Some interesting currency moves today

[Barnsley]

The Troika has lost a lot... they issued their ultimatum, they lost when Greece voted "f*ck you, Troika".

There are a few facts that cannot be ignored.

a) Greece is never going to fully pay its debt owed at 100 percent, even over the next 50 years. Somebody needs to get used to this... I refer you again to Argentina and Iceland. F*ck the banks, the people come first.
b) The Troika can forgive debt, even a bunch of it but there are two things wrong. First, they will never forgive as much debt as Greece can eliminate by defaulting, and second, without the ability to devalue its currency, Greece cannot become economically competitive.
c) Greece needs to have cheaper labor, cheaper imports. They need the Drachma in order to devalue it. Those with the cash are going to scream when currency controls are in place (aren't they already?) that forces those with money in Greece to become poorer.

The bottom line is short term pain in excess of the so called "austerity" program but a relatively rapid return or prosperity.

What is the Greeks primary industries , I believe its shipping & tourism. I think its still a popular tourist destination, what it shouldnt be doing like many countries try to is move into mature industries whilst offering nothing new. Just be the best you can be with what you are good at.

Its a small country , how it could have royally fckd itself up is beyond me.

How does "cheaper imports work with a devalued currency" , by devaluing your currency are you not making your imports instantly more expensive to the populous?

[Primrose Hill]

I don't even know if it is possible to re-issue the drahma. It will be an interesting and turbulent week. China too is providing some fun times. And what is happening to the MYR?

[JR8]

http://www.telegraph.co.uk/finance/econ ... gn=DM29310
-----------------
...
'The shock result effectively calls the bluff of eurozone leaders and the heads of the European Commission and Parliament, forcing them either to back down or carry out drastic threats to eject Greece from monetary union.'...
' The EU's leadership was in utter confusion as it became clear during the day that support was swinging back to the "No" camp, despite blanket coverage from the private TV stations warning that a "No" meant Armageddon.

"The Greek people have proven that they cannot be blackmailed, terrorized, and threatened," said Panos Kammenos, the defence minister and head of the coalition's ANEL party.

French president Francois Hollande said he would bend over backwards to keep Greece in the euro despite voting no. He is to meet German Chancellor Angela Merkel in Paris on Monday to draw up a joint response to what has turned into the biggest EU fiasco since the rejection of the European constitution by France and Holland in 2005.

Martin Schulz, head of the European Parliament, was still insisting on Sunday that a "No" vote must mean expulsion from the euro, but his view is becoming untenable.

Jean-Claude Juncker, the Commission's chief, is equally trapped by his own rhetoric after warning last week that a No vote would be a rejection of Europe itself, leading to calamitous consequences. '...

'There is now a clear rift between Germany and France, perhaps serious enough to cause long-term damge to the coherence of monetary union. '...

...
' "With the rejection of the rules of the euro zone, negotiations about a programme worth billions are barely conceivable," he said. His hardline position was echoed by Slovak finance minister, Peter Kazimir, who tweeted: "The nightmare of the "euro-architects" that a country could leave the club seems like a realistic scenario after Greece voted No today."

Such an approach appears irreconcilable with the views of the French economy minister, Emmanuel Macron, who said the EMU creditors are equally to blame for the crisis and must resist the temptation to "crush" the Greek people. "It is our responsibility to avoid a Versailles Treaty[*] within the eurozone," he said.

Italy's Matteo Renzi said the sight of pensioners weeping in front of banks was a black mark on the conscience of Europe. "We must start to speak to each other again, and nobody knows this than better than Angela Merkel," he said. '[/color]
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Continues... and again worth reading the whole article (if the subject is of interest of course )

I find it almost inconceivable that the 'rulers' of the EU could have completely stuffed up their project in such a savagely incompetent fashion. Heavens knows how this situation is going to get settled. ... I don't know, and no wonder, Germany and France clearly have no idea either ...[genuinely shaking head in disbelief...]. Me thinks the fall-out from this is going to be playing out for a long time to come.

[JR8]

http://www.dailymail.co.uk/debate/artic ... ls-we.html

[Strong Eagle]

And one more from the Business Insider... who are the real capitalists?

http://www.businessinsider.com/greece-r ... ign=buffer

[Strong Eagle]

http://www.dailymail.co.uk/debate/artic ... ls-we.html

Another spot on point of view... Merkel and friends have taken a giant dump in their own beds... it will be interesting to see how Germany, especially, deals with this, and what German public sentiment looks like.

[Strong Eagle]

I don't even know if it is possible to re-issue the drahma.

What other choice is there, other than a serious forgiveness of debt by the Troika,? And even that won't be enough, were it to happen. For Greece to become competitive again in world markets, there has to be a decline in real wages. But to attempt to cut prevailing wages and still stay in the Euro would result in a serious bought of deflation, causing the economy to contract even more.

Why? People don't spend or borrow because they are waiting for prices to drop. People don't want to borrow because they know they will have to pay back the loan in more expensive dollars. And finally, history has shown that it is exceedingly difficult to cut prevailing wages without very high unemployment. Deflation can lead to recession and depression, the last thing Greece needs.

So, Greece will not go down the deflationary path. Instead, it will follow the road previously taken by other countries. And that means they will need to dump the Euro and return to the Drachma. There are lots of ways they could do it but historically, it will be a combination of things... an immediate creation of the Drachma on a 1 to 1 par basis with the Euro followed by a large expansion of the money supply which provides both liquidity in Greece while driving the value of the Drachma down.

Obviously, currency devaluation has its problems but the benefits outweigh the problems in the short term for Greece. Cheaper exports and more expensive imports drive the economy. Labor becomes competitive. Investment grows as debtors know they will pay back in cheaper dollars.

And as for the massive debt? They could elect to repay on a 1 to 1 Drachma for Euro basis, even though the Drachma isn't worth that much. More likely, they will simply restructure and renegotiate debt payments like Argentina did.

[Strong Eagle]

A joke is now circulating in Athens. A young Greek man visits the Australian consulate in Athens and asks for a work visa. “Why do you want to leave Greece?” asks the official.

“For two reasons,” replies the Greek. “First, I am worried that Greece will leave the EU, which will lead to new poverty and chaos in the country . . .”

“But,” interrupts the official, “this is pure nonsense: Greece will remain in the EU and submit to financial discipline!”

“Well,” responds the Greek calmly, “this is my second reason.”

[calugaruvaxile]

http://www.telegraph.co.uk/finance/econ ... gn=DM29310
-----------------
...
'The shock result effectively calls the bluff of eurozone leaders and the heads of the European Commission and Parliament, forcing them either to back down or carry out drastic threats to eject Greece from monetary union.'...
' The EU's leadership was in utter confusion as it became clear during the day that support was swinging back to the "No" camp, despite blanket coverage from the private TV stations warning that a "No" meant Armageddon.

"The Greek people have proven that they cannot be blackmailed, terrorized, and threatened," said Panos Kammenos, the defence minister and head of the coalition's ANEL party.

French president Francois Hollande said he would bend over backwards to keep Greece in the euro despite voting no. He is to meet German Chancellor Angela Merkel in Paris on Monday to draw up a joint response to what has turned into the biggest EU fiasco since the rejection of the European constitution by France and Holland in 2005.

Martin Schulz, head of the European Parliament, was still insisting on Sunday that a "No" vote must mean expulsion from the euro, but his view is becoming untenable.

Jean-Claude Juncker, the Commission's chief, is equally trapped by his own rhetoric after warning last week that a No vote would be a rejection of Europe itself, leading to calamitous consequences. '...

'There is now a clear rift between Germany and France, perhaps serious enough to cause long-term damge to the coherence of monetary union. '...

...
' "With the rejection of the rules of the euro zone, negotiations about a programme worth billions are barely conceivable," he said. His hardline position was echoed by Slovak finance minister, Peter Kazimir, who tweeted: "The nightmare of the "euro-architects" that a country could leave the club seems like a realistic scenario after Greece voted No today."

Such an approach appears irreconcilable with the views of the French economy minister, Emmanuel Macron, who said the EMU creditors are equally to blame for the crisis and must resist the temptation to "crush" the Greek people. "It is our responsibility to avoid a Versailles Treaty[*] within the eurozone," he said.

Italy's Matteo Renzi said the sight of pensioners weeping in front of banks was a black mark on the conscience of Europe. "We must start to speak to each other again, and nobody knows this than better than Angela Merkel," he said. '[/color]
------------------------------
Continues... and again worth reading the whole article (if the subject is of interest of course )

I find it almost inconceivable that the 'rulers' of the EU could have completely stuffed up their project in such a savagely incompetent fashion. Heavens knows how this situation is going to get settled. ... I don't know, and no wonder, Germany and France clearly have no idea either ...[genuinely shaking head in disbelief...]. Me thinks the fall-out from this is going to be playing out for a long time to come.

malum consilium quod mutari non potest

[earthfriendly]

And one more from the Business Insider... who are the real capitalists?

http://www.businessinsider.com/greece-r ... ign=buffer

Countries with huge corruption should take note. Greece and Germany are structured quite differently, their business environments, allowing corruption to thrive in the former.

"In fact, a huge chunk of the country's tax-collection problems stem from the fact that there are two and a half times more self-employed and small-business people in Greece than there are in the average country. And small businesses are expert at avoiding tax.................

If Greece were more socialist — more like Germany, with its giant corporations that have massive unionised workforces paying taxes off their payrolls — then tax collection would be a lot higher in Greece."

[Strong Eagle]

I'm reading (and happen to agree) that EU troika has less than 48 hours to either fund Greek banks so they can stay open or they will have to issue script, effectively the pre-Drachma, which will pretty will cinch an exit from an least the Euro.

[JR8]

If Greece leaves, then expect Portugal, Spain and Italy to be rattling their cage-bars next. This doesn't start and end with just Greece. Germany must know this, even if they dare not refer to it at this time.

[Wd40]

Meanwhile China Stock market crash is causing ripples around the world. Interestingly when China was on the way up and more than doubled, it did affect the world markets much, but on the way down it is scaring people.

[Strong Eagle]

Meanwhile China Stock market crash is causing ripples around the world. Interestingly when China was on the way up and more than doubled, it did affect the world markets much, but on the way down it is scaring people.

How is the China crash causing ripples around the world? It's a self contained universe. As a foreigner you really have to be insane to invest in the stock market, or for that matter, in a company. You can't take the profits back out. If you're in the market, every last financial report is in Chinese. Transparency is zero. You really do have to be insane.

China investments by companies are already factored into US and Europe stock prices. You can't get your money out, you can't get your profits out... the crash doesn't make much difference... although it makes a hell of a difference in China as the collapse of the bubble wipes out middle class savings.

[bro75]

Chinese purchasing habits will be affected. Multinational companies whose future growth hinges on China will be affected. Countries that export to China for Chinese consumption will be affected.