Greferendum

[camberiu]

Looks like La Campora - just in red and black instead of blue.

I think it is a fair comparison. If no relief is provided, these guys (or worse) will gain strength as the situation in Greece deteriorates. Greece is ripe right now for populists, demagogues and ultra-nationalists. The same applies to Spain, Italy, Portugal and Ireland.

 

[jeff1234]

Surprisingly a really important but seldom mentioned consideration: Greece is not physically connected to Europe and it lives in a really bad neighborhood. Its neighbors are Macedonia, Albania, Bulgaria, Turkey.
Its only connections to Europe are the Euro and NATO.
Since NATO has a full plate thanks to Putin the Greeks may decide that they need the Euro to preserve their connection to Europe and the West.

 

[el_expatriado]

The problem with Europe today is that you have Germany who is like everyone's frugal grandpappy who lived through the great depression and won't spend a dime more than he makes married to Greece who is like the 16 year old who's going nuts with daddy's credit card and lies about how much she spent (which only works until the statement arrives). At some point there is going to be a divorce. This is not compatible.

Here's the solution. Europe needs two currencies with two monetary policies. You need to put everything south of Switzerland/Austria into one group... Let's call it Sunny Europe and everything north of Switzerland into another, Cold Europe.

Sunny Europe: Portugal, Spain, Italy, Greece, etc. All the Mediterranean siesta countries go here.
Cold Europe: Germany, Austria, UK, Switzerland, Netherlands, Belgium, Norway, Finland, Baltics, etc. All the frugal harsh winter countries go here.
France could go either way. Let them flip a coin.

Everyone on the sunny side gets to keep running budget deficits, inflation, devaluation, etc.
Everyone on the cold side gets a stable currency, low inflation, balanced budgets.

Then just let the currency market and the bond market work everything out automatically. Problem solved.

 

[ajoknoblauch]

The problem with Europe today is that you have Germany who is like everyone's frugal grandpappy who lived through the great depression and won't spend a dime more than he makes married to Greece who is like the 16 year old who's going nuts with daddy's credit card and lies about how much she spent (which only works until the statement arrives). At some point there is going to be a divorce. This is not compatible.

Here's the solution. Europe needs two currencies with two monetary policies. You need to put everything south of Switzerland/Austria into one group... Let's call it Sunny Europe and everything north of Switzerland into another, Cold Europe.

Sunny Europe: Portugal, Spain, Italy, Greece, etc. All the Mediterranean siesta countries go here.
Cold Europe: Germany, Austria, UK, Switzerland, Netherlands, Belgium, Norway, Finland, Baltics, etc. All the frugal harsh winter countries go here.
France could go either way. Let them flip a coin.

Everyone on the sunny side gets to keep running budget deficits, inflation, devaluation, etc.
Everyone on the cold side gets a stable currency, low inflation, balanced budgets.

Then just let the currency market and the bond market work everything out automatically. Problem solved.

UK, Norway, Sweden (which you do not mention) all have their own currencies.

 

[el_expatriado]

UK, Norway, Sweden (which you do not mention) all have their own currencies.

Yes, but they don't need to. They could be lumped in with the rest of the "responsable" countries. Take Sweden (which I didn't mention specifically but was included in the "etc"), does it really make sense for a country with just 10 million people to have its own currency when they are surrounded by neighbors who all use the same common currency? I don't think so.

The problem is the siesta countries. They need to get them out of the currency block.

 

[Joe]

France is Latin so it would go in the Club Med Euro camp (also called the Soft Euro). The Germanic countries would have the Hard Euro.

The rule for the future (2020) is that only those countries abiding by the Maastricht Treaty could use the Hard Euro.

 

[camberiu]

Surprisingly a really important but seldom mentioned consideration: Greece is not physically connected to Europe and it lives in a really bad neighborhood. Its neighbors are Macedonia, Albania, Bulgaria, Turkey.
Its only connections to Europe are the Euro and NATO.
Since NATO has a full plate thanks to Putin the Greeks may decide that they need the Euro to preserve their connection to Europe and the West.

So Albania, Bulgaria and Macedonia are not part of Europe? Not sure if I am following you.

 

[ajoknoblauch]

So Albania, Bulgaria and Macedonia are not part of Europe? Not sure if I am following you.

Not to mention Cyprus.

 

[camberiu]

Everyone on the sunny side gets to keep running budget deficits, inflation, devaluation, etc.
Everyone on the cold side gets a stable currency, low inflation, balanced budgets.

Then just let the currency market and the bond market work everything out automatically. Problem solved.

I am sorry, but I fail to see how that would solve anything. The combined $1 trillion+ euros of debt shared by the PIIGS would not disappear overnight after this division. And now the countries in question would have to pay back their already unplayable debts with devaluated currencies. Talk about an Argentina like scenario.

The way I see it, re-arranging the chairs does nothing. The only solution I can picture is default.

 

[Joe]

The way I see it, re-arranging the chairs does nothing. The only solution I can picture is default.

Yeah but you could say the same about the USA, Japan, Canada, etc.