Euro Area Financial Crisis Inevitable?

[Puppycow]

It appears that some kind of default is inevitable for Greece at least. Even if everything goes according to the most optimistic projections, their debt will continue to increase.

Other countries like Ireland, Portugal and Spain also have major problems.

http://www.theglobeandmail.com/report-on-business/economy/greece-raises-projected-deficit-for-2010/article1799565/

http://www.businessweek.com/news/2010-12-15/euro-falls-as-moody-s-says-spain-may-be-downgraded-dollar-gains.html

What will happen if they decide bondholders have to take a big haircut?
Or is there another way out? Will Germans accept paying for other countries' debts?
Will the ECB print new money to pay for the debts?

How will this be resolved if it becomes impossible for countries to pay their debts?

[Sceptic-PK]

Yeah, does the Euro act as a quasi gold standard, in that governments can no longer inflate their way out of debt?

[Puppycow]

Yeah, does the Euro act as a quasi gold standard, in that governments can no longer inflate their way out of debt?

That would appear to be the case under the current rules, or at least the rules prior to the Greek crisis. But I think those rules have already been bent a little, and a political consensus may form around allowing them to be bnt even more, because it may be preferable to the alternatives.

Formerly, (IIRC) the ECB was prohibited from buying any member nation's debt. But I believe they began to do it by buying some Greek debt. This seems like a strong possibility to me, although there is strong resistance to the idea in the ECB itself and countries like Germany.

[Eddie Dane]

I the Euro is the only currency in the world that cannot inflate, it will become the most expensive currency in no time.

Can the ECB "print" money?

[Puppycow]

I the Euro is the only currency in the world that cannot inflate, it will become the most expensive currency in no time.

Can the ECB "print" money?

It's a little hard to say with certainty, but if the following stories are true, that would appear to be what they are doing, in effect:

http://www.businessweek.com/news/2010-11-17/ecb-buys-portuguese-greek-bonds-amid-irish-talks-traders-say.html

http://www.businessweek.com/news/2010-12-07/ecb-said-to-buy-irish-portuguese-greek-government-bonds-today.html

[Puppycow]

Greece raises 1.95 bn euros at 4.9% (http://economictimes.indiatimes.com/news/international-business/greece-raises-195-bn-euros-at-49/articleshow/7260187.cms)

4.9% doesn't sound too bad -- until you realize that it's for 6-month debt. The US pays 0.17% for 6-month debt.

Greek 10-year debt (http://blog.wallstreetgrand.com/2011/01/greece-bond-spreads-to-highest-level/) is now 10% higher than that for Germany.

[CatOfGrey]

I the Euro is the only currency in the world that cannot inflate, it will become the most expensive currency in no time.

Can the ECB "print" money?

My understanding is that it can inflate, however, all the member nations need to agree on how much.

Greece, has been giving their people way more than they produce for the last 20 years, if not 60 years. In the old days, they could just inflate the drachma. The pension payment wouldn't change, but it would buy less bread than it used to. In other words, what people produced would eventually match what people spent, as a nation.

It works reasonably well, especially if you are a Greek politician, as you can campaign on a platform of "Vote for Me! Get Free Stuff!"

But now, with the Euro, Greece can't do this on it's own. Germany, and other countries, don't make these big promises. And they don't want Greek promises to screw up their economy. So, Greece now has to squeeze it's people directly, by breaking all it's promises, which is a much more harsh way of matching spending to producing.

As an aside, the British are looking smarter and smarter all the time for not throwing their Pound into this mix...

[CatOfGrey]

Greece raises 1.95 bn euros at 4.9% (http://economictimes.indiatimes.com/news/international-business/greece-raises-195-bn-euros-at-49/articleshow/7260187.cms)

4.9% doesn't sound too bad -- until you realize that it's for 6-month debt. The US pays 0.17% for 6-month debt.

Greek 10-year debt (http://blog.wallstreetgrand.com/2011/01/greece-bond-spreads-to-highest-level/) is now 10% higher than that for Germany.

Theoretically, the inflation rates for Germany and Greece should be the same, considering that they share a currency. So the difference (and that is a huge difference!) between Greece and Germany is in one of two places.

1. Risk that Greece drops out or gets thrown out of the Euro, and their replacement currency for their bonds is devalued.

2. Risk that Greece will default on their debt.

[kellyb]

It's a little hard to say with certainty, but if the following stories are true, that would appear to be what they are doing, in effect:

http://www.businessweek.com/news/2010-11-17/ecb-buys-portuguese-greek-bonds-amid-irish-talks-traders-say.html

http://www.businessweek.com/news/2010-12-07/ecb-said-to-buy-irish-portuguese-greek-government-bonds-today.html

Yeah, that's how I understand it, too:

http://www.cepr.net/index.php/blogs/beat-the-press/spain-is-not-too-big-to-save

The ECB, with the approval of the European Union, could easily cover the debts of Spain and any other country for the simple reason, to take Ben Bernanke's line, that it has a printing press. It is possible that the ECB will opt not to save Spain, either because of concerns about inflation or simply out of a desire to teach Spain a lesson (i.e. it was stupid to join the euro) but this would be a choice. Spain could be saved if the euro zone countries want to save it.

It is also worth noting that Spain may well be better off if it is not saved. Its unemployment rate is currently over 20 percent. The austerity being demanded by the euro zone countries will prevent the unemployment rate from declining any time soon. By contrast, if Spain were to default on its debt and leave the euro it would be immediately be free to take steps to boost growth and employment. This could lead to a sharp turnaround and a rapid move back toward full employment.

This is exactly what happened in Argentina. It had a sharp 6-month plunge after its December 2001 default, but then had 7 years of solid growth until the world economic crisis in 2008 brought Argentina's economy to a near standstill.




http://www.cepr.net/index.php/blogs/beat-the-press/paul-krugman-on-the-euro-crisis

First, there are powerful forces who are working hard to prevent the partial or full Argentinification (partial default or a departure from the euro) of any euro zone country. After all, it does mean that banks and other creditors don't get back all of their money. They will lie, cheat, and steal to try to prevent such a route from even being considered. We know this because of the efforts of the international financial community to punish Argentina when it went the route of Argentinification back in 2002.

The IMF did everything it could to strangle Argentina (it was known internally as the "A" word) including the publication of consistently over-pessimistic growth projections in order to undermine confidence in its economy. Given that many of the same people who were shooting at Argentina in 2002 are still around in positions of responsibilty today, it is reasonable to believe that any country that tried to follow the same path would face similar efforts at economic sabotage.

The other important point is that the "revived Europeanism" route that Krugman outlines would essentially be costless right now to the core countries who would ostensibly be financing it. This is the route that would have the European Union and/or European Central Bank provide the funding necessary to get Ireland, Greece, Spain and other peripheral countries through the crisis.

This route would be largely costless because Europe, like the United States, has huge amounts of excess capacity and idle resources. The ECB could essentially finance the transfers by buying bonds (i.e. printing money) just as the Fed can (and to some extent is) finance the U.S. deficit by buying bonds. While printing money at other times would raise the risk of inflation, this is not the case in the middle of a steep downturn like the current one. Of course a modest increase in the rate of inflation (e.g. 3-4 percent) would be desirable in any case since it would lower real interest rates and reduce real debt burdens.

[Puppycow]

Yeah, that's how I understand it, too:

http://www.cepr.net/index.php/blogs/beat-the-press/spain-is-not-too-big-to-save




http://www.cepr.net/index.php/blogs/beat-the-press/paul-krugman-on-the-euro-crisis

Thanks for those links. I'm now reading the magazine article about the Euro by Krugman mentioned in the second link:

http://www.nytimes.com/2011/01/16/magazine/16Europe-t.html?_r=1&hp

[Tippit]

http://www.nytimes.com/2011/01/16/magazine/16Europe-t.html?_r=1&hp

The hard right often favors hard money — preferably a gold standard — but left-leaning European politicians have been enthusiastic proponents of the euro. Liberal American economists, myself included, tend to favor freely floating national currencies that leave more scope for activist economic policies — in particular, cutting interest rates and increasing the money supply to fight recessions.


Statists like Krugman favor a monetary system that enables arbitrarilly unlimited taxation. Big surprise here. What better invention exists for politicians and bankers to buy votes than a monetary printing press?



Imagine that you’re a country that, like Spain today, recently saw wages and prices driven up by a housing boom, which then went bust. Now you need to get those costs back down. But getting wages and prices to fall is tough: nobody wants to be the first to take a pay cut, especially without some assurance that prices will come down, too. Two years of intense suffering have brought Irish wages down to some extent, although Spain and Greece have barely begun the process. It’s a nasty affair, and as we’ll see later, cutting wages when you’re awash in debt creates new problems.

If you still have your own currency, however, you wouldn’t have to go through the protracted pain of cutting wages: you could just devalue your currency — reduce its value in terms of other currencies — and you would effect a de facto wage cut.



Here we have a glimmer of honesty from Krugman! Of course, a central bank sponsored "de facto wage cut" is also a de facto tax increase (on the poor) - a transfer of wealth from the wage earners and the savers, to whoever gets to spend the new money (bankers and politicians). Of course, what Krugman won't mention is that the ECB caused the economic dislocations that the PIGS are suffering from currently by years of monetary inflation, and unaccountable government spending.


Won’t workers reject de facto wage cuts via devaluation just as much as explicit cuts in their paychecks? Historical experience says no. In the current crisis, it took Ireland two years of severe unemployment to achieve about a 5 percent reduction in average wages. But in 1993 a devaluation of the Irish punt brought an instant 10 percent reduction in Irish wages measured in German currency.




Since the inflation tax is a passive form of taxation, it can be done without worker's consent. There is nothing to reject. As long as they continue to accept renumeration for employment in a fiat currency, they will be at the mercy of this form of surreptitious looting. According to Krugman, however, it's all for a good cause, the health of the general economy.



Why the difference? Back in 1953, Milton Friedman offered an analogy: daylight saving time. It makes a lot of sense for businesses to open later during the winter months, yet it’s hard for any individual business to change its hours: if you operate from 10 to 6 when everyone else is operating 9 to 5, you’ll be out of sync. By requiring that everyone shift clocks back in the fall and forward in the spring, daylight saving time obviates this coordination problem. Similarly, Friedman argued, adjusting your currency’s value solves the coordination problem when wages and prices are out of line, sidestepping the unwillingness of workers to be the first to take pay cuts.



In other words, it's more expeditious to steal from everyone at the same time, rather than on an individual basis. Of course this theft is necessary given the extreme circumstances. Or so we should believe.



Also, Nevada, unlike Ireland, doesn’t have to worry about the cost of bank bailouts, not because the state has avoided large loan losses but because those losses, for the most part, aren’t Nevada’s problem. Thus Nevada accounts for a disproportionate share of the losses incurred by Fannie Mae and Freddie Mac, the government-sponsored mortgage companies — losses that, like Social Security and Medicare payments, will be covered by Washington, not Carson City.



No they won't, the losses will be covered by average Americans, for whom the parasites in Washington are presumably acting on their behalf.

[INRM]

I think this whole financial crisis in Europe is deliberate, as do I believe the 2008 financial crisis in the US was deliberate as well.

There are powerful people who want nothing more than a world-government which will be anything but democratic, and causing huge financial implosions are an excellent way for them to get their way

[Sceptic-PK]

I think this whole financial crisis in Europe is deliberate, as do I believe the 2008 financial crisis in the US was deliberate as well.

There are powerful people who want nothing more than a world-government which will be anything but democratic, and causing huge financial implosions are an excellent way for them to get their way

So, do you actually any evidence to support these outlandish notions? What mechanisms were used (and by whom) to cause the financial crisis?

[drkitten]

I think this whole financial crisis in Europe is deliberate, as do I believe the 2008 financial crisis in the US was deliberate as well.

Yes. You're well-known to spin fanciful and paranoiac fantasies with no basis in reality.

[Puppycow]

As long as they continue to accept renumeration for employment in a fiat currency, they will be at the mercy of this form of surreptitious looting.

Just curious: do you accept remuneration for employment in a fiat currency?

[Tippit]

Just curious: do you accept remuneration for employment in a fiat currency?

I don't need to work. I try to get rid of Federal Reserve Notes as soon as I get any.

[USEagle13]

It appears that some kind of default is inevitable for Greece at least. Even if everything goes according to the most optimistic projections, their debt will continue to increase.

Other countries like Ireland, Portugal and Spain also have major problems.

I think all of Europe has major problems. The EU is a horrible failure and is full of hippocrits.

What will happen if they decide bondholders have to take a big haircut?

BIG SCISSORS!?

Fires like usual. European people love fires. You know...raise retirement age couple years then burn the country side. I guess that's that sense of civility Europe smuggly puts in everyone else's faces.

Or is there another way out?

Way out!? There is no way out. All the smart Europeans left a couple centuries ago. Where are you gonna go? Don't come to the USA we have enough psychotic socialists.

Go to Saudi Arabia or something and tell em how bad it is to be a fundie and how no matter what job they give you they are required to give you 2 weeks paid vacation, retirement at 30yrs of age, and socialized medicine (which is what helped get you guys in the situation you are in now).

Will Germans accept paying for other countries' debts?

No. They will get ticked off like in WWII and start destroying the people who they will blame the problem on. That is History for you. It repeats itself.

Will the ECB print new money to pay for the debts?

They will have to.

How will this be resolved if it becomes impossible for countries to pay their debts?

WAR. Like always.

[The Don]

I think USEagle13 is a little jealous of our European lifestyles and frightened of the Eurozone as an economic entity.

I realise that he/she is working to polemic effect but he/she is either very misinformed about Europe generally and the EU specifically or they're just trolling for effect.

The EU is by no means perfect but I consider its major accomplishments to include:

- The integration of the former Eastern-bloc countries
- The rollout of consistent human rights legislation across Europe
- Free movement of people across mainland Europe
- Movement of labour across Europe

I suspect USEagle13 would love to work in a country where the standard work week is 35 hours, where people typically have 6 weeks paid vacation a year (in addition to national holidays) and were the poor, old and sick don't live in fear of not being able to afford high quality healthcare

[lionking]

I suspect USEagle13 would love to work in a country where the standard work week is 35 hours, where people typically have 6 weeks paid vacation a year (in addition to national holidays) and were the poor, old and sick don't live in fear of not being able to afford high quality healthcare

He wants to live in Australia? ;)

Yeah, yeah we only get 4 weeks vacation, but 4 weeks in the sun trumps 6 weeks in sleet.

[USEagle13]

I dated a girl from Australia when I was younger whom was here on some kind of cultural work trade visa thingy. They are ok but seeing as how all the top deadliest animals in the world are there.....no thanks. You can have fun playing with funnel webs and microscopic killer jelly fish. Besides Australia is more like an aquarium right now.


Jealous of Europe!? Puuuuullleeeaassee. How many times we gotta save you sorry Sods. Honestly.

Only reason you guys are even remotely safe from the Kings of the East at the moment is because of us. Once we get destroyed (Wings of Eagle torn from the Lion in the Bible) you guys are next.

Some Union you got huh? Once someone gets in monetary trouble you talk about kicking em out. Why doesn't London throw in the pound huh?

That missile defense system should be put along the US Canadian border not Europe. But they putting in Europe. Doesn't matter anyways Russia has new missiles that it can't defend against.

Who went to the moon 1st? What country developed that lil thingy you typing on now!? Where did your cars come from!? Electricity!? Airplane!? I can go on and on.....

[USEagle13]

I think USEagle13 is a little jealous of our European lifestyles and frightened of the Eurozone as an economic entity.

I realise that he/she is working to polemic effect but he/she is either very misinformed about Europe generally and the EU specifically or they're just trolling for effect.

The EU is by no means perfect but I consider its major accomplishments to include:

[QUOTE=The Don;6774605]- The integration of the former Eastern-bloc countries

Yeah and once they get upset enough they will unintergrate and take what they claim is theirs


- The rollout of consistent human rights legislation across Europe

Oh yeah. That is when the UN peacekeepers just stands there and watches people ethnic cleanse each other with machetes. UN is a joke at peacekeeping.


- Free movement of people across mainland Europe

People been moving cross Europe since the beginning of times my friend

- Movement of labour across Europe

Oh socialism. Hence your situation you have now.

So no great feats there in any of that. It's all for show to "trick the sheeple"

I suspect USEagle13 would love to work in a country where the standard work week is 35 hours, where people typically have 6 weeks paid vacation a year (in addition to national holidays) and were the poor, old and sick don't live in fear of not being able to afford high quality healthcare

Oh live with a bunch of lazy bums!? Nahhhh. I'll pass.

[The Don]

Oh yeah. That is when the UN peacekeepers just stands there and watches people ethnic cleanse each other with machetes. UN is a joke at peacekeeping.
.

UN peacekeepers in the EU ?

When did this happen ?

[The Don]

Oh socialism. Hence your situation you have now.


No, capitalism ! I can get a job anywhere in Europe without having to worry about getting a work permit or more pertinently, I can recruit from anywhere in the EU without worrying about having to get a work permit

[drkitten]

UN peacekeepers in the EU ?

Hey, by his own admission, he's an American, and he's evidently not especially well educated. You can't expect him to be able to tell all those groups of garlic-smelling furrin types apart.

UN, EU, France, NATO, what's the difference?

[USEagle13]

UN peacekeepers in the EU ?

When did this happen ?

No it is when they are doing "peace keeping missions" in other countries.

[rjh01]

<snip>
As an aside, the British are looking smarter and smarter all the time for not throwing their Pound into this mix...

The pound used to buy a lot more Euro than it does now.

Dec 2010 1.17913 EUR
Dec 2009 1.11153 EUR
Dec 2008 1.09921 EUR
Dec 2007 1.38419 EUR
Dec 2006 1.48667 EUR
Dec 2005 1.47142 EUR
Dec 2004 1.43871 EUR
Dec 2003 1.42451 EUR
Dec 2002 1.55625 EUR
Dec 2001 1.61735 EUR
Dec 2000 1.62893 EUR

Ref http://www.x-rates.com/d/EUR/GBP/hist2000.html

[The Don]

The drop in the value of the pound against the Euro has been cited as a key benefit to the UK which has enabled the UK to improve export performance.

Of course it has also been an inflationary factor for imported goods.

The same is true for the Pound against most currencies

[Emperor_Gestahl]

I dunno what the ECB can or can't do but Ireland already printed 51B euros on it's own so I'm guessing the ECB can do that too:

http://www.independent.ie/business/irish/central-bank-steps-up-its-cash-support-to-irish-banks-financed-by-institution-printing-own-money-2497212.html

[Puppycow]

I dunno what the ECB can or can't do but Ireland already printed 51B euros on it's own so I'm guessing the ECB can do that too:

http://www.independent.ie/business/irish/central-bank-steps-up-its-cash-support-to-irish-banks-financed-by-institution-printing-own-money-2497212.html

A spokesman for the ECB said the Irish Central Bank is itself creating the money it is lending to banks, not borrowing cash from the ECB to fund the payments. The ECB spokesman said the Irish Central Bank can create its own funds if it deems it appropriate, as long as the ECB is notified.

News that money is being created in Ireland will feed fears already voiced this week by ECB president Jean-Claude Trichet that inflation is a potential concern for the eurozone.

However, a source at the ECB said the European bank is comfortable that the amounts involved are small enough not to be systemically significant. The ECB has been lending money to banks in Ireland at just 1pc, as long as the banks can put up acceptable collateral.

Huh. I hadn't realized that Ireland retained its own central bank which can print euros.

Now I'm confused. :confused:

Can other EU countries do the same thing? Can Greece?

[CatOfGrey]

The EU is by no means perfect but I consider its major accomplishments to include:

- The integration of the former Eastern-bloc countries
- The rollout of consistent human rights legislation across Europe
- Free movement of people across mainland Europe
- Movement of labour across Europe

I suspect USEagle13 would love to work in a country where the standard work week is 35 hours, where people typically have 6 weeks paid vacation a year (in addition to national holidays) and were the poor, old and sick don't live in fear of not being able to afford high quality healthcare

The accomplishments are a testament to the the good things about Europe, not least of which is a well-educated populace.

However, I would not brag about a 35-hour workweek and 6 weeks of mandatory vacation. That lack of production is a reason that Europe is falling behind Asia, and has much bigger structural issues (namely, countries writing checks for benefits that, ten years later, their population isn't willing to cash, because they won't work 40 hours, 50 weeks to pay).

I also wouldn't brag too much about health care. Unlike the US, the average person does not need to wait for medical procedures (the cost of time is how health care is paid for by those under a 'free healthcare' system.) We also don't have a system where government controls who gets medical treatment and who doesn't.

[kellyb]

Huh. I hadn't realized that Ireland retained its own central bank which can print euros.

Now I'm confused. :confused:

Can other EU countries do the same thing? Can Greece?

I'm curious about that, as well. And can the ECB or IMF "retaliate" if they deem that a country is printing too many Euros?

[kellyb]

However, I would not brag about a 35-hour workweek and 6 weeks of mandatory vacation. That lack of production is a reason that Europe is falling behind Asia, and has much bigger structural issues (namely, countries writing checks for benefits that, ten years later, their population isn't willing to cash, because they won't work 40 hours, 50 weeks to pay).


Benefits aren't why some of them are in trouble, maybe with the exception of Greece. It was the unchecked housing bubble and insolvent banks that got them into trouble. Ireland had perfectly balanced budgets.


I also wouldn't brag too much about health care. Unlike the US, the average person does not need to wait for medical procedures (the cost of time is how health care is paid for by those under a 'free healthcare' system.) We also don't have a system where government controls who gets medical treatment and who doesn't.
This is outdated information. The NHS used to have bad waiting lists, but that's been resolved via better funding and organization.

[Francesca R]

Ireland already printed 51B euros on it's own so I'm guessing the ECB can do that too:Huh. I hadn't realized that Ireland retained its own central bank which can print euros. I'm curious about that, as well. And can the ECB or IMF "retaliate" if they deem that a country is printing too many Euros?"Printing money" in the form of lending to banks happens every day at every central bank in the world. So does "destroying money" which is its reverse. But it's different from what's usually regarded as monetizing debt / financing the government--which is when central bank money creation goes straight to central government.

[Francesca R]

As an aside, the British are looking smarter and smarter all the time for not throwing their Pound into this mix...The pound used to buy a lot more Euro than it does now. [ . . . ]Well that's kind of the point, isn't it?

[Francesca R]

Benefits aren't why some of them are in trouble, maybe with the exception of Greece.They are not the proximate cause of the crisis, but unfunded pension promises are very much the reason why almost every rich country in the world will be in trouble without any changes. And those problems are biggest where labour-force productivity is lowest, retirement ages are lowest, promised benefits most generous, and fertility rates lowest. Which applies to a lot of Europe.

[Francesca R]

I the Euro is the only currency in the world that cannot inflate, it will become the most expensive currency in no time.My understanding is that it can inflate, however, all the member nations need to agree on how much.The ECB can certainly "inflate" (expand the monetary base) but only in a way that is consistent with its inflation objective (http://www.ecb.int/mopo/html/index.en.html), which is to achieve 2% inflation or less over the medium term. Since inflation is around that level (http://epp.eurostat.ec.europa.eu/portal/page/portal/product_details/publication?p_product_code=KS-QA-11-002) anyway (actually a little above it), it doesn't think it should inflate. It isn't likely to do so in order to reduce the real value of Greece's public debt (offset by reducing the purchasing power of the rest of the region's public. The rationale in favour of independent central banks, and the creation of the euro itself, is precisely to sever the incentives to do that (which--it was hoped--would stop national governments getting into the type of situation that would call for it in the first place, but that part hasn't worked out too well).

Having said that, it isn't necessarily easy to get inflation up even if it was too low (see Japan). But 2% inflation surely won't help Greece afford the real cost of its likely future debt service.

[Francesca R]

What will happen if they decide bondholders have to take a big haircut?With existing bonds it can be a legal mess because it is hard--even for governments, when they have borrowed from lenders other than their own citizens--to just impose losses without breaching internationally recognised contract terms, and the process of restructuring bond payments via voluntary participation can be hijacked by hold-outs (http://en.wikipedia.org/wiki/Holdout_problem). Hence the recent discussion/fuss about writing in collective action (http://en.wikipedia.org/wiki/Collective_action_clause) clauses (which make it easier to restructure) to future issues of euro-zone sovereign debt.

Other than that, disorderly repudiation of debt is not something that Europe is likely to do.

Or is there another way out?The other ways out are (2) fiscal transfers from the large states to the troubled ones (Re-rigging the EFSF so that countries like Ireland and Greece pay a subsidised interest rate is a form of fiscal transfer, but the kind that can be sneaked through without angering electorates so much), or (3) generating a large positive inflation surprise that lowers the real value of government liabilities.

There are huge political and other risks with both of those

Will the ECB print new money to pay for the debts?If it doesn't create unanticipated inflation, and it isn't financed by the large governments (IE a fiscal transfer), then ECB money printing isn't a way out, since it does nothing to improve the solvency of the afflicted sovereigns.

[pipelineaudio]

Hey, by his own admission, he's an American, and he's evidently not especially well educated. You can't expect him to be able to tell all those groups of garlic-smelling furrin types apart.

UN, EU, France, NATO, what's the difference?

Before you drown in smug

http://en.wikipedia.org/wiki/United_Nations_Protection_Force

[drkitten]

Before you drown in smug

http://en.wikipedia.org/wiki/United_Nations_Protection_Force

Hmmm....


The United Nations Protection Force (UNPROFOR), was the first United Nations peacekeeping force in Croatia and in Bosnia and Herzegovina during the Yugoslav wars. It existed between the beginning of UN involvement in February 1992, and its restructuring into other forces in March 1995.

Did I miss a memo? When did Croatia, Bosnia, and Herzegovina join the EU?

[pipelineaudio]

Where did he say EU? What he quoted was "europe"

The poster after him tried to move the goalposts to EU

[drkitten]

Where did he say EU?

In the thread title itself. Looks like the goalpost moving was done by the jingoistic 'tard who can't tell the difference between France and Croatia.

[Emperor_Gestahl]

drkitten, were you aware that individual central banks could still print Euros? I had been led to believe that in the EU monetary zone nations gave up that power.

[drkitten]

drkitten, were you aware that individual central banks could still print Euros? I had been led to believe that in the EU monetary zone nations gave up that power.

I was not aware of that, nor am I aware of that now; I haven't investigated the question.

[Emperor_Gestahl]

Linked this a few posts ago, found it surprising:

http://www.independent.ie/business/irish/central-bank-steps-up-its-cash-support-to-irish-banks-financed-by-institution-printing-own-money-2497212.html

[Puppycow]

I think it's about time to update this thread.

IMF Believes Greece Should Consider Debt Restructuring By 2012 (http://online.wsj.com/article/SB10001424052748704487904576267173833529958.html?m od=WSJ_hp_us_mostpop_read)

WASHINGTON -- The International Monetary Fund believes Greece's debt is unsustainable and has told European government and central bank officials that Athens should consider restructuring by next year, three people familiar with the situation said Saturday.

"The IMF believes the debt situation in Greece is unsustainable," one of those people, who has direct knowledge of the matter, told Dow Jones Newswires. "Senior (IMF) officials have told the parties involved that restructuring should be considered soon," including the European Commission and euro-zone governments.

Officially this is all being denied of course because even talking about it makes it more likely to happen sooner rather than later, but signs are that it is heading in that direction.

[Francesca R]

Greek 2 year yields would not be trading at 20% (which they are today) if this was not already expected to a meaningful extent. Moreover this has happened despite Greece not actually having borrowed anything directly from the market for a year (it borrows from the IMF/EU stabilisation fund at 5.5%) and despite the ECB being a net buyer of already-issued Greek debt.

The alternative to default is some kind of fiscal transfer from the rich states to the troubled ones. That is more orderly but a harder political sell. Which of the two options would inflict the most damage on the other countries is not obvious.