Why Greece Should Reject the Euro

[BeBMan]

I blame Italy for that. And Austria of course.

[giblets]

Greece needs a larger tax base. I have an idea for how Turkey can get into the EU

[Tuga]

Whats in the Euro for Greece, for Portugal, for Belgium, for ...?
The Euro is just a proxy for the mitteleurope Mark.

The EU has we know it is ending. There is no european socio economic solidarity anymore.

Looks like the XIX century Prussian trust to unify germany, bankrupting all the others german states...

[C0ckney]

Whats in the Euro for Greece, for Portugal, for Belgium, for ...?
The Euro is just a proxy for the mitteleurope Mark.

The EU has we know it is ending. There is no european socio economic solidarity anymore.

Looks like the XIX century Prussian trust to unify germany, bankrupting all the others german states...

what does that even mean? 'soco-economic solidarity' = northern europe bailing out southern europe?

gribbler, the article in OP is rubbish. it's a shallow analysis written by someone who appears to have a very shallow understanding of the situation. he takes what happened in argentina (barabas' post pointed out the differences between argentina and greece very well), applies a big dolop of fashionable keysian thinking and therefore concludes that the best thing for greece to do is to leave the euro and default.

now in point of fact, his conclusion (leaving the euro and defaulting) may well be correct, but his reasoning is worthless.

From a creditors’ point of view, which the European Union authorities have apparently adopted, a country that has accumulated too much debt must be punished, so as not to encourage “bad behavior.” But punishing an entire country for the past mistakes of some of its leaders, while morally satisfying to some, is hardly the basis for sound policy.

firstly, let me explain what motivates the EU and its responses to the debt crisis.

1) keeping the euro together
2) saving the european banking system from collapse

that is the prism through which its actions ought to be viewed. all other considerations are secondary at best. the plan essentially is to get through the crisis without breaking up the euro and not imposing damaging (read: any) losses on european banks. so that means stopping any country from defaulting (either a real default, or a 'soft default'). the plans and their execution are extremely flawed, but there it is.

now of course keeping the euro together may or may not make economic sense, but the euro is a political project, and to lose one or more members would be an enormous blow to the currency's prestige and that of the EU and its politicians.

the european banking system is in a lot of trouble. we hear a lot about the strength and weakness of various country's banking systems, like for example that german banks are strong and that spanish banks are in a lot of trouble. however, this analysis tends to be based on their domestic activities. the truth is that they are all, almost without exception, up to their necks in it. many banks in many, many countries have lent significant sums of money to countries like ireland, greece, portugal and spain, and would be in line for enormous losses if one or more of these should default. the EU and the banks are extremely worried about the prospect of this happening, because if one country defaults, then the losses and/or the ensuing panic could bring the whole house of cards tumbling down.

the EU has acted in an extremely incompetent way to achieve its aims. one only has to look at the rescue plan for greece, which, barely 12 months old, has already failed and the irish rescue is unraveling as we speak, to see EU's competence on this matter. they also look like making the same mistakes regarding the coming portuguese rescue. i have some fairly detailed thoughts on why they've failed, which i've touched upon in other threads, however, there's seems to be a very limited appetite for a serious discussion about these issues here. if anyone is interested though i will post them in full. essentially the problem is that they are trying to do the things i describe while making it politically acceptable to the northern european nations (and taxpayers) who are paying for the rescues. this, as well as a big dose of incompetence and a poor to non-existent grasp of the realities of the situation, has led to plans that are unrealistic and therefore, do not work, have not worked, and will not work going forward. it is deeply ironic that in trying to 'satisfy' these northern european taxpayers, the EU has created a worse situation for them.

now, it may be that those northern european taxpayers have had enough. they are asking themselves if keeping the euro together and saving the banking system (although politicians and the ECB are always downplaying this aspect - with the result, that it is not talked about as much), are really worth it. they (rightly in my view) see these rescues as a bottomless pit and are also (again rightly) critical of the EU's handling of the situation. in many parts of europe euro-spektic parties, outside the cosy mainstream pro-EU consensus that has dominated the politics of continental europe for so long, are gaining ground. true finns have made a breakthrough at the finnish elections, german leaders are having the make uncooperative noises towards to the continuing bailouts (despite the fact that german banks are deeply involved in greece for example), because of public hostility. it looks as if opposition will continue to harden as the crisis continues.

now of course the EU, and indeed national politicians when it comes to EU matters, have an extremely poor record on listening to their people, but we are living in incredible times and this may the issue that forces the EU to actually start acting like a democratic institution. stranger things have happened...

[giblets]

if anyone is interested though i will post them in full.

Please do.

Just wondering, why would the German banks decide to get so heavily involved in Greek sovereign debts that a Greek default could cause them to collapse?

[Barnabas]

The issue is that if you force the Southern European countries to adjust, that may worsen the recession, and make everything even worse, making all those adjustments pointless.

If you fire public employees increasing unemployment drastically, cut the income of retired people, I don't see the economy growing, the tax collection growing, most likely the opposite, so paying back would be increasingly more difficult and the State would have to choose between spending the money in its people or paying the debt. The leftist commiest would be clownishly revolting in the streets.

The best thing about devaluations is that it is the less painful way of impoverishing a country. That is why it is so tempting. People generally take it better if they receive the same ammount of money as before, even if their money is worth 20% less than before, over getting a 20% salary cut.

I only see two options, Greece and Portugal becoming unofficial deficitary pseudo colonies of the big EuroCountries

Or an Argentine solution combining

Abandoning the Euro
Default and debt restructuring helped by Germany
Screwing the Greeks and Portuguese who saved money in Euros by giving them bonds or turning their savings into Drachmas or Cruzados, in order to save the banking system and the indebted people.
But if that happens forget about Greece or Portugal as first world countries.
The very low birth rate doesn't help much either, if the young decide to emigrate the countries would be left with a very old average population.

If they had never joined the Euro in first place, they would never have found themselves able of living above their means and creating this problem.

[KrazyHorse]

Why Greece should reject the Euro:

1) It would allow a soft default on its sovereign debt
2) It would allow a soft default on the part of domestic debtors
3) It would allow a more painless drop in the real price of labor and real estate

Greece and Germany have vastly different economies, and the labor mobility between Greece and Germany is pretty low. Why should they have the same monetary policy? The Euro was a mistake to start with, and the current crisis merely reveals that mistake.

[Hauldren Collider]

Could they actually just leave the Euro on a whim?

[KrazyHorse]

Who would stop them?

[Tuga]

Euros, anyone?

Why Greece should reject the Euro:

1) It would allow a soft default on its sovereign debt
2) It would allow a soft default on the part of domestic debtors
3) It would allow a more painless drop in the real price of labor and real estate

Greece and Germany have vastly different economies, and the labor mobility between Greece and Germany is pretty low. Why should they have the same monetary policy? The Euro was a mistake to start with, and the current crisis merely reveals that mistake.

Germany must leave the Euro. All others should not. Others and Germany have vastly different economies, and the labor mobility between others and Germany is pretty low. All others countries must stay in it.

What??! No Euro wihtout Germany? Whats the point of a germanless euro?
Any single country could quit the euro. The euro will survive it. Greece could quit, Denmark could quit, even France could quit, but if Germany quit its the euro's end!

At is kernel, Euro is german currency. QED

- - -
Now the funny part:
Around here we can import electric power from the UE (France, Germany, ..) when there is peak shortage, but we cannot sell to them when there is peak overcapacity.
Is this a joke? No, its for real!

Several years ago we developed an electronic toll system, called the "Via Verde", (loose translation: "Go Green"), undoubtly the most advanced (still is) in the EU.
Germans, Frenchs dont want to buy it, they want to build their own and then to aprove an EU directive imposing "the best" system, soviet style!
Is this a joke? No, its for real!

We must buy their products, but cannot sell them our products, unless we sell them the patent. Is this a joke? No, its for real!

This is the real soviet UE, with or without Germany.
Last year we (and a lot of others) had to bougth Merck over a million no needed vaccines because of the great mexican influenza scam...
Is this a joke? No, its for real!

Why is the economy faltering? Because under current rules we must buy, but cannot sell. Not even timber!
Q: What are we allowed to sell?
A: Real estate, mostly to eager german buyers.
Is this a joke? No, its for real!
- - -

The grand final: Who opposes this german uber alles Euro is busted.
Look at FMI, still an independent economic force. Decapitated!

- - -
Q: Is Germany the root of all EU evil?
A: Thats a bad taste joke. The root of all EU evil lies in the EU conception, in the narrow minded politician culture, in the underground bigotry disguised under politically correct imposed speechs.

Dont let them fool us.

For them there is no Europe, for them there is no need to tolerate and harmonize. For them there is the need to make impositions, there are the good and bad guys, there is us and them.
The citizens dream: "We are all europeans" is dying!
- - -
well, this were my two cents...

[BeBMan]

[BeBMan]

We must buy their products, but cannot sell them our products, unless we sell them the patent. Is this a joke? No, its for real!

According to what I read, Germany has been amongst the top three countries getting products from Portugal in all recent years from 2000 up to now (number one is usually Spain, two is/was mostly Germany, in some years France).

[Tuga]

According to what I read, Germany has been amongst the top three countries getting products from Portugal in all recent years from 2000 up to now (number one is usually Spain, two is/was mostly Germany, in some years France).

... as long as the trade inbalance is good for Germany/France/EU.

[BeBMan]

Spain gets much more products from Portugal than Germany (products which Portugal is not allowed to sell anywhere because of EU aggression). IMO this suggests that Spain secretly leads the Franco-German conspiracy

[MRT144]

Greece sucks

Never been there, have you?

My honeymoon was great and it would have been even better if there were on their own currency.