Greece, financial meltdown......

[R1Geezer]

The country's down the back bend of the Kasi, finally the governement takes action, what happens? Kin Public sector go on strike! That's going to help! Unions and public sector they are a shower of sh1te the world over! At the same time the rest of the Eurozone is suffering and now they look at the rest of the EU to bail this sh1te out.. Anyone like to guess who'll bear the brunt for bailing this lot out? Where we wise toi stay out of the Euro? Is this a consequence of the "Cart before the horse", political shoe horn approach that was taken in implementing the Euro?

[anotheoldgit]

http://www.timesonlin...pe/article7022690.ece

/// Germany will be expected to put up most of the money ///

Surprise, surprise, it seems that we might keep out of this one, but I find it very hard to believe.

[Gromit]

UK banks have investments in Greece worth the equivalent of 16% of GDP.

As the Government own several UK banks, then some kind of bailout of Greece is in our national interest. Or we could let them default and where would that leave us?

Geezer again misses the point. He spouts about the public sector workers and the Unions, but again, the people who have left us in this mess are the bankers.

Who in their right mind would invest 16% of GDP worth into Greece? It certainly wasn't UNISON.

[R1Geezer]

not talking about blame Gromit I'm talking about making a bad situation worse.

[buildersmate]

Surely it's the Greek Government and the 'Bank of Greece' that have fouled up (BoG being the analogous equivalent to the Bank of England).
It's not the commercial sector Greek banks - in which UK institutions may well have a stake - that are in a mess.
Now I accept that those Greek commercial banks may well have investments in Greek GILTS and other Government securities on which the BoG may be about to default on.
So that may have a knock-on impact on those commercial banks.
But the starting point is the failure of the Greek Government to raise enough revenue from taxes to pay for expenditure, not irrational behaviour by the commercial banks (on this occasion).

[Booldawg]

Chucking good money after bad. Again.

[modeller]

We contribute 20% of the EU budget and therfore any EU bail out Greece or any other country will be partly supported by us.

[buildersmate]

On what basis do you believe the EU budget is linked to the Eurozone?

[R1Geezer]

The budget is innextrivably linked I'm talking about the effect on the currency. The Eurozone will have no chpoice but to prop it up. In Doing so they will no doubt use funds that have been and will be contributed by non Euro countries, presumably converted to Euro's.

[kinell]

mmm, the wonder euro and the single currency,

portugal spain and ireland arent in great shape either,

spose that our gb pound will be acceptable for a bailout?

[buildersmate]

I know you are, RIG. It was to modeller that my comment was addressed.
I (like you, I suspect) don't see this action as anti-Union. It's rather similar to when Callaghan had to go cap in hand to the IMF and had to make some pretty unpopular measures.
Union people the world over just don't get it - if there ain't no money coming in, one goes bust. It applies both to companies and countries.

[buildersmate]

Now is just not the time to think about entry, Kinell.
For once in our country's life, we can laugh our way all the way back to the bank (though I'm not sure which bank).

[Gromit]

The worry is that after the speculators have finished in Greece, Spain and Portugal, and huge profits have been made by hedge funds paid for by the European central Bank propping up the Euro, then they will come after the pound, which will be very easy prey with no such backing.

It could well see the end of the pound and see us joining the protection of the Eurozone.

[buildersmate]

Interesting, got any sources or is that in-built Gromit intellectual horsepower at work?

[Gromit]

You cannot blame the speculators, they are only trying to cash in on an opportunity. They do not (usually) cause a crisis, but they tend to make it worse.

The Greek, Spanish and Portuguese Economies are the most at risk at present which might give us some breathing space. They will not set their sights on betting against our currency only if they think our economy is strong and robust and we have a good plan for settling the deficit. Are you confident about we are in that situation? If there are any cracks, the speculators will be in.

Normally, a country in such dire straits as Greece would call in the IMF who would tell them how to run their economy to get it back on track. This would in practice be very humiliating in the Eurozone where the European Central Bank (ECB) runs things. Would the other 15 countries in the Eurozone have to follow the IMFs figures? So the ECB will not allow Greece (or Spain or Portugal or the others) to get the IMF involved and Greece will be re-financed from the EU.

We do not have that same insurance policy. If the speculators come (and they might not do) then we are one our own. So it might be a bit premature to scoff at Greece's plight.

[anotheoldgit]

These are the countries in trouble.

Portugal, Italy, Greece, Spain.

Better known as the PIGS.

[modeller]

I didn't answer you directly builder because RIG seemed to have done so, however I was reading in the busness section of the Telegraph that the EU budget lends it support to the national banks of member states .

[buildersmate]

Thanks, G, very informative.
Modeller - the issue I was seeking to get my head around was whether the EU budget (revenue budget, raised from taxes within member countries, paid in accordance with allocation, used for funding projects and subsidies) can in fact by used to prop up the ECB - if it needed more funds to support PIGS.
The analogy in the UK is surely that the Bank of England is not the same department as HM Treasury.