The death of the euro

The nature and impact of financial issues

The death of the euro

Postby Nathan » 12 Apr 2013, 23:14

I thought it would be a good idea to have one thread for all stories related to the last months or years of the euro as we know it, unless of course there is any one major event related to it which deserves its own thread.

How many fronts is the Troika fighting on now to keep their pet project afloat: Cyprus, Greece, Spain, Portugal, Italy, Ireland, Slovenia, not to mention the creditor nations like Germany, Finland and Slovakia starting to baulk at the mounting and increasing indefensible costs of it to them? It's hard to say where the breakthrough will be and what form it will take, the options are that many. People have been predicting the imminent death of the euro for five years now, and may continue to do so for another five years if not more, but the longer this goes on the more dramatic the implications of it will likely be.

I'm not sure how much influence this man has, but the first democratic, post-dictatorship leader of Portugal, Mario Soares, has called upon 'all political forces in the country to bring down the government' and repudiate the tightening austerity policies of the Troika. He has called for an Argentine-style default, which is what many have been suggesting, but to the best of my knowledge is the strongest and most common-sense language yet to come from a major political figure.

Portugal will never be able to pay its debts, however much it impoverishes itself. If you can’t pay, the only solution is not to pay. When Argentina was in crisis it didn’t pay. Did anything happen? No, nothing happened.
Nathan
 
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Re: The death of the euro

Postby Caleb » 13 Apr 2013, 06:26

Slovakia is actually not looking too good if you look at this article and the charts therein.

Regarding the euro, this is pretty startling, as is this.

There is also a conspiracy theory circulating now that it's all about gold. See stories such as this and then this. When you relate it to the above article and charts in reference to Slovakia and articles such as this regarding what's been going on with gold recently, the theory goes that there's basically insider trading going on to 1.1) drive down the price of gold, 1.2) force central banks (at least in peripheral countries) to sell their gold, 2.1) enter positions in government bonds in distressed economies, 2.2) exit conveniently before it all goes to hell/allowing it all to go to hell. Basically, it's all about squeezing every last bit out of ordinary people (small investors and taxpayers) while the going is good and then getting out before it bad (parts 2.1 and 2.2) and then getting into something of real value (parts 1.1 and 1.2) before the whole euro project (and fiat currencies in general) goes belly up.

One of the crazier conspiracy theories is that BitCoin is actually a scam run by those close to the levers of power to keep a lot of people out of gold who would normally be in gold, thus contributing to 1.1 above.

The probe into why some people (including the president) were able to withdraw their money from Cypriot banks while capital controls were supposedly in place has been stopped.

Think insider trading...I mean corruption...I mean mistakes are only on that side of the Atlantic? Guess again, with follow up stories here and here.

The world is getting very crazy right now.
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Re: The death of the euro

Postby Charlie » 14 Apr 2013, 18:54

Nathan wrote:I'm not sure how much influence this man has, but the first democratic, post-dictatorship leader of Portugal, Mario Soares, has called upon 'all political forces in the country to bring down the government' and repudiate the tightening austerity policies of the Troika. He has called for an Argentine-style default, which is what many have been suggesting, but to the best of my knowledge is the strongest and most common-sense language yet to come from a major political figure.

Portugal will never be able to pay its debts, however much it impoverishes itself. If you can’t pay, the only solution is not to pay. When Argentina was in crisis it didn’t pay. Did anything happen? No, nothing happened.


I can't speak for how much influence he has outside of Portugal, but within it, people still always listen to what Soares has to say, although he doesn't do much for me. He may be a socialist, but he's got his country's situation weighed up pretty accurately. I don't think that Argentina is the example to follow economically, but, were Portugal to "do an Argentina", I would just pray for them not to go ahead and vote in figures as bellicose and destructive as the Kirchner clan afterwards.

That's how bad things are getting with the EU: it's the one issue where socialists and libertarians have found themselves in agreement lately: get out of there!

What kind of future is it, when your politicians can only resort to telling young Portuguese graduates to head abroad to Brazil, Angola, Australia and the UK etc? A whole talented generation will have to head abroad, and currently there's not much chance of them coming back. Is that what the EU stands for? Another Portuguese diaspora?

Another quick aside: Even last year, when I was still living there, some cafés in Lisbon had started giving receipts with both euros and escudos. It just goes to show that even some have been either praying for secession or predicting it.
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Re: The death of the euro

Postby Nathan » 21 Jul 2014, 18:17

It has been very quiet on the euro front recently, but this Telegraph article I read prompted me to think I might not have to eat my words after all: Germany has racked up a current account surplus that is above the EU limit and is potentially going to be fined 0.1% of its GDP (€2.4 billion). Apparently the EU even has the power to seize this money.

The fact that there is even a limit as to how much more you should be allowed to export than import says it all as far as I am concerned: the stability of the euro depends on success being penalised!

http://www.telegraph.co.uk/finance/econ ... rplus.html
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Re: The death of the euro

Postby Yessica » 22 Jul 2014, 08:40

Off-topic, but I think Germany's success being penalized is a good thing. Our economy is far too "hot" which has already negative side effects such as business people calling for more immigration than is good for the balance of the society and environmental consequenzes.

There is a discussion about making English the second official language of Saxony to attract more immigrants who cannot be borthered to learn our language as it seems.
Not against you or your language, but a) Germans already have a unique culture and a very fine language, what is wrong with learning that? b) Saxony was hid hardest by the English bombardements during WWII, it will be an unnecessary hardship for the survivors to see everything written in Englis, c) if anything why not make Polish or Czech second official languages as those are neighbouring countries which a similar culture and a surplus of workers as opposed to all the countries world wide were English is spoken, which often have very different cultures?

I do not understand anything about economy. Does a country really benefit from exporting more than it imports? To me that sounds a little odd: We produce more for the world than getting back as it seems. Why is that considered a good thing from an economic perspective.

Can somebody explain?
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Re: The death of the euro

Postby Paul » 23 Jul 2014, 21:51

Yessica wrote:
I do not understand anything about economy. Does a country really benefit from exporting more than it imports? To me that sounds a little odd: We produce more for the world than getting back as it seems. Why is that considered a good thing from an economic perspective.

Can somebody explain?


Because you make money from the surplus goods, which can be hoarded, or invested further, or used to improve the national lot in other areas of life - we used to do that once upon a time.

It's like any other business. You have to make some profit and enough for some savings too. You have to sell more than you purchase, otherwise you go bankrupt - or into debt!
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Re: The death of the euro

Postby Nathan » 23 Jul 2014, 23:01

Yessica, I think the reason why the ECB wants Germany to spend more is that it would put more of that extra surplus money back into the economy, which helps raise inflation.

At the moment because most of the rest of the Eurozone is struggling the problem is deflation - people aren't spending, because they can't, meaning prices are remaining stagnant, which discourages people from spending even more because they think the prices will be lower further down the line. Also, deflation makes it harder for the southern European countries to pay back their debts, since the debts keep rising but wages don't. I think that's how it works at least.
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Re: The death of the euro

Postby Yessica » 24 Jul 2014, 06:13

Thanks for the explanation.

Just to make sure I understand that correctly: We are currently saving it for a rainy day. If that rainy day comes one day our foreign trade bilance will suddenly show we import more than we export.

If we already invested it further or used it to improve the lot of the population it would already show up in the bilance wouldn't it? Because we would buy the goods needed to do that.

So we are saving it to invest it further one day.

Some countries such as the US seems to import more than they export for years and decades in a row do you think there will be negative consequences one day?
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