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

[GommeInc]

The only real option I can see working is that Greek pulls out of the Eurozone, reinstates their own currency (Drachma), devalue it heavily in the hopes of making it cheap to invest and import/export, and grow that way. Maybe in the future they can rejoin the Eurozone, but until then they seriously need their own currency for any hope of recovery. The Euro is too strong for them and their hands are too tied. They do not really need the Euro either, and have always been seen as an outsider.

[-:Undertaker:-]

The only real option I can see working is that Greek pulls out of the Eurozone, reinstates their own currency (Drachma), devalue it heavily in the hopes of making it cheap to invest and import/export, and grow that way. Maybe in the future they can rejoin the Eurozone, but until then they seriously need their own currency for any hope of recovery. The Euro is too strong for them and their hands are too tied. They do not really need the Euro either, and have always been seen as an outsider.

The Euro is doomed to fail even for the other countries as with any monetary union (parts of England can even be an example) you have poorer areas and richer areas and obviously currency in say inner Liverpool and Glasgow is different to the English shires and Islington. The reason why the Sterling zone works though is that it has subsidies from the wealthier parts to the poorer parts, which helps offset any differences: and this is politically acceptable to the people of Great Britain as we're a nation, a people and thus we have a demos. We're in agreement to subsidise one another rather like a family unit which is what nationhood is.

For the Euro to work there will need to be huge fiscal transfers of a permanent kind from wealthier countries like Germany and the Netherlands to the likes of Greece and Spain. Of course, the problem is that as none of these countries have any shared culture/a demos it's politically not going to happen. It's doomed.

[FlyingJesus]

Would losing a weak and leeching country not make the Euro stronger overall

[-:Undertaker:-]

Would losing a weak and leeching country not make the Euro stronger overall

Not really, the entire project isn't an economic project it's a political one. And much like the broader European project, it runs on the premise that European integration is irreversible and ever close union constantly ongoing - once that principle is violated the the project will unravel. The danger in allowing Greece to go for the EU is that others will follow as should Greece recover then why would the likes of Spain, Portugal and Italy want to continue to submit themselves to economic sadomachism? Economically for example, the weaker countries leaving the Eurozone would hurt the richer countries as their exports would then be more expensive.

All of this was warned about when the Euro was concepted and the EEC/EU ignored the warnings. Any potential crisis was seen as another way to force integration.

[The Don]

Would losing a weak and leeching country not make the Euro stronger overall

of course it would, dunno what conspiracy crap dans talking about when it is basic economics.

[-:Undertaker:-]

of course it would, dunno what conspiracy crap dans talking about when it is basic economics.

Taking economic lessons from an avid supporter of the European project (which gave birth to the Euro) is funny.

If the weaker countries such as Greece, Portugal and Spain left the Euro then you still wouldn't have solved the underlying fundamental problem that monetary union requires economic union to work which in turn requires political union. In addition, the cost of exporting for the wealthier countries such as Germany, Austria and the Netherlands would rise - something Germany has made use of over the past decade which is an artificially low (thanks to Greece etc) currency rate.

[The Don]

Taking economic lessons from an avid supporter of the European project (which gave birth to the Euro) is funny.

If the weaker countries such as Greece, Portugal and Spain left the Euro then you still wouldn't have solved the underlying fundamental problem that monetary union requires economic union to work which in turn requires political union. In addition, the cost of exporting for the wealthier countries such as Germany, Austria and the Netherlands would rise - something Germany has made use of over the past decade which is an artificially low (thanks to Greece etc) currency rate.

Nice ad hominem response. If the weakest nation leaves the eurozone it will strengthen the currency which is what Tom said. Good grief, didn't you just study economics for three years?

[-:Undertaker:-]

Nice ad hominem response. If the weakest nation leaves the eurozone it will strengthen the currency which is what Tom said. Good grief, didn't you just study economics for three years?

And I just told you how the likes of Germany have benefitted from having an artifically weak currency.

A currency being 'strong' is harmful to exports, which means a 'strong' aka more expensively valued Euro would hit Germany and the Netherlands hard.

[The Don]

And I just told you how the likes of Germany have benefitted from having an artifically weak currency.

A currency being 'strong' is harmful to exports, which means a 'strong' aka more expensively valued Euro would hit Germany and the Netherlands hard.

So you do agree that Greece leaving would make the euro stronger overall, thank you.

[-:Undertaker:-]

So you do agree that Greece leaving would make the euro stronger overall, thank you.

I assume by Euro we are talking about the Eurozone economies, not the exchange rate of a currency which changes day to day. The Euro becoming 'stronger' against the US Dollar in the event of the weaker countries would hurt the Eurozone countries left themselves, as exports would become more expensive.

So yes, the Euro would probably rise in % against the US Dollar but the Eurozone economies themselves would then suffer and become weaker.