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The run on banks in Greece in progress; Euro collapse coming?

Discussion in 'Sports and News' started by The Big Ragu, Jun 13, 2012.

  1. Stitch

    Stitch Active Member

    I don't recall a case where two truly democratic states have gone to war with one another. I don't think the U.S. is worried about a unified Europe.

    My thesis adviser in my master's program thinks the debt crises will push the U.S., Canada, and the EU to drop trade barriers and allow mobility of labor within that trade bloc.
     
  2. TrooperBari

    TrooperBari Well-Known Member

    You're right -- that does sound paranoid. How did this suddenly become a zero-sum game?

    The rises in the US and European stock markets appear to be largely based on the assumption of central banks injecting more economic stimulus, which may not be such a sure thing. As for why Americans should be concerned, when people start talking about the Greek vote being another potential "Lehman moment," I'd say that's one sign:

    http://www.guardian.co.uk/business/2012/jun/15/eurozone-crisis-live-bank-england-emergency-measures
    http://www.businessinsider.com/the-financial-equivalent-of-the-cuban-missile-crisis-2012-6

    You want a worst-case scenario? Here you go:

    http://www.theatlantic.com/business/archive/2012/06/eurogeddon-a-worst-case-scenario-handbook-for-the-european-debt-crisis/258368/

     
  3. britwrit

    britwrit Well-Known Member

    I don't know. I think we're talking about two different time frames. And I absolutely misframed my original question. Should Americans be worried about a bank collapse in Europe next week, next month, this year? Will it seriously affect us? Yes to both.

    That being said, over a decade, should Americans be worried that European countries won't make the structural changes - whatever they are - that will make their economies that much stronger? Should we be rooting for them to do it? No. They're already pretty strong (with four of the top-ten ranked economies and collectively, the largest GDP in the world. If drastically cutting their debt boosts them over the long term, I don't see good things.

    I'm not talking about going to war. But what if, say, the EU decides to dramatically boost its own sad little force, sideline NATO? Does that benefit the American defense industry or the European Aeronautic Defense and Space Company?

    Generally, I want Europe to muddle along the way it has been - being of benefit to the American economy but not a threat. Individually, Britain, France, Germany, Spain, et al, have a history going back centuries of throwing their weight around the world. Maybe that didn't stop in 1945 or 1918.

    (I could definitively see that mobility of labor scheme, especially if it was linked to a quota system. Like North America and Europe agree to swap X number of engineers, Y number of architects?)
     
  4. Stitch

    Stitch Active Member

    Any system that doesn't let people seek work wherever it is is inherently unfair, especially when capital can be moved with few restrictions.
     
  5. LongTimeListener

    LongTimeListener Well-Known Member

    Well I'll be goddamned ... the pro-bailout, pro-euro party wins the election and the world does not enter Monday facing financial apocalypse.

    http://worldnews.msnbc.msn.com/_news/2012/06/17/12260721-pro-bailout-party-wins-greek-election?lite

    End of world postponed until Ragu can consult with the Mayans about what the real year is that the world ends.
     
  6. The Big Ragu

    The Big Ragu Moderator Staff Member

    Yup. The douchy post encapsulates what I said on this thread.

    In any case:

    http://online.wSportsJournalists.com/article/BT-CO-20120617-701962.html

    http://www.marketwatch.com/story/ecb-battens-down-the-hatches-2012-06-18?reflink=MW_news_stmp

    I'd cash out at 1.26 today, if you do have any Euros sitting at home in a drawer. At best it drags on another year with the ECB devaluing the currency like mad to inflate away some of the debt. At worst, they end up a wall decoration.

    I haven't predicted the end of the world, but I have been short the Euro since it was trading at 1.43 less than a year ago. God love those Mayans.
     
  7. LongTimeListener

    LongTimeListener Well-Known Member

    From the OP:

     
  8. doctorquant

    doctorquant Well-Known Member

    Moments before NFL pre-game coin toss ...

    Ragu in bar (RIB): I call heads.

    NFL referee ...The toss is tails ...

    LTL to RIB: You think you know so much ...
     
  9. LongTimeListener

    LongTimeListener Well-Known Member

    Huge difference between "I think Greece is going to vote to leave the Eurozone" and "I don't see how Greece is not going to vote to leave the Eurozone."

    And I probably wouldn't start a thread about how the coin is definitely going to come up heads.
     
  10. doctorquant

    doctorquant Well-Known Member

    Note to self ... remember to start a thread on how the coin toss is going to go at the Super Bowl next year

    :D
     
  11. NoOneLikesUs

    NoOneLikesUs Active Member

    I'm not sure the acceptance of the bailout is guaranteed. There's still pressure from the public to get a better bailout deal from the Germans, but the Germans aren't budging. Nobody knows what sort of batshit is going to go on when legislative sessions actually start.
     
  12. The Big Ragu

    The Big Ragu Moderator Staff Member

    Well, it's silly. I started a thread about the unraveling of the Euro. I wasn't really trying to handicap the Greek elections. And LTL knows it, despite the repeated posts about the end of the world (something I don't believe, obviously -- even when the Euro goes poof, the sun will still rise and it will still set).

    Anyone who knows me off of a message board where I am just typing out quick (and posts that get made fun of for being too long) posts as an anonymous guy knows I am not a bookie type, and even if I was, I wouldn't be laying bets on things like the Greek election. My posts on this thread (and the posts before this thread that get everyone into a bunch) were clearly about long-term events that have been building to where we are today.

    To what you just said, the Greek election was a nail biter, and it did little to calm anyone. Today yields on Spanish bonds are back above 7 percent and Italian yields are rising toward there. That is the magic level where bailouts are not an option, they are a necessity. At the same time, there are no guarantees today that Greece is playing ball, which is why the rhetoric coming from Christina Lagarde and others has been semi-threatening and cajoling today.

    Greece is not going to stay in the Euro. It may be tomorrow, it may be weeks or months from now, it probably won't be much than a year from now. The only reason there has been so much effort put into keeping them in the Euro is that there is panic right now. From our president, from China and from Europe. They are trying to portray calm, but they have a situation that is out of control and they have no clue how to reign in it. It has been three years of short-term, feckless measures that bought time. That isn't cutting it anymore.

    There have been mini-runs in the last week at banks in Greece (which continue today, by the way), but also in Spain and Italy.

    Right now, you have the ECB (And EMU, which is going to be handing over broad powers to the ECB, because they are too weak to do anything -- and they are out of the options at their disposal -- desperately trying to figure out how to do two things: 1) buy time the way they have for three years now, and 2) find some magical solution (that doesn't exist) to a situation without an easy way out.

    The next steps will likely be the ECB given the power to take on a role more similar to our Federal Reserve. That will mean printing money to try to inflate away some of the debt and adding tremendous amounts of money to its balance sheet. Which is tricky, because there is not one sovereign country responsible for that debt. They might issue some modified form of Euro bonds and some kind of deposit insurance in addition to the insurance offered by individual countries, but it will be a half measure, because I can't see the Northern European countries going to go for a full-fledged Eurobond scheme that makes them responsible for the debt of Spain and Italy and Portugal and Ireland.

    But they will keep announcing measures like this, starting this week probably. The markets will see through it. It may buy some time. But with each measure (for example, the promise of funds to Spain last week) the amount of time it buys has been less and less. No one is buying it anymore.

    The half measures, which don't address the simple problem of too much debt and oncoming insolvency, are just exacerbating the problem. With each day more debt is accumulated and it makes the day of reckoning even worse. It's sad that they couldn't have faced this head on two years ago. Instead, we have Europe in a recession anyhow, with high unemployment across the continent, due to the drag the crisis has brought on. And we still are on the verge of a collapse that could have devastating worldwide fallout. And really, all the world's leaders (Barack Obama, Angela Merkel, etc.) are interested in right now is holding off the collapse at any cost, in order to create as much stability as possible through their reelections.
     
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