BERLIN — Just weeks ago, the idea that Greece would leave the euro zone was almost unthinkable. Now, with Greece’s newly empowered political parties refusing to abide by the terms of the country’s international loan agreement and Europe’s leaders talking tough, that outcome is looking increasingly likely.
Germany’s devotion to the euro and the European Union runs extremely deep and cuts across the political spectrum. But the frustration with Greece here is undeniable. There is a growing conviction that it is up to Greece to follow through on its commitments, that Europe is done negotiating.
“Germans are now predominantly of the opinion that they would be better off if Greece left the euro zone,”? said Carsten Hefeker, a professor of economics and an expert on the euro at the University of Siegen. “If the country really is continuing on the path they are taking now, it would be hard to justify keeping them in. How do you deal with a country that says we don’t want to keep any of the commitments we have made?”?
Mr. Wolff said that even with Greece’s departure, the structural problems of the euro zone, which ropes together economies of vastly different levels of competitiveness, are going to remain. European policy makers are “still in a state of denial,”? he said.
With Greece thumbing their nose at austerity agreements and party leaders threatening to nationalize all banks, and Hollande openly declaring war on the French finance world, I personally don't see how Germany can afford to stick around and humor these guys anymore.
I know next to nothing about the inner workings of the Euro. But I know when I see something that isn't working.
The Euro will die sooner rather than later. I never gave it 20 years to live personally. It was always a bad idea. The EU may go along with it. Let's just hope we don't get a war out of it when it comes crashing down.
I'm pretty sure that in the basement of the German central bank there are many pallets of German Deutsche Marks printed and ready to see the sun at a moment's notice.
So assuming there's a decent chance the euro will break up at some point and there will be resulting financial chaos in Europe for a time, is there anything we need to be worrying about (that we can control) from a PP perspective? I'm specifically thinking about the gold ETFs with vaults/financial ties in London or Zurich.
(Yeah, I know neither Great Britain nor Switzerland are on the Euro, but I assume the banks are all tied together somehow. If not, feel free to educate me. )
Maybe I'm just being paranoid, and I know the worst thing to do is to overthink things and start making trades based on fear. But I figured I'd ask.
Last edited by Tyler on Wed May 09, 2012 1:07 am, edited 1 time in total.
Tyler wrote:
So assuming there's a decent chance the euro will break up at some point and there will be resulting financial chaos in Europe for a time, is there anything we need to be worrying about (that we can control) from a PP perspective? I'm specifically thinking about the gold ETFs with vaults/financial ties in London or Zurich.
Maybe I'm just being paranoid, and I know the worst thing to do is to overthink things and start making trades based on fear. But I figured I'd ask.
I don't see this effecting any of the bullion ETF's. And Switzerland is not a member of the EU in any case.
Trumpism is not a philosophy or a movement. It's a cult.
[quote=CR]He should walk right up to the Germans and tell them how it is: “we are going to blow this whole thing up if you don’t start giving us what we want”?. Then the ball’s in Germany’s court. Maybe they leave the Euro? Maybe they succumb to the pressure and move towards something resembling a fiscal union? Maybe they give in on E-bonds? Who knows. But someone needs to push back because the current construct isn’t working and isn’t going to work.[/quote]
"Well, if you're gonna sin you might as well be original" -- Mike "The Cool-Person"
"Yeah, well, that’s just, like, your opinion, man" -- The Dude
I'll say straight-out that I'm not a macro-economics guy, so what do I know. But from my uneducated perspective, Cullen Roche is basically saying "German banks have profited from making loans to Greece, so shut up and keep doing it."
I think it's true that if the Euro breaks up it's going to get ugly in Europe. But it's already getting ugly. Unless something dramatically changes, they're just delaying the inevitable.
The New York Times’ coverage of the euro zone crisis continues to exhibit two related flaws. First, it is overwhelmingly written from the German perspective – the Berlin Consensus that is driving the crisis. Second, it continues to ignore economics. Paul Krugman, the NYT’s Nobel Laureate in economics, has been explaining the economics of the crisis for years in his weekly NYT column. We know that Berlin either doesn’t read or comprehend what Krugman has been trying to explain, but it is remarkable that so many of the NYT reporters covering the euro zone crisis share their failure to read or comprehend.
"Well, if you're gonna sin you might as well be original" -- Mike "The Cool-Person"
"Yeah, well, that’s just, like, your opinion, man" -- The Dude
I wouldn't be so sure... Spain was a fiscal saint (as was Ireland) up until the 2008 financial crisis. I think there's something inherantly unstable about a currency union of former enemies w/o a fiscal union.
"Men did not make the earth. It is the value of the improvements only, and not the earth itself, that is individual property. Every proprietor owes to the community a ground rent for the land which he holds."
The Euro may or it may not survive. But if it is going to survive it will only be if the EU becomes a great deal more centralized than it is now. I remain highly skeptical that Greece will remain in any event. But the long term survival of the Euro requires some form of centralized government that can monitor, and where needed, interfere with the budgets of member states.
Trumpism is not a philosophy or a movement. It's a cult.
Ad Orientem wrote:
The Euro may or it may not survive. But if it is going to survive it will only be if the EU becomes a great deal more centralized than it is now. I remain highly skeptical that Greece will remain in any event. But the long term survival of the Euro requires some form of centralized government that can monitor, and where needed, interfere with the budgets of member states.
A simple resolution to ban the selling of each member's states sovereign bonds outside their respective country would solve all the problems instantly.
"All generous minds have a horror of what are commonly called 'Facts'. They are the brute beasts of the intellectual domain." -- Thomas Hobbes
Disclaimer: I am not a broker, dealer, investment advisor, physician, theologian or prophet. I should not be considered as legally permitted to render such advice!
Ad Orientem wrote:
The Euro may or it may not survive. But if it is going to survive it will only be if the EU becomes a great deal more centralized than it is now. I remain highly skeptical that Greece will remain in any event. But the long term survival of the Euro requires some form of centralized government that can monitor, and where needed, interfere with the budgets of member states.
Are you confident that such a consolidation of power would actually benefit the people living in the EU?
It sounds to me like a great example of "crisis is a friend of the state."
Q: “Do you have funny shaped balloons?”
A: “Not unless round is funny.”
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