Will the Euro survive,,,
Yves Smith asks
…I’ll throw it out to you: what do you deem the odds of Euro breakup to be (with “breakup” defined as at least one country exiting the Eurozone) in the next month? In the next six months? And if you think it will come apart, but later, guesstimate how much later and why you think it will occur later rather than sooner.
How about the AB crowd?
here’s what i wrote in closing my commentary about the eurozone before the greek results:
from here it’s hard to see it all blowing up tomorrow; watching europe stumble from crisis to crisis for over two years has been more like watching paint dry than anything explosive; the eurozone will certainly break up, but it will more likely be with a long whimper than anything like a bang…
I am in the same league with rjs. The eurozone is doomed, but not this month. Probably will still be around in 6 months and in 6 years. Will Greece be part of it? Nope. Greece will probably be out in a year (but lots of people thought that last year (including me)). The bailout of Spain literally lasted hours before the bond market went right back up.
So you have Spain and Italy wobbling (Spain more so) and Greece is swirling the drain. The rest of the PIIGS are not doing well either. Germany isn’t going to keep throwing good money after bad and Merkal holds the center position.
But the real story is France. The socialists won the elections Sunday and this will quickly bring France and Germany to a showdown over the future of the eurozone and the bailouts of the PIIGS (Greece and Spain especially). On top of that we have a set of policies espoused by teh socialist that will destroy France economically if implemented. This comment by the French Labor Minister is indicative of the cliff the French plan to jump off of. ” “The main idea is to make layoffs so expensive for companies that it’s not worth it,” Sapin said in an interview with France Info radio”
So the near term will be interesting to watch – like a slow motion train wreck. But there is way, way to many European leaders who feel the Eurozone MUST work – including all the beuaracrats in Brussels. And they will do everything to stave off the final reckoning.
So count me in the ‘later’ group.
Islam will change
Greece will be out in the next year, but I think a core euro will survive. The big question is whether Spain, Italy, and Portugal can stay in. That depends on what lessons the Germans take from the likely Greek exit. I think the Greek election makes the survival of the euro more likely, as the failure to come in Greece will be clearly the fault of the current Eurozone austerity policies.
The Euro was doomed from day one. The fiscal and political entities do not correspond. This can work when times are good, and that lasted a decade or so. When times are bad it must, of necessity, come unzipped.
It has degenerated to an an unstable state, but it can reside there for an uncertain and even surprisingly long period.
It amuses me at times to see the world in cartoon images. This is Wiley Coyote just running off the edge of the cliff, suspended until he looks down . . .
Though, I guess the Greek version has already looked down, and is now flapping his arms to stay airborn. That and a good updraft will help to prolong the agony.
After the inevitable Euro breakup and the upcoming next Great Depression, how long until WW III?
I think within my life time, and I’m 65.
Germany will refuse to do what is necessary to stabilize the economies of whatever nations constitute the periphery of the euro zone at any given time because of their obsession with hard currency.
People inside my company are speculating that once the southern countries are out, the only way to resolve the resulting banking crisis will be to print, and Germany turns into a wild card then.
My view is that I suspect I already know what Germany will say about that.
Euro 2015: Germany, France, Benelux, maybe. Once the fringes start dumping the euro and paying their debts off with soft currency, all bets are off. It really threatens the financial stability that Germany craves so much. It could literally go very bloody bad directions. It’s happened before.
I can’t believe that Greece has lasted this long. You can only get “so much blood out of a stone.” Saving Greece by demanding more austerity and spending reductions at the rates being offered can’t succeed. The country can’t afford to pay back what it currently owes, and now we’re talking about pililng on more debt? Whether Greece exits voluntarily or gets “pushed”, it’s only a matter of time. The longer the inevitably is prolonged the more it will cost everyone associated with this mess.
I think the Germans will do what ever they have to to keep the Euro and prevent it from turning into a Drachma or Lira. The Greeks do not want to go back to the Drachme, it would even be worse than what they have now. There will be changes and it will be a bumpy road for some time to come. But all the countries are better off, they want to keep what they have. We will see if they make the right decisions.
The UK is in recession, they don’t have the Euro. Does Cameron support austerity for Greece too? Did he make the right decisions for the UK? Spain too had a housing bauble, so did Ireland. I think the Germans will swallow the bitter pill and bail the banks out, just like we did here. The consequences could be much worse than the bailouts.