Will the Eurozone Collapse?
- Thread starter Mark1031
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Diverse in Unity
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Sound about right as to the size of the mess it would cause.
Verbose
Deity
This seems to be the actual report:
http://www.scribd.com/doc/64020390/xrm45126
Punchline: The Euro should not exist (in its current format).
The real danger he seems to be driving at is the political risks of the Euro collapsing: Demise of democracy and/or civil war in hard-hit nations. And peripheral countries in trouble (read Greece I suppose) might suffer an immediate down-shift to the tune of 50% if GDP in the report's estimate.
UBS´s credibility...I know its low but I couldnt resist 
Other economists say that it will help, maybe its time for experiment
Other economists say that it will help, maybe its time for experiment
innonimatu
the resident Cassandra
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The only thing european politicians can agree on is postponing the inevitable, so I interpret this latest resignation as an indication that yet another fund (perhaps the "eurobonds" idea) is being set up for feeding the bankers. A few more months...
As for the costs of default, I live on one of those countries and I do not hesitate to call bullcrap (edit: damn censorship on this forum!) on that "study". Banks are commissioning propaganda saying that default is going to be terrible? What a surprise! They are the ones with the most to lose! My country defaulted what, 8 times in 800 years? We're still around. We'll still be around after USB goes bankrupt and forgotten.
GDP will become smaller, certainly - because all the debt dealing which artificially inflated it will end. It might even come to again reflect the actual state of an economy! The collapse of finance will cause a temporary disorganization of economic activity until a new stable banking system is in place? Again, sure. A few months. But real assets won't be exceptionally destroyed. Factories won't sink into the earth, land won't be washed out to sea in some cataclysmic event. Only financial assets (and make-believe ones at that) will vanish. That means changes in power relations, but the world never stops just because a currency changes, or a powerful class gets kicked out of power and replaced. We're not even talking civil war here, we're talking something like a real change of government - for a change!
The funny thing is: the euro could have been saved, if debt had been defaulted on immediately when the crisis became obvious (2008). But the bankers would have none of that: it would cause some to go bankrupt, and devalue the euro which would negate the big advantage which the banks have been seeking in the euro from the start: leverage to expand outside the EU. International finance is still very much a dollar market, and devaluation of the euro would have starved them of funds to expand.
Instead, they'll now get the death of the euro and of the even more insolvent banks. Not "death of the banks", but bankruptcy and nationalization and thus (hopefully) an end to the little empires of the "financier-class" which manages them (for a couple of generations or so).
By the way, if someone wants to check a serious short study about the possible management of an exit from the euro, here is one worth reading (for those of you who know understand french), concerning France.
As for the costs of default, I live on one of those countries and I do not hesitate to call bullcrap (edit: damn censorship on this forum!) on that "study". Banks are commissioning propaganda saying that default is going to be terrible? What a surprise! They are the ones with the most to lose! My country defaulted what, 8 times in 800 years? We're still around. We'll still be around after USB goes bankrupt and forgotten.
GDP will become smaller, certainly - because all the debt dealing which artificially inflated it will end. It might even come to again reflect the actual state of an economy! The collapse of finance will cause a temporary disorganization of economic activity until a new stable banking system is in place? Again, sure. A few months. But real assets won't be exceptionally destroyed. Factories won't sink into the earth, land won't be washed out to sea in some cataclysmic event. Only financial assets (and make-believe ones at that) will vanish. That means changes in power relations, but the world never stops just because a currency changes, or a powerful class gets kicked out of power and replaced. We're not even talking civil war here, we're talking something like a real change of government - for a change!
The funny thing is: the euro could have been saved, if debt had been defaulted on immediately when the crisis became obvious (2008). But the bankers would have none of that: it would cause some to go bankrupt, and devalue the euro which would negate the big advantage which the banks have been seeking in the euro from the start: leverage to expand outside the EU. International finance is still very much a dollar market, and devaluation of the euro would have starved them of funds to expand.
Instead, they'll now get the death of the euro and of the even more insolvent banks. Not "death of the banks", but bankruptcy and nationalization and thus (hopefully) an end to the little empires of the "financier-class" which manages them (for a couple of generations or so).
By the way, if someone wants to check a serious short study about the possible management of an exit from the euro, here is one worth reading (for those of you who know understand french), concerning France.
