What do you think the US to Euro exchange rate will be in 18 months

[Dinner]

I hate to say it but Argentina really does need deregulation. Ditch the minimum wage so more people get hired, deregulate just about everything (other than banks) so industry has a reason to relocate there, lower spending and taxes so a real recovery can occur, and consider a Chile style pension system where workers are forced to contribute to long term savings. Yes, this will make things worse in the short run but it will attract investment capital, give people with money a reason to bring it into Argentina, and actually get employment growth going again.

Lastly, fire the ***** in charge and make damn sure the government stops trying to steal foreign owned assets (like the Spanish oil company's investment). That kind of bull**** destroys economies because no one will investment if the government just steals their earnings after they invest. They need a good strong dose of the rule of law in Argentina. While they're at it, copy South Korea and sign free trade agreements with everyone you can just so prices come down and businesses are more competitive. Don't worry about local manufacture because that will pop up when and where there is an opportunity and right now they need to lower costs and become competitive.

If the government has absolutely any ability to borrow it should be put into infrastructure to get people working again and to increase the ease of which goods and people move about the country. Roads, rails, canals, ports. Deregulation should take care of their electricity shortages in time provided they truly take the hard medicine.

[C0ckney]

I just don't think that Spain has been extraordinarily profligate recently -- no more profligate than the US, for instance. The story line doesn't fit with regard to Spain or Ireland. It does fit with Greece, Italy, and Portugal.

It's not my opinion that Spain has done things correctly, of course. Just that normal ways of doing business that could serve Spain well in this situation don't exist. Compare to the support that the BoE and the Fed provided. Unavailable to Spain.

all the countries in trouble have their own crisis, with its own causes. i wouldn't put them into two groups.

the ecb has already intervened with enormous sums to aid spanish and other european banks (more than 1 trillions euros and counting) and this has clearly not resolved the problems in the european banking system. for them to do the same for countries directly would be massive politically and legally (it would be contrary to the treaties). i don't see how it could be done.

There are more solutions than you list.

there really aren't IMHO, in terms of workable solutions to keep the euro in its current form, with its current members. there are many variations on a theme and different names being bandied about but they all come down to those two things. i don't think either will happen, because of political difficulties. so there will be no solution and things will continue on their current downward path.

i think that greece will leave, or be forced out, within the next few months. a lot depends on the elections in june. after that, things will get very interesting.

[C0ckney]

just to be clear, i think the only realistic solution is for the euro to either be abandoned altogether or relaunched with a much smaller group of countries.

all this talk about a two tier euro or some such is nonsense. the problems in the euro stem from the fact that the various european economies are too different to each other to work as a single currency zone. any plan which does not address this problem will solve nothing.

[Dinner]

i think that greece will leave, or be forced out, within the next few months. a lot depends on the elections in june. after that, things will get very interesting.

Greece will never leave. They'll be forced out kicking and screaming because they're too third world and incompetent to do what in necessary to stay. So long Greece because the door will be hitting them on the ass shortly.

[Dinner]

That's incredibly ridiculous.

It makes sense in the short term as it helps to prevent capital flight. Of course, the long term solution is to give investors a reason to invest so that capital stops leaving the country and starts coming in. That would mean the worthless ***** in charge would have to stop trying to steal other people's money (see Ripsol) and it would mean difficult financial solutions if it was implemented but it is the best long term solution. Once people see profitable reasons to bring money in they will stop trying to get money out.

[C0ckney]

Greece will never leave. They'll be forced out kicking and screaming because they're too third world and incompetent to do what in necessary to stay. So long Greece because the door will be hitting them on the ass shortly.

the plan that greece was told to follow in the 'rescues' could never have worked. however the effects of the greeks attempting to follow those plans have been an economic depression and a furious electorate.

if syriza win the election (about 50/50) and manage to form a government (difficult to see how), they will repudiate the 'bailouts' and this will mean leaving the euro and defaulting on their debts. if new democracy win (about 50/50) and manage to form a government (difficult to see how, but not impossible), we will continue with this farce for a while longer.

i hope that syriza win. not only because it will mean an end to the farcical 'rescues', but because they might actually be able to slaughter some of the sacred cows in greek politics (i.e. tax the church, slash military spending).

[Dinner]

http://economywatch.msnbc.msn.com/_news/2012/06/05/12066322-g7-meets-to-discuss-eurozone-as-spain-warns-time-is-running-short?lite

Spain is saying they're almost cut off from credit markets due to sky high interest rates.

[DanS]

all the countries in trouble have their own crisis, with its own causes. i wouldn't put them into two groups.

Why not? You're handwaving here.

the ecb has already intervened with enormous sums to aid spanish and other european banks (more than 1 trillions euros and counting)

During the 2008 crisis, the Fed provided $13 trillion in liquidity to the financial system. Much of that was directly to European banks. It's time for Germany, et al. to get serious and stop passing the buck.

[C0ckney]

Why not? You're handwaving here.

During the 2008 crisis, the Fed provided $13 trillion in liquidity to the financial system. Much of that was directly to European banks. It's time for Germany, et al. to get serious and stop passing the buck.

handwaving?

i wouldn't put them into two groups because each country has its own crisis. they need to be analysed individually. the bigger problem is that as well as the problems in each country, there is a europe wide banking crisis in the background.

the one trillion in fact only relates to the two LTROs and a few other related items (i checked the figures, as they seemed on the low side). the ecb has provided a huge amount of, short term, liquidity and undertaken many other measures to help the banks. in fact i would argue that the country 'bailouts' are in reality, banking bailouts. however all these measures have not worked. i don't think more of the same, only bigger, is the answer.

[C0ckney]

i have a problem with the two groups thing as well, the 'good' countries, who didn't spend too much, and the 'bad' countries who overspent, not only because it's wrong, but because it reduces the whole thing to some kind of morality tale.

[Dinner]

They need to do something besides just bailing out the banks to get the economy growing again. A new rash of infrastructure projects would be nice but there is no way the southern European countries could afford that (and unlike the US, Japan, the UK, or Germany they can't just borrow more; to compare foreigners are begging the US to borrow more because it's seen as safe) so they're pretty much stuck with trying to do things like lowering the minimum wage, making it easier to hire by reducing regulations, and trying to allow things like mines or logging which previously had been blocked by NIMBYs. At least those things would create jobs, make current businesses more profitable (though tax cuts are out due to the fact they'd make the deficits worse), and maybe increasing export earnings and employment by green lighting natural resources projects.

[The Mad Monk]

x-puppy'd

Like "The Ant and the Grasshopper"?

[C0ckney]

very much so.

[giblets]

Except in this case both the ant and the grasshopper are going to freeze to death.

[DaShi]

And many other bugs, if this keeps up.