Mellor 3 Ward 4
Well-known member
Pretty much what I said earlier - Syriza will become the biggest Party, reject the bail out terms, and get them renegotiated.
As for Sterling, it certainly doesn't help those of us who Export.
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Will Greece Be First Relegation From Eurozone ?
- Thread starter Beach Hut
- Start date
Pretty much what I said earlier - Syriza will become the biggest Party, reject the bail out terms, and get them renegotiated.
As for Sterling, it certainly doesn't help those of us who Export.
Dandyman
In London village.
You are proving my point - the money being lend now is to service debt not to regenerate the Greek economy.
As others have said the only way forward is for Greece to either arrange an agreed default ( a super CVA ?) or sink into total collapse.
beorhthelm
A. Virgo, Football Genius
- Jul 21, 2003
- 36,015
thats the whole point, they've entered into the equivilent of a CVA (cut spending, rolling over short/medium term bonds into 30year bonds etc) but decided its too burdensome and want to reject/renegotiate it.
fork me
I have changed this
Bad news for my summer. I get paid in Euros, and I'm coming back to England for July. Hope it gets back to something sensible by then, I'll be changing a grand or so, enough to make a difference!
- Jan 18, 2009
- 4,885
Jeez, that's a bummer.........I think the reality is, that unless Angela gets her cheque book out.................you're forked.
Uncle C
Well-known member
keithbeaky
New member
- Dec 26, 2011
- 472
Austerity is needed but is also a VERY vicious circle. Need stimulus as well.
Mellor 3 Ward 4
Well-known member
Date set for new Elections in Greece - June 17th
Mellor 3 Ward 4
Well-known member
How is 1.25 not sensible? and did you manage when it was 1.4/1.45 for a LONG time.
You must have been laughing when it was 1.08 last year?
Uncle Spielberg
Well-known member
It will and it is going through it's death throes now. Germany will be left out of pocket to the tune of 664 billion euro's from their exposure to Greece, Italy and Spain alone. Peston I see is doing his best to make it happen like he did with Northern Rock.
Uncle Spielberg
Well-known member
Robert Peston.
A Greek departure from the euro, which accelerated withdrawal of cash from banks in other vulnerable economies, would surely create the imperative for yet more emergency ECB lending to banks.
And since the European Central Bank and the national central banks insist on lending only in return for collateral, there is a danger that banks would shortly run out of collateral of sufficient quality.
Which means the ECB would face the uncomfortable choice of turning off the life support, and see quite a few banks falling over, or lending on the basis of inadequate security - and thus taking significant credit risks with these loans.
The most likely outcome is that the banking system of the eurozone would become significantly more nationalised, kept alive on the drip of exceptional central bank credit. This is neither healthy or sustainable.
But quite apart from the explicit lending to banks, the ECB and central banks of the stronger economies, especially the Bundesbank, also have a huge "counterparty" risk to Greece, Italy and Spain from the way that the payments system in the eurozone works.
Under this system, called Target2, one consequence of businesses and households taking their money out of the bank accounts of the deficit countries, such as Greece, Italy and Spain, is that the German central bank ends up lending vast sums to the central banks of those deficit countries.
Here is a slightly simplified account of how this works: when someone takes 100 euros from a Greek bank and transfers it to the perceived safety of a German bank (which has been happening quite a lot), that Greek bank gets the 100 euros from the Greek central bank, which in turn borrows the money from the Bundesbank.
Here is the thing. As of March of this year, the German central bank had 644bn euros of claims on other central banks, equivalent to a quarter of German GDP. These are euros owed to the Bundesbank by the central banks of the economies where there has been the greatest capital flight, names those of Greece, Italy and Spain.
So if all of a sudden, Greece and Italy and Spain decided to revert to their national currencies, it is an interesting question how much (if any) of the 644bn euros the Bundesbank could get back.
Now it is true that under the Target2 rules, the liability for losses on these balances is supposed to be shared between all eurozone central banks in proportion to their respective shareholdings in the European Central Bank. Which would mean that the Bundesbank's loss from non-repayment of what it is owed by the Greek central bank, for example, would be 19% of what the Greek central banks owes to all the eurozone's central banks.
But if the entire eurozone fractured completely, it is difficult to see how that distribution of losses could take place. In practice, the Bundesbank would surely have to take the entire hit - and then, I suppose, it could sue Italy, Spain and the rest for compensation.
A Greek departure from the euro, which accelerated withdrawal of cash from banks in other vulnerable economies, would surely create the imperative for yet more emergency ECB lending to banks.
And since the European Central Bank and the national central banks insist on lending only in return for collateral, there is a danger that banks would shortly run out of collateral of sufficient quality.
Which means the ECB would face the uncomfortable choice of turning off the life support, and see quite a few banks falling over, or lending on the basis of inadequate security - and thus taking significant credit risks with these loans.
The most likely outcome is that the banking system of the eurozone would become significantly more nationalised, kept alive on the drip of exceptional central bank credit. This is neither healthy or sustainable.
But quite apart from the explicit lending to banks, the ECB and central banks of the stronger economies, especially the Bundesbank, also have a huge "counterparty" risk to Greece, Italy and Spain from the way that the payments system in the eurozone works.
Under this system, called Target2, one consequence of businesses and households taking their money out of the bank accounts of the deficit countries, such as Greece, Italy and Spain, is that the German central bank ends up lending vast sums to the central banks of those deficit countries.
Here is a slightly simplified account of how this works: when someone takes 100 euros from a Greek bank and transfers it to the perceived safety of a German bank (which has been happening quite a lot), that Greek bank gets the 100 euros from the Greek central bank, which in turn borrows the money from the Bundesbank.
Here is the thing. As of March of this year, the German central bank had 644bn euros of claims on other central banks, equivalent to a quarter of German GDP. These are euros owed to the Bundesbank by the central banks of the economies where there has been the greatest capital flight, names those of Greece, Italy and Spain.
So if all of a sudden, Greece and Italy and Spain decided to revert to their national currencies, it is an interesting question how much (if any) of the 644bn euros the Bundesbank could get back.
Now it is true that under the Target2 rules, the liability for losses on these balances is supposed to be shared between all eurozone central banks in proportion to their respective shareholdings in the European Central Bank. Which would mean that the Bundesbank's loss from non-repayment of what it is owed by the Greek central bank, for example, would be 19% of what the Greek central banks owes to all the eurozone's central banks.
But if the entire eurozone fractured completely, it is difficult to see how that distribution of losses could take place. In practice, the Bundesbank would surely have to take the entire hit - and then, I suppose, it could sue Italy, Spain and the rest for compensation.
Uncle Spielberg
Well-known member
Robert Peston.
And for Europe's banking system, once the Rubicon has been crossed of a country leaving the euro, once it is demonstrated that there is an exit, all sorts of horrible things follow.
Perhaps most importantly, any business of any nationality will find it extremely difficult to leave its money in euros in a bank in a country perceived to be at risk of following Greece out the door. That risk was already highlighted earlier this year in public statements of Vodafone, GlaxoSmithKline, WPP and Reckitt Benckiser that they were moving their surplus cash out of euros and out of the eurozone on a daily basis.
To be clear, it's not just British and non-eurozone companies that are under an obligation to their owners to avoid (as far as they can) the devaluation and credit risk of letting their cash sit in Ireland, Portugal, Spain or Italy, the economies buckling under the burden of the most troublesomely large debts. The same duty would fall on big international Italian companies in Italy, or Spanish ones in Spain, and so on.
Because the thing about global financial capitalism is that it is very hard for mobile multinational businesses to put patriotism before the preservation of wealth.
Of course it is not just companies. Citizens too, if they are able to do so, have a huge economic incentive right now to take their money out of Greek banks, and either hold it in cash or transfer it to a perceived safe haven, such as Germany.
These trends, of banks in the vulnerable economies finding it increasingly hard to hang on to deposits and increasingly hard to borrow, have been conspicuous for months. And they have had two important consequences for the European Central Bank and for the central banks of the stronger economies, especially Germany's, the Bundesbank.
The first, which you will know about, has been the massive emergency bailout of banks by the European Central Bank, with the trillion euros of cheap three-year loans it has provided to them in the so-called LTRO. The ECB has been providing the credit to banks that financial institutions and big companies were increasingly reluctant to provide.
And, as you would expect, Italian and Spanish banks took about 60% of all the net new loans from the ECB, with Spain's overstretched banks taking marginally more than Italy's.
And for Europe's banking system, once the Rubicon has been crossed of a country leaving the euro, once it is demonstrated that there is an exit, all sorts of horrible things follow.
Perhaps most importantly, any business of any nationality will find it extremely difficult to leave its money in euros in a bank in a country perceived to be at risk of following Greece out the door. That risk was already highlighted earlier this year in public statements of Vodafone, GlaxoSmithKline, WPP and Reckitt Benckiser that they were moving their surplus cash out of euros and out of the eurozone on a daily basis.
To be clear, it's not just British and non-eurozone companies that are under an obligation to their owners to avoid (as far as they can) the devaluation and credit risk of letting their cash sit in Ireland, Portugal, Spain or Italy, the economies buckling under the burden of the most troublesomely large debts. The same duty would fall on big international Italian companies in Italy, or Spanish ones in Spain, and so on.
Because the thing about global financial capitalism is that it is very hard for mobile multinational businesses to put patriotism before the preservation of wealth.
Of course it is not just companies. Citizens too, if they are able to do so, have a huge economic incentive right now to take their money out of Greek banks, and either hold it in cash or transfer it to a perceived safe haven, such as Germany.
These trends, of banks in the vulnerable economies finding it increasingly hard to hang on to deposits and increasingly hard to borrow, have been conspicuous for months. And they have had two important consequences for the European Central Bank and for the central banks of the stronger economies, especially Germany's, the Bundesbank.
The first, which you will know about, has been the massive emergency bailout of banks by the European Central Bank, with the trillion euros of cheap three-year loans it has provided to them in the so-called LTRO. The ECB has been providing the credit to banks that financial institutions and big companies were increasingly reluctant to provide.
And, as you would expect, Italian and Spanish banks took about 60% of all the net new loans from the ECB, with Spain's overstretched banks taking marginally more than Italy's.
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The best thing for the EZ would be for Germany to leave the euro...............it would freefall in value making the countries more competitive.
Hillian1
( . ) ( . )
Would someone mind answering a question from a financial simpleton.
Are we f***ed, Yes or No?
Are we f***ed, Yes or No?
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The first people to break the rules on the stability pact were ...................the germans , who then moved the goalposts .
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Working on sky soccer saturday ?
I'm not Portillo's greatest fan but he made a lot of sense in that programme.
The Euro was a political idea doomed to fail - all of us that predicted that at the time were shouted down as anti-EU, jingoistic and little Englanders. The Euro, if it does survive, will be used in much fewer countries and be much less powerful. If it didn't affect us so badly I'd raise a glass when it does finally collapse.
How can a single currency allow for Greece and Italy to have unelected leaders that were hand picked by the EU ? Disgusting.
I think you may be giving a journalist somewhat too much credit for somebody else's mess. He didn't take NR under - the FSA, the banks board, their customers and IFAs willing to try and get people 110% mortgages achieved that little feat.
Go and work for the European Commission ?
Uncle Spielberg
Well-known member
Peston did not help HR. I did not do any excess 100% mortgages but if they were part of their portfolio its not a surprise they were used.