At 18:12 01/06/2012, D wrote:
Countries have been taken over economically before (and still -
through trade/embargo, etc.). So, if a country defaults, does that
mean all the population goes into an international debtors prison
situation and becomes a 'third world' economic slave state for the
benefit of the bankers and multinational money players that created
the catastrophe in the first place??? That will create war. But war
has always been the ultimate amassing source of income for
international "money lenders". So .... .
Usually what happens when a country defaults is that, in order to
save face as a bona fide nation-state and resume normal facilities
(diplomatic, etc), it re-engages with its creditors and they agree on
a new repayment schedule. This is usually over a long time period
such as 31, 41, 51 years, etc. (The odd number seems to be more usual
than not!) If the country chooses a sensible exchange rate for its
new currency, it can resume its exports fairly quickly (most
countries have some specialized product or service that other
countries will want to buy) and thus be able to afford interest
payments on its re-negotiated debts (even though the country's
standard of living will remain very low). This applied to Germany
after WWI, several Latin American countries in the 1980s and, most
recently, to Argentina in 2000*. In the case of Greece, however (if
it leaves the Eurozone), it's likely that it won't even be able to
afford interest payments immediately so some period of grace would no
doubt be negotiated. (*By 2003, Argentina had largely picked itself
up and was prospering again [even while repaying its debts] but then
its government started to fall into its old populist ways [spending
money grandly], its economy is declining and people are sending their
pesos abroad for fear of a sudden devaluation.)
Keith
D.
On 01/06/2012 8:49 AM, Ed Weick wrote:
The Eurozone was a beautiful idea that didn't, and indeed couldn't
possibly, go far enough. As Keith points out, the members of the
EU remain sovereign states, each responsible to their own people
for all matters that countries are normally responsible for except
for one very major thing, their currencies. Responsibility for
that was given to the European Central Bank and ultimately to the
EU's powerhouse, Germany. What is being recognized with increasing
clarity by EU members is that crucial affairs of state like levels
of debt, employment and other critical matters simply cannot be
managed if the state doesn't have fiscal and monetary control. And
yet, one wonders what will happen if Greece goes back to the
drachma, Spain to the peseta, Italy to the lira, and Ireland to the
Irish pound. Would the huge debts that Greece and Spain have
incurred be repayable? Would creditors who expect repayment in the
relatively stable Euro accept payment in much less stable national
currencies? Is default inevitable, and if it is, what might the
consequences be for the international economy? We live in
interesting times that will likely become far more interesting in
future, though not in a positive sense.
Ed
----- Original Message -----
From: <mailto:[email protected]>Keith Hudson
To: <mailto:[email protected]>RE-DESIGNING WORK, INCOME
DISTRIBUTION, EDUCATION ; <mailto:[email protected]>Ed Weick
Sent: Friday, June 01, 2012 9:49 AM
Subject: Re: [Futurework] Goodby Euro?
At 13:47 01/06/2012, you wrote:
<http://www.washingtonpost.com/business/economy/ecb-chief-calls-euro-unsustainable-slams-spanish-bank-response/2012/05/31/gJQAB7qY5U_story.html?wpisrc=nl_headlines_Fri>http://www.washingtonpost.com/business/economy/ecb-chief-calls-euro-unsustainable-slams-spanish-bank-response/2012/05/31/gJQAB7qY5U_story.html?wpisrc=nl_headlines_Fri
Ed
As you know, I've been forecasting the imminent death of the
Eurozone for the last two years or so. But they've been able to
devise another money-printing type plan each time and kicked the
can down the road. The problem gets worse each time it recurs. The
one that's been gathering pace for the past three weeks (and
paralyzing shares on the New York Stock Exchange) is by far the
worst yet. It's now seriously rippling from Greece to Spain and
Italy. Euros are fleeing those countries or going into German bonds
(where they get a negative rate of interest). Eurodollars are
fleeing Europe for US bonds (with almost no real rate of interest).
The Eurocrats might possibly kick the can down the road once again
with another Euro-printing solution, but I can't see how the end of
the Eurozone as we now know can be delayed for much longer.
15 minutes ago The Guardian has already said that America's job
position "has hit a wall in May". Collapse of the Eurozone's
imports and exports will send America and China into tailspins. We
live in interesting times!
Keith
Keith Hudson, Saltford, England http://allisstatus.wordpress.com
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Keith Hudson, Saltford, England http://allisstatus.wordpress.com
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