Sovereign debt bubble thread

[The Minsky Moment]

My hunch is if Merkele had boldy, quickly and decisively told the Greeks to take a flying fuck on day one you would not have been applauding her leadership.

No but even that would have been better than half-assing it for 2 years.

[Admiral Yi]

Why not? Greece did cook its numbers. It could have been left out in the cold for that. I think it's a clear enough line for the markets.

The Greeks would have been better off, and so would the Germans.

Because I was talking to Shelf, and for Shelf the whole point of the excercise is maintaining the euro and the EU.

[alfred russel]

My hunch is if Merkele had boldy, quickly and decisively told the Greeks to take a flying fuck on day one you would not have been applauding her leadership.

No but even that would have been better than half-assing it for 2 years.

Do you really think so? At least now institutions have had a chance to protect themselves.

[Admiral Yi]

No but even that would have been better than half-assing it for 2 years.

I question the sincerity of this statement.

The previous version you were offering was that Merkele blew it by not throwing enough money at Greece to stop the "contagion."

[The Minsky Moment]

No but even that would have been better than half-assing it for 2 years.

I question the sincerity of this statement.

The previous version you were offering was that Merkele blew it by not throwing enough money at Greece to stop the "contagion."

And that's the version I am sticking to.  Two years ago this could have been fixed up for a good deal less money and trouble.

But the worst option was what was taken - to fall between the two stools.

[Zanza]

What would have been this cheap solution two years ago?

[Neil]

What would have been this cheap solution two years ago?

To eject the Greeks from the EU and sell them to the Turks.

[The Brain]

What would have been this cheap solution two years ago?

To eject the Greeks from the EU and sell them to the Turks.

How much would the Turks have demanded for taking them?

[Neil]

What would have been this cheap solution two years ago?

To eject the Greeks from the EU and sell them to the Turks.

How much would the Turks have demanded for taking them?

They would have paid.  As shitty as they are, slaves are still worth something.

[Sheilbh]

Because I was talking to Shelf, and for Shelf the whole point of the excercise is maintaining the euro and the EU.

What?

Do you really think so? At least now institutions have had a chance to protect themselves.

Which they've failed to take.  I wish the EZ had spent the last year building an institutional framework that could either enable member state defaults, or addressing the banking problem in the Eurozone, or reforming the position of the ECB (especially in relation to the banking sector), or establishing a bailout fund large enough to implicitly guarantee all EZ debt.  But they've done none of that.  The permanent Euro bailout fund is too small to deal with a Spanish or Italian debt crisis, I think it's not allowed to lend to banks and it's not even operational.  The bailout fund's size was meant to increase through IMF and Chinese participation and by leveraging it.

I know the Dutch FinMin and Schauble have spoken about how the last two years have strengthened the institutions and no-one can doubt the Euro now and their ability and resolution to take immediate decisions have been demonstrated.  But I think they're delusional.

[PJL]

Apparently Greek euronotes (whose serial number begns with a Y) are being withdrawn from circulation. Looks like they're preparing for a Greek exit from the euro in the not too distant future.

[Admiral Yi]

Just read an article in the NYT Sunday Review about Spain.  It's mostly space-filler, but I did notice a comment about Spaniards who are coping with the crisis by working in the gray market while collecting unemployment.

That's not helpful.  So Yuros should take note of one feature of the American system of unemployment insurance: benefits here are a function of the legitimate jobs you've held in the recent past and how much you earned in them.  So people are incentivized to work on the books.

[The Larch]

Just read an article in the NYT Sunday Review about Spain.  It's mostly space-filler, but I did notice a comment about Spaniards who are coping with the crisis by working in the gray market while collecting unemployment.

That's not helpful.  So Yuros should take note of one feature of the American system of unemployment insurance: benefits here are a function of the legitimate jobs you've held in the recent past and how much you earned in them.  So people are incentivized to work on the books.

It's the same over here.

[Sheilbh]

That's not helpful.  So Yuros should take note of one feature of the American system of unemployment insurance: benefits here are a function of the legitimate jobs you've held in the recent past and how much you earned in them.  So people are incentivized to work on the books.

That's also true in all Euro countries I know of in some way or other - the UK doesn't link it to what you used to earn, it's a flat rate.  I once got trained by a guy who set up a perfectly legal EU social security scam that allowed French bankers getting fired from the City to go work a MacDonalds in Paris for one day and claim very generous income-based French unemployment benefits, rather than the less attractive British Jobseeekers Allowance.

[Tamas]

An Argentinian working in Greece telling his memories of their 2001 default.
A sobering reminder for the "what could possibly go wrong with a Greek default" crowd:
http://www.athensnews.gr/issue/13462/48005