What will happen to Greece?

Drifterwood

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I used to be a big fan of the EU/USA. No more. I see it is flawed, failing, corrupt, anti-democratic, and in the operation of the CAP/Power evil. I think we are now seeing the start of the failure of the Euro/USA. This will cause lots of misery - it is not something to be pleased about. But it has the potential to be cathartic.

I remember being told to learn from my mistakes. I didn't like the idea of the consequences, so I studied history to learn from other people's.

Ah, let a hundred flowers blossom.
Extraordinary.
Can you enlarge on this, Jason?

You are a very naughty boy, Rubi.

Take a quiet look at the world. How does it work? I am lucky, I think, to be involved in International Commerce in my own small way. I meet successful and intelligent people from all over the world. I also see first hand a lot of the fall out of not being a "player".

If you wish to effect change, you need to be a player. That means to me, the UK in Europe and Europe in the world. I don't mind free market economics, they act like an accelerated form of evolution. Yes, the fittest, or strongest survive. They are the nemesis of the weak and they seek them out and constantly test. Nature shows many survival strategies. If you have a think about it, you need to find your own, as an individual, community, nation, group, empire etc etc
 

Jason

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Ah, let a hundred flowers blossom.
Extraordinary.
Can you enlarge on this, Jason?

Indeed I can.

The reference is C-274/99 - it is a legal case started 1999 though the decision was actually 2000. UK national Bernard Connolly wrote a book "The Rotten Heart of Europe" (1995) in which he argued that the single currency project would lead to an impetus for political union and that this policy was being persued by stealth. His employer the European Commission sacked him specifically because of his book, and he took them to court to get his job back. There was no question of any breach of contract by him or use of classified information, merely that the Commission did not find the views acceptable. The European Court of Justice found against him arguing: "criticism of the EU, its institutions or its leading figures is akin to blasphemy." Because blasphemy laws already exist in the UK and elsewhere this is seen as not restricting freedom of speech. Rather the blasphemy laws have been extended to apply to criticism of the EU, its institutions or its leading figures.

This ruling remains on the books and is therefore part of EU law applicable in all EU states. The EU has not brought other cases under it, presumably fearing a popular backlash. Right now if I want to criticise UK prime minister Gordon Brown I can do so without breaking the law. But if I want to criticise Baroness Ashton I have breached the law as it stands. I can say Gordon is gormless but I can't say Ashton is not up to the job. :eek:

There was also a case where European Commission's Chief Accountant Marta Andreasen was sacked (2002) for trying to take the Commission to the European Court of Justice for financial irregularities - basically she said it was open to fraud and doing nothing to prevent fraud. The reason for her sacking was: "violating Articles 12 and 21 of staff regulations, failure to show sufficient loyalty and respect". The fact that the auditors have failed to sign off the European Commissions budget since 1993 because of endemic fraud was not seen as supporting her view. The EU requires an almost Stalinist level of loyalty and respect from its senior staff. :eek:
 
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Jason

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If you wish to effect change, you need to be a player. That means to me, the UK in Europe and Europe in the world.

I used to agree that the UK should be a fully committed player within the EU, and that being a player was the way to bring about change.

But in the EU we are faced with something sinister. By a process of incremental changes it has reduced democracy to the sham of a de facto single party - the Grand Coalition - while referenda are held as often as needed until the required result is achieved. The European Commission is subject to massive fraud. The legal system is not independent of the politicians. The policies implemented include policies which are utterly beyond defense - the CAP which has the direct effect of causing famine in Africa, so that the jobs of European farmers are bought at the price of African lives. We are creating a monster, a Eurocracy which is terrifying in the powers it is taking to itself without anything resembling adequate checks. And the hubris of the whole is that Europe can defy the markets and make the single currency work simply because failure of the Euro is unthinkable.

I want the UK out of this monster. I want as many European nations as possible to leave. The way in which the UK can most effectively be a player is to lead the rebellion - and there are lots of rebels out there. That is the new show in town.
 

D_Gunther Snotpole

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Well, Jason, these are cases of employees being sacked for offering detriment to the interests of their employer.
This is less worrisome than it first sounded.

I am assuming you are not an EU employee.
Making that assumption, I ask: Do you seriously suggest you could be liable if you criticized Baronness Ashton?
If you are serious and can make a case ... then the situation is a scandal.
But are you, and can you?
 
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But in the EU we are faced with something sinister. By a process of incremental changes it has reduced democracy to the sham of a de facto single party - the Grand Coalition - while referenda are held as often as needed until the required result is achieved. The European Commission is subject to massive fraud. The legal system is not independent of the politicians. The policies implemented include policies which are utterly beyond defense - the CAP which has the direct effect of causing famine in Africa, so that the jobs of European farmers are bought at the price of African lives. We are creating a monster, a Eurocracy which is terrifying in the powers it is taking to itself without anything resembling adequate checks.

Plus, being in for the past 30-odd years hasn't been an unqualified success. We joined partly to try and influence things from the inside - which hasn't succeeded in changing the direction of the EU, just in slowing it down a bit.

It is 'safer' on the surface to stick with the status quo - but that ends up with Britain having no sovereignty left (as has been witnessed so far), and the UK being taken much further along a road we don't want to go down.
 
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D_Gunther Snotpole

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You are a very naughty boy, Rubi.

Thank you, Drifter.
Like a good Navi, you see me.:cool:

Take a quiet look at the world. How does it work? I am lucky, I think, to be involved in International Commerce in my own small way. I meet successful and intelligent people from all over the world. I also see first hand a lot of the fall out of not being a "player".

If you wish to effect change, you need to be a player. That means to me, the UK in Europe and Europe in the world. I don't mind free market economics, they act like an accelerated form of evolution. Yes, the fittest, or strongest survive. They are the nemesis of the weak and they seek them out and constantly test. Nature shows many survival strategies. If you have a think about it, you need to find your own, as an individual, community, nation, group, empire etc etc

This is a summary of the topside view of any European nation becoming deeply embedded in the EU.
And it makes wonderful sense to me.
But there is a downside, and a highly valid one.
By temperament, you
[yes, yoooou] are a citizen of the world.
The EU project is not destructive to any value to which you cling with any fervour.
But I can imagine many Englishmen who want no dilution of their vision of England, and many Frenchmen who can brook no thinning of the glories of La France profonde and so on down the line.

It's the wish to have hands on the levers versus the wish to preserve identity.

There's no real adjudication between these two ... only the vagaries of individual makeup and personal choice.

I would probably stand, less resolutely, with you. But I understand those across the hall and, in principle, a quarter or a third of my heart might choose with them.
 

Jason

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Well, Jason, these are cases of employees being sacked for offering detriment to the interests of their employer.
This is less worrisome than it first sounded.

I am assuming you are not an EU employee.
Making that assumption, I ask: Do you seriously suggest you could be liable if you criticized Baronness Ashton?
If you are serious and can make a case ... then the situation is a scandal.
But are you, and can you?

The decision of a court creates a precedent, ie it creates a law. This decision is not subject to a qualification that it only applies to employees of the EU, but is phrased in such a way that it applies to all people who live within the EU. In theory there is nothing to stop anyone at all who criticises Baroness Ashton from being prosecuted under blasphemy laws. It is possible to imagine at some future time a senior EU figure who has been made a laughing stock of by a journalist prosecuting the journalist under this law, and it is hard to see how a court could do other than apply the law as it stands. I suppose the decision could then be challenged.

The concern is that this law is on the books. The idea of "it's there, but we will never use it" isn't terribly reassuring. The history books are full of examples of politicians who latch onto some obscure law to persecute anyone who stands against them. For example as the law stands it would seem to make all supporters of the political party UKIP subject to prosecution. Is it beyond imagining that at some time the EU would not decide to prosecute this blasphemy, say by arresting and trying all UKIP politicians?
 

D_Gunther Snotpole

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Well, this article from The Telegraph (March 7, 2001) partially agrees with you:
The ruling stated that the commission could restrict dissent in order to "protect the rights of others" and punish individuals who "damaged the institution's image and reputation". The case has wider implications for free speech that could extend to EU citizens who do not work for the Brussels bureaucracy.

Where it doesn't quite agree with you is here:
The court ... dropped an argument put forward three months ago by the advocate-general, Damaso Ruiz-Jarabo Colomer, which implied that Mr Connolly's criticism of the EU was akin to extreme blasphemy, and therefore not protected speech.

But even with the latter qualification, the situation seems extraordinary.
A good reason why someone who grew up under English common law might not step willingly into the EU's open arms.

I can't believe that the law would be used against someone who didn't work for the EU, but stranger things have happened.
 

Jason

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I can't believe that the law would be used against someone who didn't work for the EU, but stranger things have happened.

Well I don't lie awake worrying about it.

Right now I think it is all close to irrelevant. Events/markets are deciding the fate of the EU. If Greece leaves the Euro - which is still the most likely outcome - it is an enormous blow to the EU project and would completely change the background music. Ditto if the IMF bails out Greece. And it is not so much different if Germany and others bail out Greece - it is still an enormous admission of a financial failure within the EU and within the Eurozone. And then there's the rest of Club Med.
 

B_nyvin

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Not sure why you would say that.
But in any case, Nyvin's statement was about currency unions ... as in, to take the immediate case, the Eurozone.
Is it working?
Very many people would say No.

Countries are still striving to join, world reserve currency status still going up each year...better outlook overall then the dollar still

Just because a financial crisis happens and a few nations are having trouble means it's not working? The PIIGS weren't even the worst hit, countries like Latvia, Iceland, and even the UK have bigger problems (except compared to Greece) Greece has it's own unique problems which are being dealt with (frankly i don't think Greece ever should've been allowed to join the Euro) Being APART from the EU would've just meant Greece problems would've been bigger, not better off.

I would still say after all this that the USA has more to worry about then the EU, the EU is just being highlighted because it's "New" and thus unproven to be reliable. No one KNOWS if it will work or not.
 

Drifterwood

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There's no real adjudication between these two ... only the vagaries of individual makeup and personal choice.

The Free Market Darwinians do not want an unsinkable Euro. Who will they play their profitable games with? The US does not want a currency, whose supemacy over the $ will cause them hardship. But then look at China. Can you fuck with their currency? There has been quite a step down quietly by the US.

Economic warfare is very real.

Part of the strategy is the hearts and minds of those whom you are actually damaging - the "patriots", who cling to the soundbites about their sovereignty and national identity. Strange bedfellows indeed.

The current state of the PIGS, gives Northern Europe the chance to address many of the probems that Jason rightly observes. I am not talking about taking away their way of life, I am talking about a realignment in terms of mentality to government. If the UK dives in wholeheartedly, the balance of power will shift. La Belle France will be one of three and their rantings against Anglo Saxonism will fade. I don't have a problem with countries leaving if they don't like the concept of living within reality.
 

dandelion

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Yes Greece wants to be a modern European Democracy - but it also wants to be Greece, which means tolerating the Greek way of doing things and not being run by the ECB.
which is just another way of saying they are not willing to take advice from anyone whatever sort of financial system they are using. A drachma mess would just be a worse mess.

There are about two dozen currency unions which have failed since the 2WW.
Interesting. Which of them were similar to the euro and why did they fail?

I do not think there is a single example of a significant, non-colonial currency union which has endured for more than a decade or two without a political union.
What do you mean by non-colonial? Most of europe was a colony at one time or another. All of it has recently been under US hegemony.

There are overwhelming economic reasons why such a currency union without political union cannot work.
Then name them so we can be overwhelmed.

The Euro project only ever made sense within the context of full political integration as one nation state.
Tell me a similar project without such integration which failed, and why?

Austerity in Germany post 1WW was a contributor to the great depression and a major cause of the rise of the Nazis and the 2WW - I think this is an example of why such an austerity programme should not be contemplated. Austerity in the nations of Europe following the 2WW was dire, but still not as dire as what is being asked of Greece.
So austerity proposed for Greece is worse than 10 years of food rationing in Britain following WWII? I think my point was that the floating German currency failed to save Germany from recession and failed to stop the subsequent rise of the Nazi party. The nazi party itself was only a symptom of gereral hatred for everyone who had inflicted the economic collapse on Germany.


All these nations had currencies which could devalue. Much of the media and the political chatter seems to be that an austerity project is right for Greece, but I think this is dangerous thinking. A country can only take so much austerity.
I don't understand why you think devaluing your currency is not an austerity program? It makes goods more expensive and erodes the value of your savings. Boosts inflation and so encourages wage demands. It sucks cash out of the private economy and places it in government hands. It is basically a massive stealth tax which is difficult to avoid, but it is still austerity. In extreme cases the currency becomes totally worthless and people start using other firm currencies (like the euro) anyway. What Greek citizen in their right mind would agree to give up savings denominated in euros for new drachmas? There would be absolutely no change to existing government debt repayable in euros which it would rapidly become impossible for the Greek government to obtain. The Greek governments own selling of drachma to buy euros to pay those debts would force its new currency to destruction. A new currency could only possibly work if the Greek government had already defaulted. And in that situation what credibility could it have?

bringing down wages and benefits rarely works anywhere and certainly isn't going to in corrupt and unionised Greece.
And inflation produced by devaluing currency isnt going to help. That's what devaluing means. It has less value.

In economic terms the solution is straightforward - bring in the IMF with appropriate loans, float a new drachma and devalue.
Yes, the solution is simple. The government has to spend less and people have to accept having less. No, persuading them to accept this, that is difficult. Really makes no difference who is calling the tune, it is agreeing to measures which counts. The IMF would never agree to lend a penny unless the Greeks massively sort out their government borrowing, which is the bit they aren't willing to do right now.
 

dandelion

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In the position we are now in - a Euro crisis without full political integration - we have powerful forces attacking this single currency.
actually, what euro crisis? There is not a euro crisis. The currency is doing quite well. There is a crisis in that the Greek government is unable to finance its budget. This is arguably a EU crisis, in that one of its members might go bankrupt, but really has little to do with the euro.

There is a moral defecit of massive proportions through the Common Agricultural Policy which causes death in Africa to featherbed European farmers.
Now isnt that just a teeny bit unfair? What about US policy of making biofuels from food which led to sudden hikes in rice prices..leading no doubt to countless unreported deaths? By which I am saying the idea that one country takes as much food as it wants from anyone else is nothing new. People are starving as we speak, and this will become steadily worse over the next few decades. The CAP generated surpluses in a few products and stops food from outside the EU being sold here. Fundamentally, how does this cause people to starve elsewhere? The only way it can possibly do this is because food is too cheap in many places for it to be economic to grow it. Yet still people cannot afford to pay this price. So how could they afford it if it was more expensive?

I used to be a big fan of the EU. No more. I see it is flawed, failing, corrupt, anti-democratic, and in the operation of the CAP evil.
That's a big word. Invading someones country is evil. Giving them free food?

But there is a downside..... I can imagine many Englishmen who want no dilution of their vision of England, and many Frenchmen who can brook no thinning of the glories of La France profonde and so on down the line.

That is quite true. However, that vision is a fantasy which has twice led europe to vast carnage and many times before that on a smaller scale only because we were far less efficient at killing each other. You want to go that way again? Jason talks about evil, but to suggest we should allow these fallacies to rise again, now that's evil.
 

Jason

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In political terms right now nothing much is actually being done. Rather we have the ostritch response - that the Euro is not is crisis and Greece has not actually asked for a bailout. No one really expects the crisis to manifest itself in terms of a plunge in the value of the Euro, so in the sense of the Euro broadly holding up I suppose it is possible to argue that there is no crisis. Rather the crisis is at the level of the fiscal policy of five member states, Club Med + Ireland, and the misery for people in these countries. These are being asked to take austerity measures which Ireland might just pull off - but which Club Med certainly won't. The crisis is both in the economic misery already present in these countries and in the future prospect of four broken economies. For example youth unemployment in all four is already sky high - we've already got a lost generation. Yet the future road map is austerity that will push unemployment still higher. Politicians urgently need to tackle these real, human problems. At the moment we seem to have an ideal of European integration put before the well being of millions of people. The EU medecine for Club Med is worse than the illness.

Devaluation (and revaluation) of freely floating currencies is the safety valve. Of course there are severe problems, but the concept offers a way forward. Greece needs an across the board reduction in wages and benefits which it just won't get by consensus. Devaluation makes this possible. Greece needs to boost exports and reduce imports, which devaluation does. Yes devaluation is inflationary and inflation is a real problem, but faced with sky high unemployment it can be a lesser problem.

The closest parallel I know to the Eurozone monetary union was the rouble union which followed the disintegration of the USSR - it is compable in terms of size and number of countries, and has both similarities and differences in the way it was administered. This currency union had a powerful factor supporting its stability in that it was in effect a post-colonial currency union, the type that do sometimes work. But it also had big problems, as does the Eurozone. The three conditions usually considered essential for a monetary union are:
1) common monetary and fiscal policy
2) a single government controlling the above
3) common legislation around banking practices/exchange rates/bond issue.
The Eurozone, like the rouble zone, lacks elements of all three. In efect (2) creates (1) and (3).

The stages in the breakup of the rouble union may indicate the process we are seeing within the Eurozone:
1) a dominant member (Russia/Germany) follows policies which help that nation but hurt weaker members (Baltic States/Club Med).
2) markets bid so as to create different prices for what is essentially the same product. In the CIS this was national banks in their international rouble trading, in the EU it is sovereign debt being sold at different prices.

A source I know for the rouble union failure is http://www.case.com.pl/upload/publikacja_plik/3460035_058e.pdf

To the fans of the Euro I say, where is your example of a currency union that has worked? If you are basing the success of the Euro on the idea that it is so big it cannot fail, remember the failure of currency of the superpower the USSR.
 

dandelion

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The EU medecine for Club Med is worse than the illness.
You are, I think, arguing that the EU does not have any formal mechanisms for wealth redistribution and thus cannot operate as a single currency area. I find this assertion very questionable, but it also seems to overlook the very real redistributive mechanism which exists in the EU. A Greek goes to Germany, gets a job and sends the money home. He is entirely entitled to do this and it is an enormously powerful mechanism. He has a legal right to go and work anywhere in the EU, and will even be paid in the right currency to carry home. Norman Tebbit's famous 'get on your bike' suggestion for the unemployed from the times of Thatcher.


Devaluation (and revaluation) of freely floating currencies is the safety valve.
Only up to a point. What would be the situation in Greece now if the drachma was in free fall, which is what would be the case. Greece would have defaulted by now. There would be no money to buy anything from abroad and economic migrants running all over europe like the desperate people they would be.


Greece needs an across the board reduction in wages and benefits which it just won't get by consensus. Devaluation makes this possible.
Again I think of the example of the UK in the 70s and 80s. Devaluation may have helped but it also pushes up inflation which can be fatal. Bad productivity in britain had to be fixed by changed practices at home. This only happened after people realised there was no choice and agreed to change. Some pain is needed to make this point.


The closest parallel I know to the Eurozone monetary union was the rouble union which followed the disintegration of the USSR - it is compable in terms of size and number of countries, and has both similarities and differences in the way it was administered.
Surely the biggest difference is that it was the last remnant of the russian empire. That is why other countries wanted nothing to do with it. The euro is a grouping of people who want to belong to it and come from very similar economic backgrounds.

The three conditions usually considered essential for a monetary union are:
1) common monetary and fiscal policy
2) a single government controlling the above
3) common legislation around banking practices/exchange rates/bond issue.
The Eurozone, like the rouble zone, lacks elements of all three. In efect (2) creates (1) and (3).
But the euro does have a single admistrative control, carefully designed to represent all its members and not give control to just one, unlike in the case of Russia.

2) markets bid so as to create different prices for what is essentially the same product. In the CIS this was national banks in their international rouble trading, in the EU it is sovereign debt being sold at different prices.
eh what? GreeK sovereign debt is not the same as German soveregn debt or anyone elses. Any market trader would laugh at a suggestion it was the same thing. A greek euro is the same as a German one, but no one would give you same price for a Greek government IOU as a Geman one.

A source I know for the rouble union failure is ? indigo 2004 - B??D 404 - strona niedost?pna
http://www.case.com.pl/upload/publikacja_plik/3460035_058e.pdf[/QUOTE
I see the report acknowledges that a major redristrubutive process which enables a monetary union to work is free movement of labour. As a pole I expect the author understands very well the principle of going abroad to make enough money to keep your country afloat.

To the fans of the Euro I say, where is your example of a currency union that has worked? If you are basing the success of the Euro on the idea that it is so big it cannot fail, remember the failure of currency of the superpower the USSR.
I dont know much about currencies, but I dont need to give an example. You are claiming they cannot work and have always failed, so it is up to you to give examples where this has happened. The report you quote says 1) the russian states hated each other so could not cooperate. 2) there was no free movement of labour. 3) Russia refused to continue subsidies to the regions which it had always paid. With the euro 1) states do cooperate. 2) free movement of labour. 3) no sudden cutting off of funds, and in fact people edging round to giving more.
 

Jason

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I dont know much about currencies, but I dont need to give an example. You are claiming they cannot work and have always failed, so it is up to you to give examples where this has happened.

Within a European Context some of the big, failed currency unions are:
1) The C19th Latin Monetary Union of France, Belgium, Switzerland, Italy, Greece, Bulgaria, maybe one or two others...
2) The C19th Scandinavian Monetary Union - Norway, Sweden, Denmark.
3) The big C20th currency union is the rouble union of the CIS.

There is one European currency union that has worked - the German Customs Union, which at one time had 39 member territories. It worked because in 1871 all were united as a single country, Germany, and because prior to 1871 Prussia pretty much ruled the roost.

Outside Europe there are easily a dozen big currency unions which have failed in the twentieth century, in Africa, South America, the Caribbean. The East African Currency Union (Kenya, Uganda, Tanganjika) is typical. Maybe another dozen smaller ones that have failed.

Leaving aside the colonial and post-colonial currency unions I do not think there is at present a single currency union more than 20 years old. They all break down. It is Economics 101 that a currency union without a political union (fiscal union, union of social policy and legislation, customs union, true freedom of movement) just won't work. I'm sure the Europhiles know this - the key driving force of the Euro was to bring about a political union as a single state. So far this hasn't happened, and with Lisbon the process has rather stalled.

Either we get a full fiscal union with the EU setting the budgets and social policies of member states or the Euro fails. And we can't get the former on the timetable the markets are now demanding. Right now we need proper political leadership - but instead we seem to be getting a sense that the EU project is the only way forward, so we are accelerated up a dead end. The disagreement between Merkel and Sarkozy plus the different demands from Club Med is just creating a sense of leaderlessness.

Right now the Titanic is holed below the waterline and will inevitably sink. But right now she still floats. Just as the captain and his team on the Titanic were told soon after the hit that the ship would inevitably sink, so Merkel, Sarkozy the ECB and all will know the Euro is going, just not quite yet. We need leadership for an orderly manning of the lifeboats. The matter affects the Eurozone, the Euro and the whole world. And we have a real leadership defecit.

It would be constructive if Greece, Portugal, perhaps others could take their future into their own hands - but it is asking a lot. It would be constructive if the UK had an economically literate PM who could give some leadership. It would help a lot if Merkel and Sarkozy could agree. Or maybe the big contribution of the first president of the EU should be to say that the present system isn't working, and start to dismantle it. Even the likes of Poland and the Czech Republic have a platform from which to express a view (we're listening Klaus!) I dont know at what stage the US will get involved - presumably at some stage.

For the Europhiles European integration is a decade behind target, and this Greek crisis was not predicted (indeed it is a bit of a bummer that Greece falsified accounts). The Europhiles anticipated much more union by now, then a crisis in say a dacade to force the tidy up of the odds and ends. It has gone wrong for them. Not it might go wrong, or there is a possibility that it may go wrong. It has already gone wrong. There is no way out of this mess which doesn't damage the Eurozone and the EU project - rather there are different degrees of damage possible. The Euro in particular is under pressure and its days are numbered.
 

Drifterwood

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To the fans of the Euro I say, where is your example of a currency union that has worked? If you are basing the success of the Euro on the idea that it is so big it cannot fail, remember the failure of currency of the superpower the USSR.

I really do think that you are wrong here Jason. The USSR currency may have in part failed becuase the whole concept failed.

You still seem to have this idea that negotiable bonds have to have any intrinsic value. They don't. They are based on confidence that they will be honoured. Whilst the confidence, and need is there, you can just keep printing promisory notes.

Let the suckers believe or fear that they have to believe. This is Greenspan economics.