Reply to post: Re: An excellent example ...

NEVER MIND the B*LLOCKS Osbo peddles, deficits don't really matter

David L Webb

Re: An excellent example ...

"States may not go bankrupt, but currently hospitals in Athens are running out of painkillers and money to pay nurses. We may be about to see how close they can get to bankruptcy."

States often default on their debts which is as near to bankrupcy as you can get for a state. However in the current world of fiat currencies this is pretty much only ever necessary if the debts are in a currency which the state doesn't have full control of. Hence Greece is in trouble because it doesn't control the Euro. The UK and USA in contrast have full control over their currencies and their debts are overwhelmingly denominated in those currencies. Taken in its totality the Eurozone is in a similar position to the UK and US. However in the UK and US mechanisms are in place for fiscal transfers which mean that imbalances between different states or the constituant countries of the UK are evened out. Whereas in the Eurozone the northern nations in particular Germany are reluctant to see permanent fiscal transfers to nations such as Greece.

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