & Balkan fanbase to cheer them on.

If Netherlands is not exposed to a large amount of PIIGS debt and Germany pulled out then you could pull out take a small hit on debt and then follow the new D-Mark.

Well a large amount obviously. Would not be surprised if it was mainly Irish debt through ties with the UK, and Spanish debt as well. But it is mostly the French and German banks which bought the PIGS (minus Ireland), and a lot of PIGS amongst each other for instance. (Spain owning Ireland owning Greece that kind of thing.)

edit disclaimer obviously if Germany was not your main trading partner none of the previous thought experiment can happen.

The real reason why the Netherlands cannot pull out has to do with the fact that the Netherlands heavily depends on those free flows of goods, capital and people -- transportation being what the Netherlands has been built around for hundreds of years and what determines the difference between a boom or a slow year, between a slow year or a recession. While in theory the Netherlands can do without the EU, the difference between having an EU and not having an EU (or at least having those treaties which ensure our economy can take full advantage of reduced overhead in dealing with different countries) ends up much, much more severe.

[Tellos Athenaios]

The UK works as it has been there for so long. If the English for example were aware of how much it costs to hang on to Wales they might be far more peeved at sharing the union with them (let alone Northern Ireland). But it has been thus for so long that it is not thought of in purely fiscal terms any more.

Well the Germans have shown they can execute on those stunts much more effectively than the English where unity ends where the next accent begins unless the Germans are proving again how much better they are at football.

Take East Germany. Only 20 years into the game and already there is much the same feeling of why do we pay for them Easterners anyway, and what have those Westerners ever done for us (except paying for everything we now rely on, as we are out of job). But the suggestion that West & East should split again is less likely than the EU disbanding willingly.

[Fragony]

Wouldn't you agree that the Netherlands is too succesful to fail, we can nurish a hard coin. Why shouldn't we use the current crisis as an opertunity, buy cheap screw Europe, let's buy up Ireland just to laugh at them. Time for some good old fashioned hardcore capitalism.

[gaelic cowboy]

Wouldn't you agree that the Netherlands is too succesful to fail

No I would not agree Netherlands is too successful to fail.

[Fragony]

No I would not agree Netherlands is too successful to fail.

Why? Don't see how. We will always have a real economy no matter what happens, we are the gate of the mainland, euro can fall not our problem, if we have our own currency it's a feast really.

[gaelic cowboy]

Why? Don't see how. We will always have a real economy no matter what happens, we are the gate of the mainland, euro can fall not our problem, if we have our own currency it's a feast really.

two reasons really

Your banking system is quite large now and probably depends to a large degree on the Euro stability.

And lastly your gateway to Europe analogy is a bit overdone you cant charge too much or people just go somewere else.

The key is how you leave not just wanting to leave.

[Fragony]

two reasons really

Your banking system is quite large now and probably depends to a large degree on the Euro stability.

And lastly your gateway to Europe analogy is a bit overdone you cant charge too much or people just go somewere else.

And where would they go? There is no alternative to Rotterdam for the bigger ships, unless you want to spend 20 years building it

[gaelic cowboy]

And where would they go? There is no alternative to Rotterdam for the bigger ships, unless you want to spend 20 years building it

They wouldnt come at all Fragony we have a saying here "Ten hungry men nine dinners" other countries will buy the imports and the exports would collapse.

Basically there are other places to go nowadays for a market.

[Fragony]

We also got a saying here but it really means nothing

Market de Frag, African and Oceanic art and ceremonial weapons.

[gaelic cowboy]

We also got a saying here but it really means nothing

Market de Frag, African and Oceanic art and ceremonial weapons.

Ten hungry men nine dinners

It means that someone will always be willing to pay extra to ensure that they do not go hungry. However in the case were talking about it is the reverse as someone would be willing to pay less to take the goods passing through the Netherlands for importation to Europe to circumvent the Netherlands.

Just because the Netherlands is at a natural choke point of trade routes does not mean it is gifted with eternal dominance have you been to Venice lately.

Anyway were getting side tracked the key point to remember is it will not be painless to leave the Euro unless there is an agreed mechanism.

[Furunculus]

Anyway were getting side tracked the key point to remember is it will not be painless to leave the Euro unless there is an agreed mechanism.

which there isn't.

http://www.eurointelligence.com/uplo...eb_Edition.pdf

except for one country............... Germany.

“Another possibility is an amicable agreement for that country to leave the euro area, but to remain inside the EU. That country would then be left in a state of non-compliance with the EMU convergence criteria. The country would be back in the ante-chamber of EMU, and thus not be considered in breach of the EU entry obligations. While this is possible in theory, we cannot see why other member states should accept such an agreement, since they will not benefit from having to put up with a country that will seek a competitive advantage by devaluing, and then re-entering at the next opportune moment. Furthermore, if such a procedure were applied once, it could be used as a precedent for others, or even for the same country, in the future. This would seriously undermine the long-term viability of monetary union.”

To answer the objections above point by point:

Q. Why would other nations allow a fellow Eurozone nation to do this?

A. Because it’s Germany and the reintroduced Deutschmark would appreciate, which would allow the other Eurozone nations to devalue, and thus become more competitive with non-Euro nations.

Q. Would that nation not seek to re-join at a better rate in a few years?

A. No, because it’s Germany, their new currency would appreciate and not depreciate, and the Germany people would not agree to abandon the Deutschmark a second time round.

Q. Would it create a precedent?

A. Yes, it would create the precedent of a currency leaving the Euro on condition than any re-entry would be at a higher rate, an eventuality unlikely to be appealing to other Eurozone members.

Q. Why would Germany choose to leave the Euro?

A. It would have no choice, German Basic law contains an eternity clause declaring the executive and judiciary to be bound by the law, and if the GCC declares the bail-out incompatible with German Basic law………..

Q. Why would Germany choose to make themselves less competitive on the world market?

A. Other than the above, it would also see a return to sound money and the end of bail-outs for countries that are monetarily incompatible with Germany, and it would return the majority share of its export markets to a growth zone rather than have to rely on un-free markets in the east.

[Fragony]

The point is that we simply don't have to

Nothing natural about it by the way it's manmade

[Vladimir]

Wouldn't you agree that the Netherlands is too succesful to fail,

Break it up.

[Tellos Athenaios]

I don't think the Netherlands is too successful to fail. Leaving EU is not a sound option at this point, really, leaving euro is looking for problems rather than solving them (Dutch bonds are largely unaffected by Ireland as of now, but a new Dutch currency will need some time to find its balance). That might change once, say, Germany leaves, as we can peg our currency to a Dmark or possibly do a monetary union with Germans (if Germany leaves it might be part of broader exit party). However that is highly speculative if.

[gaelic cowboy]

I don't think the Netherlands is too successful to fail. Leaving EU is not a sound option at this point, really, leaving euro is looking for problems rather than solving them (Dutch bonds are largely unaffected by Ireland as of now, but a new Dutch currency will need some time to find its balance). That might change once, say, Germany leaves, as we can peg our currency to a Dmark or possibly do a monetary union with Germans (if Germany leaves it might be part of broader exit party). However that is highly speculative if.

Exactly in a sense we are waiting on Germany because it is they who will decide the fate of the Euro. I believe there is a 50% chance that Germany leaves the Euro and then certain countries could leave too and peg to the D-Mark which will be stronger than a rump euro. The key is being stronger than the debt your leaving behind but even then it will still depend on how much confidence there is for your future economy.

Basically we wait till we know where were all going.

[Husar]

Huh? What? Now we are going to leave the Euro? 50% chance? Where? What? Huh?

It's all you small problem countries who want out while we're trying to keep you all on your feet to keep the Eurozone alive and now you make up rumours about us leaving? Why did we bail everyone out if we want to lave you all to rot anyway?
I'm sure we could establish a new union though, everything would be centered around Germany, Berlin would be renamed into Germania and....

[Louis VI the Fat]

Huh? What? Now we are going to leave the Euro? 50% chance? Where? What? Huh?

It's all you small problem countries who want out while we're trying to keep you all on your feet to keep the Eurozone alive and now you make up rumours about us leaving? Why did we bail everyone out if we want to lave you all to rot anyway?
I'm sure we could establish a new union though, everything would be centered around Germany, Berlin would be renamed into Germania and....

Last time I looked, Greece and Ireland together are 15 million people. Francogermania 150 million people. We're not sweating. Why should we do away with our currency? Because some smaller countries lacked discipline? Pft.


We're cleaning house. While the Germans beat some Teutonic discipline into Europe by the sheer power of Merkel's words, France imposes a social Europe, by fighting bondholders, financial de-regulation, and tax havens. Although sadly, the Germans seem to have more succes with their part of the cleaning up than France.

[gaelic cowboy]

Huh? What? Now we are going to leave the Euro? 50% chance? Where? What? Huh?

It's all you small problem countries who want out while we're trying to keep you all on your feet to keep the Eurozone alive and now you make up rumours about us leaving? Why did we bail everyone out if we want to lave you all to rot anyway?
I'm sure we could establish a new union though, everything would be centered around Germany, Berlin would be renamed into Germania and....

I aint making rumours up just to fulfill a secret dream or something I am merely stating it is the logical conclusion of present policy of kicking the debt down the road and hoping it will go away. The ECB is basically telling France and Germany to bail us out and hope this solves the problem, it wont cos the market types don't believe us anymore and they don't believe Germany has the cash to bail out Spain.

All that means is that there is a 50% chance you will leave or we will integrate politically and have transfers like they do in USA. Simply put does Germany want to pay for it cos it is a question of cash, I seriously doubt that is high on any German agenda. Why do I say that well Germany is mad enough about bailing two countries out so how does four or five strike the average German, I expect they will be even more furious than now.

Take all that into account and the move out by Germany looks likely to me.

[gaelic cowboy]

Last time I looked, Greece and Ireland together are 15 million people. Francogermania 150 million people. We're not sweating. Why should we do away with our currency? Because some smaller countries lacked discipline? Pft.


We're cleaning house. While the Germans beat some Teutonic discipline into Europe by the sheer power of Merkel's words, France imposes a social Europe, by fighting bondholders, financial de-regulation, and tax havens. Although sadly, the Germans seem to have more succes with their part of the cleaning up than France.

If these Bondholder barbarian types take down Spain or Italy all bets are off Louis it really is as simple as that.

The population of the PIIGS is what 120mill can FrancoGermania bail that out, throw in a bit of Belgium seasoning and were talking around 130 mill once were in this terroritory were talking a veritable economic manhattan project.

[Husar]

Well, we'll pay, but with even harsher conditions, Spain and Portugal will cede their independence and become German states, then we can tax everybody in Germany with another solidarity tax to build up these two.We can deal with the speculators and bondholders once we have conquered the world, they will cause their own downfall...

Actually you're right to an extent, but the thing that makes Spain and Portugal most likely to default (whatever exactly that means in financial terms) is people talking about them defaulting soon, which scares all the bondfondlers and sharecrows.

[Furunculus]

the thing that makes Spain and Portugal most likely to default (whatever exactly that means in financial terms) is people talking about them defaulting soon, which scares all the bondfondlers and sharecrows.

yes, but that is because people have begun to realise that it's a stupid, dumb, ridiculous political project sparked by ideological idiocy, that should never have been borne into this world.

[Beskar]

yes, but that is because people have begun to realise that it's a stupid, dumb, ridiculous political project sparked by ideological idiocy, that should never have been borne into this world.

Not true.

[Furunculus]

really?

that's not what europe's leaders now believe according to Mervyn King..........?

Germany's rules based system now being implemented would work without the PIIGS, but as constituted with all 17 (18?) members it can only EVER work with political union to justify that transfer union and regulatory harmony required of a monetary union.

until you have a mandate for that political union, or the periphery leaves it's a stupid, dumb, ridiculous political project sparked by ideological idiocy, that should never have been borne into this world!

[gaelic cowboy]

Actually you're right to an extent, but the thing that makes Spain and Portugal most likely to default (whatever exactly that means in financial terms) is people talking about them defaulting soon, which scares all the bondfondlers and sharecrows.

Talking about them defaulting does not cause a default that sounds a bit like when someone tells you to "Stop talking the Economy Down" people used to say that here round 2006 when our bubble stumbled a bit.(it was rubbish then and it's rubbish now)

Sure you can bailout Ireland and Greece but can we pay you back that is the question and no one really seems to have asked it much at all in the rush to lend to us to save someone else. A lot of the contagion lately is because people are not convinced we can pay this one off and grow our GDP again. If a resolution of Irish bank debt happens(and there will come a scalping)then it will have an effect on European banking as the Irish banks are actually larger than our entire economy.

This bank resolution is what is driving the fear in the markets and the longer we all wait the bigger the risk for the Eurozone as a whole.

[Louis VI the Fat]

Sure you can bailout Ireland and Greece but can we pay you back that is the question and no one really seems to have asked it much at all in the rush to lend to us to save someone else.

Nobody asked if Ireland could pay it back? I'd say we did. I say this entire thread is about us daring to ask that question. About 'who the hell do you people think you are daring to ask questions, who the hell do you EUSSR think you are daring to ask for even the minutest conditions (when you part with tens of billions of your taxpayers money - LVI)'.

Commies if we ask questions, nazis if we don't.

On the stability of the Euro depends our very pensions. Nor did the problems originate in Europe's core. But by jove, we're a bunch of commiefascists if we try so much as to save our financial stability by sending tens of billions abroad.

[Louis VI the Fat]

World stock markets and the euro have surged amid reports that Washington may join Europe in further support for heavily indebted countries.
The US Treasury has sent an envoy to Europe to discuss the continuing financial crisis.


It follows comments from European Central Bank chief Jean-Claude Trichet that people should not "underestimate" the eurozone's "determination" to act.
Meanwhile, Portugal's PM has insisted that Lisbon does not need a bail-out.


Germany's Dax stock index led European markets higher, rising 2.6%, with the FTSE 100 up 2%, ending days of losses. Wall Street opened more than 2% up.
In mid-day trading in New York, the euro jumped to $1.3140, up from $1.3011 on Tuesday.



http://www.bbc.co.uk/news/business-11884132

The cavalry has arrived!

That bastion of global capitlaism, the USA, is sending in the troops to bring about the EUSSR and enslave Europe with a Euro. Or, for those with less fantastical world views, to support indebted countries, prevent contagion and further unrest in the financial markets.


I am already looking forward to reading in this thread that Obama is a socialist co-operating with the EUSSR. While I simultaneously read in the Wikileaks thread that Obama is the head of a global fascist superpower.

[Don Corleone]

Aaah, but Louis, you forget.... we ourselves our indentured servants to Beijing. So in accepting our financial bailout package, you join our yoke of slavery to the new Han dynasty. Join us in bondage, oh wise ones of Europe. ;-)

[Louis VI the Fat]

Aaah, but Louis, you forget.... we ourselves our indentured servants to Beijing. So in accepting our financial bailout package, you join our yoke of slavery to the new Han dynasty. Join us in bondage, oh wise ones of Europe. ;-)

Well Beijng is no doubt having a ball, that much seems true. We self-destruct while they buy up the world and take over.


The problem with Europe is that there are too many parvenus. Their house increased in value, their stocks skyrocketed. They make money so easily that they think those without it must be stupid. They thus think it is owing to a moral quality of theirs. They think themselves invincible, untouchable. They invest more and more. Borrow to invest. Are so blinded by greed and a sense of untouchability that they engage in what has descended into a pyramid scheme.

Then their high risk investments collapse. The pyramid collapses. All assets are in the pyramid, or in two four-wheel gas-guzzling SUVs and other blingbling. Panic!

Still, they deem themselves morally superior. The government is there to protect them from scum, leeches, immigrants. Indeed, governments itself, the public sector, has adopted their values: it is all about immediate, private gain. The government secures their assets, their bad debts. Secures it with the money taken from the poor, with austerity measures that hit the poor.

Meanwhile, more established families have their money in low yield, safe, unglamorous investments. These still exists, even if a dying breed. They must suffer that the loudmouth parvenus, all their money in bling and too large cars, had their cake and got to eat it too. High risk investestments, with huge private profits, and when they collapsed, the risks were socialised and the bill passed on.


The loudmouth, crass, populist-voting Eurotrash parvenu rules Europe. They complain about the EU, about politicians, about immigrants, about everybody. Except about Europe's biggest problem: they themselves.

[edyzmedieval]

I skipped through most of the thread but I want to ask this - if the EU crashes down, what would it mean in terms of economic growth and PPP (Purchasing Power Parity) in the next five years?

[Furunculus]

wrecked.