“A Greek exit does not mean the end of the euro, as some claim,” he said. “
I doubt Greece will voluntarily exit ... they will be pushed out.
“A Greek exit does not mean the end of the euro, as some claim,” he said. “
Wrong. When the first domino falls, the rest will surely fall!
This will cost Merkel the election in Germany.
If the EU is the “United States of Europe” and they can kick out members, can we (the USA) kick out our lib states?
60/40 odds that the Greeks wake up on Morning with any remaining deposits denominated in neo-Drachmas where their Euros used to be...and bondholders take an epic haircut.
How soon people forget.
Weimar Germany was an economic basket case with hyperinflation of its fiat (backed by nothing) currency, so a plan was devised to move them to a new, backed by gold currency.
To insulate the new currency, an intermediate currency, also backed by gold and some other commodities, was created. It was not a “common currency”, but just for use by the banks and nations that were Germany’s creditors.
It worked marvelously. The intermediate currency was tightly controlled, so had zero inflation, and it could absorb the hyperinflated currency at a reasoned exchange rate, perhaps a billion to one.
Then once the intermediate currency was stabilized, the new common currency was introduced. Thus Germany went from hyperinflation to no inflation.
Unfortunately, the economic recovery happened just before the Nazis took power. Yet even Hitler did not fiddle with the new currency, and it lasted through WWII, being replaced 1 for 1 by the Deutschmark at the end of the war.
Which lasted until the Euro was introduced.
So what needs to happen to Greece, using this model?
First, an intermediate currency, called, for example, the “Greco”, would be created and controlled by the European Central Bank. It would be backed by both European and Greek commodities, and would only be for use by the banks and the European nations.
It would be tightly controlled by the ECB, which could then sell Greece European market surpluses at a discount, and buy Greek products to sell at a “preferred mark up”. This would do much to balance Greece’s balance sheet.
While this is happening, Greece would print its own, old currency, the Drachma, again. But it would not be exchangeable outside of Greece. So its value would be in keeping local markets and local governments functioning.
And as a “real” currency, Greece could only print as many Drachmas as they could back with taxes. A forced balanced budget. At the same times, Euros in Greece would be worthless. Banks nor major merchants could legally accept them.
Eventually, the Greek economy would find its own balance, while its debts were being reduced. There would no longer be any government largess, only charity.
“...the country’s exit would cost European taxpayers at least €225bn (£180bn).”
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OK, I know the world is upside down, we after all, have an America-hating RaceMarxist as Commander in Chief, but someone please tell me that someone, somewhere is totally pissed off by this.
Not a peep of protest when the Kenyan stuck it to all those GM debtholders.
Maybe I just need to wake up from a bad dream.......
Correct me if I’m wrong, but couldn’t Greece hold a flea market sale to sell off its seaports, parks, airports, state-owned telecomm companies, art galleries and museums?
That’s gotta be worth a few hundred billion.
I don’t want to see Greece go under; I like baklava and gyros.
“A Greek exit does not mean the end of the euro, as some claim,” he said. “
There is no more money to recapitalize anyone. Period.
5.56mm