Greece default/exiting Euro?

[germantrader]

If Greece leaves the Eurozone (or the EU), it will set a precedent. It's like opening pandora's box. :.

Greece total depts is 300 billion....and keeps growing.

Who's gonna pay it...the european tax payer.

Money wise, the Euro was not a good deal.

The "Euro-Zone" as such could be viewed as a "virtuell country" which creates a bigger political "importance".

I guess the founders back in 2000 dreamed of a united europe.......if that ever comes true?(and is desirable?)

 

[pixel]

Greece total depts is 300 billion....and keeps growing.

Who's gonna pay it...the european tax payer.

Money wise, the Euro was not a good deal.

The "Euro-Zone" as such could be viewed as a "virtuell country" which creates a bigger political "importance".

I guess the founders back in 2000 dreamed of a united europe.......if that ever comes true?(and is desirable?)

300 Billion Euros !
That's a lot of debt for a small country with a population of 11.03M (according to Wikipedia).

Greece, officially the Hellenic Republic and known since ancient times as Hellas, is a country in Southern Europe and Balkans. According to the 2011 census, Greece's population is around 11 million. Athens is the nation's capital and largest city.

Related statistics
GDP per capita $21,910.22 USD ‎(2013)
Gross domestic product $241.7 billion USD ‎(2013)
Life expectancy 80.63 years ‎(2012)

Let's do some sums:
300B over 11M is 27,200 Euros per capita, or $32,000 USD (2015)

That means, every Greek - whether newborn or past use-by date - has to work 18 months for free to pay back that debt. And that is the figure if they remain in the Euro-Zone.
Were Greece to revert to their Drachma, they would still have to convert the repayments into Euros - and you can bet your life that the exchange rate wouldn't be pretty...

But has reason and Mathematics ever stopped a Politician promising prosperity and the brightest future, if only THEY get elected? ... Nope!

 

[McLovin]

Were Greece to revert to their Drachma, they would still have to convert the repayments into Euros - and you can bet your life that the exchange rate wouldn't be pretty...

(my bolds)

They wouldn't necessarily have to convert payments into euros. The more likely outcome remains, imo, that Greek debt defaults by converting into the new drachma. Once they're freed of the euro there's very little the ECB can do to corral Greece into making payments in euros.

 

[Klogg]

(my bolds)

They wouldn't necessarily have to convert payments into euros. The more likely outcome remains, imo, that Greek debt defaults by converting into the new drachma. Once they're freed of the euro there's very little the ECB can do to corral Greece into making payments in euros.

I can't say I followed the formation of the EU, but I do have to ask - at the time, what was the incentive for countries to handover their ability to print money (i.e. control their own Central Bank/currency)?

 

[pixel]

(my bolds)

They wouldn't necessarily have to convert payments into euros. The more likely outcome remains, imo, that Greek debt defaults by converting into the new drachma. Once they're freed of the euro there's very little the ECB can do to corral Greece into making payments in euros.

Technically true; I should've said, as the debt is denominated in hard currencies (mainly USD and EUR) the lenders would want repayment of an equivalent amount.
I also left out the option of them simply defaulting. That has happened before with other debtors. But the consequences will be ugly for all involved.

That aside, I agree with our German Trader: The entire idea of a common currency without a common political unit has been an "Impossible Dream". Did Herr Kohl really believe the German economy could pull the rest of Europe out of their Siesta and Early Retirement? Did he believe France and Italy would help? ... Keep dreamn' :1zhelp:

 

[McLovin]

I can't say I followed the formation of the EU, but I do have to ask - at the time, what was the incentive for countries to handover their ability to print money (i.e. control their own Central Bank/currency)?

Boiled down it was about monetary stability and the European Exchange Rate Mechanism's inability to produce it. Going back further, this only became an issue after Bretton Woods collapsed. Europe was integrating (and EU integration was the big thing in the 80s and 90s) and the ERM was not producing the stability required for deeper integration. When Europeans looked across the Atlantic they saw a massive trading bloc (the USA) that they thought they could emulate except with a single currency. Ironically, for smaller countries, like Greece, the single currency in theory should have worked brilliantly; smaller countries tend to have volatile currencies that affect the cost of goods in the domestic economy more and make price stability harder. That worked well.

There's whole books that have been written about the reasons for integration but the above paragraph is my ham fisted attempt at brevity.

 

[McLovin]

I also left out the option of them simply defaulting. That has happened before with other debtors. But the consequences will be ugly for all involved.

They are but they're also temporary. Surely it's better than a generation of Southern Europeans living in poverty. The problem is that without any other changes the cycle will just repeat.

That aside, I agree with our German Trader: The entire idea of a common currency without a common political unit has been an "Impossible Dream". Did Herr Kohl really believe the German economy could pull the rest of Europe out of their Siesta and Early Retirement? Did he believe France and Italy would help? ... Keep dreamn' :1zhelp:

Weren't the French opposed to German reunification unless they agreed to come along on the euro ride? That's a pretty big carrot to dangle!

 

[pixel]

I can't say I followed the formation of the EU, but I do have to ask - at the time, what was the incentive for countries to handover their ability to print money (i.e. control their own Central Bank/currency)?

The incentive was a "United States of Europe" to follow the monetary Unity.
Reality bites:
A. Given the historic national differences, it could only have been dreamt of in the euphoria following the Fall of the Berlin Wall.
B. They put the cart before the horse. Political Unity, or at least common binding fiscal policy, is essential for a common currency. They couldn't even agree on a common design of the Euro banknotes and coins: Each country prints their own "National Treasures" on their bills.

 

[Klogg]

Boiled down it was about monetary stability and the European Exchange Rate Mechanism's inability to produce it. Going back further, this only became an issue after Bretton Woods collapsed. Europe was integrating (and EU integration was the big thing in the 80s and 90s) and the ERM was not producing the stability required for deeper integration. When Europeans looked across the Atlantic they saw a massive trading bloc (the USA) that they thought they could emulate except with a single currency. Ironically, for smaller countries, like Greece, the single currency in theory should have worked brilliantly; smaller countries tend to have volatile currencies that affect the cost of goods in the domestic economy more and make price stability harder. That worked well.

There's whole books that have been written about the reasons for integration but the above paragraph is my ham fisted attempt at brevity.

Oh awesome response, thanks! If you've read any of these books, are any that you'd recommend?

Thanks again.

 

[germantrader]

B. They put the cart before the horse.

Nice way to put it

Yeah sitting here in europe and seeing the swiss abandoning the euro support.......gives a "falling" feeling.
But well, which country does not increase dept every second? USA probably most.

I was just thinking of buying australen dollars .
Good idea?

 

[qldfrog]

Nice way to put it

I was just thinking of buying australen dollars .
Good idea?

Here in australia, we are fleeing to the USD.
If i were you, buy CHF or gold, the economy is shot IMHO and interest rates can still go lower here.
I assume you mean not short term day/week trading but more medium term or long term (months)
And please note: DYOR, this is just what I would do: I am not a qualified advisor and am known as being mostly wrong!

 

[StockTrader010]

Greece had national elections on Sunday. I wonder whether (and if so, how) the outcome will change the current agreements with the 'trojka'

 

[notting]

Greece had national elections on Sunday. I wonder whether (and if so, how) the outcome will change the current agreements with the 'trojka'

Let's just hope the anti austerity party are a pack of liars like the rest of em and don't follow through with their pork barrel to oblivion.
Given they only got the majority using independents, hopefully they can blame that for not doing what they pretended they would.
DAX is up so markets voting so so, so far.

 

[StockTrader010]

Let's just hope the anti austerity party are a pack of liars like the rest of em and don't follow through with their pork barrel to oblivion.
Given they only got the majority using independents, hopefully they can blame that for not doing what they pretended they would.
DAX is up so markets voting so so, so far.

So far so good. But I guess the real impact will only become clear as they start (re)negotiating the terms of the bailout they received.

 

[notting]

Aw ASX looks for record highs in real AU$ terms (capital raisings and so ons included)

No worries. She'll be right mate ~

http://www.dailymail.co.uk/news/article-2941373/Do-not-humiliate-Greece-s-finance-minister-pleads-Germany-reminds-nation-debts-World-War-ahead-talks-debts.html?ito=social-twitter_mailonline

 

[pixel]

from FNN Midday News:

Following negative leads from the US and Europe, the Australian share market opened lower and is half a per cent down at noon. A slew of half year earnings reports are also setting the market mood as investors digest the potential showdown between Greece and the Eurozone.

(my bolds)

 

[DeepState]

I liked this one from Mauldin:

 

[StockTrader010]

Makes sense. Almost all Greek debt is owned by the ECB and IMF. They are definitely in a better bargaining position now, compared to 2,5 years ago.

 

[notting]

Greek used car salesman prime minister starting to look very stupid.
No stagger left just a knitted brow.
Should go down in history as a buffoon who took a cheap shot to become the idiot prime minister for a moment.

 

[Bintang]

Greek used car salesman prime minister starting to look very stupid.
No stagger left just a knitted brow.
Should go down in history as a buffoon who took a cheap shot to become the idiot prime minister for a moment.

Notting, why do you say this just now?
All the players in this saga look pretty stupid to me.
But the 'fat lady hasn't sung yet' so the question still is, 'how is this gonna end'?