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Thread: Eurozone crisis could rip EU apart: officials

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    Re: Eurozone crisis could rip EU apart: officials

    Quote Originally Posted by American View Post
    You think this is good for Europe, it plainly says that the Chinese will benefit....and Europe only in the short term. Economic problems remain. Is that good for Europe? I guess your think so. I think most of what goes on these days everywhere is nothing but short terms ways of delaying the inevitable.
    The whole world is in economic doldrums and you're still playing tit for tat. It's not like America is in such great shape now, and we're even more indebted to China than Europe is. At least China doesn't hold all of our debt treasuries. At least Europe has central banks that are under public purview, unlike the Federal Reserve. We've been printing money here for years that has no capital value attached.

    Honestly American. Yet another thread celebrating the downfall of Europe, when we're not doing much better. Do you have any sense of proportion?

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    Re: Eurozone crisis could rip EU apart: officials

    Quote Originally Posted by American View Post
    Link





    So who still wants to be like Europe? Who wants to be like China, who thinks buying up Euros and such is a great idea?

    CHINA China buying Euro debt - Asia News

    Irony Behind China's European Bond Buying - Seeking Alpha

    A New World Financial Order: Why is China Buying EU Sovereign Bonds? - Larry McDonald

    China is participating in a scheme to cheat the laws of economics, and all they are doing is delaying the inevidable.
    Europe's mistake was treating any country that joined the EU like it magically suddenly had a good economy and was worth investing in. Thus Greece, Portugal, Ireland, etc. The internal models of France, Germany, and the other more successful countries are still solid.
    For: legalizing drugs, gay marriage, abortion, guns, universal health care, public sector jobs, nuclear power, free education, progressive taxation
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    Re: Eurozone crisis could rip EU apart: officials

    Quote Originally Posted by washunut View Post
    The question is how much will the two powers within the EU, Germany and France be willing to do. This is as much a political as economic question. It seems that there is little appetite for a Eurobond, which would probably quell the problem, Europe seems to have waited too long to address the fundamental problem that they had a united currency but did not hold governments to the agreement about deficits and debt. Greece is now in a position that the only real option is some sort of default. Once that happens how do you stop Portugal and Ireland not to go that route.
    First of.. the appetite is there, but the political willingness is not. The reasons are very simple... both Germany and France have national elections soon.. along with pretty much every other major economy in Europe. It is not much different that the present political gridlock in the US. No one is able (Obama) or willing (GOP) to fix the US deficit problems and many other issues, all because of... the 2012 elections.

    As for Portugal and Ireland. Greece's problem is quite unique. We are talking about massive tax dodging, corruption and political faliure that lead them to fuddle the books so to say and lie to everyone.

    Portugal and Ireland are totally different situations. Portugal has structural problems that prevent growth and frankly did not have to ask for a bail-out if it had not been for the blood thirsty markets pushing them over the edge. Their deficits were "big", but compared to other countries not so much. And the deficits were in most part because of the economic downturn, since they did have much less deficits before the crash (if not a surplus a few times).

    Ireland it was political stupidity and the belief in an American style economic growth system based on massive amounts of debt. If anything Ireland should have gone belly up before Greece, since Irelands debt problems are both state and personal. Because the former Irish government in all its wisdom guaranteed all debt in Ireland, then the amount of debt the country is burdened with is far far larger than that of Greece. But because Ireland is still a darling in the Anglo-American financial world, then the markets so far have not pushed too hard against Ireland.

    The EU over expanded and added countries that do not have the financial disciplines of a Germany.
    Hmm.. you mixing two things up. Yes in my opinion the EU did expand too fast by taking in Romania and Bulgaria. However these countries are not in the Euro and have nothing to do with the present Eurocrisis.

    The countries that are in "trouble" were in the EEC before the EU was founded, so cant claim that they expanded too fast on that point. And all but Greece were founding members of the Eurozone in 1999.

    What the Eurozone did wrong was to bring Greece in, despite knowing of its issues with its economy and taking the Greek's governments word that things were under control.

    Now Portugal should probably not have become a member, but like it or not it did meet the conditions at the time and it was their wish to be a member. Ireland was a booming Celtic Tiger at the time of the start of the Eurozone.. with an economy that was better than Germany's.

    Now the problem with the Eurozone from the start was a lack of accountability and control of member states economies and the ability to "push" said economies down more sound paths... I fully admit this and acknowledge as long as the economies were booming due to the US lead debt spending spree, then all was fine. Like America, many in Europe though/hoped that this would continue forever, so the preparation for the opposite was never seriously taken into consideration and let to the individual countries. That is why we saw Ireland committee suicide when their house of cards fell apart, that is why we saw Portugal hurt because they did not have the political will to fix their structural growth problems, and that is why we saw Greece simply lie to everyone.

    But lets not forget, that the economies of Portugal, Ireland and Greece combined does not account for much of the over all Eurozone economies.

    But let me say this again.. yes it was a mistake to let Greece in because the Eurozone did not do enough to investigate the Greek economy and relied far far too much on Greek governments statistics and numbers.

    perhaps the best answer is let Greece have some type of default with their penalty being getting kicked out of the EU and having to use their own currency.
    Again you are mixing the EU and Eurozone up. Yes the answer seems to be a structured default (in full or in part). I dont like it, but the markets want a resolution fast and have been pushing for it for a long time.

    As for leaving the Eurozone, that is still hard to see. The economic costs of doing so would be huge. Alone switching over to a new currency would cost billions, and lets not forget that currency would be next to worthless and all debt they still had (if any) or debt they would get, would all have to be paid in Euros and Dollars.

    As for leaving the EU... never... no one in their right mind would want to leave the EU since the benefits far far out weigh the negatives. But if Greece leaves the Eurozone, then it does not mean that they will leave the EU. In fact more and more countries want into the EU because of the economic freedoms and access to markets that this membership gives. The EU is great for business.
    PeteEU

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    Re: Eurozone crisis could rip EU apart: officials

    Quote Originally Posted by atrasicarius View Post
    Europe's mistake was treating any country that joined the EU like it magically suddenly had a good economy and was worth investing in. Thus Greece, Portugal, Ireland, etc. The internal models of France, Germany, and the other more successful countries are still solid.
    EU is not the Eurozone. The EU is much larger than the Eurozone and have much different economic conditions in joining.
    PeteEU

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    Re: Eurozone crisis could rip EU apart: officials

    Quote Originally Posted by PeteEU View Post
    And nice of you not to answer the question..

    What is "a scheme to cheat the laws of economics"? Explain that..
    I trust you'll stay out of the economic forum from now on since you have to ask me a question like that. If you promise and swear to it right here, I'll try to answer your question. If you promise and ever go back in there, you have to leave this site forever.
    "He who does not think himself worth saving from poverty and ignorance by his own efforts, will hardly be thought worth the efforts of anybody else." -- Frederick Douglass, Self-Made Men (1872)
    "Fly-over" country voted, and The Donald is now POTUS.

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    Re: Eurozone crisis could rip EU apart: officials

    Quote Originally Posted by Temporal View Post
    The whole world is in economic doldrums and you're still playing tit for tat. It's not like America is in such great shape now, and we're even more indebted to China than Europe is. At least China doesn't hold all of our debt treasuries. At least Europe has central banks that are under public purview, unlike the Federal Reserve. We've been printing money here for years that has no capital value attached.

    Honestly American. Yet another thread celebrating the downfall of Europe, when we're not doing much better. Do you have any sense of proportion?
    I'm doing nothing of the sort. All these jackasses around here who want us to be just like Europe, yet they have as much problem as we do, if not more. Now China with their new money tries to come swooping in. All these countries are applying bad economics to their problems, which makes it worse. This includes us. China is merely delaying what can't be stopped.
    "He who does not think himself worth saving from poverty and ignorance by his own efforts, will hardly be thought worth the efforts of anybody else." -- Frederick Douglass, Self-Made Men (1872)
    "Fly-over" country voted, and The Donald is now POTUS.

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    Re: Eurozone crisis could rip EU apart: officials

    Quote Originally Posted by PeteEU View Post
    As for leaving the Eurozone, that is still hard to see. The economic costs of doing so would be huge. Alone switching over to a new currency would cost billions, and lets not forget that currency would be next to worthless and all debt they still had (if any) or debt they would get, would all have to be paid in Euros and Dollars.
    If they are going to default, they have to be kicked out of the Euro. If not, then they have to be bailed out again. This is favourable for Greece and Portugal and Ireland will probably follow suit creating a massive spike in their yields. This would in turn crush the European economy and create another major recession. I don't want that to happen, because it would damage the job market in the whole world.

    There are two solutions to the problems.
    1. Eurobonds, fiscal union or some other way of giving a free handout to Greece. Greece won't reform and it is an extremely unpopular decision. It could only pass undemocratically.

    2. Let Greece default, kick them out of Euro or just don't give them a bailout. Since they are kicked out of the Eurozone, their economy will collapse and won't be envyed by any countries in Europe. This will prevent Portugal and Ireland to follow suit. Then promise to bail out any other countries in Europe, by putting up a collective crisis fund. This would increase the confidence in the Euro. If they change currency, then their debt can be converted into greek dollars.

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    Re: Eurozone crisis could rip EU apart: officials

    You break the laws of economics when you practice with your currency what the west may not want you to do with it apparently.

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    Re: Eurozone crisis could rip EU apart: officials

    Quote Originally Posted by Camlon View Post
    There are two solutions to the problems.
    1. Eurobonds, fiscal union or some other way of giving a free handout to Greece. Greece won't reform and it is an extremely unpopular decision. It could only pass undemocratically.
    While many pundits and market participants like the idea of Eurobonds, I'm far less enthusiastic about them. I suspect that they would be little more than a quick fix de jour. They might offer a short-term boost to certain markets (hence the enthusiasm by select market participants), but they could largely prove to be a "punt" of sorts under which Greece would gain a mechanism to avoid making the deep structural reforms that it must undertake to become fiscally viable. If so, Europe as a whole would have higher interest rates and their associated macroeconomic drag than would otherwise be the case, while Greece's structural problems would persist. That latter situation could push interest rates still higher across Europe and worse, over time, the Eurobond could become a potential channel of contagion.

    IMO, an approach that buys Greece time in exchange for Greece making big structural reforms is far superior to any quick fix that would avoid tackling Greece's tough issues. In that context, France and Germany should remain steadfast against a Eurobond idea, especially as the EU's members have divergent credit and interest rate fundamentals and I welcome the Chancellor's latest rejection of the Eurobond idea.

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    Re: Eurozone crisis could rip EU apart: officials

    Quote Originally Posted by donsutherland1 View Post
    IMO, an approach that buys Greece time in exchange for Greece making big structural reforms is far superior to any quick fix that would avoid tackling Greece's tough issues. In that context, France and Germany should remain steadfast against a Eurobond idea, especially as the EU's members have divergent credit and interest rate fundamentals and I welcome the Chancellor's latest rejection of the Eurobond idea.
    It would give a bad signal. It means that there will be no consequences of not meeting your targets. Why would Greece even attempt to implement the austerity measures?

    Anyway, since Greece will never be able to repay, it is just another handout, and can be included in point 1.

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