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Old 02-19-2012, 06:22 AM
 
Location: Maryland
18,630 posts, read 19,379,893 times
Reputation: 6462

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Quote:
Originally Posted by LauraC View Post
"Plans for Greece to default, potentially leaving the euro, have been drafted in Germany as the European Union begins to face up to the fact that Greek debt is spiralling out of control - with or without a second bailout...It found that even if Greece implemented all the austerity measures expected of it, and if it achieves highly optimistic economic growth targets, it will still fall short of what is needed, with debt likely to total 129 per cent of GDP in 2020. But the European Central Bank and the Eucopean Commission are, for now, lining up with Mrs Merkel to push for the rescue attempt to continue, fearful that the financial tsunami that would be unleashed if it failed would swamp the eurozone."

Germany drawing up plans for Greece to leave the euro - Telegraph


The article goes on to say that the German finance minister thinks that the severe austerity measures being demanded have caused such fury in Greece, and the cuts required are so deep, that no government would be able to implement them. They are asking Greece to reduce the minimum wage, cut mass redundancies in the public sector, and slash both the health and defence budgets.

March 20 is the drop dead date when Greece has to come up with €14.5 billion before the EU-IMF will give them any money. They expect banks, insurance companies and funds (?) to give up 70 percent of their claims and that Wall Street is rumored to be preparing for a default.

There is talk that China will fund more EU debt and less US debt.

Greece Crisis Impacting Europe and the U.S. - ETF Guide


What do you think? Will they default? Will they be kicked out of the EU? And what is the implication for the US? Could this possibly impact the November elections here?
Implications for the US minimal. Greece is a small economy and the EU has spent the last two years building up a firewall around Greece.

Impact on November elections minimal. I think spiraling gas prices will have more of an impact.

I think they will default for the reasons Mr Schäuble highlighted. It's simply too tough for an elected government to implement such draconian cuts. Best have the markets due via currency devaluations.

Kicked out of the euro yes, EU it depends. If the social upheavals lead to some sort of military junta it is quite possible.
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Old 02-19-2012, 06:25 AM
 
Location: Chicago
38,707 posts, read 102,951,116 times
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Quote:
Originally Posted by chielgirl View Post
The EU is EUROPE, not the US.
The US needs to mind its own business and stay out of the rest of the world.

Holy moley, some people will make anything into a stupid US political issue.
Sheesh.
Hear that "whooooosh!" sound sailing over your head?

That's the bigger picture. At least try to glance at it as it sails by.
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Old 02-19-2012, 06:26 AM
 
Location: Maryland
18,630 posts, read 19,379,893 times
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Quote:
Originally Posted by LauraC View Post
What kind of shape was Greece in when they let them join the EU? Anyone know? I'm trying to figure out if they could have seen this coming back then.
Greece was more or less a slightly above a third world country before the EU. It had a long history of emigration and its living standards were quite low. The euro allowed them to borrow cheaply to fund a generous welfare state that gave the Greeks the veneer that they were living a first world lifestyle.
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Old 02-19-2012, 06:26 AM
 
Location: Tennessee
37,769 posts, read 40,902,683 times
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Quote:
Originally Posted by EdwardA View Post
Implications for the US minimal. Greece is a small economy and the EU has spent the last two years building up a firewall around Greece.

Impact on November elections minimal. I think spiraling gas prices will have more of an impact.

I think they will default for the reasons Mr Schäuble highlighted. It's simply too tough for an elected government to implement such draconian cuts. Best have the markets due via currency devaluations.

Kicked out of the euro yes, EU it depends. If the social upheavals lead to some sort of military junta it is quite possible.
How about if China funds more European and less US debt? I totally agree on the gas especially, if the GOP makes the connection for people to rising food prices not just gas at the pumps.
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Old 02-19-2012, 06:28 AM
 
Location: Maryland
18,630 posts, read 19,379,893 times
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Quote:
Originally Posted by LauraC View Post
How about if China funds more European and less US debt?
US debt is still considerably safer than the Euro debt. Obviously if the market for American debt becomes more difficult, borrowing costs would rise and funding our deficits would become more difficult.

Still I wouldn't see a Greek style situation since our economy is large and dominant.

Also China has problems of their own with rising labor costs and inflation.
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Old 02-19-2012, 06:44 AM
 
Location: Great State of Texas
86,052 posts, read 84,321,515 times
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Countries cannot be kicked out of the EU. A country has to leave the EU.
That's clearly spelled out in their treaty.
The most Germany can do, along with the rest of the EU, is to suspend Greece.

But Greece cannot be kicked out. Greece would have to leave the EU on it's own doing.

Member state of the European Union - Wikipedia, the free encyclopedia
However the treaties do not provide any mechanism to expel a member state outright.
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Old 02-19-2012, 06:52 AM
 
Location: Fredericktown,Ohio
7,168 posts, read 5,355,764 times
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Quote:
EdwardA;23047942 US debt is still considerably safer than the Euro debt. Obviously if the market for American debt becomes more difficult, borrowing costs would rise and funding our deficits would become more difficult.
I do not think Barnanke will let the cost of borrowing to rise instead he will start QE3 and buy up the debt.

Quote:
Still I wouldn't see a Greek style situation since our economy is large and dominant.
Our economy is being propped up with spending {1.3 trillion deficit} take away some of the props with budget cuts and we would see the economy drop. Or the other road is keep spending,propping, and printing and watch USD drop in value causing more inflation.



Quote:
Also China has problems of their own with rising labor costs and inflation
They are still in the drivers seat with money to burn and at least their wages are rising where ours are declining.
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Old 02-19-2012, 06:55 AM
 
4,699 posts, read 4,057,907 times
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Quote:
Originally Posted by HappyTexan View Post
Countries cannot be kicked out of the EU. A country has to leave the EU.
That's clearly spelled out in their treaty.
The most Germany can do, along with the rest of the EU, is to suspend Greece.

But Greece cannot be kicked out. Greece would have to leave the EU on it's own doing.

Member state of the European Union - Wikipedia, the free encyclopedia
However the treaties do not provide any mechanism to expel a member state outright.
Without bailouts, it will be forced to leave.

However, I can't imagine that will happen, but I do expect a Greece default and further bailouts. In a couple of years we will probably see a modest recovery and the EU will declare success.

I don't believe there will be a revolution in Greece. The people are not organized enough, and are not against the bailout. They just want the bailout without the austerity.
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Old 02-19-2012, 07:01 AM
 
Location: Tennessee
37,769 posts, read 40,902,683 times
Reputation: 62076
Quote:
Originally Posted by chielgirl View Post

You were involved in some threads where this was discussed.
Yup but I just checked. I didn't say anything profound then, either, about Greece and the EU as it relates to us in the US which is probably why I didn't remember. In one, I asked a question about what percent of a country's debt do you have to hold before you own them? In another, I made a crack about us being Greece in the fetal stage but that was a food stamp post in a US economy thread. One was about the Happiest Liberal Countries and I made another crack "They're happy until the money runs out, then they're Greece." In one post the topic was about The United States of greece but my post had to do with Democrat handouts and voters, nothing to do with Greece. Another had to do with politicians tweaking Social Security with one eye on Greece but I didn't say anything specific about Greece. The only other time I mentioned Greece in the Politics forum was in regard to a plane crash. I also made a wisecrack about China and Greece in the Business form but again, said nothing profound. I don't recall posting anything about China diversifying by putting more money into Europe and less into the US and how that could impact us. I think, at the time I asked a question about what percent of a country's debt do you have to hold before you own them, I was concerned about US debt and at what point China would own us.
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Old 02-19-2012, 07:06 AM
 
Location: Sierra Vista, AZ
17,531 posts, read 24,648,910 times
Reputation: 9980
Just as with Iceland, the sun will still rise over Greece in the morning and the grass will still grow. Tourists will arrive and spend Drachmas instead of euros. The rich parasites who wasted Greece's wealth gambling on currency exchanges will pay the price for gambling on other peoples money
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