Calling all those interested in financial markets...

[JR8]

Why do you think the EU won't let Greece leave the euro?

[aster]

I would sooner ask why Greece doesn't want to leave the Euro. They are using their hands and feet to desperately cling on to the common currency.

They could of course give up and fall into financial oblivion, entering third world status that would stay with them forever. They would also lose all credibility which would hit at foreign investment, and even their own citizens would never keep their life savings in their dinky, little currency that would become a national symbol of Greece's failure on a global scale.

[JR8]

That didn't answer the question.

Oh well.

[aster]

If Greece wants to leave they can.

The thing is they don't want to, and will continue fighting tooth and nail to stay part of the eurozone. Can't blame them.

[JR8]

This is like Groundhog Day!

I'm done.

[aster]

You're right. If you think Greece is being held hostage and cannot leave the Euro even if it wants to... well, then I guess the discussion is over.

[Strong Eagle]

There is not much substance in these opinions. Therefore cannot tell if they have merit or not.

[aster]

Greece needs to give an answer today. If they don't agree to do what they're told, they won't get a pat of the back, a "good boy" call... and further bail-out funds.

So they'll jump around, grumble, etc., but at the end of the day they'll see the Dollar (or rather Euro) sign on the horizon and come running for help. Works like a charm every time. So I don't get why the media are playing this as if Greece was about to go supernova on everybody. They still have basic survival instincts and those will see their hands reaching out for more Euros...

[Mi Amigo]

"Works like a charm" only in as much as they've been good at coming up with plausible sounding promises up until now, and then doing very little in terms of the real structural changes that are desperately needed. But the days of the other players politely accepting their disingenuous assurances are long gone. Thank goodness, as that's what's brought us to this almighty mess.

Up to now, Greece has effectively been able to hold the rest of euro land hostage, but now the relative risks (to the others) of a forced withdrawal versus keeping them in the euro are less certain. Germany et al might yet decide to call their bluff.

As usual, I found the Economist's viewpoint on this informative:

http://www.economist.com/node/21543522

[jepackt]

i think greece will stay in the euro, but they will have to make a debt cut. that will put lots of countries and the markets under pressure, but it doesn't come as a surprise, i don't think there will be a meltdown or a major crisis. as for iran there would be a rise in the oil prices but the iranian economy is so weak that i can't imagine it to effect the markets that much.

[Strong Eagle]

i think greece will stay in the euro, but they will have to make a debt cut. that will put lots of countries and the markets under pressure, but it doesn't come as a surprise, i don't think there will be a meltdown or a major crisis. as for iran there would be a rise in the oil prices but the iranian economy is so weak that i can't imagine it to effect the markets that much.

I'm going back to my original assertion. No country can or will ever make truly significant reductions in their national debt. Won't happen. Too many pressures pushing in the opposite direction.

Austerity measures designed to cut spending so that the debt can be reduced only backfire... the net effect is reduced GDP and reduced tax revenues for the country undertaking the austerity measures. Just look at Greece. They could shave their balls and eat roots and berries, giving everything else to the bankers, and it still wouldn't work. And the Greek populace, already unhappy, will truly revolt with reduced standard of living and/or more taxes.

So, the only way to reduce debt is to monetize it. Greece can't do this because it is not in control of the Euro. Greece lives in a fantasy land... they think the debt gets solved when Germany and France bail them out... but at most, this is short term thinking.

All need to come to the realization that the Euro is a failed contract. Greece should dump it, create a Drachma at Euro parity, declare all debts payable in Drachmas, then promptly devalue it to about 50 percent or less.

[JR8]

All need to come to the realization that the Euro is a failed contract. Greece should dump it, create a Drachma at Euro parity, declare all debts payable in Drachmas, then promptly devalue it to about 50 percent or less.

Indeed. But there is a problem...

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'Rehn*: I do not see a withdrawal from the monetary union as a serious option. It would harm the Greek economy and be a setback for European integration. The euro is more than a currency; it's the central political project of our community. For this reason, too, we would not accept a Greek withdrawal.'
http://www.greekcrisis.net/2011/05/inte ... ioner.html
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*Oli Rehn is European Commissioner for Economic and Monetary Affairs and the Euro

[Strong Eagle]

All need to come to the realization that the Euro is a failed contract. Greece should dump it, create a Drachma at Euro parity, declare all debts payable in Drachmas, then promptly devalue it to about 50 percent or less.

Indeed. But there is a problem...

--------------
'Rehn*: I do not see a withdrawal from the monetary union as a serious option. It would harm the Greek economy and be a setback for European integration. The euro is more than a currency; it's the central political project of our community. For this reason, too, we would not accept a Greek withdrawal.'
http://www.greekcrisis.net/2011/05/inte ... ioner.html
---------------


*Oli Rehn is European Commissioner for Economic and Monetary Affairs and the Euro

Yah... well... and I'm still waiting for Haley Mills and Meryl Streep to sneak into my bedroom and have their way with me.

Good luck to the EU... so long as the Germans and French are willing to dump money down a rathole... ie... pay the bankers... I suppose this model can be sustained... but to what end? Oh...for a central political project.

[aster]

create a Drachma at Euro parity, declare all debts payable in Drachmas, then promptly devalue it to about 50 percent or less.

That's the thing, they wouldn't be able to convert the debts to Drachmas whilst maintaining a fake conversion rate that would plummet about 50% as soon as it was released and made susceptible to market forces.

So if they adopt their own dinky currency again then their debt level would surge from 160% to 320%.

At the end of the day they are bankrupt no matter what. I'm starting to think this might all be a game with the single aim of neutralising the shock factor of Greece failing/leaving the Euro/etc. If it would have happened 1-2 years ago it would have been like a meteorite striking the markets. If it happens today then the effect might even be minimal as everyone has gotten used to the notion of Greece giving up the ghost and pretty much expects it to happen.

Same thing with restructuring Greek debt. A while back there were severe warnings that ratings agencies would consider it as a default and this sent shivers down everyone's spine. Today nobody cares anymore, not about Greece, and not about what the ratings agencies have to say anymore...

[aster]

http://www.bbc.co.uk/news/world-europe-16941929

Of course they are going to get down on their knees to have a few Euros thrown at them. How predictable was that? Snore....