UBS report: what if Euro cracks up?

[Umfriend]

I'd like to repeat that I find your interpretation of sovereignty very, very disturbing.

Yeah, I think you wondered why Icelandic, or in this case Greek presumably, people should choose to become slaves or become exploited? Something like that?

[dZeus]

Yeah, I think you wondered why Icelandic, or in this case Greek presumably, people should choose to become slaves or become exploited? Something like that?

specifically, I'm saying that Icelanders or Greeks themselves can chose to become slaves or not. But it's not up to the creditors of the country (or presumed creditors in case of Iceland as the debts were private, but public). Countries should always have the option to default on their debt.

[Brian Ellis]

Anyone ever hear of abrogating a treaty?

"Oopsie....never mind...."

Abrogation would still require the say-so from 27 referenda. In any case, I don't believe that could happen any more than the division of the pound sterling could go back to the crown, florin, shilling, groat and penny (d)

Remember also that, over 200 years after it became the legal tender of the USA, the value of the dollar varies from state to state. I could buy a lot more food in a Mississippi Walmart than I could in a Massachusetts one with 20 bucks.

And some of the states, e.g., California, are also in Queer Street and need federal funding to make ends meet.

I think that inequity is inevitable in any country of group of countries. Even here, with only 800 kilopeople, some places offer more bang for your euro than others, even in the same-name supermarkets.

[Umfriend]

specifically, I'm saying that Icelanders or Greeks themselves can chose to become slaves or not. But it's not up to the creditors of the country (or presumed creditors in case of Iceland as the debts were private, but public). Countries should always have the option to default on their debt.

But I have never suggested that the new ex-Greek citizens would have other obligations or rights than the, say, Dutch citizens under their new sovereign. Actually, the Greeks would probably gain a lot of freedom. The Greeks are now part of a state that hardly lets the develop business and is corrupt. No surprise many young greeks are looking to emigrate (and that was the case prior to the crisis already). Why not replace a failed stated with a better, freeer one?

I would say that people (and corporations) should always have the option to default on their debt but not countries. The reason is that for people (and corporations) their is (e.g. bankruptcy) law which, as reasonably as possibly, protects both debtors and creditors and is enforcable. No such law exists or is enforcable against countries which leaves creditors in a terrible position that is simply unjust.

[dZeus]

But I have never suggested that the new ex-Greek citizens would have other obligations or rights than the, say, Dutch citizens under their new sovereign. Actually, the Greeks would probably gain a lot of freedom. The Greeks are now part of a state that hardly lets the develop business and is corrupt. No surprise many young greeks are looking to emigrate (and that was the case prior to the crisis already). Why not replace a failed stated with a better, freeer one?

I would say that people (and corporations) should always have the option to default on their debt but not countries. The reason is that for people (and corporations) their is (e.g. bankruptcy) law which, as reasonably as possibly, protects both debtors and creditors and is enforcable. No such law exists or is enforcable against countries which leaves creditors in a terrible position that is simply unjust.

And because everybody knows this, you can take it into account when loaning money to sovereign entities. No need to change international laws to turn whole countries into debt serfs because their politicians screwed them over (like they often and always do). The whole idea is ludicrous.

[Dr Mordrid]

Abrogation would still require the say-so from 27 referenda.
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Spoken like a true bureau/techno-crat.

As soverign nations a 'have' set of EU states just tosses the treaty, and the referendum requirement with it, keeping the Euro as a now stronger currency as they won't be supporting failed economies like Greece etc. As others have said; are the others going to go to war over it? With what resources?

Nation states don't always have to play nice, or fair, if their own well being and stability is at stake. It might even be good for the have-nots if they reboot their whole system like Argentina did.

[Umfriend]

And because everybody knows this, you can take it into account when loaning money to sovereign entities. No need to change international laws to turn whole countries into debt serfs because their politicians screwed them over (like they often and always do). The whole idea is ludicrous.

Debt serfs? Why is paying taxes to one state worse than paying taxes to another? They'd not be serfs anymore that I would be.

But he, I'd settle for just the real eastate / land, that'd be fine by me too.

edit: And besides, in the case of Greece, they have systematically, misrepresented their financial position. That's fraud.

[Dr Mordrid]

Financial Times....

Italy turns to China for help in debt crisis

By Guy Dinmore in Rome

Italy’s centre-right government is turning to cash-rich China in the hope that Beijing will help rescue it from financial crisis by making “significant” purchases of Italian bonds and investments in strategic companies.

According to Italian officials, Lou Jiwei, chairman of China Investment Corp, one of the world’s largest sovereign wealth funds, led a delegation to Rome last week for talks with Giulio Tremonti, finance minister, and Italy’s Cassa Depositi e Prestiti, a state-controlled entity that has established an Italian Strategic Fund open to foreign investors.
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[Evildead666]

http://www.20minutes.fr/economie/786386-charles-wyplosz-les-banques-manipulent-etats-soutenir-grece

One guy here, Charles Wyplosz categorically says that Greece will default on its repayments, there's no other way about it.
French banks are trying their best to get the ECB to send more money to Greece because they have a large amount of Debt over Greece.

He also says that any country (apart from Germany) cannot leave the Euro without causing at least France to go into a recession. He also states that if Greece were to leave the Euro (due to the population demanding it) then there would be nothing to stop Spain and Italy, etc, doing the same, and its down the pan for everyone.

Maybe it would be time to just to flush the toilet and start again ?

[Dr Mordrid]

Makes me think Europe has but two options, the status quo not being one of the options.

1) separate. This would make it easier for each nation to monetize its debts if necessary.

2) a US style Federalism with a constitutionally limited central govt.

[Evildead666]

No2 is out of the question. We can't get along nicely at all, so it would be impossible. And probably costly.

For me, the only option is to stay EU, but we are all going to have to go back to our own currencies.

I think they wanted something like the United States of Europe when it was all being thought up and implemented, but they forgot that different countries are, different.

What will put a spanner in the works, is that quite a lot of countries have moved their factories to Eastern Europe, due to the help of the Euro, and low wages out there.
These will probably have to come back, otherwise how does your country get out of the recession its going to have in any case (just sooner rather than later) ?

Wouldn't it be better to put the country into a planned recession now, rather than wait for the investors to suck the market as dry as possible before jumping ship with their moneybags ?

[Brian Ellis]

I disagree. I firmly believe that the current crisis is due to fraudulent declarations by eurozone members and that every effort will be made to sustain the euro, albeit at a more realistic value (possibly roughly at parity with the dollar). There is no political will by eurozone members to abandon it. Once the situation has stabilised, in about 5 or 6 years, the members will all be closely monitored to avoid the same kind of fraud.

All this started off with European investment banks purchasing US toxic debts due to over-mortgaging on immoveable property, which could be also called fraud, disguised under the term negative equity. Then Europeans thought that this was a great idea and jumped on the bandwagon. This was combined with over-spending in the public sector, particularly in remuneration of civil servants, who see austerity measures as a halt to their gravy train. (The average civil servant receives 70% better remuneration and better conditions than the private sector workers, here)

I think the Euro will stay but as a weaker currency.

[Umfriend]

I diagree. The credit crisis related to the US sub-prime residential mortgage collapse has only causes the European sovereign credit crisis to emerge sooner. This is due to the fact that during a crisis, investors become more risk aware and the economy seeks to deleverage. The overspending in Greece and Italy (bad fiscal policy), real-estate building booms in Spain, Ireland and Portugal (badly diversified economy), the structurally inflexible economy (Greece), large scale corruption (Greece, Italy), racketering (Italy) and substantial black economy (Greece and Italy) are problems in and of themselves that were just waiting to get triggered.

Weakening the Euro, in and by itself, won't solve anything. The issue is one of wealth distribution within the EU and the stronger economies will only be prepared to give out so much (regardless of th fact that the loss has been made already: the money is simply irrecoverable in the case of Greece in any case). Only well performing economies will benefit from a depreciation of the Euro (Germany, The Netherlands, France and, Italy (Italy well performing? Well yes, in that it is diversified and has a good export potential).

[Dr Mordrid]

Story in today's US media -

MSNBC....

US taxpayers could be on hook for Europe bailout

The U.S. is coming to Europe's financial rescue.

So far, America's role is fairly limited. But if the crisis continues to grow and the U.S. takes on a wider role, U.S. consumers and taxpayers could feel a bigger impact. The biggest exposure could come from America's status as the single largest source of money for the International Monetary Fund.

The latest round of American financial assistance came Thursday with a promise by the Federal Reserve to swap as many dollars for euros as European bankers need. In the short run, those transactions won't have much impact because the central banks are simply swapping currencies of equal value. If the move helps avert a wider crisis, it could help spare the global economy from another recession.

But over the long term, consumers could feel the impact of central bankers flooding the financial system with cash, according to John Ryding, chief economist at RDQ Economics.

"This is a lender of last resort function," he told CNBC. "With the dollar injections that the Fed has done, it's like giving a patient medicine with really bad side effects." Ryding said the bad side effect in the U.S. has been inflation, which has picked up to 3.8 percent year over year.

Fed policymakers meet next week to decide whether the flagging U.S. economy needs another round of easy-money measures that could include buying more Treasury bonds to push more cash into the financial system.

So far, no one has floated publicly the idea of the U.S underwriting a broader bailout of the European financial system. But Senate Republicans have already voiced concerns over such a move.

"Our concern is that innocent American taxpayers will pay for yet another bailout -- this time to one or several countries whose spending and debt choices led them to financial calamity,” Sen. Orrin Hatch, R-Utah, and seven other Republican senators wrote in a letter to Treasury Secretary Timothy Geithner in June.

The source of the senators' concern is an emergency provision, approved by the Group of 20 industrialized nations in 2009, granting the IMF broad powers to expand its lending authority. That could leave American taxpayers on the hook for any IMF loans that later go bad.
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[Technoid]

Personally I think the governments who "bails" out banks are doing it wrong.

It definitely sends the wrong message. any bank (or other company) that gets "bailed out" should become regulated at the least. best would actually to NOT help the company that just proved they shouldn't be in business and instead help the "Victims" ie; people or companies who lended (I think I'm have got the wrong word here ) the bank money.

and it's kinda scary that private companies can potentially take a country with it when it fails...

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On the idea that a EU member country can't "leave"; its self delusions..

Who is gonna stop them? the secret EU men in black?

And while the euro countries have the "same" currency it could for all practical uses be different for them all since the practical value of a 1 euro coin differs from country to country. The only thing it did was to kill the inter euro currency exchange trade.