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I would say there is certainly a significant risk that the euro (and probably the EU with it) will fall apart but that the odds are still around 66% that it will survive.
The issue to me is that when it comes to it those nations, such as Germany, that will have to foot the bill will do so. Grandstanding politicians aside, the consequences of not doing so are too great. If, for example, the club med countries were allowed to go down they would bring many of the German banks with them.
Thus far, every time they have looked over the precipice, they have pulled back. My guess is that this pattern will continue. One of the real downsides of this is that the indebted countries are likely to have stagnant economies, austerity measures and high unemployment for many years to come.
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@brianc_li wrote:
Thus far, every time they have looked over the precipice, they have pulled back. My guess is that this pattern will continue. One of the real downsides of this is that the indebted countries are likely to have stagnant economies, austerity measures and high unemployment for many years to come.
Actually it looks like the lenders will have austerity measures to pay for the PIIGS debts.
This is pretty much how it works within a country as well; borrowers get their debts inflated away and savers get their saving inflated away with 0% interest rates, plus they pay more tax to bail out mortgage holders.
Savers have a few more options though, buy other assets or currencies, emigrate. Mortgage holders however are tied down and bled to death until they expire, shortly before their very delayed retirement with the promise of a heavily reduced pension.
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@brianc_li wrote:
I would say there is certainly a significant risk that the euro (and probably the EU with it) will fall apart but that the odds are still around 66% that it will survive.
.34% chance to fall is quite big, I guess it was around 0% not long ago…
Germany and Spain/Greece will never have the same time of economy. I guess the only way to deal with the situation is to create an European Fed who dictates economic policy for the entire Europe.
But even in USA things are far from rosy, from I read California seems to be close to defaulting on the debts… -
@adiep wrote:
Abandoned. Can we have that option.
Sorry adiep, I forgot to add that option, I am not sure if I can change the poll now.
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EU President Herman Van Rompuy said:
“We’re in a survival crisis. We all have to work together in order to survive with the euro zone, because if we don’t survive with the euro zone we will not survive with the European Union,”Ambrose Evans-Pritchard’s comment in reply (Daily Telegraph):
He is admitting that the gamble of launching a premature and dysfunctional currency without a central treasury, or debt union, or economic government, to back it up – and before the economies, legal systems, wage bargaining practices, productivity growth, and interest rate sensitivity, of North and South Europe had come anywhere near sustainable convergence – may now backfire horribly.
Jacques Delors and fellow fathers of EMU were told by Commission economists in the early 1990s that this reckless adventure could not work as constructed, and would lead to a traumatic crisis. They shrugged off the warnings.
Personally, I think the future for the Euro and the EU project is heading for a train crash. It’s just a case of ‘when’ it implodes, not ‘if’.
A good thread flosmichael – a topic that can affect us all. Even the UK wouldn’t get off lightly. -
An American economist (can’t remember his name) was speaking about this on tv, and he says that even if Ireland and others are bailed out, propped up etc, it’s putting off the inevitable a few years maybe. He reckons the Euro will collapse causing chaos for world markets in due course, contagion will spread etc, it’s all too fragmented to last in it’s present form.
He then said the US is in a no better situation. 🙄
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Ambrose Evans-Pritchard has a long and not too glorious record of rubbishing everything to do with Europe in general and the euro in particular. Back in the days of the ERM he was confidently predicting that the euro would never get off the ground.
Its a bit of a shame in a sense because he does make some valid comments. His lack of balance, however, leaves me very sceptical about any of his missives.
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@brianc_li wrote:
Ambrose Evans-Pritchard has a long and not too glorious record of rubbishing everything to do with Europe in general and the euro in particular.
Maybe he was bearing this in mind?
“Jacques Delors and fellow fathers of EMU were told by Commission economists in the early 1990s that this reckless adventure could not work as constructed, and would lead to a traumatic crisis”.I don’t think one can condemn him for having maintained his own strong views. And I’m not sure it’s necessary to always give a ‘balance’ when commenting if you can’t happen to see one. He obviously trusted the views/wisdom of the Commission economists more than career politicians.
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Didn’t we do all of this to death at the time of the Greek Crisis? The whole Euro collapse or not? The PIIGS analysis etc? It played havoc with our business and created a considerable fuss back then, but this time around, clients don’t seem to be bothered. It seems to just become so much noise. My view is that at the minute not a lot of people are taking that much notice of this issue.
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@flosmichael wrote:
@brianc_li wrote:
I would say there is certainly a significant risk that the euro (and probably the EU with it) will fall apart but that the odds are still around 66% that it will survive.
.34% chance to fall is quite big, I guess it was around 0% not long ago….
Its not even close to 34%, the likelihood is about 95% that the Euro will fail.
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@brianc_li wrote:
Ambrose Evans-Pritchard has a long and not too glorious record of rubbishing everything to do with Europe in general and the euro in particular. Back in the days of the ERM he was confidently predicting that the euro would never get off the ground.
Its a bit of a shame in a sense because he does make some valid comments. His lack of balance, however, leaves me very sceptical about any of his missives.
AEP has done a splendid job throughout. Where were those who were predicting this crisis a few years back? Who in the main stream media was warning that this would happen? The chances of this crisis were always extremely high, even Delors foresaw it, but reckoned it could be used to push these countries even further towards union – use the crisis to force in further EU laws. Others just ignored the warning signs or rode the gravy train, having been turned into vested interests by the common agricultural policy or some other bribary (grant) mechanism.
The resistance to this dreadful union is now coming from Ireland, and fair bloody play to them. I see that the UK are giving Ireland the possibility of a no-strings attached loan. Well done George !!
You guys do realise that Berlin and France want to take Ireland’s right to have low corporation tax away? Appreciate how this will devastate Ireland even further and turn them into debt slaves of the wealthier European nations.
Perhaps that appears over-dramatic, but it’s actually what’s going on right now. Ireland are fighting for their country and their right to democracy. Fingers crossed that they hold out.
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He says (among other things):
“But the real nightmare domino is Spain. Roubini refers to the Spanish debt problems as “the elephant in the room”.
“You can try to ring fence Spain. And you can essentially try to provide financing officially to Ireland, Portugal, and Greece for three years. Leave them out of the market. Maybe restructure their debt down the line.”
“But if Spain falls off the cliff, there is not enough official money in this envelope of European resources to bail out Spain. Spain is too big to fail on one side-and also too big to be bailed out.”
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Margaret Thatcher knew the single currency would devastate Europe
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charlie, there’d be a litle more money in the Eurozone pot if they hadn’t created 2 more strange appointments in Herbert V Rompuy and his deputy, that takes care of another 5-600k euros, plus their staff, and then there are all the MEPs claiming all sorts of huge expenses as shown on tv the other night, mainly crooks like the UK MPs feathering their big nests.
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This Irish/PIGS problem seems to be spreading, now Belgium is up to it’s neck in debt and may look for a bail-out.
These massive loans do still have to be repaid sometime, there is huge interest to be paid too. I can’t see how Ireland/Greece etc will be able to afford to repay theses loans unless the World economy booms.
Is this just a patch-up to stop the Euro crashing and it’s effects on the rest of the World, and is it just putting off the inevitable for later on?
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