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Old 06-15-2012, 07:21 PM
 
Location: Los Angeles area
14,017 posts, read 18,909,580 times
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The thread title was not a rhetorical question because I do not know the answer. I am hoping some knowledgeable poster will answer, or will perhaps provide a link. I am not interested in purely personal theories or ideological rants. I am very curious what, and how severe, the consequences will be for Greece itself, for the rest of the Eurozone, and whether there would probably be spill-over effects for the United States.
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Old 06-15-2012, 07:32 PM
 
8,265 posts, read 11,216,864 times
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I'm certainly not the knowledgeable poster on the subject but I did see this:

https://personal.vanguard.com/us/ins...reece-05302012
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Old 06-15-2012, 07:42 PM
 
Location: Sierra Vista, AZ
16,546 posts, read 22,023,896 times
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If Greece converts to the Drachma they will survive, the sun will rise in the morning. Iceland has been bankrupt for years, it provides uniiversal health care, old age pensions, and a better education system than ours. Argentina has been bankrupt for decades. As for me it will have no effect, none of my pensions are based in the banks that caused this calamiity just like they caused ours
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Old 06-15-2012, 07:53 PM
 
Location: Los Angeles area
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Excellent link, Slackjaw. Thank you very much. If I were a Greek citizen, I would be extremely worried right now. Ah, how our mistakes so often come back to haunt us; one of the experts in the interview stated that it was a mistake to admit Greece to the Eurozone in the first place, which I've read before in various places.
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Old 06-15-2012, 08:00 PM
 
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Absolutely no one knows, but I always hear that the problem is not Greece leaving as they are only 2% of the euro zone GDP. The problem would be if the other PIIGS followed suit. As far as affecting the USA, all I know is that our banks have $4 trillion dollars invested in the euro zone, so it would definitely not be good for us.
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Old 06-15-2012, 08:57 PM
 
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Ok, this is from someone knowledgeable. He directly addresses the Greece situation.

David Stockman on the Key to Avoiding Another Meltdown
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Old 06-16-2012, 03:23 AM
 
5,609 posts, read 9,898,683 times
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The problem with all the analysis is its going 3 steps ahead and not really thinking about what each step is. First of all, no one is respecting the fact that there isn't a politician in Greece who says lets get out of the Euro. This vote and probably all votes will never be a do you want to be in the Euro vote. Greece and the smaller, less well off economies which have helped make the EU so large get way too much aid and benefit from the ability to use a worldwide convertible currency with clout to ever freely leave the Euro.

Further put yourself in the shoes of a Greek politician. If you ever suggested the way out was to just drop the Euro, think about what you would be subjecting yourself to. People who have saved money, bought houses, developed businesses and everything else that goes into an economy would suddenly see those things they value go down lets say 50-60% in a matter of hours or days. Its incomprehensible to think a politician would want his legacy to be the guy who made millions of Greeks lose half their wealth.

Greece will never leave the Euro on its own, nor will any other economy. They will fight to get the best deal possible and they will in some ways dare the EU to kick them out, but ultimately there are no real mechanisms to kick a country out. There is no solid history for Germany or France to say follow our rules or else because they have at times flaunted the budgetary rules or the economic free trade rules which they are trying to tell Greece to follow now. About the only way you could logistically get Greece out would be to cut off all aid forcing them into hard defaults. It could come to that one day, but that day is a long way off into the future. It can only come after countries have ring-fenced their banks from the fallout and after they found no other way to get concessions for aid packages.
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Old 06-16-2012, 05:43 AM
 
Location: western East Roman Empire
8,067 posts, read 11,858,044 times
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Quote:
Originally Posted by Escort Rider View Post
The thread title was not a rhetorical question because I do not know the answer. I am hoping some knowledgeable poster will answer, or will perhaps provide a link. I am not interested in purely personal theories or ideological rants. I am very curious what, and how severe, the consequences will be for Greece itself, for the rest of the Eurozone, and whether there would probably be spill-over effects for the United States.
Actually this topic has been beaten to death, even on this forum, especially in the investment sub-forum, check out some threads there, especially Greek Mess, and you already have some outside links.

The latest news came at mid-week this past week from a G-20 meeting: basically the major central banks are on stand-by to flood the financial markets with liquidity, regardless of the outcome of the Greece election, sort of a global instant QE. As a result, both the stock markets and the EUR/USD recovered already on Thursday and Friday some of their losses over the past month or so. In short, the ringfence around exposed banks is already being built.

There is also a series of high level meetings scheduled over the days and weeks after this Sunday's results, both internationally and intra-European, including a European Council meeting set for 28-29 June, I believe. The European Council is basically the heads of government and finance ministers, the most powerful EU institution, but not a sovereign power in itself.

To be sure, the election is not officially a referendum on the euro, nonetheless most market participants view it that way, identifying a pro bail-out coalition led by Nea Demokratia, and an anti bail-out coalition led by Syriza.

It is too difficult to predict the step-by-step sequence of events, but basically average workers in the countries of early industrialization are experiencing an at least relative decline in the standard of living, and Greece is one of the weakest links in the chain in a region where there is no clear sovereign and lender of last resort, that's why in Europe they call it the sovereign debt crisis.

Who in the eurozone is sovereign? Not the European Council, not the European Commission, not the European Parliament, but also not the individual countries who do not issue their own currencies. And who is the lender of last resort? A role that the ECB cannot fully take on by statute and that it is not willing to take on politically, at least not yet.

The Germans are not willing to use money illusion to alleviate the problem, they want implementation of visible and painful internal devaluations and real economy restructuring in the weaker countries where politicians are relatively more corrupt and the bulk of the populations is not used to pursuing competitiveness.

In my view, the economic policy problem - but also a social, cultural and even a geostrategic problem (eastern Europe and the Mediterranean) - is how to allow the individual eurozone countries, especially the Mediterranean eurozone countries, to put their competitive advantages to best use while at the same time continue to enjoy the advantages of a single currency. There is simply no easy solution to that problem, and it has been a problem in the Mediterranean for the last 1,400 years or so.

One thing is sure, the longer no progress is made towards a solution, the faster and deeper will be the decline in the standard of living for average workers, especially in the most vulnerable countries such as Greece. Again, the various general scenarios have been beaten to death, though no-one knows the step-by-step details, not even the policymakers.

The US is exposed through trade and investment linkages, the financial system, and sentiment. In the short run, the outcome of the Greece election and the question of whether Greece remains in the eurozone will affect market direction but especially volatility. It is also affecting short-term growth trends - the eurozone is already at basically zero growth, the southern European countries in recession, some deep recession - and possibly the presidential elections in November in the US where employment and overall economic growth has stalled.

In the long run, however, the US economy could probably absorb the impact of further decline in the weaker eurozone countries, whether they stay in the eurozone or not, and adjust accordingly.

Last edited by bale002; 06-16-2012 at 06:11 AM..
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Old 06-16-2012, 08:07 AM
 
5,410 posts, read 10,350,796 times
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Quote:
Originally Posted by Boompa View Post
If Greece converts to the Drachma they will survive, the sun will rise in the morning. Iceland has been bankrupt for years, it provides uniiversal health care, old age pensions, and a better education system than ours. Argentina has been bankrupt for decades. As for me it will have no effect, none of my pensions are based in the banks that caused this calamiity just like they caused ours
A+

Maybe they will pay Germany back in Sea Shells.
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Old 06-16-2012, 08:33 AM
 
Location: Sierra Vista, AZ
16,546 posts, read 22,023,896 times
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Quote:
Originally Posted by Philip T View Post
A+

Maybe they will pay Germany back in Sea Shells.
Or they won't pay them at all, CitiBaank lost billions on Argentina in the 1970s and hasn't gotten a penny. Sadaam owed billions to Russia and France which they never got. This is nothing new
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