5 Comments
  1. Anonymous says

    You are right. I cannot see how they can stay in. Re-capitalisation of the state owned banks will harm the sovereign credit rating, that is already clear. It will be the CDS rates on bank debt which will be the trigger. As to when they do anything will depend on what politicians do elsewhere. Greece will be first to exit, then things might get quiet for six months to see the outcome for Greece. If Greece starts to look better then it could be a stampede for the exit. The issue will be who intervenes and how seriously? If the ECB start buying the sovereign debt directly then it might end the crisis but will that step be taken? 

    1. Edward Harrison says

      David, note that I am just running through scenarios. I don’t have an opinion yet about France, probably because I still think Armegeddon can be avoided. You know me (always hoping for some upside)!!

      These guys I quote here were very logical in picking up the French problem – and that goes to the whole heart of the Euro, the Franco-German duo.

      1. Anonymous says

        The path that France is on now is for exit. That could be a long way out, maybe three or more years. The crisis has been running for three years already and things could change with a brave decision from one of the top two politicians that saves the day. If France exits then the euro will have been a massive failure. That will mean that Germany cannot carry on alone. They might simply backstop France, Italy and Spain and end the crisis. There are a number of scenarios that could happen. If they refuse to backstop the banks and allow them to crash wiping out much of the debt across Europe it could become very manageable and the euro will be safe for now. So yes looking at various scenarios is good but some are less practical than others, also never underestimate a politician wanting to look good at the end of this stopping them from making a decision. 

  2. Anonymous says

    You are right. I cannot see how they can stay in. Re-capitalisation of the state owned banks will harm the sovereign credit rating, that is already clear. It will be the CDS rates on bank debt which will be the trigger. As to when they do anything will depend on what politicians do elsewhere. Greece will be first to exit, then things might get quiet for six months to see the outcome for Greece. If Greece starts to look better then it could be a stampede for the exit. The issue will be who intervenes and how seriously? If the ECB start buying the sovereign debt directly then it might end the crisis but will that step be taken? 

    1. Edward Harrison says

      David, note that I am just running through scenarios. I don’t have an opinion yet about France, probably because I still think Armegeddon can be avoided. You know me (always hoping for some upside)!!

      These guys I quote here were very logical in picking up the French problem – and that goes to the whole heart of the Euro, the Franco-German duo.

      1. Anonymous says

        The path that France is on now is for exit. That could be a long way out, maybe three or more years. The crisis has been running for three years already and things could change with a brave decision from one of the top two politicians that saves the day. If France exits then the euro will have been a massive failure. That will mean that Germany cannot carry on alone. They might simply backstop France, Italy and Spain and end the crisis. There are a number of scenarios that could happen. If they refuse to backstop the banks and allow them to crash wiping out much of the debt across Europe it could become very manageable and the euro will be safe for now. So yes looking at various scenarios is good but some are less practical than others, also never underestimate a politician wanting to look good at the end of this stopping them from making a decision. 

  3. Charlie says

    Though:

    “Over the past 10 years, Greece has consistently spent less, as a share of GDP, than the European Union as a whole. During the last economic cycle, from 2001 to 2007, Greek government expenditures totaled an annual average of 44.6 percent of GDP. Over the same period, the European Union as a whole spent an annual average of 46.6 percent of GDP. Germany, for example, spent an average of 46.7 percent of GDP over this period. Indeed, from 2001 to 2007, Greek average annual spending ranked precisely in the center of all EU countries, with 13 countries spending more, and 13 countries spending less. Fundamentally, the argument that the Greeks spent lavishly and licentiously ignores the simple fact that Greek spending is and has been boringly average for EU countries.”http://www.americanprogress.org/issues/2010/05/greek_myth_profligacy.html

    Greece’s real problem was taxation. 

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