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> From: de Bivort Lawrence <[email protected]> > Date: June 4, 2012 11:27:47 AM EDT > To: [email protected] > Subject: Re: [Futurework] [Ottawadissenters] A little more on the Euro > > Thanks, Ed, > > I understand the interconnected nature of the financial industry. In part, if > I am not mistaken, it is a result of individual financial institutions > wanting to lay off risk by selling debts to others (and sometimes > misrepresenting the value of those debts to the buyer). The > interconnectedness is, as I understand it, a matter of financial strategy and > choice. > > So let's say that the general consequence, from your note, of a borrowing > country defaulting is that other potential lenders will not want to lend to > the defaulter. You ask what this might mean to the peace, stability and > living standards of the defaulter. I would guess that the stability and > living standards would suffer. I doubt that "peace" would be affected, but I > may be misunderstanding what you mean by this term. > > So with regard to the stability and living standards of the defaulter, which > -- yes -- would suffer int he case of a default, I'll ask another naive > question: so what? I have a friend who once cheerfully told me that she had > considerable personal savings. Later, she disclosed that she also had > considerable debt, which exceeded her "savings." And yes, her standard of > living dropped for a while as she both used those savings and a larger > portion of her income to rid herself of those debts. The key point is that > while she rejoiced in the size of her savings, it was a deluded joy: in fact > she had few net assets. She could have kept on running up debt, and enjoyed a > delusional higher standard of living, but this only exacerbated her > situation, given her need to service her debt. > > Is it not the same with Greece? If the Greek people, collectively, have been > living beyond their means, is this not a delusional financial stance? Does > enjoying a higher stander of living temporarily outweigh in terms of social > values the accumulation of greater and greater debt and its concurrent > service obligations? My friend did not expect anyone to take pity on her; > she simply knuckled down and accepted the temporary diminishment of her > standard of living. Why not Greece? > > Cheers, > Lawry > > > On Jun 3, 2012, at 10:41 AM, Ed Weick wrote: > >> >> >> ----- Original Message ----- >> From: Ed Weick >> To: RE-DESIGNING WORK, INCOME DISTRIBUTION,EDUCATION >> Sent: Sunday, June 03, 2012 10:38 AM >> Subject: Re: [Futurework] [Ottawadissenters] A little more on the Euro >> >> A couple of points, Lawry. One is that the banking system is highly >> connected internationally. To lend money to the Greek or Spanish >> governments, Greek or Spanish banks borrowed money from banks in other >> countries. The impact would likely be similar to that of the American >> sub-prime mortgage crisis of some four years ago. Via the widely traded >> Consolidated Debt Obligations it was not only American banks that lost a lot >> of money, but foreign banks as well. I think defaults by the highly >> leveraged members of the EU would have a much larger negative impact than >> the sub-prime crisis. >> >> The other point is that the EU governments of Greece, Italy, Spain, Ireland >> and perhaps others (France?) have kept themselves going by borrowing huge >> sums of money. If they defaulted, it is unlikely that anyone would want to >> lend to them. What might that mean in terms peace, stability and living >> standards in those countries? >> >> Ed >> >> >> ----- Original Message ----- >> From: de Bivort Lawrence >> To: [email protected] >> Cc: 'RE-DESIGNING WORK, INCOME DISTRIBUTION,EDUCATION' >> Sent: Sunday, June 03, 2012 10:17 AM >> Subject: Re: [Futurework] [Ottawadissenters] A little more on the Euro >> >> A simplistic question, but one that may, I hope, cut to the chase: >> >> What is the problem if Greece and perhaps Italy and Spain simply default on >> their debts, and do nothing else? I can readily see that lenders would >> subsequently shy away from making any new loans to those countries, of >> course, but...so what? >> >> Can we build a damage/risk tree out from this initial question? >> >> Cheers, >> Lawry >> >> >> >> >> On Jun 3, 2012, at 9:20 AM, Ed Weick wrote: >> >>> >>> >>> There seemed to be some agreement yesterday that exit from the EU by Greece >>> and perhaps others like Spain and Italy was inevitable. But is it really? >>> Greece, Spain and a few other countries have huge debts -- but debts that >>> are denominated in Euros. It is highly unlikely that creditors would >>> accept repayment in far less stable currencies like the drachma or the >>> peseta, and default by some of the larger EU debtors could wreak havoc with >>> the international banking system. Exit from the EU is, IMHO, most unlikely >>> unless someone steps in and provides the kind of bailout supports needed. >>> Perhaps the IMF or, as Barry suggested, Russia? For a countries like >>> Greece or Spain, would being beholden to Russia be better than being under >>> Germany's thumb? >>> >>> Ed >>> >> >> >> >> _______________________________________________ >> Futurework mailing list >> [email protected] >> https://lists.uwaterloo.ca/mailman/listinfo/futurework >> >> __._,_.___ >> Reply to sender | Reply to group | Reply via web post | Start a New Topic >> Messages in this topic (1) >> RECENT ACTIVITY: >> Visit Your Group >> Switch to: Text-Only, Daily Digest • Unsubscribe • Terms of Use >> . >> >> __,_._,___ >
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