Greek Financial Crisis Thread

[The balkens]

So....they will just print their own Euros?

Gee, print more money, that worked so well for people before.

Greece is almost literally running out of money and their economy is wobbling on the precipice of becoming nonexistent. The Greek government really doesn't have much to lose at this point.

Hyperinflation guys! limitless money!

Why is it worth 0.00000001% next to the Dollar?

[Gauthier]

Greece is almost literally running out of money and their economy is wobbling on the precipice of becoming nonexistent. The Greek government really doesn't have much to lose at this point.

Hyperinflation guys! limitless money!

Why is it worth 0.00000001% next to the Dollar?

Greece starts importing Zimbabwe dollars, the only currency with more value than theirs they can afford?

[Pollona]

That is the question. Greece has no plan and currently no capability to make its own currency. It took Argentina several years of planning to get their own currency.

As noted above, they do have the capability to make their 'own' currency - they have a printing press that will make 20 euro bills. Syriza is contemplating ordering the Greek national bank to start printing euros independently of central EU control. There is apparently a legal argument to make with regards to the Lisbon Treaty that they have that authority in extreme cases.

That's really interesting, I had no idea that Lisbon would allow for such a circumstance. It's clever and just a tad bit genius.

It will undoubtedly make the ECB and Bundesbank furious.

[The balkens]

Hyperinflation guys! limitless money!

Why is it worth 0.00000001% next to the Dollar?

Greece starts importing Zimbabwe dollars, the only currency with more value than theirs they can afford?

or better yet, Reichsmarks! Germans ovbs knew what they were doing!

[Bogdanov Vishniac]

Greece is almost literally running out of money and their economy is wobbling on the precipice of becoming nonexistent. The Greek government really doesn't have much to lose at this point.

Hyperinflation guys! limitless money!

Why is it worth 0.00000001% next to the Dollar?

The idea, it should be noted, is not to pay off their debt by printing however many euros they need, but rather to inject enough money into the Greek economy to keep people able to buy things like food and water or to be paid wages from their jobs. That's why there's apparently a legal argument to be made for this - the ECB apparently has an obligation to 'stabilize' member economies in times of extreme crisis, and the Greek government would basically be arguing that the ECB was derelicting its duty and they had to step in.

[MERIZoC]

The Greek people have made the right decision. Best of luck to them in the times ahead.

[Bogdanov Vishniac]

As noted above, they do have the capability to make their 'own' currency - they have a printing press that will make 20 euro bills. Syriza is contemplating ordering the Greek national bank to start printing euros independently of central EU control. There is apparently a legal argument to make with regards to the Lisbon Treaty that they have that authority in extreme cases.

That's really interesting, I had no idea that Lisbon would allow for such a circumstance. It's clever and just a tad bit genius.

It will undoubtedly make the ECB and Bundesbank furious.

Oh absolutely - on both accounts. Doubly so since apparently the Lisbon Treaty has no provisions within it that would allow members of the Eurozone to be kicked out for these sorts of infractions - or at all, for that matter. Therefore the rest of the EU apparently has very little ability to prevent the Greeks from doing this, should they decide to go down that route.

[Natapoc]

Hyperinflation guys! limitless money!

Why is it worth 0.00000001% next to the Dollar?

The idea, it should be noted, is not to pay off their debt by printing however many euros they need, but rather to inject enough money into the Greek economy to keep people able to buy things like food and water or to be paid wages from their jobs. That's why there's apparently a legal argument to be made for this - the ECB apparently has an obligation to 'stabilize' member economies in times of extreme crisis, and the Greek government would basically be arguing that the ECB was derelicting its duty and they had to step in.

Considering many in Germany have been essentially arguing that they should use their power to intentionally destabilize the Greek economy until a political party that is more acceptable to them is elected, I think their argument has merit.

[Novus America]

That's really interesting, I had no idea that Lisbon would allow for such a circumstance. It's clever and just a tad bit genius.

It will undoubtedly make the ECB and Bundesbank furious.

Oh absolutely - on both accounts. Doubly so since apparently the Lisbon Treaty has no provisions within it that would allow members of the Eurozone to be kicked out for these sorts of infractions - or at all, for that matter. Therefore the rest of the EU apparently has very little ability to prevent the Greeks from doing this, should they decide to go down that route.

I had no idea they could do this. If they do it will destroy the Euro's (remaining) credibility. The value of the Euro will crash. Then what?

[Chessmistress]

I think that, yes, it means Greece leaving the eurozone and rejoining when its economy improves.
The most absurd thing is that if Greece will leave the eurozone and then its economy improves, oh, well, then it'll NEVER rejoin again eurozone but it'll avoid eurozone like the plague....

Pretty much this. Assuming it's economy ever does really improve, a big if.

In the long run it'll improve for sure. Not within an year or two years, but in something like five years...

[Natapoc]

Oh absolutely - on both accounts. Doubly so since apparently the Lisbon Treaty has no provisions within it that would allow members of the Eurozone to be kicked out for these sorts of infractions - or at all, for that matter. Therefore the rest of the EU apparently has very little ability to prevent the Greeks from doing this, should they decide to go down that route.

I had no idea they could do this. If they do it will destroy the Euro's (remaining) credibility. The value of the Euro will crash. Then what?

Why would it destroy the Euro's credibility or crash the value of the Euro? A controlled injection of cash will stimulate the economy and facilitate trade.

[Bogdanov Vishniac]

Oh absolutely - on both accounts. Doubly so since apparently the Lisbon Treaty has no provisions within it that would allow members of the Eurozone to be kicked out for these sorts of infractions - or at all, for that matter. Therefore the rest of the EU apparently has very little ability to prevent the Greeks from doing this, should they decide to go down that route.

I had no idea they could do this. If they do it will destroy the Euro's (remaining) credibility. The value of the Euro will crash. Then what?

I don't think the euro will crash. Again, it's not as though Greece is suddenly going to decide to print off money to pay their debt all at once, they're just contemplating injecting enough money to keep their economy from ceasing to exist, since Greek banks are literally going to run out of money to put in the ATMs by the end of this week.

[Chessmistress]

The idea, it should be noted, is not to pay off their debt by printing however many euros they need, but rather to inject enough money into the Greek economy to keep people able to buy things like food and water or to be paid wages from their jobs. That's why there's apparently a legal argument to be made for this - the ECB apparently has an obligation to 'stabilize' member economies in times of extreme crisis, and the Greek government would basically be arguing that the ECB was derelicting its duty and they had to step in.

Considering many in Germany have been essentially arguing that they should use their power to intentionally destabilize the Greek economy until a political party that is more acceptable to them is elected, I think their argument has merit.

Pretty much that.
Greece should defend itself by the excessively aggressive German policies: under the German rule (because, yeah, I think that in fact EU it's really a "German rule") I have yet to see some solidarity within the EU: interests on money lend to States are far higher than interests on money lend to private banks - and it should be the exact opposite....

[Novus America]

Pretty much this. Assuming it's economy ever does really improve, a big if.

In the long run it'll improve for sure. Not within an year or two years, but in something like five years...

Japan has been largely stagnant for decades. The Phillipines has gone from one of the richest countries in Asia to one of the poorest. It took the U.S. over 10 years to get out of the Great Depression, most of Europe much longer. Britain struggled into the 70s. I am sure it will eventually grow but likely to take decades to recover to anywhere near what it was. And it might not. Japan never fully recovered.

[Pollona]

I had no idea they could do this. If they do it will destroy the Euro's (remaining) credibility. The value of the Euro will crash. Then what?

I don't think the euro will crash. Again, it's not as though Greece is suddenly going to decide to print off money to pay their debt all at once, they're just contemplating injecting enough money to keep their economy from ceasing to exist, since Greek banks are literally going to run out of money to put in the ATMs by the end of this week.

It would probably destroy the Euro's credibility as a safe investment. The worry from investors would then fall as to who else could also pull this kind of trick (looking at you PIIGS countries). I doubt the Euro will "crash" as it is suggested, but if Greece does decide to go down that route it might cause a sharp sell-off and severe devaluation of the Euro. Germany's worst nightmare: higher inflation, would be creeping up from the bay window.

[Novus America]

I had no idea they could do this. If they do it will destroy the Euro's (remaining) credibility. The value of the Euro will crash. Then what?

Why would it destroy the Euro's credibility or crash the value of the Euro? A controlled injection of cash will stimulate the economy and facilitate trade.

Currency speculation is the real immediate threat. It will drive down the value regardless. How much depends on how much they print. Printing money faster than the economy grows always creates a loss of value. That is how money works. It's value is based on the amount of currency in circulation divided by the value of the economy.

http://static6.businessinsider.com/imag ... dollar.png
And the Euro is already crashing, this will just accelerate the process.

[Novus America]

I don't think the euro will crash. Again, it's not as though Greece is suddenly going to decide to print off money to pay their debt all at once, they're just contemplating injecting enough money to keep their economy from ceasing to exist, since Greek banks are literally going to run out of money to put in the ATMs by the end of this week.

It would probably destroy the Euro's credibility as a safe investment. The worry from investors would then fall as to who else could also pull this kind of trick (looking at you PIIGS countries). I doubt the Euro will "crash" as it is suggested, but if Greece does decide to go down that route it might cause a sharp sell-off and severe devaluation of the Euro. Germany's worst nightmare: higher inflation, would be creeping up from the bay window.

Too late. The Euro is already crashing.
http://static6.businessinsider.com/imag ... dollar.png
The only question now is how to mitigate the damage. This will not help.

[Bogdanov Vishniac]

I don't think the euro will crash. Again, it's not as though Greece is suddenly going to decide to print off money to pay their debt all at once, they're just contemplating injecting enough money to keep their economy from ceasing to exist, since Greek banks are literally going to run out of money to put in the ATMs by the end of this week.

It would probably destroy the Euro's credibility as a safe investment. The worry from investors would then fall as to who else could also pull this kind of trick (looking at you PIIGS countries). I doubt the Euro will "crash" as it is suggested, but if Greece does decide to go down that route it might cause a sharp sell-off and severe devaluation of the Euro. Germany's worst nightmare: higher inflation, would be creeping up from the bay window.

Well, I think at this point the idea of the euro being a 'safe' investment is already dead in the ditch. This whole sorry mess is rather incontrovertible proof that the eurozone's common financial apparatus (and really, its political apparatus as well) is pretty seriously flawed. Doubly so considering there seems to be no end in sight.

[Fremont Forest]

Greece is almost literally running out of money and their economy is wobbling on the precipice of becoming nonexistent. The Greek government really doesn't have much to lose at this point.

Hyperinflation guys! limitless money!

Why is it worth 0.00000001% next to the Dollar?

As I understand it, Greece is in a deflationary spiral.


Inflation is the least of their concerns.

[Pollona]

It would probably destroy the Euro's credibility as a safe investment. The worry from investors would then fall as to who else could also pull this kind of trick (looking at you PIIGS countries). I doubt the Euro will "crash" as it is suggested, but if Greece does decide to go down that route it might cause a sharp sell-off and severe devaluation of the Euro. Germany's worst nightmare: higher inflation, would be creeping up from the bay window.

Well, I think at this point the idea of the euro being a 'safe' investment is already dead in the ditch. This whole sorry mess is rather incontrovertible proof that the eurozone's common financial apparatus (and really, its political apparatus as well) is pretty seriously flawed. Doubly so considering there seems to be no end in sight.

Perhaps, I don't think it's shot quite yet because of the Northern Eurozone. Although ditto on the mess, if you have a monetary union it is typically accompanied by some form of fiscal union or regular order of fiscal transfers. Otherwise, you run into problems like Greece. I don't think that sort of connection has been made in the North, and when those taxpayers make the connection they will likely be up in arms.

The Euro was always a political project. They never moved beyond the basics.

[Hydesland]

Cullen Roche:

"The strangest part about everything going on here is that the Bundesbank, I mean, the ECB, a supposedly independent Central Bank, has become the focal political point. When the ECB decided to stop providing emergency funding to the Greek banking system they acted in a manner that should be against any Central Bank’s mandate. As the implicit Greek Central Bank the ECB is there to ensure that the Greek banking system operates smoothly. Instead, in the last 2 weeks it has been used as a political tool that is now contributing to economic problems in Greece. We should be very clear about this. If the Greek banking system collapses and substantial contagion results it will be, in large part, because the ECB poured fuel on the fire. It’s amazing to me, that, after Lehman Brothers, a Central Bank could act so irresponsibly and simply stop providing emergency funding to a banking system in desperate need of it."

Nail successfully struck on head.

[Novus America]

Well, I think at this point the idea of the euro being a 'safe' investment is already dead in the ditch. This whole sorry mess is rather incontrovertible proof that the eurozone's common financial apparatus (and really, its political apparatus as well) is pretty seriously flawed. Doubly so considering there seems to be no end in sight.

Perhaps, I don't think it's shot quite yet because of the Northern Eurozone. Although ditto on the mess, if you have a monetary union it is typically accompanied by some form of fiscal union or regular order of fiscal transfers. Otherwise, you run into problems like Greece. I don't think that sort of connection has been made in the North, and when those taxpayers make the connection they will likely be up in arms.

The Euro was always a political project. They never moved beyond the basics.

This helps explain it.
http://www.washingtonpost.com/blogs/won ... -is-wrong/

Although if the Euro continued to plunge what will the Germans do?

#germexit?!

[Hydesland]

Although if the Euro continued to plunge

The ECB has been deliberately plunging the Euro over the last several months, that's almost an explicit policy objective of their recent stimulus measures.

[Novus America]

Cullen Roche:

"The strangest part about everything going on here is that the Bundesbank, I mean, the ECB, a supposedly independent Central Bank, has become the focal political point. When the ECB decided to stop providing emergency funding to the Greek banking system they acted in a manner that should be against any Central Bank’s mandate. As the implicit Greek Central Bank the ECB is there to ensure that the Greek banking system operates smoothly. Instead, in the last 2 weeks it has been used as a political tool that is now contributing to economic problems in Greece. We should be very clear about this. If the Greek banking system collapses and substantial contagion results it will be, in large part, because the ECB poured fuel on the fire. It’s amazing to me, that, after Lehman Brothers, a Central Bank could act so irresponsibly and simply stop providing emergency funding to a banking system in desperate need of it."

Nail successfully struck on head.

I think we can all agree the Eurozone needs to be reformed. Can it? The EU cannot seem to agree on any real reform.

[Novus America]

Although if the Euro continued to plunge

The ECB has been deliberately plunging the Euro over the last several months, that's almost an explicit policy objective of their recent stimulus measures.

I am aware, but they need a bottom. How low do they intend it to go? Otherwise Greece might get hyperinflation in the EU, Germany too. Once you start the fall, stopping it is not easy.