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Quite why the received wisdom has taken root that should the Greek government default on its debts then it follows that Greece will leave the Eurozone is something of a mystery. Logically, the two do not follow at all.
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The line that got me thinking was: "The Eurocrisis has rumbled on for so long now (close to half the life of the Euro itself),"
Which is surprising, and yet on second thoughts is probably true. What a failure it has been, and how we must call out the people who were crying for us to join it back in 2000/1
Cheers Mr Herdson, - I always make a point of reading Smithson Jnr’s comments on Grexit (and all things financial) it’s the only way I can keep track of the almost daily shenanigans from the EU – Speaking of which, yesterday saw another €2 billion bung from the ECB. The EURO project must continue, even though it’s starting to look like a rather battered Hillman, held together with sticky tape.
If we are to vote out, I'd much rather an out vote where we can say: "Fare thee well, let's be friends", over your rather antagonistic view.
http://www.dailymail.co.uk/news/article-3131606/EXCLUSIVE-s-paedo-Cypriot-hotel-guests-reveal-moment-crowd-angry-British-parents-collared-suspect-accused-trying-snatch-children.html
Perhaps Europe should throw us out, as many of our exports seem to be pig-thick, ignorant little sh*ts.
This money is being supplied by the ECB, who are now effectively funding a bank run. Surely this situation cannot continue much further.
Matt sums it all up rather well...
So New Labour.
Sadly there are plenty of other negatives about Brown that are less easy to excuse.
It's not the Euro itself that's the problem (see rcs1000's quote in the leader), and leaving it will not be an answer for Greece - do you think they'll be able to borrow in the international money markets in Drachmae?
Joining the Euro was supposed to make member countries more European; in fact, to start with, they became more national. Germany invested, Ireland partied and Greece had a siesta. Had Britain joined, we'd have bought even more houses, even more quickly. But that phase is over now and the dynamics which were always seen as part of the project have been at play. Ireland has shown how you can make a success of Euro membership after initially messing it up.
Joining the Euro was not the cause of Greece's problems; it was the means of exposing them. Exiting it in an orderly fashion would be the means of hiding them until they became acute even under their own currency. But I doubt we're going to get an orderly exit.
That said, those who look to Grexit or GrEUxit as a trigger to bring the whole EU will be mistaken. No other country is in remotely the same position and the chaos that would follow internally within Greece will be warning to others who might contemplate it.
As an aside, that chaos might play into the hands of the In camp in Britain, who would portray it as the consequence of Britain leaving. It would be wrong to do so for many reasons but would sound plausible to people with limited interest in politics or understanding of economics.
Can get the Grauniad though!
(Time to get a coffee while foxinsocksEU prepares his rant in reply
They are surviving in this zombie-economy state by playing two (or possibly three) sides off against each other. If they had not joined the Euro, that would not have been possible to the same extent.
(Time to get a coffee while foxinsocksEU prepares his rant in reply
Isn't the key line there "They would have ... lower interest rates, reflecting the market borrowing cost of the creditors"?
There is a good reason why the Greek government cannot borrow at German levels and good reason why it should not be able to.
However, the central point is right: this is a political process, now more than ever. Finance comes second.
The Guardian makes the Mail look positively professional.
Unfortunately too many in the Tory party including the leadership seem to have forgotten how catastrophically wrong these people were last time and are now finding themselves on the same side of the fence as those who thought the UK not entering the Euro was a disaster for the country.
http://www.irishtimes.com/business/economy/morgan-kelly-warns-our-real-economic-crisis-will-begin-if-ecb-credit-stops-1.1724130
It should be pointed out that that article may not be right, but it is written by the only man to correctly predict that Ireland was heading for a catastrophic financial collapse.
Of course that sort of contagion won't happen overnight but it may well inspire greater resistance to reform in countries where austerity is already viewed as the greatest evil of the 21st century and there are plenty of left wing parties ready to capitalise on the example set by Greece.
Ultimately, some sort of managed debt forgiveness may be worked out for Greece, and for Ireland (that was tried before but Timothy Geithner stopped it for some strange reason that nobody understands). They are very small and such losses could be contained. But it's difficult to believe it could be worked out for Spain or Italy - or for us.
It takes two sides to agree a debt write-off. If Greece unilaterally defaults, the creditors will (or should) still expect their money back. It won't come from a Syriza-led government but a Syriza-led government might not last long if they're the ones that lead the country into the vortex.
And if we look at the relative performances of the UK, EZ and Greek economies over the last decade it is not at all clear that our own economy has done better than the EX in GDP per capita:
http://data.worldbank.org/indicator/NY.GDP.PCAP.CD/countries/1W-GR-XC-GB?display=graph
A more pertinent point is that had we joined the Euro, our initial boom would have been greater, our financial collapse a great deal worse and it is almost inconceivable that under such circumstances we would not have dragged the Euro down with us to utter oblivion. It nearly happened with Spain, and that was a lot less serious than a British euro collapse would have been!
I don't think there has ever been a poll showing a majority in favour of euro membership - 2002 there was one showing it very close. However, there was never a realistic chance that Blair could win a democratic referendum on membership, which is why he toyed with the 'electoral college' idea of block votes for the Unions, Parliaments and the people.
Greece is still richer on a per capita basis than it was when when it joined the EZ. The problem is a very socialist one of distribution.
Ireland +23%
Spain +15%
Germany +11%
France +8%
Italy +7%
And I think Finland's done pretty badly (although that we more the result of their economy being absolutely dominated by Nokia and its supply chain rather than the Euro).
Is that the best you can do? Really? If I was in a less charitable mood I'd even call it pathetic.
How about addressing the points about the Guardian?
(As an side, I see you're loathe to mention when the Mail did this, which was rather brave:
http://pulitzercenter.org/reporting/london-daily-mail-dacre-press-prints-verdict-libel-stephen-lawrence )
If they concede changes for Greece then I suggest this will be just the start of problems for the EU and not just from Greece. The typical fudge will not work this time.
1. Greece defaults on its obligations.
2. The ratings agencies cut Greek bonds to "default"
3. The ECB, as it is legally required to do, refuses to allow banks to use Greek government bonds as collateral.
4. The Greek banks are now insolvent. Even if the Greek government refuses to allow them to close, other banks simply will not deal with them. They will run out of physical Euros within a day. And no other banks will accept transfers from them.
5. The Greek banks refuse to open their door.
6. At this point, with no one in Greece able to access their bank accounts, or for normal commerce to continue, you either (a) move to an entirely cash economy, or (b) the Greek government prints a new currency with which to recapitalise the banks.
7. As the government needs to pay pensions, bills, etc., option (b) is the most likely.
8. Grexit
I have no idea whether you personally were in favour of Euro membership for the UK but I hope that if you were you have come to regret holding such dangerous views.
Without the ECB, then Ireland would have had no choice but to follow the Icelandic model of allowing their banks to fail. This would have placed a much higher burden on the UK, instead of bailing out about 10% of the Irish losses, the UK would either had had to provide funding for the full bailout or allow Irish banks to fail and be left with a massive, unrecoverable bill to cover British depositors and an even larger bill for the losses of the British financial institutions heavily exposed to Ireland.
http://data.worldbank.org/indicator/NY.GDP.PCAP.CD/countries/GR-XC-GB-ES-IT-PT-DE?display=graph
Apart from Greece I think the closest one to match an economy doing catastrophically is the UK. Italy Spain et al are a little flat right now, but their relative position to our own has been a gaining of ground.
The non-Greek EZ has had a fairly unspectacular last few years, but is still substantially better off than at commencement of the Euro because of the rapid growth of 2000-2007. This was a worldwide boom, but the EZ outgrew other developed economies. This is why there is no significant call anywhere in the EZ (including Greece) for the Euro to be abandoned.
Bigger booms are followed by bigger busts, and the finances need to be fixed in the booms as it is near impossible to do in a bust. True of Greece and true for us.
They kept being thwarted by the ECB over Ireland because the largest bondholders were French and German banks and the ECB was terrified of contagion causing the Euro to collapse entirely if that course were adopted. Ireland went along because, remarkably, their politicians believed it was a better deal - the IMF made reference to 'Stockholm syndrome'. I don't know enough about Greece to comment on whether they played the same role there.
The point I was making is that it was the UK which benefited (and massively) from Ireland being able to call in the ECB, not Ireland.
If the peoples of peripheral Europe want to live like Northern Europe then they need to run an economy like Northern Europe. There is no shortcut to virtue.
P3 starts in about an hour. Be interesting to see how Hamilton does. He buggered up his laps yesterday and last year screwed up in qualifying. Something about Austria doesn't seem to suit him.
The rest is just a question of timing.
As well as the decline in in our GDP (and rise in population as my graphs are GDP per capita) Britain devalued substantially in the Brown recession.
Even the Southern EZ (Greece excepted) has done better than us over the last decade.
It therefore exaggerates the change in GDP. For comparing the performance of various countries, using $ based GDP is probably the best option we have, even if it does cause some distortions.
titter.......
As you can see, we went from $1.73 in 2005 to $2.10 in 2007, which exaggerates UK GDP, before artificially surpressing it in 2008 and 2009.
Probably you would be best to "smooth" the GBPUSD number so it went $1.75 to $1.55 between 2006 and 2010, and then you'd get a decent handle on real underlying economic performance.
Nonetheless the patterns are much the same. Greece is the exception in the EZ, not the rule. This is why the Euro remains popular in the EZ countries, people are considerably better off on average than they were before formation.
"Lawyers for the suspected extremist, who lives in this country, successfully argued that it breached the European Convention on Human Rights because the suspect believed it was a bomb and contained a camera."
There must be more to this story than that. Surely???
There is no mention of him being convicted of any crime, so it does seem the ECHR is better at protecting his Magna Carta rights than our own government.
Murphy at least has some principles, stating he will not be going to the HoL trough any time in the future
Italy goes from 36,073 USD in 2000 to 33,924 in 2014. Spain from 30,647 to 31,683. Portugal from 26,147 to 25,933. Greece from 25,030 to 24,305. UK from 32,543 to 36,931.
data.world bank.org/indicator/NY.GDP.PCAP.PP.KD
http://www.telegraph.co.uk/travel/familyholidays/11686010/Judith-Woods-Why-we-wont-be-holidaying-in-the-Med-this-year.html
On topic, I take the point to believe that the next crisis point will be navigated because it's been managed so far is complacent, but it's beyond parody by now, and the Matt cartoon sums up how often we've been informed this is it, and yet if the problem is closer to be resolved for the medium term, let along the long term, is sure doesn't seem like it. If there is something that will actually fix this mess, it is abundantly clear there is not the will to do it, so some measure of fudge is the order of the day, anything more seems like stressing over minor details.
I would happily abolish the House of Lords. Although personally I hope we can cream even more billions wind oil and gas wealth from impoverished and overtaxed Scotland to refurbish the Palace of Westminster before you shuffle off into your dreamland of independence. :-)
Ring the bell and we'll stop the world whilst you get off.
http://data.worldbank.org/indicator/NY.GDP.PCAP.PP.KD/countries/GB-US?display=graph
Very simple: it's all down to politics
- The States debts were mostly owned to private investors, who take their chances and lose their money. Greece's money is owed to the Eurozone countries and the IMF. The IMF can't budge (the Americans won't let them) because it would set a precedent. The European politicians find it more difficult to just write off a chink of the debts (hence the extend & pretend model, which reduces the real burden of the debt while preventing a write down of the face value)
- To allow an unreformed Greece to remain in the Eurozone would require long-term fiscal transfer. Texas is happy subsidising Arkansas because they feel that they are part of a common demos. Germans don't want to subsidise Greeks - and the politicians know it (one of them said "how can I tell my constituents to work to 70 so that the Greeks can retire at 55"). Even though some kind of subsidy would actually be "fair" given that the Germans have benefited from a depressed Euro...
http://www.bbc.co.uk/news/world-europe-33197782
You have to pity the Greek communists and the Kipper dreamists who think Putin is the answer.
For all that we are a leading economy we do seem to play fast and lose by our own rules and only survive because we are able to suffer alone and minister to ourselves when we get it wrong. None of that would have been possible under the single currency and we would have been responsible for causing massive grief across Europe had we joined.
For those of our friends with an unnatural fear of lawyers:
http://www.spiegel.de/international/europe/greek-debt-crisis-how-goldman-sachs-helped-greece-to-mask-its-true-debt-a-676634.html
(As an aside, I was told last night by a very plugged in friend of mine in Paris that part of the issue is that Tspiras is being advised by a specific Lazard banker who delights in chaos for its own sake and therefore might be encouraging him to take a hard line for very odd reasons!)
And about the eleventh hour he went out, and found others standing idle, and saith unto them, Why stand ye here all the day idle?
Nor have things been great since May 2010. But, the economy has clearly improved since then, by any measure.
http://www.itv.com/news/update/2015-06-20/alex-salmond-wont-stand-again-for-scottish-parliament/
Two massive egos in one Assembly too much even for the SNP?
WTF?
I really don't get it.
It'a a variant on the Juncker maxim of "We all know what to do, we just don’t know how to get re-elected after we’ve done it.", Tsipras may well be thinking "We know what to do to leave the euro, we just don’t know how to get re-elected after we’ve done it." and this prolonged dance is about selling the Greek people the story that any resulting immolation is the result of EU intransigence.
That might be wrong, and it might be silly, but it is also understandable. Remember Woolfe's 'Sainsbury's madness ?
http://www.telegraph.co.uk/news/politics/ukip/11664384/Ukip-MEP-launches-anti-Sainsburys-campaign-after-confusing-its-stance-on-EU.html
A comment from a WW1 veteran came to mind where he pointed out that a battlefield could have action in one area and the rest were waiting for something to happen. You can actually see this in this reenactment.
Well done to them all.
IIRC there were 115k troops at Waterloo.
Head of Oxfam just demanded open boarders so we can take many more refugees and states it's our humanitarian duty.
On that point: he's a bloody oaf. We should allow him to house as many as he likes at his own house, though.
I just think he also misses that I would expect Out to have the momentum as with Scots independence. Plus I think people will be sorely disappointed with the concessions Cameron is pushing for let alone those we will be granted.
Who is Greece defaulting with? Basically the ECB The IMF are bit players in this. Who is the ECB? Basically the other members of the currency union who are left to explain to their taxpayers why they are picking up the tab.
What are the consequences of that default? No more Euros. So no more banking system. So a new currency. The position of an American city is not even vaguely analogous.
Will they leave? I think they are overplaying their hand to an extent that might cause it to happen whether they want to or not. Will they leave the EU? That I doubt