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By Breaker (Wed May 16, 2012 at 09:26:55 AM EST) (all tags)

On the Grexit.

Some outcomes -

There is an "interim" government formed between now and the 2nd election which promises to meet all the ECB spending cuts. Which will invalidate whatever the next government got elected on. Don't know if there is a "this parliament may not bind its' successor" clause in Greek constitution though that might come into play.
Greek collapse as some superbond or other fails to roll as the Greeks cannot refinance at anything like affordable. I think bond yields are >20% right now.
Massive EU "education" campaign to get the Greeks to vote the "right" way.
The Greeks do not vote the "right" way and some backroom fudge is concocted in secret to deliver cuts but make it appear they haven't. Contra to the UKian government's untruths.
Second election elects anti-austerity government, EU puts the smackdown on Greece just to encourager les autres and cuts them off dead. Mass civil unrest, EU sends in their shiny new pan European police force "to restore order" and installs a technocratic, tame government. Didn't the EU pass some act or other a few years back giving this group the right to use lethal force on EU citizens?

Your turn...

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Open thread | 19 comments (19 topical, 0 hidden) | Trackback

I can't eat baklava because it has walnuts. by ammoniacal (2.00 / 0) #1 Wed May 16, 2012 at 10:04:00 AM EST

You can't handle my complete attention.

: only when made by non-greek infidels by sasquatchan (2.00 / 0) #3 Wed May 16, 2012 at 10:54:42 AM EST

it should be pistachios.

[ Parent ]

My opinion on the Grexit by Driusan (2.00 / 0) #2 Wed May 16, 2012 at 10:25:28 AM EST

I think it's a stupid "word."

--
Vive le Montréal libre.

Grex... by ana

(2.00 / 0) #4 Wed May 16, 2012 at 11:31:03 AM EST

is a Latin word for a flock, herd, or mob. So I wonder if there's a corresponding verb like gregere meaning to gather, or, nowadays, to flashmob. In any case, it'd be gregit most likely, for 3rd person singular present tense.

I now know what the noise that is usually spelled "lolwhut" sounds like. --Kellnerin
[ Parent ]

Cassell didn't have it by lm (2.00 / 0) #6 Wed May 16, 2012 at 11:48:18 AM EST

But Lewis and Short to the rescue.

grĕgo , āvi, ātum, 1, v. a. id.
to collect into a flock or herd, to gather into a host, to collect, assemble

There is no more degenerate kind of state than that in which the richest are supposed to be the best.
Cicero, The Republic
[ Parent ]

So... by ana

(2.00 / 0) #7 Wed May 16, 2012 at 11:49:57 AM EST

it'd be gregat for the case I cited above.

And the grand tradition of verbing nouns goes way back to the roots of our little Indo-European language instincts.

I now know what the noise that is usually spelled "lolwhut" sounds like. --Kellnerin
[ Parent ]

: And this is why by Breaker (4.00 / 1) #18 Thu May 17, 2012 at 05:46:29 AM EST

I love reading HuSi. Completely tangetial conversation, yet interesting and informative!

[ Parent ]

Stupid as you think it is by lm (2.00 / 0) #5 Wed May 16, 2012 at 11:33:58 AM EST

Grexit has decent reviews.

I myself don't have any need of such a service but I can see how it might be useful to some.

There is no more degenerate kind of state than that in which the richest are supposed to be the best.
Cicero, The Republic
[ Parent ]

Hard to say what will happen by TheophileEscargot (2.00 / 0) #8 Wed May 16, 2012 at 01:49:06 PM EST

I still think sticking to the EU plan is probably about the best compromise for Greece. But the voters may not see it that way. Or even if it is, they may not be able to form a government coalition capable of seeing it through.

Since most Greek voters still favour being in the Euro, I wouldn't overlook the possibility of them totally defaulting on their debt, but staying in the Euro. There's not really a mechanism I'm aware of to actually force them out if they don't want to go, or force them to pay their debts if they don't want to and are willing to forgo conditional EU bailout cash.

I think journalists like the idea that there will be some kind of sharp resolution. But without an effective government (of the kind that First Past the Post can deliver) or any real means for the rest of Europe to enforce things on the Greeks, things can keep staggering along chaotically for a long time. E.g. miss a debt repayment, massive market turbulence, failure to pay state pensions or wages, another mini European bailout to keep them from starving, stagger along a bit, miss another repayment... repeat the process, getting a little worse each time.
--
It is unlikely that the good of a snail should reside in its shell: so is it likely that the good of a man should?

That is a reasoned scenario by Breaker (2.00 / 0) #9 Wed May 16, 2012 at 04:03:24 PM EST

What'll happen to the EZ though, if it's part defaulted?

That'll be some damned interesting horse trading with the ratings agencies and Fixed Income houses IMHO.

Maybe it'll be brought back to the banks by MartiniPhilosopher (2.00 / 0) #10 Wed May 16, 2012 at 04:44:08 PM EST

The interesting part of all of this, to my mind, has been the fact that most of the crisis was manufactured by the people running the banks. It could be Greece defaulting which finally brings the problems back to their feet and we could be seeing one or two of the TBTF ones actually going under.

Whenever I hear one of those aforementioned douche bags pontificate about how dangerous [...] videogames are I get a little stabby. --Wil Wheaton.
[ Parent ]

: Manufactured crisis you say? by dmg (2.00 / 0) #12 Wed May 16, 2012 at 05:17:51 PM EST

Say it ain't so.
Order out of chaos is the default M.O. of politicians the world over.
--
dmg - HuSi's most dimwitted overprivileged user.
[ Parent ]
: Huh? by Breaker (2.00 / 0) #17 Thu May 17, 2012 at 05:45:33 AM EST

I am not excusing the banks, but the national goverments have a pretty fair claim to a good proportion of the mess was caused by borrowing more than they should. The banks know they can tap the ECB / EU government so carried on lending. Where was the EU saying to overborrowed nation states - hey no more? Where was the ECB (and national regulators) saying to the banks - are you sure this is a good loan?
Now, the banks have made it worse with the CDS/CDO shenanigans killing their reserves and needing government bailouts to lance that particular boil, but I'm not going to point the finger soleley at them. The banks got greedy, the governments got greedy and the people got greedy.

[ Parent ]

Sticking to the EU plan is not good... by dmg (4.00 / 1) #11 Wed May 16, 2012 at 04:55:26 PM EST

For any country. Read up on 'natural currency areas'. Without a fiscal transfer mechanism I.e. permanent structural funding for the poor/profligate member states, we will simply lurch from one 'crisis' to another. That's before you get into the democratic deficiet that EU membership inevitably brings to the table.

So the choice as a member state is to be either in he position of bankrolling other states spending or being a welfare recipient. Hardly a recipie for cohesion or community.

Of course Greek voters favour euro membership, it is a free lunch for them, up to this point, they have had artificial interest rates subsidised in effect by Germany.

The real mistake politicians have made is to assume that nationalism can be papered over. It cannot. You can ignore it for a while but it will inevitably boil over. Tribalism trumps political allegiances. See Yugoslavia for a recent example. Or Rwanda.

You only have to look at the average British person's attitude to the Germans and French. Or for that matter of the Scots toward the English to see how deep this 'irrational' even 'racist' tribalism runs. When painted in terms of hardworking Germans subsidising lazy Greeks, EU membership is a sure fire vote loser.

The problem the EU has with democracy in its member states is much the same problem e USA has allowing democracy in the Muslim world. It's only ok if democracy produces the "right" answer.

Much as I really really want the whole nightmare EU project to fail, I fear it will run and run and run. My prediction is France and Germany will continue to bail out he Greeks whatever the cost, and regardless of what their voters want.
--
dmg - HuSi's most dimwitted overprivileged user.
[ Parent ]

You seem to have changed your mind suddenly by TheophileEscargot (2.00 / 0) #13 Wed May 16, 2012 at 05:52:25 PM EST

Not long ago you were all about the gold standard: i.e. a single currency of gold for all nations that adopt it.

Single currencies, like the Euro or the gold standard have advantages and disadvantages. Advantage: easier and freer trade as nobody has to worry about exchange rates. Disadvantage: national governments can no longer tailor the exchange rate to the needs of their nation.

The concept of an "optimum currency area" is a reasonable one. But it has an underlying assumption: that nations can promote efficiency by tailoring the money supply to the nation's needs. From your other comments, I get the impression that you don't accept that assumption.

Are single currencies good or bad?
--
It is unlikely that the good of a snail should reside in its shell: so is it likely that the good of a man should?
[ Parent ]

They are good by dmg (2.00 / 0) #14 Wed May 16, 2012 at 06:58:42 PM EST

In a natural currency area, and bad otherwise (unless the area can agree upon acceptable levels of subsidy to the structurally weak areas). The key word being 'agree'. By which i mean the majority of Germans should want and vote for those permanent subsidies to Greece on the basis that they are convinced it is in their national interest, rather than have the subsidies imposed on them.

My objections to the EU are mostly about it's democratic illegitimacy rather than the the specific technical manifestations of it. Most Europeans in the bill paying states are against EU membership, shouldn't their voices be heard?
--
dmg - HuSi's most dimwitted overprivileged user.
[ Parent ]

But how can you believe by TheophileEscargot (2.00 / 0) #16 Thu May 17, 2012 at 02:47:47 AM EST

In a natural currency area? According to you, the money supply should be determined by how much of a yellow metal is dug out of the ground. You don't believe in the mainstream economics that supports the concept of a natural currency area.

If there is a such a thing as a natural currency area, then the gold standard can only be appropriate for certain nations, depending on the status of their neighbouring nations. The price of gold, determined as it is by mining technology and commercial demand, is not going to be optimal for a currency, except by coincidence.

Also, what is an "artificial interest rate" as in "artificial interest rates subsidised in effect by Germany"? Suppose Greece had adopted the gold standard instead of the Euro. This would have had a similar effect on the base rates of the Greek currency: lower inflation expectations would have allowed lower interest rates. Would this have been "artificial" or "natural", and how do we tell the difference?

Further suppose that Germany had also adopted the gold standard, and just as now, German banks owned Greek bonds which may become worthless if Greece goes back to a fiat Drachma. Just as now, Germany would have an incentive to subsidize Greece to avoid German bank collapses. It's the same situation, so why is it OK if the common currency happens to be gold rather than Euros?
--
It is unlikely that the good of a snail should reside in its shell: so is it likely that the good of a man should?
[ Parent ]

: You are misunderstanding me. by dmg (2.00 / 0) #19 Wed Jul 04, 2012 at 07:58:14 PM EST

A natural currency area is one in which the population agree with the fiscal policies of the government that rules them. An un-natural currency area is one where the interest-rate requirements of the regions which make up the area is not uniform.
It is possible to have a weak natural currency area e.g. southern Europe, or a strong natural currency area e.g. northern Europe. It wouldn't make much sense for southern Europe to go onto a gold standard, but it might make sense for northern Europe.
Indeed, the Swiss franc was tied to gold until very recently, and there are political rumblings from that country calling for a return of the gold link.
If the common currency were gold-backed, it would be harder to 'print our way out of trouble' by increasing the money supply, but admittedly it would be at the expense of the southern European countries. If I were 'good European' I would find this abhorrent, however I don't give a fuck about the EU, and don't see why profligate corrupt southern European countries should be permanently subsidised by the north, hence I think the gold-backed Euro is a good idea. YMMV.
--
dmg - HuSi's most dimwitted overprivileged user.
[ Parent ]

Negotiated Exit by jimgon (2.00 / 0) #15 Wed May 16, 2012 at 07:59:39 PM EST

It's possible that France will convince Germany that the austerity plan won't work. The recent regional election in Germany seems to indicate that the German people may be shifting, but I won't claim to know anything about internal German politics. My best guess right now is a negotiated exit for Greece. It won't be a situation of close the banks today and re-open tomorrow issuing drachmas. There needs to be a lot of negotiation and planning there. I think it's in the best interest of Germany and Greece to walk away from the currency union. Reissuance of the drachma with an immediate devaluation is probably the best. They do have exports which would then be in demand under the lower prices. An example being olive oil which now competes against Spanish olive oil. At the same time the increase in cost of imports will cause them to pretty much stop importing and buy locally. It'll be tough for a while, but given that they are in a depression they're in a tough situation now. So from a long term perspective leaving the EZ is probably the best alternative for them.

Some people think that this will put Spain and Italy on notice, but the thing is that the Spanish and Italian (and Irish for that matter) deficits were caused by a housing bust and not though wild spending. Though Italy was a bit loose there, but not the same situation as Greece. They might use this as the path out of the Euro. Not sure. But once one country leaves the path is open to others. And like Germany, I have no familiarity with their internal politics. I'm just speculating.

---------------
Technician - "We can't even get decent physical health care. Mental health is like witchcraft here."

Open thread | 19 comments (19 topical, 0 hidden) | Trackback