Eurozone will collapse...

[Osem]

It'd be nice if he was right but I can't help thinking it's the triumph of desperation over reasoning.

[Sirius]

Originally Posted by Chris

http://www.telegraph.co.uk/finance/e...-Hollande.html




Oh, well that's OK then.

The Euro zone leaders really are in cloud cuckoo land

Greece has closed ERT, its state broadcaster, giving staff just hours notice that they were losing their jobs. National and regional TV and radio stations have now all gone off air.

But it's ok, it's the price of keeping Greece in the Euro, and we all know the Euro's integrity must be preserved at all costs.

http://www.bbc.co.uk/news/world-europe-22861577

[Osem]

Not to worry, it's just collateral damage...

Wouldn't they have had to close it anyway? It's not as if they were floating in money before...

Originally Posted by Damien

Wouldn't they have had to close it anyway? It's not as if they were floating in money before...

Why would they have had to close it?

The austerity measures in Greece (real austerity, by the way, not the softly-softly austerity lite we have in the UK), have been mandated by the Troika as a condition of bail-out funds. And at least one member of that Troika, the IMF, has been found to have ignored its own basic operating principles, its very reason to exist, in fact, because it has been acting to save a supra-national currency rather than to rescue a national economy.

Greece's fundamental problem is that its exchange rate is too high. The Euro is simply too expensive for it to use as a national currency. The solution is for it to default on all its Euro-denominated debt, issue Drachmas and begin paying all public sector employees in that currency. The result would be a severe short-term economic shock for Greece, but let's face it, when you get to the point where you have to close down your state broadcaster at less than 24 hour's notice just to keep the rest of the country ticking over, how much worse can things actually get?

With the Drachma floating freely Greece could start to rebuild. The Drachma would be worth next to nothing initially, but Greece has very strong tourism potential and still has something of a shipping industry, so therefore a ready means of earning foreign currency.

This is inevitable, if not now, then within the next five years. The only question is whether they accept the inevitability and do it in a managed way, or wait until circumstances force them into an unplanned, chaotic fall out of the Euro system.

I wonder if the Greeks will be expected to keep paying the monthly subscription whilst the service is down?

Originally Posted by Chris

Why would they have had to close it?

The austerity measures in Greece (real austerity, by the way, not the softly-softly austerity lite we have in the UK), have been mandated by the Troika as a condition of bail-out funds. And at least one member of that Troika, the IMF, has been found to have ignored its own basic operating principles, its very reason to exist, in fact, because it has been acting to save a supra-national currency rather than to rescue a national economy.

Greece's fundamental problem is that its exchange rate is too high. The Euro is simply too expensive for it to use as a national currency. The solution is for it to default on all its Euro-denominated debt, issue Drachmas and begin paying all public sector employees in that currency. The result would be a severe short-term economic shock for Greece, but let's face it, when you get to the point where you have to close down your state broadcaster at less than 24 hour's notice just to keep the rest of the country ticking over, how much worse can things actually get?

With the Drachma floating freely Greece could start to rebuild. The Drachma would be worth next to nothing initially, but Greece has very strong tourism potential and still has something of a shipping industry, so therefore a ready means of earning foreign currency.

Because they ran out of money. Even if they did start a new currency, promised it's value and started paying people with that they still would have had the situation where their outgoings were vastly higher than the money coming in. Changing currency wouldn't fix that. I also question how well it could work if the Drachma isn't worth anything internationally, people could have tried to deal with dollars or pounds.

Greece's fundamental problem was surely utterly incompetent economics which were only made worse by an inability to control their exchange rate but were not caused by it? They had a large state, pensions and they weren't too fussed about collecting tax.

---------- Post added at 11:27 ---------- Previous post was at 11:26 ----------

Originally Posted by heero_yuy

£3.80 a month compared to our £12.16 a month, sounds like value for money given the number of TV channels and radio it was running yet even then it was termed a haven of waste.

Depends what they did with it. The BBC is one of the largest broadcasters in the world. I doubt the Greek public broadcaster had anything like the news division or production capabilities the BBC have.

---------- Post added at 11:44 ---------- Previous post was at 11:27 ----------

Looks like they're defying the ban: http://www.guardian.co.uk/media/2013...roadcaster-ert

Originally Posted by Damien

Because they ran out of money. Even if they did start a new currency, promised it's value and started paying people with that they still would have had the situation where their outgoings were vastly higher than the money coming in. Changing currency wouldn't fix that. I also question how well it could work if the Drachma isn't worth anything internationally, people could have tried to deal with dollars or pounds.

Greece's fundamental problem was surely utterly incompetent economics which were only made worse by an inability to control their exchange rate but were not caused by it? They had a large state, pensions and they weren't too fussed about collecting tax.

Damien, this really is naive ...

The "club med" countries have had ramshackle economies pretty much forever. The clue was in the number of zeroes on their low-value indigenous banknotes, because these were evidence of repeated devaluation and money-printing, which is what you do in lieu of actual competitiveness as your international rivals outstrip you. You can't get your unit labour costs down through efficiency, so you get it down by making your country a cheaper place in which to do business.

These economies should never have been allowed into the Euro because they never ditched the loose attitude that required periodic devaluation. Now they are in, they have lost unit labour competitiveness against the industrious north (principally Germany) but they cannot devalue to make themselves competitive again because they share the same currency as the industrious north. While times were good, of course, they had a means of escape via cheap credit, far cheaper than they were ever allowed access to pre-Euro. That credit simply gave them another reason not to sharpen up their tax and spend policies.

The upshot is, if Greece had nevere entered the Euro, ERT would not be getting shut down today. The country would not be crippled with debt, the currency would not be over-valued because the Greek government would have taken steps to correct it long before now and the short-term damage to the economy that causes, through expensive imports, would even now be being ameliorated by large flows of tourist cash in Sterling and Euro as foreign tourists were attracted to a relatively cheap holiday in the sun (when you have to pay in Euros, Greece really isn't the good value holiday it was 20 years ago).

If ERT was a problematic Drachma money-pit then that would be addressed by planned reforms and efficiencies, not by the sudden, all-but-unannounced closure of a part of the state infrastructure. That you have come to see this "solution" to ERT's problems as in any way unremarkable, or reasonable, simply goes to show how bad things have become and for how long.

Let me repeat: a country with any degree of control over its own finances does not entirely shut down an entire section of its own state apparatus with less than 24 hours notice.

[Pierre]

I just can't believe that they keep throwing bad money after bad at Greece.

It's inevitable that Greece will drop out of the Euro, it's unsustainable. They should have bit the bullet when the crisis started and dropped out then, they would be recovering by now and the great Euro experiment would have been proved to have failed and may have collapsed by now, or certainly restructured to just Northern Europe states.

[Osem]

Seems like Merkel has been studying the works of Norman Tebbit:

Chancellor Angela Merkel of Germany has said the 3.6 million or so young unemployed people in the eurozone should be ready to move for work.

She has long been criticised in Eurozone countries like Spain and Greece where unemployment is rising to previously unknown levels.

In an interview for the BBC, she said their level of joblessness represented a "huge crisis".

http://www.bbc.co.uk/news/world-europe-22906820

[Osem]

New car sales across Europe fell to their lowest level in two decades for May as the deepening recession hurt demand.

Registrations dropped 5.9% to 1.04m in May, compared to a year ago, according to the industry body, the ACEA.

This is the lowest level for May since 1993 when new registrations plunged below one million.

The UK was the only country to report a rise in sales, with sales up 11%.

http://www.bbc.co.uk/news/business-22950695

11% up in spite of all the austerity eh?...

The UK's economic policy is tailored to the needs of the UK economy. But if we had only we'd listened to Ken Clarke and Peter Mandelson, and gone into the Euro, things could have been even better right now. Remember, staying out of the Euro means chaos and hardship.

What insightful prophets they turned out to be. I suggest we listen to everything they say about how awful things would be if we left the EU.

[Osem]

The pro-Euro lobby's gone a tad quiet it has to be said.

[Osem]

The Dutch coalition government says the time of "ever closer union" in all EU policy areas is over.

The government, led by liberal Prime Minister Mark Rutte, set out its stance on EU powers in a letter to parliament.

http://www.bbc.co.uk/news/world-europe-23005499

The Netherlands wants to keep control over social security, working conditions and media regulation.

How dare they want to keep control of anything...