Grexit, they’re calling it in the world of finance. Citibank has the chance of Greece leaving about 50%. The EU elite are calling for the second round of Greek elections to be pitched as a referendum on leaving the Euro.
Economic and political reality has finally caught up with the Eurozone. After protesting for a decade that you could have monetary union without fiscal union that pretence has been brutally exposed.
Small Southern European countries running up massive debts using Germany’s credit card can continue no longer. Germany running a massive current account surplus with the cheap credit being hovered up by countries running a current account deficit can continue no longer.
The brutality austerity imposed on Greece by the Eurozone, led by France and Germany, is literally killing the economy and, if it hasn’t already, if it continues will start killing pensioners as well.
If it were a normal country with its own currency Greece could default and devalue and then export its way back to competitiveness and growth. A painful process and an unpleasant one, but one that has been tried before in many countries and that works most recently in Iceland.
However, trapped in the Eurozone Greece can’t default or devalue, because first it must decouple.
Thus unable to enact either Austrian or Keynesian recessionary curing measures Greece is stuck. Economic reality.
Unemployment runs at 22%, youth unemployment at 51% and running a current account deficit of more than 7% of GDP.
The Greek people have overwhelming rejected the current austerity programme, with some justification. They have also overwhelmingly rejected the notion of ceding economic decision making to an EU central body. However, they have also overwhelmingly shown that they want to stay in the Euro.
To stay in the Euro, however, Greece must accept two things: Continued austerity imposed from outside. A ceding of economic control to an EU central body.
The only option open to EU officials to save the Euro is fiscal union with budgetary control ceded from Eurozone member states to the European parliament. This will have to be accompanied by large and permanent fiscal transfers from Germany to the Southern periphery. Political reality.
Syriza the far left anti-austerity coalition has, however, seemingly been successful in convincing Greeks that they can call the EU’s bluff.
It’s impossible to say if they’re correct, but with the €500bn rescue fund in place to help shore up Spain, Italy and Portugal and the Germans increasingly unhappy in being forced to accept lower living standards to save profligate Souther Europeans I suspect its Syriza is wrong.
And with ordinary Greeks withdrawing €2 billion this week alone, to stash under the mattress I suspect many of them also believe that the vote on in June will see the anti-austerity parties elected. From which the inevitable will happen and Greek will slow motion default from the Euro.
When Greece goes the markets will turn to Spain. Spanish toxic asset bank Bankia's share price has tumbled in the last few days and with unemployment at a coincidentally Greek level of 24% generally, 50% for under 25s and debt at 79% of GDP.
As a Eurosceptic my satisfaction at being proved right that the Euro is fundamentally unworkable with fiscal union. Is completely nullified by feelings of sympathy for what the peoples of Southern Europe, 50% youth unemployment in Spain, and Greece in particular are having to suffer and anger that all this suffering is being imposed unnecessarily by faceless Eurocrats, who are exempt from income tax, purely to save their lunatic political project. They’d rather pensioners die, the young miss out on the prime of their economic life and the global recovery be delayed just to further propagate their failed political experiment to eradicate nationhood in Europe.
Eurogeddon is coming and whether you’re in New York, London, Sydney or Tokyo you’re going to feel it and its all to keep this man in a job, regardless of whether you get to keep yours.
Greece will be the first out. How the rest of the Eurozone will fare in its wake is difficult to say. One thing that's easy to say is anyone with a pension, or shares, or is in a job which exports goods and services to southern Europe, is about to feel the hurt.
Like you I'm a big Eurosceptic. The unaccountability, corruption and blind political zeal of those who have pushed it onto the countries of Europe disgusts me. **** them all.
I actually wanted it to work, it was a nice idea but that that's all it is. Too many people with too many differences and agendas.
I'm talking about it as if it's already gone and personally, that's how I feel about it, it's busted and I think it'll go.
Even the Germans are talking about a post-Greek exit scenario. I think that makes it inevitable, the Greek people and their literally can't take any more of the EU's medicine.
Originally Posted by thrutch
My concern is contagion. As much as I'd like to see the back of the Euro I'm loathe to pay for it with my job and economic prospects.
It would and might still be able to work if fiscal union is adopted. I just don't see the constituent peoples of each Eurozone country being willing to give up their democracy to save the Euro.
Originally Posted by Kovacs
That's the price they'd have to pay, after all, once you lose the ability to choose the people who set your economic policy you've effectively lost your democracy.
I don't know much about the whole thing in general but we're voting on a referendum to accept this fiscal compact treaty or whatever it's called. We could vote no but we voted down nice and they just came back to us and asked to vote again until we voted the right way, so that's why I'd like Ireland get the hell out of europe.
Ireland don't get any kind of veto on this, so I'm not sure why they are bothering to make us vote.
$$$$$ USA! USA! USA! $$$$$
We're not far behind and definitely part of the problem.
Fiscal compact is the one. As I understand it, it basically means you cede a big chunk of your national economic decision making to Europe. There'll be legal limits on budget deficits and you'll be forced into tax harmonisation etc...
Originally Posted by Odacon
The interesting question is whether they will genuinely lock you out of the European stability mechanism if you vote no, assuming they don't make you vote again until you say yes. In theory you wouldn't be eligible to receive it if things went tits up, but whether that would be enforced and whether you would need it are questions I don't have answers to.
I hope you guys leave the EU, it would be the best thing for your economy and your democracy. It would also put a lot of pressure on our govt. to give us a referendum on leaving.
Indeed. They can pass it with a majority of 12/17. And as Odacon said the EU doesn't care what you think. If you vote the wrong way they'll either keep asking until you vote the way they want. Or they'll just ignore you like the did to the French and the Dutch.
Originally Posted by CrackFox
greece has to leave or they'll be poor forever.
germany needs to shut up and partly collectivize debt.
while we're at it kick the brits out of the E.U.
They'll be poor either way, unless they make some very major and very unpopular structural, supply side reforms.
Originally Posted by ashkelon
Who would collectivize the rest?
Originally Posted by ashkelon
We're more than willing to leave on our own accord. Why would you like us out?
Originally Posted by ashkelon