Mervyn King: Eurozone Crisis 'Storm' Imminent

[Philtaz]

http://www.bbc.co.uk/news/business-18084700

Looks like the Eurozone really is staring into the abyss.

[askyourgran]

It doesn't need a financial wizard to see the writing on the wall. Every country seems to be crashing around will debt problems. We have been wanting out of this unregulated mess for ages.

[VHG]

After the second world war Europe was broke (in more ways than one) - financially as well as infrastructure (roads, rail, cities etc.).

Even in the 1950s most of Europe was still poor (we had rationing in the UK into the 1950s).

But then gradually during the 60s, 70s and 80s and 90s things improved (even though the UK had its dips in the 70s) and gradually things looked rosy and the EU spent (wasted) money as fast as they could get it.

But then I think we (Europe) began to think the good times were here to stay for ever.

We began to borrow and spend money as though there was no tomorrow (individualy as well as countries and the EU), and we got very "generous", allowing immigrants and asylum seekers to come here and stay, often giving them homes and benefits when they had not contributed to the system.

Rather like a rich "lord" who has inherited his fathers estate and fortune and begins to spend it recklessly, soon you realise the cupboard is bare.

We (Europe) have been far too sily with our money in the last few years, watching our manufacturing business go to the Far East, China etc, but still continuing to spend as though people all over the world were buying whatever we made.

Europe is a mess, and countries like Spain, Greece, Italy, Portugal may never get out of their financial mess. Even we, the UK, are not far behind.

I dont see it geting better for years.

[mightyWBA]

Could somebody explain what happens if Greece does go "bump" and refuses to pay its debts.

Do we go in and grab some more Elgin marbles,artefacts and make Rhodes,the Ionian Islands and Crete British again as a part payment?

I can't see how a country can become bankrupt.

[kinell]

its been said before, but.....
only the finacially delusional would think that trying to tie various economies of countries possessing different cultures, values and ethics and of course resources, to a single currency is doomed to fail...

we have a hard job balancing the north of england to the south,

methinks the driver of all this euro monetary union bunkum was and still is germany...the country who unsurprisingly have done best under this hopeless scheme,

[Philtaz]

Finance expert on Sky News right now predicts a return of the Drachma!

Madman? Or Prophet of Doom?

[Sqad]

I agree with VHG.....the UK debt is greater than that of Greece and is only managed by the fact that the UK can borrow at a lower rate of interest due to it's ratings.

Interesting times for the next decade throughout Europe.

[TheNovice]

the problem as I see it (other than the Euro in an idealist theory rather than a practical solution) is that it takes forever to get a decision to take corrective action.

Look at Greece, problem identified, solutions proposed - this took 9 months, then the small matter of asking the Greek people (i.e those who are going to pay to support the Euro theory) whether they actually want this - surprisingly (and all power to them) they said "No!!". Now back to the drawing board.

When will someone stand up and say Enough!!!!!!!!! To many snouts in the trough!!!!

[TheNovice]

Squad - you're right when talking size of debt but not debt per head. Also our ouput (exports, financial services etc) is far greater than , which gives us a fighting chance of getting out of it (eventually). Also we are not bound to Euro rules and interest rates of course, thankfully.

[Philtaz]

Also we are not bound to Euro rules and interest rates of course, thankfully.
----------------------------------------

Agreed, but we'll end up continuing to bail the b*ggers out!

[TheNovice]

I think the Queens Speech contained legislation to reverse Alistair Darlings decision to participate in the bail outs - the sooner the better!!!!

[jake-the-peg]

//Could somebody explain what happens if Greece does go "bump" and refuses to pay its debts. //

Sure It happened 10 years or so ago in Argentina - they're still getting over it - Greece would be even bigger.

Nobody would lend money to them and the government would run out of cash almost immediately.

in this cas they have a "new drachma and they'd have to print them, the value would fall through the floor and on the streets people would run on the banks trying to withdraw before forcible conversion.

Where they could people would stick to using Euros the way US dollars are in some unstable countries.

Seeing this would focus minds in Spain, Italy etc. they would be able to point to Greece and say "Is that what you want?"

It's ludicrous to think that if Greece crashes out there would be a queue to follow

[jno]

the end of this

http://www.spiegel.de...0,1518,588419,00.html

recounts the way it went in Argentina

[emmie]

according to various sources Greece only has till June to sort out their mess, then it will run out of money. Also that the markets have long been preparing for the conversion from the Euro back to the Drachma, even though it doesn't appear to be what many Greeks want. What a surprise...

[Brenden]

Could someone tell me, if they have to leave the EU will our borders still be open to them.

[pilotlight]

Mrs. P and I visited Kefalonia early in May last year. As we were about to leave for home, and said " probably see you next year " the owner of our local taverna, Niko, said " everything will be priced in Drachma when you next come ".
I wonder.

[jno]

if they have to leave the EU will our borders still be open to them

Not the way they are now. But this is just about leaving the eurozone, the currency, not the whole EU.

[pdq1]

Gordon Brown once saved the world. Unfortunately there is nobody to take his place and keep the Greek banks afloat. You would think it would in Germany's interest to save the Greek economy as the Greek Euro has the same purchasing power as the German Euro.

[Johnysid]

The most intriguing aspect of the Eurozone crisis is that British commentators just "don't get it". There is much more at stake here than simple economics. Here is a quote from a European Central Bank document in 1999:

"The monetary order established by the Maastricht Treaty with the detailed statute of the European System of Central Banks by itself represents an important building block for the development of a European statehood."

See http://pol-check.blog...s-to-be-going-on.html for an analysis

[Johnysid]

pdq1 - Gordon Brown saved the world? This must be irony:

"So I congratulate you Lord Mayor and the City of London on these remarkable achievements, an era that history will record as the beginning of a new golden age for the City of London." (Gordon Brown 2007 http://pol-check.blog...e-been-foreseen.html)

"...it was Gordon Brown in 1997 who started the "race to the bottom" of deregulation that caused the global crisis. In fact Brown was determined to deregulate UK banking and it was the pressure of competition from London that led the Americans to remove the Glass-Steagall Act. Labour's Gordon Brown, more than anyone else in the world, caused the global recession." http://pol-check.blog...an-public-sector.html

[Johnysid]

"So I congratulate you Lord Mayor and the City of London on these remarkable achievements, an era that history will record as the beginning of a new golden age for the City of London." (Gordon Brown 2007 http://pol-check.blog...e-been-foreseen.html )