LIVE: Greece votes 'No' to EU debt proposals, meaning Euro exit+default highly likely

[The Don]

Ah yes, when tom talks about the strength of the euro currency i should have really assumed he was talking about Zimbabwean politics.

[-:Undertaker:-]

Ah yes, when tom talks about the strength of the euro currency i should have really assumed he was talking about Zimbabwean politics.

You are confusing strength of a currency (as in exchange rates which you are talking about) with strength of the currency area economically. Ever since currencies were unpegged from the Gold Standard, a currency exchange rate 'strength' doesn't always correlate to the size or strength of an economy.

Take the Pound Sterling to the US Dollar. America's economy is like x4 as big as Britain's, yet the Pound Sterling has the higher valued exchange rate. A Greek Eurozone exit would likely give the Euro a higher exchange rate value, but that would economically hurt exporting northern Euro countries like Germany/Austria.

So contrary to your wishes, a Greek exit wouldn't make the Euro stronger at all, and given it's political origin it will weaken the Euro.

[The Don]

You are confusing strength of a currency (as in exchange rates which you are talking about) with strength of the currency area economically. Ever since currencies were unpegged from the Gold Standard, a currency exchange rate 'strength' doesn't always correlate to the size or strength of an economy.

Take the Pound Sterling to the US Dollar. America's economy is like x4 as big as Britain's, yet the Pound Sterling has the higher valued exchange rate. A Greek Eurozone exit would likely give the Euro a higher exchange rate value, but that would economically hurt exporting northern Euro countries like Germany/Austria.

So contrary to your wishes, a Greek exit wouldn't make the Euro stronger at all, and given it's political origin it will weaken the Euro.

i'm not confusing anything, if someone says the euro and not the eurozone they're talking about the currency you fool.

[-:Undertaker:-]

i'm not confusing anything, if someone says the euro and not the eurozone they're talking about the currency you fool.

Are you stating to us then that you think Greece leaving the Eurozone will make survival of the Euro more likely or less likely?

[The Don]

Are you stating to us then that you think Greece leaving the Eurozone will make survival of the Euro more likely or less likely?

I'm saying that I think Greece leaving the Eurozone will strengthen the Euro currency. I don't know and haven't commented on the longterm survival of the Eurozone.

[-:Undertaker:-]

I'm saying that I think Greece leaving the Eurozone will strengthen the Euro currency. I don't know and haven't commented on the longterm survival of the Eurozone.

But what do you mean by strengthen? By the simple exchange rate numbers or the political and economic structure? I assume when Tom was asking about the strength of the Euro that he was referring to the structural strength and survival of the Euro as a currency rather than the irrelevant exchange rate.

I cannot see how anybody can argue that the Eurozone will become stronger by Greece leaving, given the political foundations and nature of the Eurozone.

Interestingly the former F&C Secretary William Hague has written an article in the Daily Telegraph basically saying what I have said throughout this thread.

[GommeInc]

Technically you're both wrong and right

If the weaker nations left, the stronger ones will have problems trading with the weaker countries as the currency will increase the cost of exports and imports. However, without the weaker ones the value of the currency will increase as the stronger countries will be seen as a wiser investment (as they are strong for a reason). That said, the weaker countries will have a better hand as a valueless currency could potentially open them up to good investment deals depending on if they have an effective economic policy to protect investors and ensure that what they are investing in is protected - something Greece will have to prove if they were to leave the Eurozone.

In short, stronger countries can trade better with other stronger countries, while weaker countries can only really trade with their own kind or attempt to show they're worth investing in. Japan did something similar, but was a strong country that had too strong a currency but had the luxury of devaluing its own currency to increase investments and to hold off a stalled economy.You get the problems with trading with Africa, and to some extent China, as no one really knows what value their economy is.

Not forgetting that if Greece do leave, it all depends on what market certain businesses work in. Some really won't give a crap, some will. Same for businesses in Greece. Some will thrive outside of the Eurozone, while others will suffer. It's never great for all of them - currently the banking industry is suffering.