Been wondering the last few days what would happen if Greece did bail out of the Euro? I mean surely they just can't walk away can they after having been loaned all those billions of euro's..........can they? If they just defaulted on it all and went back to their native currency and basically said "sod ya" to the rest of Europe are there plans in place for recouping the money given to them? Obviously Greece should never have been allowed in in the first place as they cooked their books (obviously checked very closely by the central banks or who ever is responsible!) so much, Their work force is inherently lazy and the vast majority of the public avoid paying tax. Just my opinion obviously.
Basically many western banks and governments will get hurt, the Greeks will find themselves living in abject poverty as the new Drachma falls through the floor, depending on how far it falls and how bad the poverty gets the country could become a great value tourist destination again and eventually they might have half a chance of dragging themselves out the mess, but it's a hell of a gamble. In the meantime the markets will panic that other Eurozone countries might desire an exit, that panic will cause what they fear and the entire European banking system will go down the toilet and probably a good chance that it will drag the American banks and a lot of others with it. The new recession will make the old one look like a quiet stroll on a Sunday afternoon, peoples pension savings will simply evaporate as the banks that are obliged to invest pension monies in government linked securities discover that they ain't ever getting those securities repaid. The unemployed will discover they are really unemployed for the first time since the 1920's, like these governments simply won't have any cash to pay them. Civil unrest will follow. Countries like the UK that have their own currency may see hyperinflation as an alternative to simple default but eventually the effect is the same, you make the debt go away by paying for it in worthless currency. Possibility of a war or two, likely pretty high, at the end of it all the west and developed world will be a lot poorer than it is right now compared to what is currently the less developed world and this is perhaps an ironic twist in that one could ask if we were ever really justifiably as rich compared to third world countries as we have managed to engineer over the last 50-60 years. The possibility of peak world oil production having already been reached just adds to the whole sorry mess, we might never dig ourselves out of this one. Just my opinion and obviously somewhat speculative but I've always had a tendency to think the worst so that when it does not happen, it's a pleasant surprise, here's hoping, at least I was wrong about World War Three in the 1980's , have a nice evening everyone
will we get more pesos for the pound and dollar or less if greece leaves ? and what about interest rates ?
Someone is a happy chappy!! So basically what your saying is that if the greeks naff off out of it, we'll basically never see the money again. Other countries may follow suit and try to chance it on their own with a currency that would be heavily devalued against the euro, and would therefore take an age to pay back. It seems to me that it would be a wise to remain in the euro zone for them then as they would continue to recieve the monetry support from the euro community and try to pull themselves out of this mess. They would also have a better chance of paying back the cash owed with a bit more stability in their economy. I hope your wrong about the other stuff though. Come to something if the likes of the philippines over takes the EU countries in GDP, living standards etc.
The euro problems have not made a lot of difference to the exchange rate recently, mostly the pound is triangulated to peso via the dollar, when the dollar sinks relative to the pound we get a short boost to our peso purchasing power but the small euro movements ahve not made a lot of difference recently. However if the euro really starts to go down the toilet the short term effect on the pound will be that inward capital flows (as funds flee euro investments) will cause it to strengthen against both the euro and the dollar which will hurt our economy but will help us folk who have to buy peso, however this will be short lasting, eventually there will be strong downward pressures on the pound as exports falter and as the impact of the euro disaster starts to increase UK unemployment and close UK businesses, this will seriously hurt tax receipts in the UK and affect our ability to service our own debts then the markets will probably turn on us as well. I could be wrong though
No they revalue the debt but this time in new drachma, then they devalue the hell out of the drachma, that way the debt goes away quickly, they also suffer like hell as well though, as they will be to poor to import anything from anyone, things would not be nice for the Greeks in the interim. The best they can hope for is to devalue but in a controlled way to make inward investment attractive and to improve their tourism industry and so on, which gets them inward capital flows of harder foreign currency but really the party is over for Greece, things are going to be pretty terrible there for a long time whatever route they take. Staying in the euro they will never clear this debt, it's just not physically possible, so they will require their lenders to take more haircuts whatever happens, it's just a matter of how they go about making that happen. I seriously think that this will happen one day but not necessarily by things getting much better over there, more by things getting MUCH worse over here. I am a natural pessimist though
Thats what I meant to be honest. Philippines is doing well on the coat tails of the other far east countries. I wonder if all of this will have a domino affect out there?
Europe free of trade borders and passport less travel was, and still is a great idea. The Euro project was ill-conceived and as it has been admitted by the Germans a couple of weeks ago, flawed from the start. Something was bound to give way sooner or later, and obviously the countries with a laxier attitude to work and taxation would suffer first. Leaving theEuro and returning to the old currency won't help in the short term, but at least it would let single countries get free of the shackles and start again, wary of german pink flying pigs.............
Well back in the 70's I studied Physics and Astronomy in Scotland, that's why I really liked that song Stu posted, edit: sorry I meant that Rob posted, Nuclear physics was a particular interest. But I eventually ended up in Software, I'm a software engineer, ran my own software business for 13 years then screwed it all up about 3 years ago for various reasons when the crash arrived. I had an interest in finance over the years as I had to manage my own accounts and also wrote a lot of systems for large companies that had to manage a lot of money, so I got to pick up a good bit about it as time went by. Plus in general I don't ever intend to stop learning as I get older, as soon as you stop learning that's when you really start to get old.
Not exactly........... But you have to admit that they have been running the show for years, wether in the open or in the background....
I owe you 10 pounds, I convert it to 20 groat as Scotland goes independent, I then devalue my currency by printing lots of groat, so I pay you back with these printed groat but I only pay you 20 of them not the 40 groat that it would be worth today. In the meantime because I printed so much more currency my population is demanding 100% per annum pay increases, yes I get hyperinflation but my debt goes away. Britain has already done this by Quantitative Easing (QE), this is the main reason that we now only get 67 peso to the pound, we made pounds worth less in real terms and any debt we were due to pay back in pounds is correspondingly reduced because the debt is denominated in pounds. For example suppose we owed the Philippines one million pounds in 2005 then that would have been worth 100 million peso at the time, now in 2012 we would still pay them back in pounds (with a little interest) but it would only be worth 67 million peso to the Philippine government. This is the conundrum because we have not yet seen the full inflationary effect at home of the Bank of England's QE programme. edit: see this link for some more info regards the typical denomination of sovereign debt http://en.wikipedia.org/wiki/Government_debt
The flaw was and is the same flaw that caused the UK to be ejected from the European Exchange Rate Mechanism in September 1992 http://en.wikipedia.org/wiki/Black_Wednesday
