lev. d. Nov 12th 2011 0:54 GMT
You're all mad. YOU'RE PAPER MONEY IS BASED ON NOTHING!!!
jackvandijk Nov 11th 2011 23:07 GMT
let's do it, it will be a rough ride, but fun
Shaheen42 Nov 11th 2011 21:34 GMT
I would have prefered to change the closing lines of this brief,"It's all a frightening prospect. But that doesn't mean it won't happen" as ,"It doesn't mean it can't happen" How could you or that matter anybody else can ber that certain to say," It won't happen" ? If E.U can rescue Greece, why can't it save Itlay whose collapse can usher a bigger storm for E.U, threatening its very exitence?
hY7hBj2RY8 in reply to Shaheen42 Nov 11th 2011 21:45 GMT
Euro-sceptics we call them. And as such, Euro era's end would somehow be an ideological success.
Sailesh Akkaraju Nov 11th 2011 20:47 GMT
If communism was the grand social experiment which failed in the last century, Euro is the grand economic experiment which collapsed in this one, albeit lot more quickly.I am not sure how it can possibly playout where Greece and then Italy stay in the Euro and the Eurozone. There is going to be a run on their financial system, which is certainly going to have a cascading effect for the European economy in particular and global economy as a whole.
Fred 1961 Nov 11th 2011 20:44 GMT
Break up of the Euro sounds like a Euro skeptic fantasy!
milonguero139 Nov 11th 2011 20:29 GMT
Gentlemen at the TE: just another article rooting for the breakup of the Euro. Relax, it won't happen. As I said before, Europe will muddle through... Dollarisation? That's a good one... Depositors ..."to move savings ... or Britain? Another good one... Dream on!
silencedogoodreturns Nov 11th 2011 19:32 GMT
The Economist lamenting the potential downfall of the euro. How the Economist has changed over the years!
The end of the euro is a question of when, not if. Handwringing is no way to prepare for it.
Dunadan Nov 11th 2011 19:15 GMT
The ECB needs to take into account that it is the Central Bank of a Union of 17 countries, and not only of Germany (and perhaps France). True, profligate countries need to restructure their economies, spend less, control their finances and increase their productivity. But the decisions that the ECB needs to make must be based on the needs of the Union as a whole. If that means setting the inflation target to a higher rate, so be it. If that means letting the euro fall slightly relative to the dollar so be it. The US has had no problem at all allowing the dollar to depreciate, and in fact it has helped its economy; but there is some sort of pride in Europe's politicians' minds in having an "overvalued" currency relative to the dollar. Getting back to my original point, the ECB needs to take into account the needs of the 331 million people and the 17 local (state) economies as a whole, and not only the needs of Germany and France and the whims of their leaders. Are all countries in this project together or are they not?
As a side note, I have always been surprised that a country that accounts for such a small amount of the EZ's GDP (Greece) can cause such havoc. If Arkansas defaults will the "dollar zone" collapse? Nonsense! Then why are the ECB, the EU leaders not taking the right decisions instead of letting the market dictate the future of the euro?
sherryblack in reply to Dunadan Nov 11th 2011 21:11 GMT
"If Arkansas defaults will the "dollar zone" collapse? Nonsense! "
If Bavaria defaults, will the euro collapse? Nope that is because it is not a country but part of a country called Germany.
Just like Arkansas is not a country but part of a country called USA . I know the EU elites love to compare American provinces (called states in American English) to countries in the eurozone. It is an absurd comparison, comparing apples to oranges. I hope the European public doesn't blindly parrot this nonsense by making absurd comparisons between provinces and countries.
Dunadan in reply to sherryblack Nov 14th 2011 16:39 GMT
The fact that the EU is not a country does not invalidate the comparison; the sovereignty -or lack thereof- of states that constitute a Union does not undermine the fact that they share a common currency and that there is a central bank that should act independently of the whims of politicians be it regional or federal. That's what makes the comparison "apples to apples". An interesting article on the History of the US as a monetary union published by the US National Bureau of Economics showed that for 150 years regions suffered financial shocks until the US adopted institutional changes such as the adoption of interregional fiscal transfers and bank deposit insurance.
The EU is slowly, and painfully learning this, but the doom-like scenario presented by the media, hinting of the beginnings of a third-world war are clearly unwarranted.
filosoph Nov 11th 2011 19:03 GMT
Would a catastrophic natural event after the break up in the break away countries help their economies? How about heavy foreign investment after the break up?
vmeldrew Nov 11th 2011 18:58 GMT
Who is actually selling Italian and Greek bonds and driving up rates? As we are finding out with the third quarter results from French and other European banks it is they! Now largely over this selling appears to be abating. With a different political leadership in both these countries there is now a growing hope that their profligate spending and lax tax collections combined with big privatisation programmes will over time alter their economic outlook. At the same time the recent turbulence may just push European politicians in a number of countries to liberalise their own economies and encourage growth - and tell the Autocrats in Brussels that their diktats on employment law and restrictions are no longer acceptable. Spanish unemployment, particularly amongst the young, is a disgrace. This is a time for courage and not lemming like panic into breaking up a monetary union that over time can reap immense benefits to the European and world economy.
mmcken5 Nov 11th 2011 18:52 GMT
There is no way that breaking up the Euro Zone will be easy. It will cause a huge mess for not only the Euro Zone, but for the world. This economic transition will put strain on any economy that comes in contact with the Euro. In essence, that is every economy. For the sake of economies across the world, hopefully the future of the Euro doesn't take on an abrupt change.
Conservative Brazilian Nov 11th 2011 18:32 GMT
The only advantage of breaking up the euro would be to allow the devaluation of the sovereign debt of one country and the disadvantagens are too many. In this case, I think that it is time for the banks to accept a discount in Italy's debt sufficient to make it intertemporally solvable. Than the European Central Bank would take care of the damage in the european banks financing their solvency. Is that so difficult?
Conservative Brazilian Nov 11th 2011 18:27 GMT
The only advantage of breaking euro would be to allow the devaluation of the debt and the disadvantagens are too many. In this case, I think that it is time form the banks to accept a discount in Italy's debt sufficient to make it intertemporally solvable. Than the European Central Bank would take of the damage in the banks financing their solvency. Is that so difficult?
XESJYEgdod Nov 11th 2011 18:23 GMT
I am quite sure that having seen who is taking over the running of Greece ( a former European Central Banker ) and now potentially a former European Commissioner taking over in Italy ( both unelected: welcome to democracy European style ) there will be no exits from the Euro-zone.
SplitMerge Nov 11th 2011 18:19 GMT
As much as a nightmare departure may sound, the alternative is a slow train wreck with the same outcome. Europe is in denial - until the countries come under a single central government (like China and the US), they are like a ship with 10 captains. Here is an alternative: create two currencies.. the "PIIG Euro" and "Euro" with backing from ECB for a few years to prevent a run on the currency. The PIIGEuro will be significantly lower in value to reflect reality -- maybe 50%.
dustin92 Nov 11th 2011 18:14 GMT
I am in shock more than anything after reading this article. If the country does switch to US dollars, I think it would be great to have more on one system rather than a bunch of different ones. The banks they are currently with are going to suffer in a big way so it either way staying they are going to bankrupt in my opinion until they do something with both Italy and Greece.
justanonymous Nov 11th 2011 18:08 GMT
Texas - it's not strictly like that. There are other factors.
During a currency devaluation the thing you don't want to have is money. So investors are not penalized per say, it's only people who have physical money in a particular legal tender who are penalized.
I no longer accept money for haircuts because I don't know how much it'll be worth at the end of the day, but I'll cut your hair for two live chickens :-)
Texan Constitutionalist in reply to justanonymous Nov 11th 2011 18:17 GMT
In a trade environment that suggests a barter system. When in any recent history has a developed nation utilized that? Thus we are switching from one rigid currency to another. The government can default on the debt and not pay it. But this eliminates the ability to devalue the currency to pay the bill. Switching to a rapidly devalued currency DOES punish investors - there always has to be a loser. Can you deny someone must lose value for a indebted nation to pay the debts without raising revenue? Essential I see that as the argument against austerity. Instead of pay the bill just devalue the money supply I pay you with so now that debt isn't worth what it was yesterday. You give me a loaf of bread and tomorrow I give you crumbs in repayment. And tomorrow I trust that debtor 0. No faith in a currency would destroy the entire monetary system - because it's not In God We Trust but rather In Government We Trust. As far as a barter system goes ... good luck with the welfare system.
Hannap11 Nov 11th 2011 18:06 GMT
It's about time the euro goes down, after all of these past years of dominating world currency, I think that if Italy and other countries return to their own currencies, the world will be on a much more level playing field. There's no way that Italy can possibly save their own asses at the moment, and if the EU doesn't help them, its inevitable that they are going to default. New unions or joint nations can decide to create a new organization like the euro, but the EU was looked upon as an example for other countries because it was so powerful and dominating, and now look where its at? I'm not sure how many more countries around the world will want to actually form something like the EU, because when events like this happen, when one country goes down, all the rest of them go down with them.
justanonymous Nov 11th 2011 18:00 GMT
ENRON comes to mind. While Enron Directors and HR were telling their employees to buy ENRON stock, the Directors themselves were dumping their shares en masse.
Could this be going on with the Euro already?
If I were a Greek citizen, I would've already moved my money to Germany or elsewhere and if I were an intelligent Italian citizen, I'd be doing the same -- before the chaos. Switzerland is convenient also.
It makes sense for the rich and powerful who are in the know to hold back the tidal wave for just long while they move their money to safer positions. And, don't tell me they won't do that -- history proves that they have in the past and they will in the future.
At what point does lying to masses become criminal? Oh, it's never illegal to lie to the masses.
Hold on to your briefcase full of money folks and make sure it's of the correct nationality ;-)
Robin Rekoob Nov 11th 2011 17:59 GMT
Medicine is horrible and it makes you better! Europe, take the medicine and get well soon!
lev. d. Nov 12th 2011 0:54 GMT
You're all mad. YOU'RE PAPER MONEY IS BASED ON NOTHING!!!
jackvandijk Nov 11th 2011 23:07 GMT
let's do it, it will be a rough ride, but fun
Shaheen42 Nov 11th 2011 21:34 GMT
I would have prefered to change the closing lines of this brief,"It's all a frightening prospect. But that doesn't mean it won't happen" as ,"It doesn't mean it can't happen" How could you or that matter anybody else can ber that certain to say," It won't happen" ? If E.U can rescue Greece, why can't it save Itlay whose collapse can usher a bigger storm for E.U, threatening its very exitence?
hY7hBj2RY8 in reply to Shaheen42 Nov 11th 2011 21:45 GMT
Euro-sceptics we call them. And as such, Euro era's end would somehow be an ideological success.
Sailesh Akkaraju Nov 11th 2011 20:47 GMT
If communism was the grand social experiment which failed in the last century, Euro is the grand economic experiment which collapsed in this one, albeit lot more quickly.I am not sure how it can possibly playout where Greece and then Italy stay in the Euro and the Eurozone. There is going to be a run on their financial system, which is certainly going to have a cascading effect for the European economy in particular and global economy as a whole.
Fred 1961 Nov 11th 2011 20:44 GMT
Break up of the Euro sounds like a Euro skeptic fantasy!
milonguero139 Nov 11th 2011 20:29 GMT
Gentlemen at the TE: just another article rooting for the breakup of the Euro. Relax, it won't happen. As I said before, Europe will muddle through... Dollarisation? That's a good one... Depositors ..."to move savings ... or Britain? Another good one... Dream on!
silencedogoodreturns Nov 11th 2011 19:32 GMT
The Economist lamenting the potential downfall of the euro. How the Economist has changed over the years!
The end of the euro is a question of when, not if. Handwringing is no way to prepare for it.
Dunadan Nov 11th 2011 19:15 GMT
The ECB needs to take into account that it is the Central Bank of a Union of 17 countries, and not only of Germany (and perhaps France). True, profligate countries need to restructure their economies, spend less, control their finances and increase their productivity. But the decisions that the ECB needs to make must be based on the needs of the Union as a whole. If that means setting the inflation target to a higher rate, so be it. If that means letting the euro fall slightly relative to the dollar so be it. The US has had no problem at all allowing the dollar to depreciate, and in fact it has helped its economy; but there is some sort of pride in Europe's politicians' minds in having an "overvalued" currency relative to the dollar. Getting back to my original point, the ECB needs to take into account the needs of the 331 million people and the 17 local (state) economies as a whole, and not only the needs of Germany and France and the whims of their leaders. Are all countries in this project together or are they not?
As a side note, I have always been surprised that a country that accounts for such a small amount of the EZ's GDP (Greece) can cause such havoc. If Arkansas defaults will the "dollar zone" collapse? Nonsense! Then why are the ECB, the EU leaders not taking the right decisions instead of letting the market dictate the future of the euro?
sherryblack in reply to Dunadan Nov 11th 2011 21:11 GMT
"If Arkansas defaults will the "dollar zone" collapse? Nonsense! "
If Bavaria defaults, will the euro collapse? Nope that is because it is not a country but part of a country called Germany.
Just like Arkansas is not a country but part of a country called USA . I know the EU elites love to compare American provinces (called states in American English) to countries in the eurozone. It is an absurd comparison, comparing apples to oranges. I hope the European public doesn't blindly parrot this nonsense by making absurd comparisons between provinces and countries.
Dunadan in reply to sherryblack Nov 14th 2011 16:39 GMT
The fact that the EU is not a country does not invalidate the comparison; the sovereignty -or lack thereof- of states that constitute a Union does not undermine the fact that they share a common currency and that there is a central bank that should act independently of the whims of politicians be it regional or federal. That's what makes the comparison "apples to apples". An interesting article on the History of the US as a monetary union published by the US National Bureau of Economics showed that for 150 years regions suffered financial shocks until the US adopted institutional changes such as the adoption of interregional fiscal transfers and bank deposit insurance.
The EU is slowly, and painfully learning this, but the doom-like scenario presented by the media, hinting of the beginnings of a third-world war are clearly unwarranted.
filosoph Nov 11th 2011 19:03 GMT
Would a catastrophic natural event after the break up in the break away countries help their economies? How about heavy foreign investment after the break up?
vmeldrew Nov 11th 2011 18:58 GMT
Who is actually selling Italian and Greek bonds and driving up rates? As we are finding out with the third quarter results from French and other European banks it is they! Now largely over this selling appears to be abating. With a different political leadership in both these countries there is now a growing hope that their profligate spending and lax tax collections combined with big privatisation programmes will over time alter their economic outlook. At the same time the recent turbulence may just push European politicians in a number of countries to liberalise their own economies and encourage growth - and tell the Autocrats in Brussels that their diktats on employment law and restrictions are no longer acceptable. Spanish unemployment, particularly amongst the young, is a disgrace. This is a time for courage and not lemming like panic into breaking up a monetary union that over time can reap immense benefit
s to the European and world economy.
mmcken5 Nov 11th 2011 18:52 GMT
There is no way that breaking up the Euro Zone will be easy. It will cause a huge mess for not only the Euro Zone, but for the world. This economic transition will put strain on any economy that comes in contact with the Euro. In essence, that is every economy. For the sake of economies across the world, hopefully the future of the Euro doesn't take on an abrupt change.
Conservative Brazilian Nov 11th 2011 18:32 GMT
The only advantage of breaking up the euro would be to allow the devaluation of the sovereign debt of one country and the disadvantagens are too many. In this case, I think that it is time for the banks to accept a discount in Italy's debt sufficient to make it intertemporally solvable. Than the European Central Bank would take care of the damage in the european banks financing their solvency. Is that so difficult?
Conservative Brazilian Nov 11th 2011 18:27 GMT
The only advantage of breaking euro would be to allow the devaluation of the debt and the disadvantagens are too many. In this case, I think that it is time form the banks to accept a discount in Italy's debt sufficient to make it intertemporally solvable. Than the European Central Bank would take of the damage in the banks financing their solvency. Is that so difficult?
XESJYEgdod Nov 11th 2011 18:23 GMT
I am quite sure that having seen who is taking over the running of Greece ( a former European Central Banker ) and now potentially a former European Commissioner taking over in Italy ( both unelected: welcome to democracy European style ) there will be no exits from the Euro-zone.
SplitMerge Nov 11th 2011 18:19 GMT
As much as a nightmare departure may sound, the alternative is a slow train wreck with the same outcome. Europe is in denial - until the countries come under a single central government (like China and the US), they are like a ship with 10 captains. Here is an alternative: create two currencies.. the "PIIG Euro" and "Euro" with backing from ECB for a few years to prevent a run on the currency. The PIIGEuro will be significantly lower in value to reflect reality -- maybe 50%.
dustin92 Nov 11th 2011 18:14 GMT
I am in shock more than anything after reading this article. If the country does switch to US dollars, I think it would be great to have more on one system rather than a bunch of different ones. The banks they are currently with are going to suffer in a big way so it either way staying they are going to bankrupt in my opinion until they do something with both Italy and Greece.
justanonymous Nov 11th 2011 18:08 GMT
Texas - it's not strictly like that. There are other factors.
During a currency devaluation the thing you don't want to have is money. So investors are not penalized per say, it's only people who have physical money in a particular legal tender who are penalized.
I no longer accept money for haircuts because I don't know how much it'll be worth at the end of the day, but I'll cut your hair for two live chickens :-)
Texan Constitutionalist in reply to justanonymous Nov 11th 2011 18:17 GMT
In a trade environment that suggests a barter system. When in any recent history has a developed nation utilized that? Thus we are switching from one rigid currency to another. The government can default on the debt and not pay it. But this eliminates the ability to devalue the currency to pay the bill. Switching to a rapidly devalued currency DOES punish investors - there always has to be a loser. Can you deny someone must lose value for a indebted nation to pay the debts without raising revenue? Essential I see that as the argument against austerity. Instead of pay the bill just devalue the money supply I pay you with so now that debt isn't worth what it was yesterday. You give me a loaf of bread and tomorrow I give you crumbs in repayment. And tomorrow I trust that debtor 0. No faith in a currency would destroy the entire monetary system - because it's not In God We Trust but rather In Government We Trust. As far as a barter system goes ... good luck with the welfare system.
Hannap11 Nov 11th 2011 18:06 GMT
It's about time the euro goes down, after all of these past years of dominating world currency, I think that if Italy and other countries return to their own currencies, the world will be on a much more level playing field. There's no way that Italy can possibly save their own asses at the moment, and if the EU doesn't help them, its inevitable that they are going to default. New unions or joint nations can decide to create a new organization like the euro, but the EU was looked upon as an example for other countries because it was so powerful and dominating, and now look where its at? I'm not sure how many more countries around the world will want to actually form something like the EU, because when events like this happen, when one country goes down, all the rest of them go down with them.
justanonymous Nov 11th 2011 18:00 GMT
ENRON comes to mind. While Enron Directors and HR were telling their employees to buy ENRON stock, the Directors themselves were dumping their shares en masse.
Could this be going on with the Euro already?
If I were a Greek citizen, I would've already moved my money to Germany or elsewhere and if I were an intelligent Italian citizen, I'd be doing the same -- before the chaos. Switzerland is convenient also.
It makes sense for the rich and powerful who are in the know to hold back the tidal wave for just long while they move their money to safer positions. And, don't tell me they won't do that -- history proves that they have in the past and they will in the future.
At what point does lying to masses become criminal? Oh, it's never illegal to lie to the masses.
Hold on to your briefcase full of money folks and make sure it's of the correct nationality ;-)
Robin Rekoob Nov 11th 2011 17:59 GMT
Medicine is horrible and it makes you better! Europe, take the medicine and get well soon!