Analysis: Thinking the unthinkable -- a euro zone breakup

[DWB]

Interesting read on Reuters... Link

I know pornographers know better than everyone else in the world, including the experts, so please comment on where they are wrong and why it would never happen.

[Odin]

Hope it does happen. The fatherland needs to unshackle itself from these incompetents.

[Klen]

Eurozone will never break up,after all those problematic countries would be bailed out even if they are not part of eurozone.After all,they giving them loan,not free money and i dont see any problem with it.

[seeandsee]

content will be cheaper to produce

[MaDalton]

nope - won't happen - no need to explain - lol

[czarina]

it'll make the dollar go up

[JFK]

Originally Posted by KlenTelaris

Eurozone will never break up,after all those problematic countries would be bailed out even if they are not part of eurozone.After all,they giving them loan,not free money and i dont see any problem with it.

LOAN ? it's a loan if you can make the payments, when they default in a couple of years down the road, it will be forgiven and all the countries doing the loaning will be fucked. This whole thing sounded great in theory, but in practice, it's a never ending money drain on the 'haves'

[u-Bob]

Originally Posted by KlenTelaris

Eurozone will never break up,after all those problematic countries would be bailed out even if they are not part of eurozone.After all,they giving them loan,not free money and i dont see any problem with it.

Let's not forget that by lending them money that didn't previously exist they are expanding the money supply and decreasing the value of our money. Let's also not forget that by lending out money at sub-market prices they are essentially encouraging more bad investments. Let's also not forget that the governments accepting the loans aren't the ones that will be held accountable if things go wrong (even though they are the ones who will be spending the money) and that those governments won't be the ones that will have to pay back those loans, but the people living in those countries.

[Paul Markham]

If the Euro survives, which it probably will. The EU will bring in very strict laws on what a country can and can't do financially. Allowing countries to run up massive debts to others have to bail them out is suicide financially.

[nolongerexists]

will happen, wait till shit hits the fan in major countries like spain or italy. that will be fun.
and webmasters should pray it happen for obvious reasons

[Lilit]

I would say go ask Germany The country pays for eurozone's wealth so they will be the main decision makers I believe. A break up is the most pessimistic scenario but I think that stricter financial regulations would be the next step to make.

[DWB]

At first I heard "Spain is too large to bail out" and now it is being considered. What's the deal with that?

[pornguy]

I believe and see signs that the only way to have something like the Euro is to have it globally. that is the only way for it to work.

[Hentaikid]

why can't they devalue the fucking euro is what I ask

[baddog]

From an outsider's perspective, the Euro amounted to welfare. You took countries like Germany and let them support the poorer countries. Just like we will never can welfare, they are pretty much stuck with the Euro.

[wehateporn]

The bailouts are a method of entwining them all together forever; exactly as the Bankers planned

[Allison]

Originally Posted by DirtyWhiteBoy

I know pornographers know better than everyone else in the world, including the experts.

Ahh my favorite quote of the day.

[Klen]

Originally Posted by JFK

LOAN ? it's a loan if you can make the payments, when they default in a couple of years down the road, it will be forgiven and all the countries doing the loaning will be fucked. This whole thing sounded great in theory, but in practice, it's a never ending money drain on the 'haves'

Yes Loan,a bit different then classic bank loan taken by average joe,but that money must be returned.

[minicivan]

Obviously it can never work over the long term. Countries (all countries) can't manage their own domestic financial affairs, under the own laws and rules - they certainly can't do it in accordance to someone else's and aren't going to take a hit for the greater good of people that don't even like you. Inviting every gangster economy in Eastern Europe into the fold certainly isn't going to make anything better. Ultimately everyone will have to revert back to acting in their own interests, rather than the collective interests of the whole. I'm sure Germany will be among the first to break away from the Euro and then the EU. Why should the producers suffer for the non producers and the responsible suffer for the irresponsible and the productive suffer for the non productive?

[$5 submissions]

It's not a question of IF but WHEN. Ever since the Fall of the Roman Empire, various individuals and organizations have tried to cobble Europe back together. Always failed.

[Lilit]

Originally Posted by baddog

From an outsider's perspective, the Euro amounted to welfare. You took countries like Germany and let them support the poorer countries. Just like we will never can welfare, they are pretty much stuck with the Euro.

On the one hand you're right, but on the other literally it's not the country that offers the welfare, it's german citizens and residents and many of them don't like the current situation. In this case Germany has to find balance between the amount of welfare it offers to other countries and keeping its own taxpayers happy.

Right now economic activity in Germany is on a roll, but market economy has cycles...

[u-Bob]

Originally Posted by KlenTelaris

Yes Loan,a bit different then classic bank loan taken by average joe,but that money must be returned.

http://www.gofuckyourself.com/showpo...78&postcount=8

[andrej_NDC]

It can happen...but it can be also in 200 years...

[HomerSimpson]

Originally Posted by MaDalton

nope - won't happen - no need to explain - lol

EUR(ope) is strong... no need to worry about...

US(D) is something you should worry about...

[Lilit]

Originally Posted by HomerSimpson

US(D) is something you should worry about...

USD is supported by China. No way China would let USD fail and harm its economy by losing their main trade partner.

Just look at the numbers:
http://www.uschina.org/statistics/tradetable.html

Not to mention that China is the main investor in US economy.

Thus in my opinion it's too early to speak about US(D) collapse because everyone realizes that it will be collapse of the entire world's financial system.

[Klen]

Originally Posted by u-Bob

http://www.gofuckyourself.com/showpo...78&postcount=8

Speaking about dropping value,i though euro will drop against all currencies,but seems it dropping only against dollar,while it grow against other europe currencies,and dollar also grow against those currencies as euro.

[_Richard_]

Originally Posted by TopBucks Lilit

USD is supported by China. No way China would let USD fail and harm its economy by losing their main trade partner.

Just look at the numbers:
http://www.uschina.org/statistics/tradetable.html

Not to mention that China is the main investor in US economy.

Thus in my opinion it's too early to speak about US(D) collapse because everyone realizes that it will be collapse of the entire world's financial system.

i'm not so sure that china wouldn't let the US fail, money is money

[Lilit]

Originally Posted by _Richard_

i'm not so sure that china wouldn't let the US fail, money is money

correct, money is money, if China lets US fail it will lose money because:

1. US is the main importer for them
2. US economy collapse will lead to decreased or negative profit rates on Chinese investment projects.
3. US collapse will affect other US trade partners most of which trade with China as well.

All mentioned above will lead to trade and financial imbalance which will result in the entire economy imbalance and of course it will start the well known "snowball effect".

[roly]

Originally Posted by Hentaikid

why can't they devalue the fucking euro is what I ask

that's the whole problem, europe has lots of different ecconomies and a once size fits all approach to interest rates etc, don't work.

[_Richard_]

Originally Posted by TopBucks Lilit

correct, money is money, if China lets US fail it will lose money because:

1. US is the main importer for them
2. US economy collapse will lead to decreased or negative profit rates on Chinese investment projects.
3. US collapse will affect other US trade partners most of which trade with China as well.

All mentioned above will lead to trade and financial imbalance which will result in the entire economy imbalance and of course it will start the well known "snowball effect".

yea but china doesn't so much trade as just buy raw materials, manufacture, and then sell back to whoever is doing the 'trading'

whereas i agree with you that china would definitely feel an impact, what exactly would be bad for China? If the US went down, it would take us, europe, and most of the developing nations along with it (taking 'aid' from us), leaving a huge vacuum power to be filled by BRIC, but under this scenario, with no competition.

hell, you could even say china was planning to invade both SK and India, leaving china, russia and brazil, with no competition and no chance of anyone saying 'nay'

[Lilit]

Originally Posted by _Richard_

yea but china doesn't so much trade as just buy raw materials, manufacture, and then sell back to whoever is doing the 'trading'

you buy raw materials -> you produce stuff -> you export it to the US -> you get money

Take the 3rd out and there won't be the 4th.

USA is the largest market for China. It explains everything.

[fatfoo]

It is interesting whether the European union will break up or not. Country borders and unions are often changed, such as the collapse of USSR. It is also possible to see a new province created within a country, such as Nunavut in Canada.

[_Richard_]

Originally Posted by TopBucks Lilit

you buy raw materials -> you produce stuff -> you export it to the US -> you get money

Take the 3rd out and there won't be the 4th.

USA is the largest market for China. It explains everything.

roger that.

[baddog]

Originally Posted by TopBucks Lilit

you buy raw materials -> you produce stuff -> you export it to the US -> you get money

Take the 3rd out and there won't be the 4th.

USA is the largest market for China. It explains everything.

Pretty and smart.

[izzynew]

Originally Posted by DirtyWhiteBoy

At first I heard "Spain is too large to bail out" and now it is being considered. What's the deal with that?

Spain is Europe's fourth largest economy and a bailout sum would be so huge, either there would not be enough funds for the bailout, or if there were, it could wipe out any funding left for other EU member states who may need it.

However, it seems that funding from outside the EU, or directly from the IMF is being considered if Spain does need a bailout.
The problem for both Spain and Portugal is that rumours that they will be next to fail have led to loss of confidence on the financial markets so it's a knock on effect.
Until the Ireland bail out, Spain was looking like it would make it, but now they're back in the spotlight again, along with recent complants of 'enough is enough' from the German chancellor, which are not particularly confidence inspiring either.

[california]

For those that missed it:

"China and Russia have decided to renounce the US dollar and resort to using their own currencies for bilateral trade, Premier Wen Jiabao and his Russian counterpart Vladimir Putin announced late on Tuesday."

http://www.chinadaily.com.cn/china/2...t_11599087.htm

[Lilit]

Originally Posted by california

For those that missed it:

"China and Russia have decided to renounce the US dollar and resort to using their own currencies for bilateral trade, Premier Wen Jiabao and his Russian counterpart Vladimir Putin announced late on Tuesday."

http://www.chinadaily.com.cn/china/2...t_11599087.htm

And how would you interpret it?

[_Richard_]

Originally Posted by california

For those that missed it:

"China and Russia have decided to renounce the US dollar and resort to using their own currencies for bilateral trade, Premier Wen Jiabao and his Russian counterpart Vladimir Putin announced late on Tuesday."

http://www.chinadaily.com.cn/china/2...t_11599087.htm

but that would never, ever, ever, happen.

...

[SZNY]

Originally Posted by _Richard_

but that would never, ever, ever, happen.

...

It is public announced, both Russia and China dropped the USD.
What's next in the US, hyper inflation? Saw a documentary and that is kind of scary

[california]

Originally Posted by TopBucks Lilit

And how would you interpret it?

not particularly good for the dollar. that said, i've been long dollar for a while

[jigg]

the eurozone is done with, it's just a matter of time.
Citizens didn't want the constitution so it was forced on them via treaty. There's resentment across the spectrum at immigrants and other countries. Now you have bailing out, loans and what not... it's just a matter of time.

The citizens of wealthier countries will force their governments to leave eventually

[Bill8]

Krugman's article about ireland and his suggestion of a way the euro could fail was interesting.

http://www.truth-out.org/ireland-and...time-part65532

... no European nation can even discuss leaving the euro because the anticipated devaluation will lead people to move deposits to other euro-zone banks, leading to the mother of all bank runs. But I?ve been reconsidering this stance, because while the Eichengreen argument explains why nations should not plan on leaving the euro, what if the bank runs and financial crisis happen anyway? In that case, the marginal cost of a nation?s leaving the euro falls dramatically, and in fact, the decision may effectively be taken out of policy makers? hands.

On Nov. 17, the Financial Times reported that the Bank of Ireland admitted it has lost 10 billion euros in corporate deposits since September. Another bank, Irish Life & Permanent, reported an 11 percent drop in customer deposits in August and September. Hank Calenti, a credit analyst at Société Générale, a major European financial services firm, told the Financial Times: ?You don?t see people queueing around the block, but it seems there?s a silent run on corporate deposits.?

Recently I came to a realization about the true nature of Ireland?s big mistake: It should have been Texas. Think about it. The United States?s savings-and-loan crisis of the 1980s and 1990s was about runaway banks. Loose regulations led to risky investments on the part of hundreds of savings and loan institutions, and then they had to be bailed out at (tremendous) taxpayer expense. And as best I can determine, about half the cost to taxpayers came from just one state ? Texas. Yet the burden was borne nationally.

But, unlike Texas, Ireland bailed out its own banks in 2009. If the European Union had taken over responsibility for the runaway Irish banks that fueled the nation?s devastating housing bubble, the situation would be much less serious. The Irish just picked the wrong continent on which to engage in crony capitalism.

[_Richard_]

Originally Posted by SZNY

It is public announced, both Russia and China dropped the USD.
What's next in the US, hyper inflation? Saw a documentary and that is kind of scary

sorry, those three dots i typed drip with sarcasm

[SZNY]

Originally Posted by _Richard_

sorry, those three dots i typed drip with sarcasm

Let's hope for positive things

[Lilit]

Originally Posted by SZNY

It is public announced, both Russia and China dropped the USD.
What's next in the US, hyper inflation? Saw a documentary and that is kind of scary

Sandro, look at the numbers first... All this buzz is more around the parties involved, that's it. The whole deal has very little impact on dollar because Russia and China don't do much bilateral trade. For example for China it's only 2% of its total trade with the world, for Russia - about 8%. So I'd say the whole deal will have more political impact rather than economic.

Plus, actually, now I'm thinking that the US even might be wanting this deal, because Federal Reserve System wanted to devalue USD a little while China needed to revalue yuan. This strategy was discussed by US and China a month or so ago. So literally the deal serves the needs of all 3 countries - USA, China and Russia. You never know the reality behind the facts shown in mass-media... So who knows...

[CaptainHowdy]

That is completely thinkable btw...

[SZNY]

Originally Posted by TopBucks Lilit

Sandro, look at the numbers first... All this buzz is more around the parties involved, that's it. The whole deal has very little impact on dollar because Russia and China don't do much bilateral trade. For example for China it's only 2% of its total trade with the world, for Russia - about 8%. So I'd say the whole deal will have more political impact rather than economic.

It's 100% a political issue, both Russia as China are complaining for some time that their currencies are undervalued.

[rogueteens]

i hope it breaks up, the big three are the only countries holding it together cash wise and are being taken for a ride by the other countries. Also this free cross-border policy have really helped to destroy local commerce, why bother having a company now in the UK/France/Germany if some eastern european will come along and do the job for half the price.

[Klen]

Originally Posted by rogueteens

i hope it breaks up, the big three are the only countries holding it together cash wise and are being taken for a ride by the other countries. Also this free cross-border policy have really helped to destroy local commerce, why bother having a company now in the UK/France/Germany if some eastern european will come along and do the job for half the price.

I had to laugh on this one,i just had

[rogueteens]

Originally Posted by KlenTelaris

I had to laugh on this one,i just had

why? are you from eastern europe?
To have a free boarder and one currency across so many countries means that for many of the worse off countries, their standard of living will rise but it also means that the standard of living in the top of the first world countries has to drop to make an average across the range.
or are you laughing at the eastern europeans undercutting jobs? its a fact that it happens thats why international buisnesses are shipping in the cheap labour at the expence of the local workforce, cheap labour means lower wages which means less spent in the local economy which means less manufactoring/retail sales which means a local economic depression - This has no benefit to the more "advanced" countries. it only benefits international buisness.
Or maybe you found the fact that its only the "big three" that put in much more cash than they take out funny, they are paying for the other countries?