back to article How to keep your money safe if the euro implodes

This is your handy guide to surviving the coming disintegration of the euro. Umm, OK, the coming possible, maybe even likely, disintegration of the euro. The current betting from the major banks is that there's a 50 to 75 per cent chance that Greece will leave before the year end. There's at least one Nobel Laureate who thinks …

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  1. 3ShadesofGray

    Personally, living and working in Switzerland, I think it might be time to buy some nice waterfront land in Italy (maybe France and Spain as well). There has to be bargains down there for those with the cash.

    1. Def Silver badge

      No. Not yet anyway. Wait until they leave the Euro and their currencies crash. *Then* you'll find some nice cheap bargains. (Assuming your money isn't already in the country that's crashing.) That's what I'm going to do anyway.

      1. Anonymous Coward
        Anonymous Coward

        Even then you need to be careful. No country likes to be looted by carpetbaggers so keep your eyes open for new (or even old) legislation that might impact your holdings.

    2. Anonymous Coward
      Anonymous Coward

      Italian lakes have nice properties, the land is already sold to Germans, the northern weather is rather swiss!

      further south - Umbria maybe - are the lower priced/great value homes, great weather , great food and very nice people.

      Italian property market is a bit strange, not too logical & non-transparent. Many builds of housing done in recent years are allegedly made by those sicilian style organizations that are best kept away from as they are re-investing their loot, sprinkling with "Daz," in the hope to recoup their money in the next decades.

      I'd stick to restructuring older independent mom+pop Villas which are being sold as families break-up. Anyone who you meet in Italy who suggests something that helps you to find a particular property can (successfully!) claim a 3% of purchase-price finders-fee from the new owners! make sure the Villa or just land if you fancy a plot has building permission, Enel electric connection and Telecomitalia telephone/ADSL connection. (can be extorted many many kiloeuro for these services if not clear) (and have a 6 month or longer wait)

      Living and working here in italy there doesn't seem to be a cloud of doom descending on the nation, the Italian banks have always been very parsimonious with their lending and investments. admittedly to get into the euro originally there was a one-off emergency 'europe' tax levied on everyone just in order to briefly inflate the government coffers and pass the adhesion criteria. It is currently impossible to get a job in italy and I buy rather a lot of household & ICT items on amazon.de at 25% of the 'free' market price here.

    3. Silverburn

      @ 3dshades

      You and me both. Except there's already talk of the CH housing market bubbling, and and in danger of being over valued.

      Then again, when a non-penthouse lake front flat is already worth 600,00-900,000, you might argue that has already happened. Maybe I should move further south...it's warmer south of the gottard at least.

  2. Pete 2 Silver badge

    Making a drachma out of a crisis

    The greek GDP is about 300 Bn euros a year. Compare that with the eurozone GDP of over 7 Tn - it's less than 5%. Now I appreciate that everything's connected to everything else and that the european (probably worldwide, too) banking systems are more brittle that Windows 3. However the UK managed to Quantitatively Ease more than that amount all on it's lonesome. With two or three eurozone countries pitching in, we could probably buy the whole of Greece for the price of a busted bank or two (and we have a few of those on the books, if anyone's interested).

    So what happens if Greece does get the boot? At the very least it will serve as an example to others. Maybe when the rest of southern europe sees Greece turn (back) into a third world country in the space of a week - possibly followed by the traditional Coup d'Etat, it will galvanise then into thinking that maybe getting off their arses and paying their taxes is the lesser of two evils.

    1. Ross 7

      Re: Making a drachma out of a crisis

      There are two problems (well, there are a shed load more than two, but for these purposes let's stick with just the two) -

      1. Someone has a boat load of money bet on the Euros demise. Unless the Eurozone countries want to get all aggressive (and slightly illegal) and start throwing a few trillion at the money markets to crush them this won't end until the Euro does.

      2. The Greek debt is *relatively* small, but the problem is the amount doesn't really matter - the agreement is that anyone in the Euro has to stay within a fairly small band. I presume the idea is to make sure that one country doesn't become massively more popular a place to invest than any other due to the local circumstances. Greece just can't stay within tolerance.

      It's very much a matter of the irresistable force meeting the immovable object . The people that want the Euro to fail have too much bet on it for it not to happen. The Eurozone countries can't afford for it to fail. One must inevitably give way though, and given that the Euro is more visible than its attackers and thus subject to more effective regulation I'd be surprised if the Euro managed to withstand the attack for longer than a year*.

      ---

      * hopefully I got that msg across without it being actionable ;)

      1. I ain't Spartacus Gold badge

        Re: Making a drachma out of a crisis

        "Someone has a boat load of money bet on the Euros demise. Unless the Eurozone countries want to get all aggressive (and slightly illegal) and start throwing a few trillion at the money markets to crush them this won't end until the Euro does."

        Ross 7,

        This one ain't the banker's fault. Well not directly. They caused the current recession, but the Eurozone created this debt-crisis all by themselves. It just needed a recession to set it off.

        This isn't the ERM crisis. There's no way to bet against the Euro, not in the same way that people could bet against the pound.

        The problem for the Euro isn't the value of the currency, which hasn't dropped that much anyway.

        The problem is that no-one wants to lend to the Spanish, Greek, Portuguese, Irish, Italian, and maybe soon Belgian and French governments. Or not at rates they can afford anyway. This isn't some evil conspiracy by shadowy market figures. It's because they might not be able to pay their debts. Well, Ireland, Portugal and Greece can't, and have needed bail-outs. Italy almost certainly can't either, not in the long term, without leaving the Euro to devalue its currency - or maybe getting a couple of million immigrants to restore the ageing population.

        Now, if the Eurozone had cheerfully helped the Greeks, Irish and Portuguese 2 years ago this might not have happened. Everyone believed that the Eurozone governments would stand together. Turns out that isn't the case. They've made it abundantly clear that they don't want to. So now it's every man for himself.

        Well having said, "it's all the market's fault for lending to Greece. We never promised to back their government borrowing. They should take their losses and stop whining". The Eurozone is now complaining that no-one wants to lend to Spain and Italy, and claiming it's a market attack! You can't have it both ways. Worse, they even cheated the Greek default, so that legitimate lenders didn't get the insurance payouts they'd been paying for. So they destroyed the market in sovereign debt insurance, just as they were having a sovereign debt crisis! Now that's the very definition of fucking stupid.

        No sensible banker would lend to Spain under these circumstances. The only reason they're not bankrupt already is because the already insolvent Spanish banks have been allowed to borrow German backed money from the ECB. Using (otherwise unsaleable) Spanish government debt as collateral. And they're using that cash to buy the new Spanish government debt. It's the bankrupt leading the bankrupt...

        It was a great move from the ECB. It bought the Eurozone time. 6 months it turns out. The entire Eurozone banking system would probably have collapsed last December, had this not happened. But it didn't solve the underlying problem. The Eurozone politicians and voters pissed that precious time up the wall, and did fuck-all to save themselves. I suspect that by the end of June Greece will be out of the Euro, and Spain will be on life-support. And if Germany don't agree to back other government's lending in some way, then the Euro will have mostly collapsed by Autumn, and the world will be in for a Depression.

    2. Mr C
      Unhappy

      Re: Making a drachma out of a crisis

      ".... sees Greece turn (back) into a third world country in the space of a week - possibly followed by the traditional Coup d'Etat, ..."

      I live in greece, and i am one of the few who actually see this sad scenario becoming reality.

      Greeks have the tendency to stick their head in the sand and *wish* for the best. Wishing isn't worth squad, obviously, but try telling my fellow countrymen that.

      Even now when we're at the brink ppl are still thinking its all doomsay from politicians to win votes by putting fear in our hearts, and as such dont put much stock in it...

      Too bad really that this time these same politicians are *not* lying for once, but this is the classic tale of the boy who cried wolf. No-one believes them or takes them serious anymore.

      Me thinks now is not such a bad time to get my papers in order for me and my family to get out of this country while we still can

      1. Tim Worstal

        Re: Making a drachma out of a crisis

        A very strong suggestion would be to take a quick trip to Austria or the like (no, not Cyprus, absolutely not Cyprus!), open a bank account and stick as much of your cash into that account as you can. Those euros will maintain their value as the New Drachma falls.

      2. J.G.Harston Silver badge

        Seeking letters of transit?

        We'll always have Athens. ;)

      3. thecakeis(not)alie

        @MR C

        Come to Canada! There's a strong Greek community out west. Edmonton, Calgary, Vancouver...all have great Greek communities. (Though Vancouver are less tolerant of immigrants than Calgary, Calgary is less tolerant than Edmonton.)

        If you read The Register, that means you probably fall into the category of "skilled worker." Which means getting into Canada shouldn't be too difficult. I live here in Edmonton, and things went from "there are no jobs whatsoever to be had, anywhere" two years ago to "15 people attempting to headhunt me for 100 different jobs on LinkedIn every week." (To contrast, in September, I was at 4 LinkedIn requests a week. GOGO BOOM TIMES.)

        If you are willing to work in the oilfield (three weeks on, one week off,) then there's stupid money...even with oil going below $100. Oilfield IT makes around $75,000 for someone with 5 years experience, $100,000 for someone with 10. (And that's mostly just onsite desk side support, with responsibility for a half dozen servers, 50 clients and some piddly networking gear.)

        If you are willing to get a trade ticket, (pipefitters and welders man...damn...) you can add anywhere from $30K more to $150K more without breaking a sweat. Once you get your citizenship, add %25 to any of those figures.

        Now, bear in mind that it’s boom time in Alberta/B.C./Saskatchewan right now. Two years from now, we’ll be back down to making $60K for an IT body and ~30% of the tradesmen will be unemployed. That will last for a year, and we’ll go repeat the cycle.

        So if you do ever actually consider moving out here, be warned: you have to apply truly Keneysian economics (save during good times so you can weather the bad) at the personal level to survive out here. That said, “surviving” out here means a nice 3 bedroom /w 2000sq ft., two vehicles and full benefits.

        We still have ecosystems we haven’t destroyed here, so there are just all sorts of externalisation of costs still going on.

        Drop me a line if you want links to relevant infos, or to be put in touch with a local headhunter. Maybe if I throw a few of you euroadmins at them, they’ll get off my back for a while…

      4. Anonymous Coward
        Anonymous Coward

        Re: Making a drachma out of a crisis

        "Me thinks now is not such a bad time to get my papers in order for me and my family to get out of this country while we still can"

        It's not a bad idea for UK-ites too. Unlike most of Europe the powers that be here have been tooling up for major unrest for near enough a decade - centralizing police forces, making it difficult for ordinary people to shuffle money about under the radar, or even meet for that matter. Not to mention the legendary camera surveillance all recorded and to an extent automatically disseminated.

        If it turns even a little bit difficult for people here when the Euro turns sour, best to be prepared for things to go very bad very quickly and have an escape plan.

        1. Chingatch
          FAIL

          Re: Making a drachma out of a crisis

          And where will you escape to?

          I don't think New Zealand can hold all of Europe and the Americans too! ;-(

    3. stuartrc

      Re: Making a drachma out of a crisis

      On a pure numbers view are right - whether Greece is in the eurozone or not is immaterial.

      The problem is broadly one of confidence. The Euro works as a fungible currency on the principle of irreversiblity of the currency union. i.e. 5 euro note has equal value regardless of which central bank prints it.

      Once you demonstrate that it is possible for a country to leave the eurozone you introduce a tangible possibility of another country leaving the eurozone and re-denominating its currency from euro. A prudent investor would have to take account of this risk and suddenly not all Euros are born equally. Quite how that dynamic plays through the market I don't know but I suspect it would be bad for everyone except Germany and a couple of others.

      To a degree you can already see this dynamic through the balkanisation of the european banking system and the spreads differential on different government bonds. I would certainly argue that the current spreads between german and spanish government bonds represents not just a difference in credit quality but the contingent FX risk each contains in a eurozone break up scenario.

      1. Magnus_Pym

        Re: Making a drachma out of a crisis @ stuartc

        So you are saying that the different rates for government bonds are a sign that prudent investors already take account of the strength of the Euro in each country. Doesn't that mean that a mechanism is already in place to balance confidence against chance of Euro default?

        1. I ain't Spartacus Gold badge

          Re: Making a drachma out of a crisis @ stuartc

          "So you are saying that the different rates for government bonds are a sign that prudent investors already take account of the strength of the Euro in each country. Doesn't that mean that a mechanism is already in place to balance confidence against chance of Euro default?"

          No. Because if a government can't pay its debts, it can devalue its currency. Or in extreme cases print money. This still means lenders lose some money, but it's a risk that can be accounted for. Also, if their economy recovers, their currency might go back up (losing you nothing).

          Because Eurozone countries can't use these options, their only choice is catastrophic default. Plus the lack of economic flexibility is dangerous. If Greece wasn't in the Euro it would suffer some economic troubles. But its economy wouldn't have got into the current death-spiral.

          1. Tom 13

            @I ain't Spartacus

            Two huge mistakes in as many paragraphs.

            First off, DEVALUING your money is the drastic step, not printing money, which is the usual step, and which never works no matter how often it is tried or how convoluted the scheme to keep the machine in perpetual motion is. If you don't understand this, shut up until you can pass Econ for pre-schoolers.

            Next up, in a similar fashion you get the Greek situation wrong. They are stuck having to leave the Euro because the worked themselves into an economic death spiral. While it might be accurate to say there would be fewer problems in Greece if they'd never been in the Euro in the first place, that would be for countries other than Greece and only because there might have been clearer signals to the morons with their both feet planted firmly on the accelerator of low interest loans to people with no means to pay it back. It would still pretty much suck if you were Greek because absent the kind of difficult economic reform they've just gotten done rejecting again you can't turn the economy around. It's simple mathematics that you can't support 60% of your adult population on 40% for your workforce. If you actually apply a little bit of behavioral analysis you quickly realize you can't support 30% of your adult population on 70% for your work force either.

            1. I ain't Spartacus Gold badge

              Re: @I ain't Spartacus

              "First off, DEVALUING your money is the drastic step, not printing money, which is the usual step, and which never works no matter how often it is tried or how convoluted the scheme to keep the machine in perpetual motion is. If you don't understand this, shut up until you can pass Econ for pre-schoolers."

              Tom,

              That sentence doesn't really make sense. What are you accusing me of getting wrong? Printing money is a more drastic step than devaluing your currency against others. I believe that's what I've said above, and I think is a perfectly fair comment. Perhaps you could try being a touch less aggressive, and perhaps, discuss things. It helps you know...

              I've passed a bit more economics that the courses aimed at pre-schoolers that you mention (ones I wasn't previously aware existed). I may have made a mistake in posting some thoughts on the internet, if so, please correct me.

              As for printing money never working, you're wrong. It can work. Not that it's a great idea. it obviously can't be done perpetually. Given a choice between your banking system collapsing, and your economy grinding to a halt or printing money to keep the machine on the road temporarily, the second is a better optinon. At this point you have to convince people that it's a temporary measure, and you have some sort of plan.

              The ECB 3 year loans are a form of temporary money printing. Theoretically so is the Bank of England's Quantitative Easing (they can choose to sell the goverment debt they 'bought' with printed money later and reverse the effect).

              "Next up, in a similar fashion you get the Greek situation wrong. They are stuck having to leave the Euro because the worked themselves into an economic death spiral. "

              Incorrect. Yes, obviously the Greeks got themselves into this mess. And yes. people shouldn't have lent to them at those interest rates. Though it's pretty unusual for 1st world governments to simply make up their GDP figures. And the Euro was all about everyone having the same interest rates. It's also a bit bloody late for the Eurozone governments to tell everyone now that they never promised to back everyone else's debt, when they took the low interest rates that were offered, and didn't complain at the time. And they took steps to try and get a roughly equal government interest rate.

              But if Greece wasn't in the Euro it wouldn't have had low ECB interest rates (designed mostly to suit Germany and France), inflating the bubble. Then when the crisis started to hit, it would have been able to drop its interest rates faster and lower, to cushion the pain. Also as it imported more and more from Germany, its currency would have slowly devalued, which would have made importing harder and exporting easier. Currency fluctuations help to balance the strains of international trade. A lower Drachma means more tourists, less imports and maybe more exports. Lots of its tourists have been going to Turkey of late, as it's cheaper than the Eurozone.

              It would also have the emergency option of printing money. As I say, bad, but sometimes better than not. If you can convince the markets and the population that you can save your banks, then you probably won't have to. Because Greece doesn't have access to these tools there's a very real possibiliy that its economy will totally collapse. There's a danger this can become self-fulfilling.

              So while Greece would still be in the shit for lying about its growth figures. Were they not in the Euro, they've have defaulted 2 years ago. There would have been a massive currency devaluation, and a big bank rescue. Inflation would have shot up, and the standard of living would have dropped. But there would be a hope of recovery, an increase in tourism (and maybe exports), and they wouldn't be in permanent, no-hope, fucked-up death spiral.

              Finally, outside the Eurozone they wouldn't have been given a bailout designed to save French and German banks, that didn't write off any of the unsustainable debt, but slowly moved it to the ESFS and ECB books. Although the Germans finally accepted reality (too late) this year. But even then only allowed a private sector default. And they were given no stimulus, either by devaluation or by direct grants of EU cash. Hence their economy has shrunk by 20%, and is still going. With no hope of a solution, there's no hope of recovery. Apparently the IMF advisors said they shouldn't agree to the bailout until this was fixed. But were overruled by Strauss-Kahn (in between sex-parties presumably). I guess he did it under French pressure. And look how well it's turned out.

    4. I ain't Spartacus Gold badge

      Re: Making a drachma out of a crisis

      "The greek GDP is about 300 Bn euros a year. Compare that with the eurozone GDP of over 7 Tn - it's less than 5%."

      "So what happens if Greece does get the boot? At the very least it will serve as an example to others."

      Pete 2,

      You've got this the wrong way round. You think that the Eurozone's failure to support Greece is a sign to other 'lazy' countries to get off their arses, get working, pull their socks up and sort themselves out. And I suppose it is. But it's also a sign that the Eurozone countries don't stick together. At that point, the Euro is no longer a proper single currency. if any government gets into serious enough trouble, it'll have no choice but to leave. So you have all the disadvantages of being tied to a single interest rate and a fixed exchange rate - but none of the advantages of being a big, mutually supporting group.

      Worse, unlike Britain when the ERM went horribly wrong, you can't just devalue. You've got to create a new currency and rip-up and re-write most of the contracts in the country. And your banking system will almost certainly collapse, and your government will probably have to default, so may not be able to borrow for a decade.

      Politically this has to change, or the Euro has to break up. Even if it survives this recession, the same thing will happen to some country in the next.

      The Spanish government may have to bail its banks out next week. it can only borrow at 6% now, and that's going to go up. Who would lend to the Spanish government? Given that they're in serious economic trouble and the Eurozone don't do bail-outs? Their current options are Euro-exit and default or economic death-spiral (Greek style).

      Needless to say, neither of these are attractive, or lead a lender to have any confidence in lending the cash they need to avoid those options.

      1. Pete 2 Silver badge

        Re: Making a drachma out of a crisis

        > a sign to other 'lazy' countries

        I was thinking more in terms that the consequences (of exiting the euro) would be a clear message to the people in those "threatened" countries. So instead of them adopting a Mikawber-esque attitude and thinking "it's not that bad, something/someone will sort it out for us", they'll see that WHEN their turn comes, the consequences will be real, painful and immediate. At that point, they might just decide to stop avoiding taxes (a big problem the greek govt. had - Spain too) reform their ways of working (the term "spanish practices" came from somewhere ;)) and start living within their means.

        I agree with you about monetary union. The problem was that the agrarian economies were no real match for the industrial economies - no matter how well they had "synced" their fiscal states. Now, if the euro had originally been called the Euromark, that might have made the balance of power a little more apparent to all the deadbeat countries who thought they were equal partners - and spent EU grants and took out EU loans accordingly. A lot of countries "peg" their currencies to a stronger one - usually the US dollar. It could be time that the euro was rearranged a little so that instead of a single currency without political union, the eurozone currencies either got a peg to the Euro(mark) or seriously all got into the same bed and agreed on a political basis, too.

        So far as the consequences for the euro - it might even be a good thing. It would show that the politicians were willing to cut away the rotten states. Financial markets fear nothing more than they fear uncertainty. So far "europe" has been prevaricating and fudging the issue, while it's clear to all the speculators what needs to be done, and should have been done years ago. Maybe they have been betting on a breakup. After all, every other previous currency union has failed. Some strong action may make the speculators rethink their position.

      2. BristolBachelor Gold badge

        @Spartacus

        "But it's also a sign that the Eurozone countries don't stick together. At that point, the Euro is no longer a proper single currency.

        Somewhere around this internet, I read that some US cities and states even have gone bust (borrowed more than they could pay, and then just refused to pay). I don't think anyone said that the US dollar was bad because of that, or is not a single currency of the US. It just means that you use the same currency as a load of other people and if you screw-up, it's your own fault (borrowing more money than you could ever pay back).

        1. I ain't Spartacus Gold badge

          Re: @Spartacus

          "Somewhere around this internet, I read that some US cities and states even have gone bust (borrowed more than they could pay, and then just refused to pay). I don't think anyone said that the US dollar was bad because of that, or is not a single currency of the US."

          El Bachelero de Bristol,

          It's a matter of scale. Everyone who lends to a US city or state knew there would be no bailouts. That's the way they've always worked it. So I'd imagine they don't get the kind of low interest rates that Greece, Italy and Spain have had recently. Also, no bank is going to lend too much to them.

          In the case of most countries, if their government defaults, all their banks and pension funds will go bust. This is because most of them hold lots of government debt, as the safest form of capital that isn't cash. Now at that point, you could try some shennanigans like cancelling all your debt, except the stuff to your own country's financial institutions. But you've then got the further troubles of no-one being willing to lend to you. And if, like most governments in the Eurozone, you're also spending more government cash than you raise in taxes, then you need to borrow. At this point,straight after your recent default, that's going to be impossible. Further, no-one will lend money to the banks of a crisis ridden country whose government has just defaulted. As banks are guaranteed by their governments. So you'll have to borrow to bail-out your banks.

          Oh, whoops. See above. Now the final way out of this is to print money. But you can't. Because you're in the Euro. Ditto for the other trick, of devaluing your currency and inflating away some of your debts.

          Finally, back to the US states. The US have Federal bank guarantee schemes. So if one bank was in total hock to California, and it went bust, they'd get bailed out by the Fed. The only people bailing out Spanish banks, are the Spanish government. And they're doing it with money borrowed from the Spanish banks. Which they're borroing from the ECB secured on Spanish government debt.... There's something delightfully circular about that. Or horrifically dangerous...

    5. TheOtherHobbes

      Re: Making a drachma out of a crisis

      Greece is bust because Maastricht was practically and philosophically insane.

      Every country in the Euro zone is supposed to run a trade surplus. Which is obviously not going to happen.

      Greek workers actually put in longer hours than the Germans do - yes they do, and there are stats to prove it, for anyone who can be bothered to Google a disinterested source. And while there's widespread tax avoidance, there's also widespread tax avoidance elsewhere in Europe - not least in the UK, which is Europe's own second-choice floating money laundering haven for non-domiciles, after Switzerland.

      So arses, and getting off same, are not the problem.

      The problem is that Greece has been fucked over by the German banks. Greece was a prime export market for German tech - including non-essential military tech - funded by German loans.

      Anyone sane would have understood the loans were never likely to be repaid. But apparently the German financial establishment won't be happy until those not-so-feckless Greeks - the ones who are literally committing suicide and literally selling their kids because they can't afford to feed them - are taught a lesson about who is really running the EU.

      Here's a clue - it's not the voters. In any country. Nor the people who do real work.

      In any case, Greece needs to hang on until the middle of next year. That psycho Merkel will be kicked out and replaced by someone who isn't going to whore for the finance industry and the personal profit of a few bessie mates.

      There might be some danger of interesting changes after that.

  3. Anonymous Coward
    Anonymous Coward

    It's going to be OK

    The Greek Government bought a massive tranche of Facebook shares!

    Oh.

  4. Anonymous Coward
    Anonymous Coward

    I find it laughable

    A company I know of is currently trying to move all its production from a non eurozone country to one of the high risk of bankrupcy countries. I'm not naming anything, because I don't think I'm meant to know this.

    The guy pushing for it, is fully aware of the current crisis and the high risk,.

    1. TangD
      Stop

      Re: I find it laughable

      That could be an inspired move, as the currency falls, so will go cost of production and any local monies borrowed. Any long term supply contracts under local law that are redenominated will also drop in cost, or generate get out penalties if they buyer wrote them properly. Oddly in this scenario the real risk is they DON'T go bankrupt and you get stuck with higher taxes, austerity and social unrest

  5. chris lively
    WTF?

    ?

    I truly don't understand the Greeks.

    The country has no more money. They have no ability to pay their bills. Essentially their socialist form of government has utterly and completely failed. Yet the people are pissed off because they have to pay for the services they use ( much higher taxes ) or go without.

    Did they stop teaching basic math and economics over there?

    1. Some Beggar
      WTF?

      Re: ?

      "Essentially their socialist form of government has utterly and completely failed."

      The "form of government" is a parliamentary republic and the president and parliament of the 3rd Republic has been right wing and centre right more often than it has been left wing. You should probably have stuck with your first sentence.

      1. Bumpy Cat
        Unhappy

        Re: ?

        It is definitely the case that a large portion of the population of Greece simply doesn't pay its way - tax avoidance/evasion is a common and accepted practice, so of course the government can't pay for basic functions. This is interesting and scary reading:

        http://www.vanityfair.com/business/features/2010/10/greeks-bearing-bonds-201010?printable=true

      2. Figgus

        Re: ?

        "Essentially their socialist form of government has utterly and completely failed."

        The "form of government" is a parliamentary republic and the president and parliament of the 3rd Republic has been right wing and centre right more often than it has been left wing. You should probably have stuck with your first sentence

        Right wing and center... for GREECE, the people who nearly revolted at some austerity measures that were 100% necessary. "Right wing" for Greece = left wing pretty much everywhere else! One can only imagine how bad their liberals are in the scheme of things...

        The EU told them it was either no more handouts or no more bailouts, and the voting population of Greece walked away from the table in protest. Any country that dependent on handouts leans pretty far to the left in general.

      3. I ain't Spartacus Gold badge

        Re: ?

        "The "form of government" is a parliamentary republic and the president and parliament of the 3rd Republic has been right wing and centre right more often than it has been left wing. You should probably have stuck with your first sentence."

        Some Beggar,

        PASOK (the Panhellenic Socialist Movement governed Greece from 1981-89, 1993-2002 and 2009-2012. So that's roughly 20 years of the 38 since the founding of the Third Republic, and civilian government taking over in 1974.

        I'm not going to claim expertise on Greek politics, and I may have got a few bits wrong, but it's worth being a bit more careful if you're going to go the pedantic route.

        It's also worth pointing out that not all European centre right parties are centre-right in global terms. For example, the German and French CDU and UMP would both be to the left of Tony Blair's New Labour. And probably quite similar to most other UK Labour governemnts. These terms tend to be used relatively.

        1. Some Beggar

          Re: ?

          @ I ain't spartacus

          Fair enough. If you count the presidency then it shifts slightly the other way. But I wasn't really arguing that Greece doesn't have strong pinko inclinations. My main point was about the 'socialist form of government' part. It isn't the form of government or the law itself that is at fault, it is corruption, tax avoidance and an almost superhuman lack of prudence in the economy and banking system. I'm not sure it makes any sense to describe any of those, or a parliamentary democracy, as 'socialist'.

          1. I ain't Spartacus Gold badge

            Re: ?

            Some Beggar,

            I don't know enough about Greek politics really. It all comes down to where you're looking from anyway. Given how controversial Obama's healthcare reform is in the US, and that the UK Conservatives are almost universally in favour of the NHS, you could argue that David Cameron is a socialist. In it's current mood, the Daily Telegraph might just do that...

            Meanwhile, I suspect both PASOK and New Democracy would count as on the left wing of labour, were they involved in UK politics. As would the French UMP. In as much as that comparison has any meaning.

            As you say, endemic tax-evasion, incompetence and corruption are huge issues. I don't know how much of Greek government spending is the parties giving their supporters useless government non-jobs for votes, and how much is 'socialism'/overspending.

      4. Mark 65 Silver badge

        Re: ?

        You say they were mainly centre right or right wing governments, but having an oversized public sector, 14 months pay per year and retiring somewhat early in that public sector etc seems to fit in better with decidedly left wing politics.

  6. Magnus_Pym

    "Essentially their corrupt form of government has utterly and completely failed."

    1. Alan Firminger

      As did the UK form of government in 2008.

      1. Magnus_Pym

        We lost the ability to elect anyone other than those we are 'allowed' to elect a lot earlier than that I think you will find.

  7. This post has been deleted by its author

    1. Magnus_Pym

      Re: Most of them are brainwashed.

      You are probably thinking of a communist inspired dictatorship. Socialism is the doctrine of shared responsibility between the state and the individual.

      All modern democracies share responsibilities. It's just where they draw the line that marks out the differences.

  8. Anonymous Coward
    Anonymous Coward

    Germany cannot afford Greece to exit

    ...and the Eurozone to break up. Nor can they afford to exit themselves, as it would mean a write down of around EUR800bn for them.

    Besides, it is much easier to rule one econo-political bureaucracy than to have to conquer 27...

  9. Anonymous Coward
    Anonymous Coward

    How do you open an acccount in a German bank?

    ...if you don't have a German address and find it hard to get there to sign the forms etc?

    1. A J Stiles

      Re: How do you open an acccount in a German bank?

      Since 1993 you just need a British (or other EU member state issued) passport, and (not absolutely essential, but it helps) the ability to speak German.

      1. This post has been deleted by its author

    2. Dan 55 Silver badge
      IT Angle

      Re: How do you open an acccount in a German bank?

      Go to a branch of DB (there aren't many in the UK) and ask them to open a non-resident account in Germany I would have thought.

      But the best bet would be Norway though since they're not reliant on importing energy and don't owe anything to anyone.

    3. Local Group
      Trollface

      Re: How do you open an acccount in a German bank?

      I would start with "Guten Tag."

  10. S4qFBxkFFg
    Trollface

    Or, if you are the Greek Government...

    ...employ some clever people from the banking and printing industries to study Euro notes, figure out the super-secret tell-tales that only the ECB know about, then run the printing presses until they melt.

    Even if they printed their entire debt, would it really inflate the Euro by that much?

  11. Anonymous Coward
    Meh

    Greece can exit the Euro but it is very unlikely to bring down the whole currency, the € is just too useful to the rest of the trading block.

    Take away the € and you're back to second guessing the future value of a basket of currencies and their potential local interest rate movements. You will also be paying a mix of commissions on exchanging those currencies and you will have to purchase futures options to hedge against those risks.

    1. I ain't Spartacus Gold badge

      "Take away the € and you're back to second guessing the future value of a basket of currencies and their potential local interest rate movements. You will also be paying a mix of commissions on exchanging those currencies and you will have to purchase futures options to hedge against those risks."

      As opposed to trading outside the Eurozone, where you have to do this anyway. Something that's been an absolute disaster for Germany, leading to it's exports outside the zone to collapse, and the long decline in its manufacturing economy.

      Hmmm, no, hang on a minute... That's not right is it? Oh no. The Eurozone as a whole has a positive current account position. It exports more than it imports. So maybe trading in other currencies isn't all that bad?

      Sure it's annoying. And loses you a bit of profit. But there's an upside. That exchange-rate flexibility is what allows countries to import your stuff. Greece couldn't devalue, or raise its interest rates. The only way to carry on buying German cars (and weapons) was to borrow the cash. Mostly from German and French banks. Which has turned out well...

      Exchange rates move for a reason. That flexibility is vital to allow the world economy to carry on working. One of the major reasons for the current recession is that China won't allow its currency to appreciate. This keeps its own people artificially poor, and stops Western economies from exporting back to them, in order to pay for what they buy.

      The Germans, as the world's second largest exporter, are doing exactly the same to the rest of the Eurozone.

      1. Anonymous Coward 101
        Facepalm

        You have to despair when people don't understand that the whole point of exporting goods to other nations is to eventually import goods from the other nation.

        What was the point in Germans lending money to Greeks to buy German cars when there was no way the Greeks could export goods of equal value to the Germans? The Germans would have been better off making the cars for their own use, but many Germans probably think all those exports 'made their economy strong'.

        1. I ain't Spartacus Gold badge

          but many Germans probably think all those exports 'made their economy strong'.

          Weird but true. For an exporting country, you'd have thought that they'd want a low currency. But many Germans I know are proud and happy when the Euro goes up in value.

          In fact I noticed a weird kind of 'EU-nationalism' when I lived over there. People were grumpy when the Euro currency came in, in 2002, and dropped by 20%-odd. At one point you could get €1.70 to the pound! As an expat, paid in sterling, I wasn't complaining. I was investing the windfall in educating myself in Belgian Beer Studies. Yum.

          But when it went down, people complained about the evil currency traders doing them down. Then when the currency went up, later, people crowed about how great the Euro was, and how it was going to kick the dollar's arse. I got this from Belgians, Germans, French, and I've seen it a lot online, since I came back to Blighty. Don't understand it though.

          1. Mark 65 Silver badge

            Probably simpler than that

            Most luxury items (except cars) are likely imported rather than locally produced so a strong currency just "makes shit cheaper". I doubt Joe Public consider macroeconomics when they're buying the 60" plasma that now seems so much cheaper.

          2. P. Lee Silver badge
            Coat

            > many Germans I know are proud and happy when the Euro goes up in value.

            Perhaps they remember what happened last time their currency rapidly depreciated.

            Be thankful its the Greeks, Spanish and Italians who are in trouble!

      2. I think so I am?
        Facepalm

        China holding trillions of $ is a problem and something no other country would be aloud to do. But who's powerful enough to stop them? If they let the cash back into the market they could cripple the US.

        1. I ain't Spartacus Gold badge

          Actually, it's the other way round. To avoid the Yuan appreciating as the Chinese economy strengthened (to help exports) - the Chinese bought lots of dollars, and lots of US T-Bills. This keeps Chinese workers artificially poor, but helps China out-compete other countries.

          The only problem is that it means the US owe China about $3 trillion! Now sure, the Chinese could play silly buggers with the US bond market, and currency. But, the US government could use the nuclear option, and default on China's debt. Plus the Chinese are in a bind. For every 10% the dollar devalues, they've just lost $300 billion! That's enough to give anyone pause...

    2. Marketing Hack Silver badge

      @ Moultoneer

      Too late to argue that the Euro obviates currency risk. Five years ago you could say that, but not now because people are progressively getting their contracts and investments out of Greece/Spain/Ireland, etc. That's becuase of the risk that you willl go to bed one night with your Greek customers owing you 1 million Euros, and wake up in the morning to find that they now owe you 1 million Drachmae, and that the Drachma is crashing on the foreign exchange markets.

  12. Velv Silver badge
    Coat

    The Greek government is currently asking tourists to bring their own Hummus and Taramasalata since its now a double dip recession.

    Mines the one with the bread sticks.

  13. A J Stiles

    Cui Bono

    Who exactly stands to gain from the break-up of the Euro anyway?

    1. Ken Hagan Gold badge

      Re: Cui Bono

      No idea, but in a world where you can take a "position" on the future price of just about anything, I'd be amazed if there weren't quite a lot of people out there who would gain. You might be one of them. Perhaps the question you meant to ask was "Who *knows* that they stand to gain and has enough influence to push?".

    2. BristolBachelor Gold badge

      Re: Cui Bono

      Well having read a few things about the US dollar, I don't understand why it hasn't collapsed (and still isn't). Except that China is sitting on soooo much of it, that if it collapsed, they'd really lose out. Also, for some reason crude is always traded in US dollar.

      Now imagine that the Euro seems to be a stable currency (not now; but 2 years ago), and so some international trades start happening in Euro instead of dollar; crude oil, metals, etc...

      That's what I've been told, but I think maybe someone needs an aluminum foil hat ?

      1. ForthIsNotDead

        Re: Cui Bono

        The only reason the US$ hasn't collapsed is because it's the world's global currency. That's the only reason. Traditionally, companies in different countries would trade with each other in US$. Governments too. However, we're now starting to see the beggining of a backlash against the US$. Some countries have formally announced that they will trade with each other in their own currency (depending on which 'direction') the trade is going. Russia and China have recently announced they are to trade with each other in Rubles in Yuan. Iran is also trading directly with Russia and China.

        It's true that China has a lot of US$ but it is quietly getting rid of it. You might have heard in the press that China is buying biblical amounts of Gold? It's paying for it in US$. In other words, it's quietly dumping the US$ as it is fully aware that America is completly and utterly bankrupt.

        As other countries and businesses move away from the US$ it will simply be left to die. The US Government know this, and are planning for the ensuing civil chaos that will result.

        1. ForthIsNotDead

          Re: Cui Bono

          Russia and China dump the dollar: http://www.craigsteiner.us/comments/312

          US Dollar Will No Longer be a Global Currency: http://www.bestsyndication.com/?q=20091006_forex_us_dollar_trading..htm

          Some interesting reading.

    3. I ain't Spartacus Gold badge

      Re: Cui Bono

      Who exactly stands to gain from the break-up of the Euro anyway?

      In my opinion, everyone in the world, and especially the Eurozone currencies. But only if it could be done in an orderly way. No idea how you'd do it.

      I think the Euro was a bad idea from the start, although I didn't expect it to be this bad. Unless countries want a proper EU super-state. In which case a common currency makes sense. Other opinions are of course available.

      In the short term, no-one gains. The effects on the global economy could be so horrible, that even if you could make a killing on it, the risk of a decade of global depression almost certainly wipes that out.

  14. Yet Another Anonymous coward Silver badge

    Good news for the UK

    The pound must be booming since we are safe from all this foreign Euro business.

    It must be up at a couple for US$ by now.

    1. John McCallum

      Re: Good news for the UK

      Yes thePound is booming but we are not safe from the Euro if it fails around 60-70% of our exports are to the Euro Countries.

  15. Old Handle
    Trollface

    Bitcoins!

    See title.

  16. Alan Firminger

    What is the chance

    What is the chance that the PIIGS collude to exit the Euro in concert to establish their own common currency ?

    1. Dan 55 Silver badge
      Mushroom

      Re: What is the chance

      No idea but there's a new euro note design appearing on the scene from 1/1/2013. If Germany, Holland, etc... can hang on that long then they can just call it a new currency, press a few buttons in banks, have a change-over period similar to how the euro first was introduced in 2001 for legal residents, and bugger off and leave the PIIGS to roll around in their own filth.

  17. Anonymous Coward
    Anonymous Coward

    Allocated Au and Ag outside the banking sector + mining shares + thick skin + patience

    Mmm Fiat Currency speculation can be rather risky especially when it is this volatile!

    That reminds me of a book I'm reading "When Money Dies", it tells you exactly why Germans are so very scared of state debt and QE, and how a persistent sovereign financial mess can be perfect for the rise of Fascism as a stupidly greedy France discovered to its cost!

    The current mess is just one of the symptoms of the coming end of the latest financial system; this cycle started no thanks to the creation of the International Federal Reserve (FED, central banks and BIS) banking scam, so the financial system must be replaced roughly every 40 years. It's on its last legs now and the strain is showing around the world because the USA and EU refuse to accept the inevitable!

    The only reliable Money is Gold for expensive stuff and Silver for cash; it is only some comments from stupid/corrupt economists and bankers, and the systematic abuse of paper 'Gold' , paper 'Silver' and related derivatives by International Federal Reserve bankster agents which has made this less obvious and mainly been responsible for the "scary" price volatility in effectively worthless fiat currency.

    1. A J Stiles

      Re: Allocated Au and Ag outside the banking sector + mining shares + thick skin + patience

      Gold? Pah. Metals are still capricious. If you were going to peg a currency to anything physical, you should peg it to the Joule. Beneficial side effect is that it explicitly rewards energy efficiency.

      1. Intractable Potsherd Silver badge

        Re: Allocated Au and Ag outside the banking sector + mining shares + thick skin + patience

        @A J Stiles - I recall a science fiction novel in which the currency was 'calories'. I can't remember the title or author at the moment (it could be Michael Swanwick's "Vacuum Flowers"). I do remember that it seemed to make sense in terms of a closed system (space station). Not so sure about its necessity on a planetary scale, though.

        1. moonface
          Thumb Up

          currency was 'calories'

          I have always thought it might be better investing in golden syrup than gold. Firstly, I can't afford bars of gold but could manage more than a few jars of golden syrup. It sure holds it's value (Heston Blumenthal's uses 70 year old glass jars of Tate and Lyle Gold) There is even more money in honey, as It last longer.

          Come financial armageddon and printed paper is no longer barterable and it's discovered that gold cannot be eaten or easily divisible. I will be laughing........ that is until the bloke with the gun takes it off me.

          1. Anonymous Coward
            Anonymous Coward

            Re: currency was 'calories'

            Bacigalupi, one novel was 'The Windup Girl'.

  18. Uplink
    Trollface

    On your way out

    Don't forget to contribute some more to the recession you're moaning about.

  19. Bob H
    Paris Hilton

    When talking about currency moves people seem to neglect that it isn't unknown for countries to exact punitive measures against people either taking advantage of uncertainty or avoiding it. It might be possible that if they think you've moved a great deal of money out of the country (thus contributing to the downfall) they could fine you in compensation. This isn't currently the case, but in the spiral of emergency measures anything is possible!

    Paris, because she likes to keep it in for as long as possible before the money shot...

  20. Anonymous Coward
    Anonymous Coward

    Anti-EU FUD from a UKIP supporter

    You have been informed.

    1. I ain't Spartacus Gold badge

      Re: Anti-EU FUD from a UKIP supporter

      Define FUD.

      If you mean bollocks talked about some thing or product you dislike, then this isn't. Because what he says is true. The Euro is in a mess.

      If on the other hand you mean 'Fear, Uncertainty and Doubt' - that's the fault of the by Eurozone governments.

      Dismissing an argument merely because you dislike the group that someone belongs to is pathetic and childish. If yoube got one, give us your opinion, and then try to back it up.

  21. Anonymous Coward
    Anonymous Coward

    Nobel Laureate

    Nobel Laureate + economics = good at economics, bad at predictions.

    1. Magnus_Pym

      Re: Nobel Laureate

      Economics is a religion not a science. There are different sects and they all say their sacred texts are the one true voice. None ever agree on anything.

  22. Anonymous Coward
    Anonymous Coward

    Don't the Greeks have two legs? And, the ECB gets 100% too.

    First, the latter. The ECB also expects to get 100 per cent of the value of the Greek bonds they (foolishly in my opinion... I'd have sold them mine if I had any... discount or no on the price) bought. No haircut for the Trichet/Draghi Teutonic puppet axis, no sirree. Of course, that was then and this is now, and if the Greeks break off and float away that 100 per cent might not happen. Merkel might look funny with a really major haircut.

    Greece is a sovereign state, and can do all sorts of things that corpies or individuals can't do, if just the Greeks would stand on their hind legs and do it. The Greek government doesn't seem to grasp this though. They slavishly get pulled around by the ring in their noses and are told what to do for a euro lollipop-- not that they don't deserve to be flogged for lying, but still they could be more creative in searching for a solution. Oh , wait , they are, after all , Greeks.... How about this solution: the Greek government bonds are sliced and diced and each citizen of Greece becomes the proud owner of their fair share. And unless that share is current in payment (or paid off), they are second class citizens. No vote, no property ownership, no public medical, and only 1/2 of any pension they think they might get. Isn't it amazing how many euros have been stashed in Greek mattresses? Half of the Greek national debt was just paid off...

    On a side note, it is amazing that there are any euros left in Greece. Why would a household hang onto a stash of soft euros in a bank (vs. hard euros in a mattress, or in bunds, or even convert to francs or pounds or dollars...). Last I looked, 2/3 of the local household cash was still in Greek banks and held in euros, which might flash vaporize within just a few weeks. I can see a company needing a bit of local liquidity for one reason or another, but any Greek keeping their savings in a Greek bank in euros deserves what they get.

  23. Chingatch

    Author: How do you back up this statement please?

    "There's at least one Nobel Laureate who thinks it will happen one weekend sometime soon."

    When/Where did he say THAT? I followed the included link to an old article where he DOESN'T discuss it???

  24. Anonymous Coward
    Anonymous Coward

    UK centric logic

    Whilst the Euro is admittedly going through a rough patch at the moment, this is not helped by the hyperbolic reporting being carried out by predominately UK rags. Let's face it, most UK citizens would love to see the Euro go under. Then you could all bask in the collective knowledge that you were right to never abandon the pound. And let's not forget the return of the cheap ski holidays in the French alps and your nouveau riche being able to buy up large swaths of the Costa del Sol (well, if it isn't already completely owned by UK ex-pats).

    Try to understand that for people and governments that are not so selfish, economic unions like the Euro are actually a good thing in that they provide safeguards for weaker states or members going through difficult periods. Economic unions also provide valuable safeguards for peace and prosperity in regions that have a history of mutual animosity.

    Whilst I'd be willing to admit that certain countries should probably have never been allowed to join the Euro, I feel that the blatant bashing of the European project, predominantly by the UK media, represents a very short sighted and superficial understanding.

    All federations and unions will go through problematic periods but they are a good thing in the long term. At the opposite end of the spectrum you can guarantee prosperity for a few at the expense of a great many by creating smaller states divided primarily along the lines of economic well being. In that case you may as well declare independence for the city of London.

    1. Intractable Potsherd Silver badge

      Re: UK centric logic

      AC, you are correct in your analysis of the benefits of the Euro, but that doesn't mean that it is wrong to give advice regarding the worst-case scenario. Unless Germany comes down off its high horse, gets over its exaggerated fears of quantitative easing, accepts that monetary union means it has to take a hit too, and allows for some flexibility, in two years' time the Eurozone is going to be a very different shape, Greece (at least) will be in the middle of a civil war, and no-one will have won except a few greedy rich people who speculated on the failure. That is not UK-centric, but it is a foreseeable result of the current situation. Talking about it from a country that has no influence over the actions of the major Euro currencies does not make it more or less likely to happen.

    2. I ain't Spartacus Gold badge

      Re: UK centric logic

      "Let's face it, most UK citizens would love to see the Euro go under."

      Bollocks to that! If the Euro fails we're in for a Depression. Which would be depressing...

      I don't think it's true anyway. Had Gordon Brown and Tony Blair been able to get their act together, I suspect we'd have joined at the beginning - unlike Germany and France, the UK met the Maastricht criteria without having to fiddle the figures. Thinks: I wonder what gave Greece the idea...

      "Try to understand that for people and governments that are not so selfish, economic unions like the Euro are actually a good thing in that they provide safeguards for weaker states or members going through difficult periods."

      That would be fucking hilarious, if it wasn't so tragic. You ask the Greeks what they think of that! Or the Irish and Portuguese, who were bailed out at punitive rates, to punish them for erring from the true path of Euro Righteousness.

      The reason the Euro is in the mess it's currently in, is precisely because of a lack of solidarity between the members. The reluctance to allow the first bail-outs, the lack of generosity of the, the way Greece has been forced into an economic death spiral (either by incompetence or as punishment), the smallness and lack of credibility of each, late, half-hearted bail-out - all these things tell people that the Eurozone countries do not want to help each other. Therefore, no-one trusts any but the strongest to be able to survive.

      You see a lot of Euro bashing, because it was a pie-in-the-sky idea, horrifically badly implemented - that could well lead the whole world into economic meltdown. Just like lots of our fellow EU members smugly criticised us when the US/UK banking systems turned out to be very badly run. As it turns out, that smugness was bollocks, the Eurozone banking system had been equally piss-poorly run, they'd just made their poor bets in different markets.

      The Eurozone have 2 choices. Either break the currency up or form a proper transfer union, where the richest countries bail-out the poorest. There are no other options. Well option 3 is to carry on failing to do anything, and watch the currency collapse, taking the world economy with it.

  25. Magnus_Pym

    "Let's face it, most UK citizens would love to see the Euro go under".

    I not sure if that's true. Just because the Euro-sceptic media voice is load it doesn't mean everyone agrees. Westminster is a control freak. It doesn't like it when local and regional government doesn't do as it is told and it doesn't like Bruxelles making it look like the bunch of bickering children that they are.

  26. daveeff
    WTF?

    Go Export yourself

    Germany exporting cars to Greece? If they're all the same currency are they really exporting? Does California "export" to Alaska?

    A currency's value has got to be defined by it's fiscal policy hasn't it? Monetary Union without Political Union was never going to work, I can only assume either

    a) politicians wanted a US of Europe by the back door

    b) politicians are too stupid and too busy chasing short term kudos to take sensible decisions

    c) both of the above.

    actually I could just have stopped at

    The Euro - & used the WTF is that all about icon

  27. earlyjester
    Facepalm

    In a coffee queue a couple of days ago a colleaque and I over heard two of the admin girls chatting' the first warned the second to check the euros she had just got for her holiday as she might want to get rid of the greek euros ........

    It amused me :o)

    1. Marketing Hack Silver badge
      Happy

      Are Greek Euros callled....

      Gyros? I wouldn't suggest keeping those in your purse for long either.....

      Mmmmm, savory money........

  28. Anonymous Coward
    Anonymous Coward

    Lets get down to the important question!

    I'm going to Greece in September, what currency should I take, or should I just use "what ever is local" on my visa?

  29. Peter Lawrence
    Pirate

    Germany will be the last

    Germany can never pull out of the Euro. Joining the EC was a condition imposed upon German Unification by France (and to a lesser extent Britain and the USSR) during the 2+4 talks. It was a way to assuage French fears of a unified Germany running roughshod over the European continent. For political reasons, Germany will have to hold on till the bitter end.

  30. Local Group
    Meh

    Why so pessimistic, Spartacus?

    "then the Euro will have mostly collapsed by Autumn, and the world will be in for a Depression."

    No currency is an island,

    Entire of itself.

    Each is a piece of the continent

    Ever since the Federal Reserve and Greenspan encouraged the subprime mortgage in the late 90's, the economically strong governments are confusing the people into believing the world is in or out of a recession, which may double dip but hasn't yet. This is done to scare the people into austerity.

    Today no one asks where the trillion plus dollars needed to fund the debt of '09, '10, '11, and '12 came from. It appears to 'droppeth as the gentle rain from heaven'.

    Games are being played with our currencies. Some people watching the household sector of the bond market think that the Fed is printing money to buy the Treasury bonds to fund our debt.

    My point is that if the Fed can print money to buy its own bonds, it can print money to rescue Greece, Spain, etc. If the world economy, which has been floundering since October 2008 (or before) is hit with the shock of the euro bomb, America will suffer too. There will be nowhere to run and no place to hide. Forget the condo on Capri.

    http://www.zerohedge.com/article/guest-post-us-dollar-money-supply-underreported

    1. Local Group
      Meh

      There is method in Bernanke's Madness

      http://www.zerohedge.com/news/its-official-fed-now-buying-european-government-bonds

      We're borrowing money to buy those European bonds.

      But it's okay. We're borrowing it from ourselves.

  31. The Florentine

    Longer term problem for Germany - any everyone else.

    The departure of Greece and potentially other PIIGS nations from the Euro could spell disaster for Germany (and everyone else by economic association) in the next two years. For example, look at Italy; the principle reason that Italy is presently in trouble is simply because GDP is depressed by the country's failure to revitalize its long-languishing economy, which has led to the market questioning if it can raise enough tax revenue to pay the interest on its debts. This led to bond interest rates to rise, compounding the problem and almost making it all a self-fulfilling prophecy.

    But if you compare Germany and Italy, one of the things that eventually strikes you, is that German debt is significantly higher than Italy's. The principle reason that the market is not as jittery is that GDP growth is much higher, leading to a much lower debt to GDP ratio (83% for Germany, 121% for Italy in 2011).

    Now consider the Euro appreciating upon the departure of Greece, et al. How will this affect German trade? And in turn how will this affect German GDP growth rates? All it takes is a sustained contraction of 1.5% or so to put Germany in a similar category to Italy - except with double the debt.

    While this is still quite a bit down the line, it is a distinct possibility and so far the Eurozone nations, including Germany (now working with one hand tied behind their back due to the falling popularity of the CDU) have not exactly been inspiring where it comes to decisive action to date.

  32. Anonymous Coward
    Anonymous Coward

    Nobody mentions Iceland

    If the Greeks say no (and they will) then the shadowy "investors" will move to the next target up the chain looking for their money.

    The smart money is in my mattress in various Asian currencies.

  33. Local Group
    Trollface

    The Smart Money

    AC, the smart money of which you speak is pretty dumb but wears Armani and Prada to the tony tapas restaurant.

  34. Charles Smith

    Bypass the paper system

    Just go out and buy some physical gold. It is much more difficult for the Banking establishment to tinker with the value by devaluation or quantitative easing (printing money).

  35. Local Group
    Childcatcher

    @Spartacus: US government could use the nuclear option, and default on China's debt

    I'm curious. Is it possible just to default on one portion of your debt, and leave the remainder intact? Wouldn't defaulting on China's debt be tantamount to defaulting on it all? Besides China, there's Japan, Saudi Arabia, Switzerland, Luxembourg, UK, Brazil, Hong Kong, Taiwan, etc.

    I agree that printing is worse than devaluation. If you print enough you get hyperinflation.

    But I don't agree that the Chinese have been buying dollars. The Bank of China gets enough from the Letters of Credit from WalMart's banks. As a matter of fact they get too many dollars and have to buy The Incredible Shrinking US Treasury bonds to recoup 2% of their larger annual loss on them.

    High finance or high on drugs? I think I made the right choice.

    1. I ain't Spartacus Gold badge

      Re: @Spartacus: US government could use the nuclear option, and default on China's debt

      Local Group,

      I guess It's called sovereign debt for a reason. The contract is under US law, which the US government can change at will. So in principle, they can do what they like. In practise, it's fantasy though. I was just making the point that the US government owing China $3 trillion does not put China in the position of power in the relationship... Technically, they might not know which specific T Bills China holds anyway.

      I'd argue China are buying dollars, so their firms can repatriate their cash from selling all the lovely goodies. Otherwise China would have kept those trillions in its own economy, which would have put up wages, and made them less competitive. But whether it's buying or keeping, the important point is that it's all part of their strategy of currency manipulation. When they stop doing this they'll lose a fortune.

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