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Thread: Breaking News: Greece on the verge of Euro exit

  1. #1 Breaking News: Greece on the verge of Euro exit 
    Ascended Member Ascended's Avatar
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    Markets were hit badly on the news that Greece is on the verge of a Euro exit that could be the first salvo in a broadside that could see Europe's first single currency facing a perfect storm it may well not survive.


    News Headlines

    Euro zone to prepare for Greek exit scenario: sources | Reuters

    Greece euro exit fears hit stock markets | Business | guardian.co.uk


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  3. #2  
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    I guess they ran out of other people's money.


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    Administrator KALSTER's Avatar
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    I don't understand economics. Why is it bad for everyone if the one dragging everyone down leaves?
    Disclaimer: I do not declare myself to be an expert on ANY subject. If I state something as fact that is obviously wrong, please don't hesitate to correct me. I welcome such corrections in an attempt to be as truthful and accurate as possible.

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    Quote Originally Posted by KALSTER View Post
    I don't understand economics. Why is it bad for everyone if the one dragging everyone down leaves?
    Good question. I am not an expert on this either , but I think it is showing that the whole idea of a common currency without a common government, may just be a bad idea. I never understood how that could work in the first place. Greece could be just the first domino in the collapse of the Euro zone, and that can't be a good thing. It's also a sign that huge budget deficits can't go on indefinitely, i.e., reality is starting to sink in.
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    Quote Originally Posted by KALSTER View Post
    I don't understand economics. Why is it bad for everyone if the one dragging everyone down leaves?
    Hey kal, the idea of the struggling economies leaving the Euro would in fact be very good for most of the people who live there as it is the only real way that they can get their economy's back on track, create jobs & exports etc.. but unfortunatly there are politians in very powerful european countries that have vested interests in keeping the Eurozone together and the value of the euro low. Also you have to take into consideration the influence of the banks, many of which hold vast reserves of bonds from countries with dodgy economies. If countries start to leave the Euro there's are real risk of them defaulting on their payments to bond holders, which terrifies the banks.

    What we have at the moment is a terrible mess where it seems the poorest people are being hit the hardest as draconian cuts are being forced through. People in greece have lost savings, public workers had their wages slashed, old and unemployed people have had their benefits slashed or abolished. On top of this Greece now has a youth umeployment rate of over 50%! and this all because of the huge debts the country is being forced pay for.
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    The more export rich european states have been propping up the weaker economies for almost all of the life of the euro>
    if Greece leaves, it will be to default on it's debts, so the big multinational banks have been pressuring the rest of europe to keep all in the fold.
    portugal, ireland, greece and spain are all running heavily in the red with little export resources to offset the debt.
    And the germans want something in return for supporting the concept with their net worth.
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    Quote Originally Posted by sculptor View Post
    The more export rich european states have been propping up the weaker economies for almost all of the life of the euro>
    if Greece leaves, it will be to default on it's debts, so the big multinational banks have been pressuring the rest of europe to keep all in the fold.
    portugal, ireland, greece and spain are all running heavily in the red with little export resources to offset the debt.
    And the germans want something in return for supporting the concept with their net worth.
    This is correct, there are economies that have been propped since the very formation of the Euro, what this has mean't is that because these countries were using the Euro investers believed, wrongly, that these countries were much more credit worthy than they ever actually were. This had the result in these countries being able to sell huge amounts of bonds and raise huge amounts of money, and debt, which in reality they had very little chance of ever paying back.

    If you want another way to look at it, imagine some of these countries as 'sub prime' morgage applicants being given huge morgages that they can never hope to repay.
    Germany is the only eurozone economy strong enough to stand guarantor by introducing 'Euro Bonds', but 'why should Germany weaken it's own economy because other countries can't live within their means' is a sentiment shared by many Germans, especially former West Germans who spent 2 decades paying to put right the effects of 5 decades of communist rule in the east.
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