Jeopardizing the Euro

[Che -Guevara]

Greece's Papandreou in crisis talks over bailout revolt

 

Greece's government is holding an emergency meeting following a day of turmoil triggered by PM George Papandreou's announcement of a referendum on the proposed EU bailout.

 

One MP from the governing Pasok party has resigned, cutting Mr Papandreou's parliament majority to two.

 

Six other leading party members have called on him to resign.

 

US and European markets, calmed by last week's EU bailout plan, have fallen sharply since the announcement.

 

The Greek government also faces a crucial confidence vote in parliament on Friday.

 

News of the referendum even took Greece's Finance Minister Evangelos Venizelos by surprise, Greek media reported.

 

As the latest crisis unfolded, it was announced that Mr Papandreou would meet German Chancellor Angela Merkel and French President Nicolas Sarkozy along with leaders of the EU, the International Monetary Fund (IMF) and eurozone leaders on the fringes of the G20 summit in Cannes on Wednesday.

 

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[Che -Guevara]

Papadandrea threw a monkey wrench into the deal worked out feverishly by the Germans and the French. Sarkozy and Merkel must be pissed.

[Gheelle.T]

"Last week, eurozone leaders agreed on a 100bn-euro loan (£86bn; $140bn) to Athens and a 50% debt write-off.

 

In return, Greece must make deep cuts in public spending, slashing pensions and wages and making thousands of civil servants redundant"

 

He doesn't have any political leverage to force another austerity on the people. Referendum must be the only card left to play, I guess.

[xiinfaniin]

And on the larger picture, Europe is fighting to prevent the inevitable, the casino culture of the west is crumbling and there is nothing that can be done to restore it.

[Che -Guevara]

Gheele.T...He's facing another vote of confidence this week and very slim margin since last time as some MPs in his party abandoned the party. What's interesting his own Finance Minister wasn't even consulted on such referendum. Most likely, there might be snap election.

 

Xiin...The question is can sovereign states with competing interests have one monetary policy without giving up sovereignty?

[Bluelicious]

Greece should evaluate their incomes and spendings and cut back and not waste money anymore on unnecessary things. Where did they go wrong to be so bankrupted at the moment. They shouldn't make their citizens suffer for the governments mistakes.

[GoldCoast]

The idea austerity will help your economy recover is a flawed and close to discredited one, that continues to be peddled like religious doctrine. They are trying to save furniture in a burning house, and it will not work. The Greeks should call the bluff and vote against the package. Trying to ignore the clear systemic problems at play, and only attributing it to domestic spending is beyond a fallacy.

[xiinfaniin]

Che, I am afraid the answer for your question is no. UK is the ultimate test here--- if memory serves me right, they refused to join the Euro Zone.

[omar12]

Che -Guevara, the answer to your question is no. The moment you join into a monetary union and have one central banking, you have given up some of your sovereignty. I think the idea of a monetary union is OK and all, but without a coherent complementary fiscal union, how can you

sustain a monetary union?

[GoldCoast]

Things are falling apart in Europe; the center is not holding. Papandreou is going to hold a referendum; the vote will be no. Italian 10-years at 6.29 at pixel time; that’s a level at which the cost of rolling over the existing debt will force a default, even though Italy has a primary surplus. And with everyone simultaneously pushing for fiscal austerity, a recession seems almost certain, aggravating all of the continent’s problems.

 

I’ve been char-ting this trainwreck for a couple of years, and am feeling too weary to trace through it again right now. Let’s just say that the euro was an inherently flawed idea that can work only given a strong European economy and a significant degree of inflation, plus open-ended credit to sovereigns facing speculative attack. Yet European elites embraced the notion of economics as morality play, imposing across-the-board austerity, tightening money despite low underlying inflation, and have been too concerned with punishing sinners to notice that everything was going to blow apart without an effective lender of last resort.

 

The question I’m trying to answer right now is how the final act will be played. At this point I’d guess soaring rates on Italian debt leading to a gigantic bank run, both because of solvency fears about Italian banks given a default and because of fear that Italy will end up leaving the euro. This then leads to emergency bank closing, and once that happens, a decision to drop the euro and install the new lira. Next stop, France.

 

It all sounds apocalyptic and unreal. But how is this situation supposed to resolve itself? The only route I see to avoid something like this involves the ECB totally changing its spots, fast.

 

Aside from that, Mr. Draghi, are you enjoying your new job?

 

 

http://krugman.blogs.nytimes.com/2011/11/01/eurodammerung/

[Somalia]

xiinfaniin;755307 wrote:

Che, I am afraid the answer for your question is no. UK is the ultimate test here--- if memory serves me right, they refused to join the Euro Zone.

But they still have to help bail out EU members.

[Naxar Nugaaleed]

the biggest losers in this would be the banks, they should not receive a dime, let the ship sink, am for one ready for a return to bartering

[Carafaat]

The biggest loosers are not the banks but rather the European's who are now confronted with the bill in the form of increasing debts per capita and private debts in the form of large mortgage debts. They are slowly realizing that for to long they have been living on large foot not realizing it wasnt their own wealth they were spending.

 

Africa can come out as the real winner with a real economy based on reality, which they and the world have undervalued for to long. To bad they still dont realize what they really are worth.

[Che -Guevara]

The referendum now became if Greece should leave or stay in the Euro Bloc and the Government and the ruling seems to be unraveling.

 

"Italian 10-years at 6.29 at pixel time; that’s a level at which the cost of rolling over the existing debt will force a default, even though Italy has a primary surplus." Goldcoast

 

Elaborate please

[GoldCoast]

^ Its not my words, I posted a blog article from economist Paul Krugman. His views have been accurate for a while now IMO. He is referring to the risk of default in Italy as well, with reference to their govt bonds.

 

BTW they are trying to get the Greek PM to resign, and replace him with a right winger who would push through the austerity measures and cancel the referendum. So far he's resisting but he's under immense pressure from his own party and basically all of Europe. Someone made a astute point when they mentioned that "bank coups are the new military coups" in 2011 lol.