Euro crisis

Europe is still China's biggest export market and she will still need that market for quite a few years yet.

I think China is thinking twice before throwing good money after bad investment.




All investors in this Euro rescue fund will lose 50% if not all their money in 2 years. (when a 10YR bond reaching interest rate of 25.4%, this is call junk, it is speculation not a investment)





I am strongly against bailouts from the Chinese (or other Euro countries). Itself will be against the free market principles, that we should let countries that lived high off the hogs for the past decade to have a taste of their own medication.

Greek should default now and leave Eurozone and restart its Greek Drachma. It will suffer great economical pain up to 5 years, but Greece can always bounce back again just like Russia in 98 and Argentina in 02.

If China and Germany want to help, wait for Greece to default. Then increasing joint capital investments and imports more from Greece.

Not to mention a lot countries in the PIIGS played with their public finance before applying for EuroZone.

Hey guys here's an interesting debate mostly on China but with footnotes and critiques on the Euro crisis.

The most spectacular recent default was that of Iceland. Its banks went belly up, it would be ruined forever. Guess what, the trouble is already over. It just got rid of its banks and bankers. Greece can't do the same unless it throws out the eurocrats.
That's were democracy might help. That's why the eurocrats are furious about the referendum.

Here's another reason why the public should not make decisions on the economy:



China can't afford to throw money at bad European investments, but China can't afford to let the European economy crash either. The most ironic statement is this: "Better to save Wenzhou than Ouzhou", considering that Wenzhou got rich in the first place from exporting to the US and Europe.

delft said:

The most spectacular recent default was that of Iceland. Its banks went belly up, it would be ruined forever. Guess what, the trouble is already over. It just got rid of its banks and bankers. Greece can't do the same unless it throws out the eurocrats.
That's were democracy might help. That's why the eurocrats are furious about the referendum.

Click to expand...

It's ironic that you should say that, considering that one of the reasons investors are regaining confidence in Iceland is because .

Finally, the third major factor behind the resolution of the financial crisis was the decision by the government of Iceland to apply for membership in the EU in July 2009. While views on the feasibility of EU membership are quite mixed in Iceland, this action has served to enhance the credibility of the country on international financial markets. One sign of the success of the above efforts is the fact that the Icelandic government was successfully able to raise 1$ billion with a bond issue on June 9, 2011. This development indicates that international investors have given the government and the new banking system, with two of the three biggest banks now in foreign hands, a clean bill of health.

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After that application for EU membership nothing has happened in that respect and of course nothing now is likely to happen.

Unfortunately the bail out fund has shown itself to be an utterly uninvestable proposition. It is more than simply Greece throwing an unexpected spanner into the works of a previously agreed deal, it is more that the action has brought to everyone's attention that any EU member could do something similar at any time, the moment they are confronted with a hard choice which they do not like.

I think these Chinese Dragons will all say "For this reason I am out!"

delft said:

The most spectacular recent default was that of Iceland. Its banks went belly up, it would be ruined forever. Guess what, the trouble is already over. It just got rid of its banks and bankers. Greece can't do the same unless it throws out the eurocrats.
That's were democracy might help. That's why the eurocrats are furious about the referendum.

Click to expand...

@delft.
there is a fundamental flaw in your analysis. Iceland didn't use Euro and it could take the default hit.
not with Greece.
Essentially in this situation Eurocrats is forcing greece to do the exact same thing Iceland did. auserity measures, budget cuts. etc.

My conclusion is that democracy is not helping.
Eurocrats (or technocracy) are not to blame here, lack of political leadership in Germany is. Merkel is beholden to her electorate (at least her political interests) to look out for interests of individuals rather than the collective good.

if German political leadership forces nationalize these European banks ( who are technically insolvent based on default of Greek-debt scenari) on the basis that they can not be trusted to make these economically important decision. and restructure them back inline of traditional service banks...

this is the key issue here. doesn't matter how austere greek budget gets.

Iceland was lucky not yet having the Euro. If Greece were to abandon its failed banks, sell them to foreign banks, let them go down and start new ones it can escape a lot of its debt. It would damage especially French and German banks that own a lot of the Greece debt and the resistance to political decisions to solve the problems come from these banks and it is their influence that is expressed in the parliaments.
In Europe there has already be a lot of talk, for years, about the democratic deficit. Most political decisions are taken by government minister councils in Brussels and the decisions cannot be considered by the parliaments of the member states nor by the European parliament.

delft said:

Iceland was lucky not yet having the Euro. If Greece were to abandon its failed banks, sell them to foreign banks, let them go down and start new ones it can escape a lot of its debt. It would damage especially French and German banks that own a lot of the Greece debt and the resistance to political decisions to solve the problems come from these banks and it is their influence that is expressed in the parliaments.
In Europe there has already be a lot of talk, for years, about the democratic deficit. Most political decisions are taken by government minister councils in Brussels and the decisions cannot be considered by the parliaments of the member states nor by the European parliament.

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If Greece was not having EURO, do you really think the German and French banks would buy Greece debt ? ... NO WAY