Thread: Investors Brace for Euro Collapse

Originally Posted by Joshawott

Originally Posted by 97SaturnSL1

for the Eurozone to survive they need to cut all of the bad or red inked assets and focus on the more stable assets. for the Euro to survive they need a General Motors style reorganization. cut the brands that were in red and only holding the company back (Hummer, Saab, Pontiac, and *sob* Saturn) by releasing the major imdebted and irresponcible contries such as greece from the eurozone .and allowing the parts of the company to stay (chevy Gmc cadillac, buick opel, vauxhall, holden) that allow the eurozone to rework itself back to stability with stable countrys such as Germany, Sweden and the UK torebenift europe. tough cuts will ahve to be made all over eurpoe (as seen with the Opel Crisis) on par with the US cutting back but for eurozone to survive this is VITAL

Except if you read my above post you'll know why just kicking out the worst hit countries is a very, very bad idea. I hope you don't think of me as rude for saying this, but can you please look deeper into complicated issues such as this financial crisis before making such broad statements?

This isn't Greece's fault; this isn't Spain's fault; this isn't Ireland's fault. It's a fault with the system - those countries may have been hit the hardest first, but they are not the main cause and they will not be the last. If Southern Europe were to leave the Euro, the currency would instantly revalue meaning that German exports will become much more expensive and thus lose export markets that it really needs (such as China), which could take the country back to the stone age.
(Also, the UK being stable? We're in a double dip recession!)

Things most likely won't move until Germany is hit harder - as unfortunately, Angela Merkel seems to be the de facto leader of the European Union and the German elite are still doing okay financially. What needs to happen is, other EU leaders need to get behind Francois Hollande and pretty much tell Merkel that her austerity can bugger off. We don't need austerity and cuts, we need growth.

A big Problem in the whole eurozone crisis is Excessive spending and not having enough income to cover the costs. with Greeces debt being at 165% GDP. with no cuts to spending it is like taking 1 step forward then taking 1.65 steps backwards. After ireland put in place more regulation, reformas and spending cuts they are on a slow path to recovery just like the US. Greece after taking 3 bailouts shows that clearly something isnt working right. in the business world you need to cut debt in order to grow. for example General motors borrowed money from the US gov to stay in business when the economy started to tank. eventually their debt grew so large that the debtors wanted their money back. with major losses GM went through CH 11 Bankruptcy (Austerity Cuts). Many Factories in the US closed and many people lost their jobs with NO benefits of Severence Pay. In reorganization they were able to focus on Core brands vital to worldwide operations, make factories more efficient, solve problems that plagued them for years, and only 2 years later were making record profits.
my view on this whole euro zone crisis is probably different since i am seeing it from a different view (being from the USA). clearly we see differntly on this topic but i feel europe will have to face some tough cuts like what has happend in the USA.

@Joshawott

As for your comment about taking 8 months for a new currency and them not lasting that long. It has been widely reported that if such a move were to be made they would print the currency in secret and then spring it as a surprise over a long holiday period where the markets are closed.

I forget the name, but it's a UK company that prints currencies for a lot of countries in the world and at the end of the tax year April 2012 they had reported a sharp rise in profits leading speculation that new currencies are being printed (not just replacing old stock as that wouldn't see an increase in profits as that is what they do all the time)

I'm not saying this as fact, but for all we know, Drachma (or Deutchmarks even) could be being printed as we speak and the decision made many months ago, but world leaders have to put up a facade of saying it will stay together when they have already decided it won't while it takes that 8 months or so.

@97SaturnSL1; you can't really compare the economy of a continent to that of a private company. As I said earlier, the problem isn't the countries themselves, it's the overall system. If Greece and other countries in Southern Europe were to leave the Euro, that would have catastrophic effects for Germany, which could be very bad news for the global economy.

@Therian; At the moment there's nothing substantial to support that idea. Besides, even without the time delay, they would be creating a currency that would come into play devalued, which would make things so expensive to import into Greece (40% of their food, as well as the majority of their medicines are among notable imports).

One of the big problems with Greece was that they retired when they were 50. All of them. This also put a big burden on the younger generations, because they had to pay for the social security for the older generations. Because they all stopped working so early in comparison to, let's say the Netherlands, where people normally retire at the age of 65, there wasn't a lot of productivity in the country, which hurt the economy. And, because the younger generations payed for the older generations, they had less money to spend on other things, which drives the economy, like tv's, computers, furniture, vacations and so forth. This is my take on why country's like Greece are in a huge debt. Please tell me if I'm wrong, because I'm interested in these kind of things and want to learn about it.

@Joshawott

You are missing the point. It is acknowledged fact that if they had decided to split the currency they won't tell anyone about it as they don't want to give speculators the time to run the Euro into the ground and move their assets elsewhere. When it happens, and I think it will because its an unstable mess, it will come as a complete surprise, there won't be a build up or some long list of hints, and it won't fit into a nice calendar Joshawott because this isn't a new Pokemon game we are talking about it's the 2nd largest currency in the world.

And again you are trapped by Short Termism. Democracy is great, but it's main draw back is that you can't really do anything for the long term good, everything has to be short term if you want to re-elected, because electorates are fools. They want a quick easy fix and will vote for anyone offering that. A few years of pain with a devalued currency allowing them to become more competitive is the needed solution but no one is willing to vote for it, instead they bury their heads in the sand and allow the problem to get worse.

It's like an elastic band, the longer you pull it, the more it will hurt when it snaps back, and you can try and prolong it as long as you like, but eventually you will have to let go and it will snap back.

@Continent Turtle

What you said is one of the possible reasons yes. But the thing that is important to remember is that it's whole ton of reasons, a shit storm like this has a multitude of factors. The MAIN factor, but indeed not the only factor, is that control of Fiscal Policy was retained by the 17 independent countries, while Monetary Policy was centralised.

If the UK was to over borrow, it could theoretically print more pounds, our currency would devalue and again it would cause inflation to go up but it would enable us to pay our debts easier. Whereas in Greece, they borrowed more than they could afford because they were so desperate to attain a Western lifestyle out of their reach and now have no money left. They can't devalue their currency because they gave that power away to the ECB, which just so happens to be in Frankfurt, Germany.

The Germans are walking an economic tight rope. They don't really want Greece to recover because at the moment the problems in Greece are doing wonders for German exports (drawing money into Germany) and forcing less Germans to import (less money leaving Germany) so they don't want Greece to recover. At the same time, they can't be too harsh on Greece, because if Greece do collapse, then faith in the entire Euro will collapse and do a big deal of damage to all the Eurozone economies and possibly other countries as well.

Well, on a related note, if, and if, the Eurozone falls apart, then I believe the Netherlands, Belgium and Luxembourg should strive for a shared monetary system, like a Benelux guilder or something. The three countries are already working together on a political, economical and several other levels, so something like that wouldn't seem completely out of the question. But if this were to happen, Luxembourg and Belgium could join the Netherlands again, and become the larger (re)United Kingdom of the Netherlands.

Originally Posted by Continent Turtle

Well, on a related note, if, and if, the Eurozone falls apart, then I believe the Netherlands, Belgium and Luxembourg should strive for a shared monetary system, like a Benelux guilder or something. The three countries are already working together on a political, economical and several other levels, so something like that wouldn't seem completely out of the question. But if this were to happen, Luxembourg and Belgium could join the Netherlands again, and become the larger (re)United Kingdom of the Netherlands.

I'm not sure about the Luxembourg position on that but would the Waloons in Belgium really be happy joining the Netherlands, it was my understanding that their was some animosity between the french speaking Waloons and Dutch speaking Flemish.

Also if you called yourself United Kingdom of Netherlands, that would just lead to confusion with the real United Kingdom! :D

Originally Posted by Therian

Also if you called yourself United Kingdom of Netherlands, that would just lead to confusion with the real United Kingdom! :D

Actually, that was our name before the Belgian Revolution. Read this: United Kingdom of the Netherlands

Originally Posted by Continent Turtle

Originally Posted by Therian

Also if you called yourself United Kingdom of Netherlands, that would just lead to confusion with the real United Kingdom! :D

Actually, that was our name before the Belgian Revolution. Read this: United Kingdom of the Netherlands

Interesting I didn't know that. The Real United Kingdom is still older though ;) 1707!

But if all goes according to plan after 2014 there won't be a United Kingdom as hopefully Scotland and England will gain their independence. I guess the Netherlands could take the name United Kingdom then if it wanted!

I'd love to learn more about the Netherlands, my grandfather was Dutch but I've never even visited and know very little about it's culture or history. I don't even know why they embrace the colour Orange so much.

Originally Posted by Therian

Interesting I didn't know that. The Real United Kingdom is still older though ;) 1707!

But if all goes according to plan after 2014 there won't be a United Kingdom as hopefully Scotland and England will gain their independence. I guess the Netherlands could take the name United Kingdom then if it wanted!

I'd love to learn more about the Netherlands, my grandfather was Dutch but I've never even visited and know very little about it's culture or history. I don't even know why they embrace the colour Orange so much.

Well, the reason why we embrace the color orange is because the leader of the beginning of the Dutch revolt, and the ancestor of our royal family, William of Orange, inherited the title of Prince of Orange, a county in southern France. Because of this we felt strongly connected to the color orange, and in the flag of the Dutch Republic, the colors were orange, white, blue. This eventually became red-white-blue at sea, because it was easier to recognise, and so was our current flag created. If you want to learn more of the Netherlands I recommend these pages: Dutch culture, Sport in the Netherlands, Dutch Cuisine, Dutch Empire and Dutch history.

Before anyone calls me out that most if not all these points have been debated, I feel its a personal duty to clear things up as someone who is dealing with the entire clusterfuck that is the Eurozone Crisis firsthand. I am not discrediting anyone, nor do I feel the need for being credited, and I know that I have to tread lightly.

Originally Posted by Therian

Greece leaving the Euro, does not necessarily mean a collapse of the Euro. Greece is not a big player like France or Germany, while the Eurozone would take a very big hit if Greece left the Euro, a loss of confidence being the main reason, the Euro could easily survive, and in the short term it will devalue as investors don't trust it, but in the long term future, we're talking a few years here, with the less stable economies removed from the Eurozone, it could be quite a high value currency, though the Germans don't want that as it harms their exports.

Greece leaving the Euro is major. European Tourism would lose a major player when it comes to income, and it would ultimately lead to actually helping Greece to get to a higher position with the Drachma against the Euro. As back asswards it sounds, its true. Right now Tourism is the only thing we have, and will likely be that way for sometime. If at any point we leave the Euro and the Drachma is re-established as a currency, the low exchange rate would eventually give an insane build up for the Drachma when it comes to Tourism. Second Greece has the biggest Merchant Navy in the world. No illusions of grandeur, but there is no way in hell that the Eurozone would allow it to be under the Drachma, and no way would the world handle under the pressure of losing such an important piece of the economy due to a bad currency. Third, and most important, is the domino effect that would carry out. Greece goes, and it won't be long till Spain and Italy fly the coop too. The less stable economies are the biggest losses Germany and Northern Europe could take, as we're talking bout huge industrial powers going for their own currencies, not just Greece. The Euro, in a best case scenario, would be a trade currency alone, and would not be the currency in any country, bar France and Germany probably.

At the moment, I'm not ashamed to say, some of the scenes in Greece, have actually made me cry, this is a European nation, the birthplace of western values imposing the harshest of cuts on its people, families unable to afford food, kids fainting in school due to starvation. And it's stupid stubbornness and pride from the politicians (and quite a few of the people) that they don't want to leave the Euro because they see it as shameful as they are basically admitting defeat. Though they would be a lot better off without the harsh economic sanctions and cuts imposed on Greece, they could devalue, set up capital controls to stop capital flight, and begin the healing process. It will take years to heal completely, but it's better to start the long healing process as soon as possible rather than carrying on with harmful economic cuts.

Oh its not pride, its greed. And going to the Drachma is not an option unfortunately. The Euro has to stay, whether its best for anyone or not. Thing is though, is that this entire economical catastrophe is a creation of the banks, and none of this impoverishment will lead to anything better. Nothing is being given out the banks, and nothing is being done to help the people as you said. Only reason all this is happening is to fill the pockets of the rich. There should be no reason to the cuts, as most of them are long term plans, that would take place decades after this entire thing is over. NO over exaggerations, loads of the Memorandum laws are only possible to be in use after 2030, mostly the pension and paycheck laws. None of it is logical, and it only feeds fuel to a fire that should not exist.

Which is what we want. As a devalued currency would make greek exports cheap, making their economy more competitive. At the moment they aren't competitive at all because they're products are more expensive as they are valued along with countries like Germany.

If you impose Capital Controls, that stops all the Euros in the country fleeing to other Eurozone countries and yes when the Drachma devalues it will mean things for ordinary Greeks will get a lot more expensive. But it's the medicine they need. It's like ripping off a band aid, it will hurt at first, but it's better than the alternative which is greece just getting worse and worse.

The problem with economics, is that economic policy is linked to politics, Politicians can't make decisions for the long term good of the country because if it hurts in the short term, they will be out of office.

Your entire post is sickening. I'm calling you out here and now because at the moment your post not only does no good for your position, Therian, but it is loaded full of ignorance. Its not the medicine we need, far from it. Everything wrong with the economy at this point is not a problem created by the people, by the citizens of the country, but by the politicians. They are all greedy scum of the earth with no reprecussion at all for what will happen to us, but what will happen to the, There is no care for the sick, the elderly, and the poor. At the moment, things are expensive, and its not just commodities. Its medicine. Fucking 20 bucks a box medicine that should be fucking taken care of by fucking health insurance but isn't because the fucking ministry of fucking health is withstanding 1 FUCKING BILLION EUROS, from the pharmacies because of the crisis. That's right, the insurance people payed for is not being given to the pharmacies to be able to hand out insured medicinals because the government doesn't have the money it has to give but doesn't want to. Politicians not making short term descisions because they don't want to, not because they can't. They are corrupt, they have complete control over everything, and unfortunately will stay that way. The government of ND-Pasok-DL should in way exist at the moment due to the pure vat of corruption that were the elections in June.

Greece is no longer an export-heavy country at all; so while some companies may benefit from competitive rates due to a devalued currency, the vast majority would not. When you balance the amount of cheap exports, compared to more expensive imports, it's not worth it at all - especially when you would be gambling with the lives of around 10 million people.


Also no, Greece don't want that either.

The Eurozone is the largest economy in the world; Greece leaving could be devastating to it due to its infrastructure not being designed for members leaving and it could be far worse than the Lehman brothers collapse; such as leading Germany into recession and inflation in other Eurozone countries, as well as big problems outside of Europe to the intricate nature in which economies are wound together.

Greece can not do an Argentina because they don't have their own currency to devalue; it would take 7-8 months to make one and then devalue it. How can they last that long without money? Simple - they can't. People won't be putting Euros in the bank due to fears of them turning into weakened Drachmas over night. Distributing them to ATMs etc would take a really long time and the entire banking system would have to be reconfigured. Germany has stored Deutsch marks, but Greece has destroyed all Drachmas so there is none in reserve either.

If you're dying, cutting off your arm won't stop you from dying. The problem is not with one individual part of the system; it's with the system itself.

Thank you Joshawott for being the boice of reason. Thank you for being some sort of beacon of logic in this dark thread. The system itself is what needs to be changed, not the economical currency of the system. Greece would be a warzone with such a change, those 7-8 months could indeed lead to at least a decade of complete poverty, perhaps being worse off then Former Soviet Countries.

Originally Posted by Continent Turtle

One of the big problems with Greece was that they retired when they were 50. All of them. This also put a big burden on the younger generations, because they had to pay for the social security for the older generations. Because they all stopped working so early in comparison to, let's say the Netherlands, where people normally retire at the age of 65, there wasn't a lot of productivity in the country, which hurt the economy. And, because the younger generations payed for the older generations, they had less money to spend on other things, which drives the economy, like tv's, computers, furniture, vacations and so forth. This is my take on why country's like Greece are in a huge debt. Please tell me if I'm wrong, because I'm interested in these kind of things and want to learn about it.

Funny thing, you indeed are. Most people here retire at the age of 65, with an unfortunately large number of people retiring then. The fact that Greeks don't work hard and get off at an early age is a complete fabrication of the truth, and in fact we work in some cases more then those who accuse us being such a lazy bunch. The domino effect that you explained isn't entirely true as we have had enough money to spend on everything, but it was money loaned by the government to give us a false sense of security. The reason we are in a debt is because the Cesspool that is the Greek Government, and I mean Cesspool in all the glory such a word can have, is because they gave the illusion to the people that bureaucracy, and government funded jobs at a desk for Federal offices can be enough for a country to thrive off of, and that we need no exports to give out, nor did we need a market apparently. The people in the long run are only at fault because they were too foolish to believe it would work, and only because we didn't have enough balls to say fuck you to the senior citizens and block em from the voting process. Its a vicious cycle that fortunately we're weening off of, but won't happen till people realize sitting at a desk for a living and not giving a damn bout the market, you know the ma and pa shops that apparently are the cause of everything, is not a solution, but our problem. Why? Because we're a 12 million populace country that has a federal work force of 1.5 million, and that is what's known. There has to be at least another 10-20 people that got jobs, and are being for it no less, that aren't on the papers, that got the jobs cause of their vote.


If anything needs clarification, I'll gladly help, but you'll need to keep a liqouir cabinet near you, cause when I'm done explaining the backwards ways this system works, you will want to jump off a bridge. Trust me, its a daily notion for 10 million people that have to deal with it.

Originally Posted by Mitchman

If anything needs clarification, I'll gladly help, but you'll need to keep a liqouir cabinet near you, cause when I'm done explaining the backwards ways this system works, you will want to jump off a bridge. Trust me, its a daily notion for 10 million people that have to deal with it.

Okay, I had no idea it worked that way. I did a bit research, and that's why I believed retired so early. It's all stereotypes mixed with fact, I think, that gives most people the idea of early-retiring lazy ass greeks. But I too think the politicians are part off a corrupt, fucked up, greedy system. An example about America. I've absolutely no idea, why they would spend more money on war than on the educational system. There are a lot of American teens who don't even now where America is on the globe. They point somewhere to Russia. Proof of a global, fucked up system.

Originally Posted by Continent Turtle

Originally Posted by Mitchman

If anything needs clarification, I'll gladly help, but you'll need to keep a liqouir cabinet near you, cause when I'm done explaining the backwards ways this system works, you will want to jump off a bridge. Trust me, its a daily notion for 10 million people that have to deal with it.

Okay, I had no idea it worked that way. I did a bit research, and that's why I believed retired so early. It's all stereotypes mixed with fact, I think, that gives most people the idea of early-retiring lazy ass greeks. But I too think the politicians are part off a corrupt, fucked up, greedy system. An example about America. I've absolutely no idea, why they would spend more money on war than on the educational system. There are a lot of American teens who don't even now where America is on the globe. They point somewhere to Russia. Proof of a global, fucked up system.

The story about Greeks retiring early is true, it may have moved up to 65 now but thats one of the sanctions imposed on Greece, and boy did they kick up a fuss when it did change. The one thing Mitchman did get correct was greed, but he was wrong to pin it to one group. The banks, the government, and even the people are all guilty of greed. But it's not something to necessarily blame them for. It's perfectly understandable. The greeks are a proud people, and while comparatively they are rich compared to their neighbours (Albania, Bulgaria, Macedonia, Turkey) they've always wanted to be seen as modern and rich like the Big 5 (Uk, France, Germany, Italy, Spain) That's not a bad thing, I think we are all guilty of that, if we are with a group of people, and see those financially better off than us, we do anything we can to strive to reach it. It was the ultimate vicious cycle, the government kept borrowing money and spending on the people, in return for votes, whoever offered the most, whoever promised to make the country more western got into power. Talking about budget responsibility up until 2008 was political suicide.

Fortunately for Greece, they voted in a coaltion of both socialists and conservatives, so the tough choices, and right decisions can be made, and petty left/right politics can't get in the way. There does need to be budget cuts, but they need to be applied fairly and hit the rich, the bankers as well. Again Greece's main problem, is also the source of their former wealth, the EU brings great opportunities and also great costs. Because they can't tax the rich because of the EU's free movement principle, so any greek businessman can just relocate to neighbouring Bulgaria and pay tax there. The EU's free movement principle needs to be suspended (as it can be in times of crisis) so that Greece can keep its rich in the country and tax them for what they owe.

I'm unsure on the fate of the Euro, I think it should go, but the politicians don't want to admit they are wrong, and will do anything they can to keep it together, even if it means the greeks suffer.

EDIT: Actualy having done some more research looks like even the Germans now want Greece out

http://www.dailymail.co.uk/news/article-2192262/Angela-Merkel-says-doesnt-care-Greece-forced-leave-eurozone.html

and according to The Economist (a widely respected non-political magazine) also makes the call for Greece to leave

http://www.economist.com/economist-asks/should-greece-leave-euro-zone-and-return-drachma

Originally Posted by Therian

Originally Posted by Continent Turtle

Originally Posted by Mitchman

If anything needs clarification, I'll gladly help, but you'll need to keep a liqouir cabinet near you, cause when I'm done explaining the backwards ways this system works, you will want to jump off a bridge. Trust me, its a daily notion for 10 million people that have to deal with it.

Okay, I had no idea it worked that way. I did a bit research, and that's why I believed retired so early. It's all stereotypes mixed with fact, I think, that gives most people the idea of early-retiring lazy ass greeks. But I too think the politicians are part off a corrupt, fucked up, greedy system. An example about America. I've absolutely no idea, why they would spend more money on war than on the educational system. There are a lot of American teens who don't even now where America is on the globe. They point somewhere to Russia. Proof of a global, fucked up system.

The story about Greeks retiring early is true, it may have moved up to 65 now but thats one of the sanctions imposed on Greece, and boy did they kick up a fuss when it did change. The one thing Mitchman did get correct was greed, but he was wrong to pin it to one group. The banks, the government, and even the people are all guilty of greed. But it's not something to necessarily blame them for. It's perfectly understandable. The greeks are a proud people, and while comparatively they are rich compared to their neighbours (Albania, Bulgaria, Macedonia, Turkey) they've always wanted to be seen as modern and rich like the Big 5 (Uk, France, Germany, Italy, Spain) That's not a bad thing, I think we are all guilty of that, if we are with a group of people, and see those financially better off than us, we do anything we can to strive to reach it. It was the ultimate vicious cycle, the government kept borrowing money and spending on the people, in return for votes, whoever offered the most, whoever promised to make the country more western got into power. Talking about budget responsibility up until 2008 was political suicide.

Fortunately for Greece, they voted in a coaltion of both socialists and conservatives, so the tough choices, and right decisions can be made, and petty left/right politics can't get in the way. There does need to be budget cuts, but they need to be applied fairly and hit the rich, the bankers as well. Again Greece's main problem, is also the source of their former wealth, the EU brings great opportunities and also great costs. Because they can't tax the rich because of the EU's free movement principle, so any greek businessman can just relocate to neighbouring Bulgaria and pay tax there. The EU's free movement principle needs to be suspended (as it can be in times of crisis) so that Greece can keep its rich in the country and tax them for what they owe.

I'm unsure on the fate of the Euro, I think it should go, but the politicians don't want to admit they are wrong, and will do anything they can to keep it together, even if it means the greeks suffer.

EDIT: Actualy having done some more research looks like even the Germans now want Greece out

Angela Merkel says she 'doesn't care' if Greece is forced to leave the eurozone | Mail Online

and according to The Economist (a widely respected non-political magazine) also makes the call for Greece to leave

Should Greece leave the euro zone and return to the drachma? | The Economist

And that's actually a greed fortified by the government wanting to give us money with some magical clause of no responsibilities. All people have greed, yes, but we have a magical greed fed by lies. We got loans for everything the past 10 years from the banks cause apparently the Euro was this infinite money machine, and the only reason people are crying poverty is cause these magical bank loans they have to pay off are building up. There was no money management on our part at all, and we kept feeding the banks without pause. Its our fault to have believed it would never end sure, but it was another illusion created by the power that be. And yes, the tax skimping is insane on the part of the rich, they have millions of euros and almost dozens of properties with no consequence. And the coalition between the socialist party and the conservatives is a scam, with a traitor leader who just wanted another piece of the pie.