Grexit

What do you guys think would be the best outcome for tonight's debate on further austerity measures in Greece?

For my part, I kind of hope they say no. The idea that the fallout from a Greek exit from the euro will be 'contained' is preposterous but I also believe it's a shock markets can withstand, at least until the situation in Portugal gets significantly worse. The situation for the Greeks has gotten completely untenable and complying with some of the measures being advocated by EU officials and ze germans right now just seems disgraceful.

My best guess is a 'grexit' would sharply increase euro volatility in the short-term but lead to some euro strength, at least until Spain/Italy come back into the limelight (and they will..).

 

Fuck Greece. I would let that whole country go down without a regret. Those fuckheads are taking our money (I'm European as you might imagine) and don't have anything to do apart from protesting, rioting and burning german and french flags and yelling "nazis out". Fuck 'em.

The Irish are making great progress and Italy will overcome that whole crisis, too. Only Portugal and Spain needs to take some more steps to overcome this whole mess.

 
Best Response

I'm French myself, but I think Greece has gotten a raw deal. Germany's been the one killing it with an undervalued exchange rate for the past 10 years and there's plenty of blame to spread around. I think it's time to admit the writing's been on the wall for a long time, at least in the case of Greece, and let them go. I've been less and less sanguine about the long-term prospects of the euro, mostly because I doubt the necessary labor mobility will ever materialize (language is an awfully serious barrier). Then again, unless we go to a pure free-float and figure out how to make that actually work, the alternative aren't all that good. There's actually an excellent paper by the BoE on possible ways to look at reform of the International Monetary System: www.bankofengland.co.uk/publications/fsr/fs_paper13.pdf

 

I'd love Greece to go. And in turn by setting up the mechanic for countries to leave the Euro it may scare the remaining PIIGS into order.

"After you work on Wall Street it’s a choice, would you rather work at McDonalds or on the sell-side? I would choose McDonalds over the sell-side.” - David Tepper
 

I'm going to play devil's advocate...

What's wrong with defaulting? It would be beautiful for Greece to default. They'll get austerity anyway, so why go through it pretending to be able to pay loans that aren't repayable. They would be idiots to try.

It would be beautiful for bond holders and lenders to finally take a hit. It's been almost 5 years since the global financial crisis started in 2007 and bondholders and banks (as well as many equity holders) have been bailed out by taxpayers and the guy on the street.

Let the banks take a hit. They made dumb loans. Let the shareholders take a hit/get wiped out. They made dumb investments... a few banks might go under (some German & French ones?)... let them be restructured / liquidated too... If Italy, Portugal and others default, so be it... all of this rhetoric about Germans/French/Whomever having to pay for Greek profligacy is nonsense. They are being asked to pay for the idiocy of German/French/Whomever lenders. That's the reality that governments don't want to address... You aren't "bailing out" Greek people, you are bailing out idiot lenders/investors when you don't have to. The borrowers (governments / citizens) will face austerity in either case.

The Euro doesn't work in its current form... it has failed more catastrophically than the ERM before it (dropping out was the best thing the UK had happen to the country in decades)... either Europe integrates politically with a common treasury (debt issuance at the Euro Zone level, as opposed to national level) or the Euro Zone membership turns into something else... a smaller Euro Zone with other European countries using their own currencies, or no Euro at all...

How exactly is Ireland making progress? Ireland should not have nationalised / socialised the bad loans of their banks. Their government has bailed out Irish bankers, and investors in/lenders to Irish banks (shareholders & bondholders) The country is worse off now than it would have been had it let the Irish banks fail. You should protect depositors, not shareholders, management and bondholders. The Irish worker will be paying for the idiocy of Irish bankers and European/global investors in Irish banks for the next 20+ years... it is completely unnecessary and was entirely avoidable... their austerity will last longer and the idiots who made the bad loans & investments have learnt that they they will always be bailed out if their mistakes are big enough.

I've had enough of the nonsensical rhetoric of governments and press... The real policy questions should be: - How do we restructure all of these banks when the defaults happen? Is there a way to restructure the holding companies without the banks operations seizing? Some form of short term conservatorship should be possible while the holding co debt is swapped for equity. This uses 0 of tax payers money. Smarter people than me can go through the legal issues with this. - What type of currency system do Euro Zone countries adopt (those that decide they want to remain in some form of currency union)?

 

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