Euro Area

[SoFarSoGood]

Under the same circumstances but with national currencies those countries would probably have resorted to devaluation, which would also have caused the rates on their bonds to spike.

That is what they need to do but the euro prevents.

[Beskar]

That is what they need to do but the euro prevents.

Printing more money is the solution to everything.

[SoFarSoGood]

Devaluation, as you must be aware, does not necessarily lead to hyperinflation. Stop creating monsters where there all that is required is good management.

[Beskar]

Devaluation, as you must be aware, does not necessarily lead to hyperinflation. Stop creating monsters where there all that is required is good management.

When/If Greece leaves, the situation there will get worse, probably look at revolution levels (it is bad enough as it is). It will end up an international pariah in the political and economical circles. If we are going to look at the facts, Greece leaving the Eurozone will benefit the Eurozone members more than Greece remaining a member, a fact Greece is willing to exploit politically.

So it is a choice being propping up Greece or letting it fall. Structured Devaluation of the Euro would help aid the situation for Greece though and most of the other southern states at the expense of Germany, Netherlands and other states. It is these states which do not want that.

This is why the whole thing is a political quagmire. national self-interest is being put before the collective good of the whole. This is why the expression "In order to fix it, more EU is required" which you scoff at. But in order to fix the situation as in, to make it economically and politically stable for all current members, there needs to be more collective will than divided self-interest. No one is disagreeing with the notion that more EU will place more burden upon the stronger economies, this is exactly what it does as that is a solution to the problem.

But "Anti-EU" banter aside, I would like you to do me a favour which in turn will help the both of us communicate so we progress. Could you define where the "Problem" is in your mind and your proposed solutions to it.

So for example with devaluation, the Euro devaluing would aid Greece, but on the flipslide, it would be a "con" to Germany. Do you believe Germany should take the hit for the devaluation to aid Greece? Should Greece be forced out of the Euro and be allowed to descend anarchy as it prints money which will have no effect upon Euro-rate Loans so would be forced simply not pay anything at all, causing European economies, including Britain to take a "hit" and decimating the Greek political and economical reputation for the next 20 years minimum. Should all the sovereign debt be bought up by the ECB then repayment split between all the Eurozone members?

The Feel free to contribute your own speculations or solutions, I am interested to hear them!

[Papewaio]

If Mohammed won't go to the mountain...

So if Greece being part of the Euro is an issue and they won't leave it.

Why not other EU nations form another currency ie New Euro, former currencies or the UK pound.

It would be funny to see all the Northern EU on UK currency.

[SoFarSoGood]

When/If Greece leaves, the situation there will get worse, probably look at revolution levels (it is bad enough as it is). It will end up an international pariah in the political and economical circles. If we are going to look at the facts, Greece leaving the Eurozone will benefit the Eurozone members more than Greece remaining a member, a fact Greece is willing to exploit politically.

So it is a choice being propping up Greece or letting it fall. Structured Devaluation of the Euro would help aid the situation for Greece though and most of the other southern states at the expense of Germany, Netherlands and other states. It is these states which do not want that.

This is why the whole thing is a political quagmire. national self-interest is being put before the collective good of the whole. This is why the expression "In order to fix it, more EU is required" which you scoff at. But in order to fix the situation as in, to make it economically and politically stable for all current members, there needs to be more collective will than divided self-interest. No one is disagreeing with the notion that more EU will place more burden upon the stronger economies, this is exactly what it does as that is a solution to the problem.

But "Anti-EU" banter aside, I would like you to do me a favour which in turn will help the both of us communicate so we progress. Could you define where the "Problem" is in your mind and your proposed solutions to it.

So for example with devaluation, the Euro devaluing would aid Greece, but on the flipslide, it would be a "con" to Germany. Do you believe Germany should take the hit for the devaluation to aid Greece? Should Greece be forced out of the Euro and be allowed to descend anarchy as it prints money which will have no effect upon Euro-rate Loans so would be forced simply not pay anything at all, causing European economies, including Britain to take a "hit" and decimating the Greek political and economical reputation for the next 20 years minimum. Should all the sovereign debt be bought up by the ECB then repayment split between all the Eurozone members?

The Feel free to contribute your own speculations or solutions, I am interested to hear them!

Argentina 1999-2005. They left the US $ peg in 2002 and inflation hit about 10% highest for one month. By 2005 they were fine.

[Kralizec]

Printing more money is the solution to everything.

To be fair; a case could be made that the ECB should pursue a moderate amount of inflation for a while. The northern economies which are doing well right now would match this development with wage increases, while the southern wages stay the same. This would take care of the trade balance issues.

[gaelic cowboy]

Printing more money is the solution to everything.

Everyone keeps waving that around like a voodoo doll and yet it hasn't happend despite printing billions in LTRO and emergency banking liquidity by the ECB.

Clearly people are forgeting the lesson of the hyperinflation episode because the payment of the debts were to be in gold form or foreign currency. Hmm a currency that cannot devalue and has very little domestic/international faith in it's value while it's debts MUST be paid back. (does that sound familiar at all)

After the Germans defaulted on some of there debts the newer currency actually became more stable, seeing as both currencies tracked gold it would seem that having a currency that couldnt devalue was not a total loss. (as long as people were sensible and forced losses on creditors)


So far no creditors like major banks or by extension the governments or ECB have lost out so were stuck with a sinking boat.

[SoFarSoGood]

LTRO actually created landed Spanish banks in worse problems.

[gaelic cowboy]

LTRO actually created landed Spanish banks in worse problems.

No that's not correct the reason Spains banks are in bad shape is because they were bust.

Basically injections of liquidity wont solve a credit crisis at a bank if the real problem is insolvency to begin with.

[SoFarSoGood]

Made it worse because the money the Spanish banks borrowed they invested in Spanish Government bonds, which they now face losses on.

[gaelic cowboy]

Made it worse because the money the Spanish banks borrowed they invested in Spanish Government bonds, which they now face losses on.

It wont matter the capital injections from the ESM are meant to cover all sorts of losses, remember that the LTRO was basically stealth QE by the ECB. The ECB intended to flood the interbank system with liquidity to enable weaker banks and governments to get some capital injections on the QT from the ECB.

Once they get that ESM cash they can mark down the government bonds or sell em on the secondary market.