7 ms·

Any country leaving euro zone must settle bill first: ECB's Draghi

45 points by cinquemb 10y ago

rokosbasilisk 10y ago
It seems like they are preparing for more exits, the world has changed a lot in one year.
- PaulHoule 10y ago
  Fortunately if the EU breaks apart, the 800 billion euro debt to Germany will be just enough to buy lunch.
  - sean_patel 10y ago
    > 800 billion euro debt to Germany. Wow! Didn't know about this. Do several countries owe Germany this debt? How?? Also if true, then Germany will also see a lot of Social unrest and the anger will be (unjustly) directed towards Refugees. And with all the young high-testonterone Arab refugees now living in Germany, and a civil unrest in the horizon, Germany seems to be 1 dangerous place to be in right now, especially for young single German women.
    - jimnotgym 10y ago
      Which you will hear a lot more of in the UK and US press than you will in Germany
    - neximo64 10y ago
      Target2. While you may take this tone, there are serious shortcomings. Such as a bit of Germany's budget being financed through Greece's misery and borrowings from Target2 when Greek funds were put into the German banking system. The way the ECB works is its built on National Central Banks lending each other funds and paying interest on borrowings to each other. So take Euros from Greece and put them into Germany means Greece borrows those Euros back.
    - tele 10y ago
      The rate of rape in Germany is 9.37 per 100,000 people.[Wikipedia] The rate of rape in the US is 26.95 per 100,000 people. [FBI UCS Annual Crime Reports]
      - sean_patel 10y ago
        > The rate of rape in Germany is 9.37 per 100,000 people.[Wikipedia] Wrong. Wikipedia now shows > The rate of rape in Germany is 3470 per 100,000 people. (guess who updated it :) Quote a better source for your stats please.
        knowaveragejoe 10y ago
        Not only does Wikipedia[1] not reflect the statistics you're quoting, I find it hard to believe the rate of rape increased from 9 per 100,000 in 2009 to 3470 just 7-8 years later. Please provide your source.
        tele 10y ago
        Are you going to source your stats, or simply make the claim that the rate of rape in Germany is 26 times that of South Africa, with 132.4 per 100,000?
- cm2187 10y ago
  I think the big question is the Italian elections of 2018. I understand the 5* movment is already pretty much the strongest political party. If they take over the parliament, this may mean the exit of the EU or euro. The Netherlands are probably close too, with elections in March this year, though I understand Wilders is unlikely to have enough seats to take power. Le Pen in France is unlikely to make its break through at the elections this year, but it is not inconcievable in 5 years. I am of the opinion that the days of the EU are numbered. High unemployment, slow growth, combined with African & Middle-East immigration and Muslim fundamentalism are going to put increasing pressure on traditional social-democrat parties, and with this a general momentum (Brexit, Trump). It may be that the UK might enjoy the status or independant safe heaven when it all happens and investors run to the door and that Brexit turns out to be a blessing in disguise.
  - alva 10y ago
    Extremely interesting times indeed. Massive political changes will always involve a certain amount of pain, but I believe the writing has been on the wall since 2008 and from political actions taken since. The problem as I see it, is that the EU is trying to stop the tide. I believe this will fail due to the sheer amount of frustration felt by many of the populations who have not necessarily received or appreciated the globalisation as it has been implemented so far. Unfortunately for the EU, the only changes that could save itself are antithetical to its hardcore believers and leaders who are in charge. Those who are looking to turn Europe into essentially one country (sounds crazy, but that has been the long and relatively successful game from the beginning), will not budge on a few key issues which are vital to their end game. The David Cameron negotiation was an example of this. If the EU had dropped Freedom of Movement, UK would have almost certainly remained. Ideology vs pragmatism. Old story.
    - cm2187 10y ago
      Rather, the EU is in a deadlock. It is stuck with a partial integration. The only solution that would save it, i.e. complete the integration and make it a federal government, is now impossible in the current political climate. So it is left being a collection of laws and treaties with no clear leadership and direction of travel, and therefore will keep accumulating grievances without being able to do anything about them.
abduhl 10y ago
My understanding of how withdrawal from the EU works is that a country's withdrawal occurs 2 years after they invoke the Article 50 process regardless of whether a final agreement has been made with the EU. Is this not correct? If it is correct, how can the ECB make this statement without it essentially being a threat of war? Edit - many below have noted that leaving the Eurozone and leaving the EU are distinctly different. I disagree. As I understand the EU charter, there is currently no way to leave the Eurozone without also leaving the Union. From Wikipedia, this is actually the exact position that Draghi espouses: "Regarding your question on withdrawing from the euro without leaving the EU, this possibility is not foreseen in the Treaties. The Treaty of Lisbon does not include this possibility, precisely because of the irreversibility of the move to the third stage of EMU for Member States." http://www.ecb.europa.eu/pub/pdf/other/20121107_morganti.en.pdf http://www.ecb.europa.eu/pub/pdf/other/20121107_morganti.en....
- cperciva 10y ago
  I'm reading "must" as meaning "or else we'll declare that you've defaulted on your loans". It's unlikely that Germany would invade Italy or Greece in order to seek loan repayments, but it's quite likely that such a declaration would be ruinous for their economies.
  - abduhl 10y ago
    The economies of these countries have already been ruined by ECB policies - that is why they are (and have been) discussing leaving the EU. Britain is the first of many, in my opinion, and their economy was strong relative to others in the EU who are being screwed. It appears to me that the EU is finally learning what the USA learned long ago: economic policy is sovereignty. If you cannot control your own economy then you are subordinate to who can: the states are subordinate to the federal government just like the lesser EU countries (Greece, Italy) are subordinate to France and Germany.
    - jimnotgym 10y ago
      Leaving the Euro zone has nothing to do with leaving the EU. Italy and Greece have borrowed too much money from Germany and want a way out of it. At the moment the EU seem rather keen to stay together against Britain and against a hostile sounding US president
SFJulie 10y ago
Europe is actually looking like a drug dealer. They give to countries like Poland "free" funds that are not required, and when you say you want to leave, they brag that your dose worthed a lot more. Being french, but seeing french predating companies (SG, orange, carrouf, auchan, go sport, decathlon, campanile, renault, vinci, valeo...) setting themselves in Poland with EU funds and destroying local economies (fr & pl) makes me want to puke. I fucking hate THIS europa. I don't hate europa, I love my polish wife as much as she loves me. I am just pissed off that the we let private interests rule our countries. Well, now that Trump is elected, I know americans will be as much fucked in the arsch as we are. lol At least now, we are not alone to be fucked
ww520 10y ago
Are leaving euro and leaving EU the same thing? Can a country leave EU but keep the euro? UK was lucky to retain its currency independence.
- MistahKoala 10y ago
  No, they are separate things. There are non-EU states that use the Euro as a currency, which demonstrates that EU membership is not a necessity. The practicalities of a seceding member state retaining the Euro would probably be fraught with difficulties, though.
- microtherion 10y ago
  As far as I can tell, "keeping the Euro" would simply involve for the country to declare the Euro legal tender. Even if the EU wanted to prevent that, it's not clear to me how it would. That does not mean that the country would have a say in Euro governance (controlling the mount of Euro "printed"), but the ECB is fairly independent anyway. According to this list, several smaller non-EU countries are using the Euro already (and several countries worldwide are using the Dollar, including Zimbabwe—pretty sure they don't get invites to FOMC meetings): https://qz.com/260980/meet-the-countries-that-dont-use-their-own-currency/ https://qz.com/260980/meet-the-countries-that-dont-use-their...
  - cm2187 10y ago
    But I think it is unlikely to go that way. Countries would either leave the euro and remain in the EU, or leave both. Monetary independance is high on the agenda of pretty much every populist party in Europe.
- Lazare 10y ago
  > Can a country leave EU but keep the euro? Technically, yes, although you'd probably lose your seat on ECB. It's not like you can be stopped from using whatever currency you want; Kosovo and Montenegro have unilaterally adopted the euro, much as some countries (eg, Zimbabwe) use the US dollar. Of course, you have zero control over monetary policy, but then, just ask Greece how much control they have as an official member. :) As a practical matter, however, it's hard to imagine. Most of the reasons why a country would leave the EU would involve wanting more control, and a big part of that is likely to be wanting your own currency.
Mikeb85 10y ago
I'm curious how he figures a nation leaving the Eurozone would be 'required' to pay off their debts first. Wouldn't the debts just carry over anyway? It's not like a country leaving would necessarily default on their loans, just like staying in the Eurozone doesn't ensure timely payment of loans. Good luck enforcing this, especially when multiple countries vote for nationalist governments...
- toomuchtodo 10y ago
  Its actually pretty easy to enforce if you still need a trade partner. We'll just embargo your goods at the dock and charge you daily storage fees. (We as in countries exacting their pound of flesh). If you don't want an activity to occur, you must disincentivize it financially.
  - Mikeb85 10y ago
    And how do you ensure compliance when half the Eurozone wants to exit? Yes, you can exact revenge against one rogue member, but several at the same time? Not to mention, ruining their economy also ensures you won't get paid. Will private creditors stand for that?
    - jimnotgym 10y ago
      That is not at all clear Mike. Even the French nationalists have dropped their calls to leave. This sounds opinion based
      - Mikeb85 10y ago
        Really? http://ici.radio-canada.ca/nouvelle/1012240/allemagne-marine-le-pen-europe-droite http://ici.radio-canada.ca/nouvelle/1012240/allemagne-marine...
        pikzen 10y ago
        The plan to drop out of the EU was removed from the FN's website because it was the one measure that was too unpopular with their voter base. Of course, it may just be for appearances, but I guarantee you that any Frexit plan would start up a shitstorm the likes of which have never been seen, and I wouldn't feel safe in the Elysée
spikels 10y ago
Surprised to see this at the top of the page. Doubt HN is a good place to discuss this.
- daveguy 10y ago
  Agreed. I flagged it. Political issues without a technology aspect are not HN topics. I expect a lot of people will be upvoting political issues over the next few days.
  - cardiffspaceman 10y ago
    Is there a high-quality discussion of this on reddit/r/worldnews or some other area of reddit? Absent that I don't think you'll do better than what I'm seeing here, realistically.
- cm2187 10y ago
  The only interesting things in this world are how Rust can do it better and how to negociate stock options in the silicon valley.
  - closeparen 10y ago
    It's rarely a high-quality discussion when people who loudly profess their contempt for serious students and practitioners of the social sciences and humanities go on to make broad, confident claims about international relations, economics, and political philosophy. It's like a homeopathy forum discussing a medical research paper.
    - cm2187 10y ago
      I think you would be surprised by the diversity of HN readers. It has a much broader audience than just technologists.

45 points by cinquemb 10y ago

rokosbasilisk 10y ago

It seems like they are preparing for more exits, the world has changed a lot in one year.

PaulHoule 10y ago
Fortunately if the EU breaks apart, the 800 billion euro debt to Germany will be just enough to buy lunch.
- sean_patel 10y ago
  > 800 billion euro debt to Germany. Wow! Didn't know about this. Do several countries owe Germany this debt? How?? Also if true, then Germany will also see a lot of Social unrest and the anger will be (unjustly) directed towards Refugees. And with all the young high-testonterone Arab refugees now living in Germany, and a civil unrest in the horizon, Germany seems to be 1 dangerous place to be in right now, especially for young single German women.
  - jimnotgym 10y ago
    Which you will hear a lot more of in the UK and US press than you will in Germany
  - neximo64 10y ago
    Target2. While you may take this tone, there are serious shortcomings. Such as a bit of Germany's budget being financed through Greece's misery and borrowings from Target2 when Greek funds were put into the German banking system. The way the ECB works is its built on National Central Banks lending each other funds and paying interest on borrowings to each other. So take Euros from Greece and put them into Germany means Greece borrows those Euros back.
  - tele 10y ago
    The rate of rape in Germany is 9.37 per 100,000 people.[Wikipedia] The rate of rape in the US is 26.95 per 100,000 people. [FBI UCS Annual Crime Reports]
    - sean_patel 10y ago
      > The rate of rape in Germany is 9.37 per 100,000 people.[Wikipedia] Wrong. Wikipedia now shows > The rate of rape in Germany is 3470 per 100,000 people. (guess who updated it :) Quote a better source for your stats please.
      - knowaveragejoe 10y ago
        Not only does Wikipedia[1] not reflect the statistics you're quoting, I find it hard to believe the rate of rape increased from 9 per 100,000 in 2009 to 3470 just 7-8 years later. Please provide your source.
      - tele 10y ago
        Are you going to source your stats, or simply make the claim that the rate of rape in Germany is 26 times that of South Africa, with 132.4 per 100,000?
cm2187 10y ago
I think the big question is the Italian elections of 2018. I understand the 5* movment is already pretty much the strongest political party. If they take over the parliament, this may mean the exit of the EU or euro. The Netherlands are probably close too, with elections in March this year, though I understand Wilders is unlikely to have enough seats to take power. Le Pen in France is unlikely to make its break through at the elections this year, but it is not inconcievable in 5 years. I am of the opinion that the days of the EU are numbered. High unemployment, slow growth, combined with African & Middle-East immigration and Muslim fundamentalism are going to put increasing pressure on traditional social-democrat parties, and with this a general momentum (Brexit, Trump). It may be that the UK might enjoy the status or independant safe heaven when it all happens and investors run to the door and that Brexit turns out to be a blessing in disguise.
- alva 10y ago
  Extremely interesting times indeed. Massive political changes will always involve a certain amount of pain, but I believe the writing has been on the wall since 2008 and from political actions taken since. The problem as I see it, is that the EU is trying to stop the tide. I believe this will fail due to the sheer amount of frustration felt by many of the populations who have not necessarily received or appreciated the globalisation as it has been implemented so far. Unfortunately for the EU, the only changes that could save itself are antithetical to its hardcore believers and leaders who are in charge. Those who are looking to turn Europe into essentially one country (sounds crazy, but that has been the long and relatively successful game from the beginning), will not budge on a few key issues which are vital to their end game. The David Cameron negotiation was an example of this. If the EU had dropped Freedom of Movement, UK would have almost certainly remained. Ideology vs pragmatism. Old story.
  - cm2187 10y ago
    Rather, the EU is in a deadlock. It is stuck with a partial integration. The only solution that would save it, i.e. complete the integration and make it a federal government, is now impossible in the current political climate. So it is left being a collection of laws and treaties with no clear leadership and direction of travel, and therefore will keep accumulating grievances without being able to do anything about them.

abduhl 10y ago

My understanding of how withdrawal from the EU works is that a country's withdrawal occurs 2 years after they invoke the Article 50 process regardless of whether a final agreement has been made with the EU. Is this not correct? If it is correct, how can the ECB make this statement without it essentially being a threat of war? Edit - many below have noted that leaving the Eurozone and leaving the EU are distinctly different. I disagree. As I understand the EU charter, there is currently no way to leave the Eurozone without also leaving the Union. From Wikipedia, this is actually the exact position that Draghi espouses: "Regarding your question on withdrawing from the euro without leaving the EU, this possibility is not foreseen in the Treaties. The Treaty of Lisbon does not include this possibility, precisely because of the irreversibility of the move to the third stage of EMU for Member States." http://www.ecb.europa.eu/pub/pdf/other/20121107_morganti.en.pdf http://www.ecb.europa.eu/pub/pdf/other/20121107_morganti.en....

cperciva 10y ago
I'm reading "must" as meaning "or else we'll declare that you've defaulted on your loans". It's unlikely that Germany would invade Italy or Greece in order to seek loan repayments, but it's quite likely that such a declaration would be ruinous for their economies.
- abduhl 10y ago
  The economies of these countries have already been ruined by ECB policies - that is why they are (and have been) discussing leaving the EU. Britain is the first of many, in my opinion, and their economy was strong relative to others in the EU who are being screwed. It appears to me that the EU is finally learning what the USA learned long ago: economic policy is sovereignty. If you cannot control your own economy then you are subordinate to who can: the states are subordinate to the federal government just like the lesser EU countries (Greece, Italy) are subordinate to France and Germany.
  - jimnotgym 10y ago
    Leaving the Euro zone has nothing to do with leaving the EU. Italy and Greece have borrowed too much money from Germany and want a way out of it. At the moment the EU seem rather keen to stay together against Britain and against a hostile sounding US president

SFJulie 10y ago

Europe is actually looking like a drug dealer. They give to countries like Poland "free" funds that are not required, and when you say you want to leave, they brag that your dose worthed a lot more. Being french, but seeing french predating companies (SG, orange, carrouf, auchan, go sport, decathlon, campanile, renault, vinci, valeo...) setting themselves in Poland with EU funds and destroying local economies (fr & pl) makes me want to puke. I fucking hate THIS europa. I don't hate europa, I love my polish wife as much as she loves me. I am just pissed off that the we let private interests rule our countries. Well, now that Trump is elected, I know americans will be as much fucked in the arsch as we are. lol At least now, we are not alone to be fucked

ww520 10y ago

Are leaving euro and leaving EU the same thing? Can a country leave EU but keep the euro? UK was lucky to retain its currency independence.

MistahKoala 10y ago
No, they are separate things. There are non-EU states that use the Euro as a currency, which demonstrates that EU membership is not a necessity. The practicalities of a seceding member state retaining the Euro would probably be fraught with difficulties, though.
microtherion 10y ago
As far as I can tell, "keeping the Euro" would simply involve for the country to declare the Euro legal tender. Even if the EU wanted to prevent that, it's not clear to me how it would. That does not mean that the country would have a say in Euro governance (controlling the mount of Euro "printed"), but the ECB is fairly independent anyway. According to this list, several smaller non-EU countries are using the Euro already (and several countries worldwide are using the Dollar, including Zimbabwe—pretty sure they don't get invites to FOMC meetings): https://qz.com/260980/meet-the-countries-that-dont-use-their-own-currency/ https://qz.com/260980/meet-the-countries-that-dont-use-their...
- cm2187 10y ago
  But I think it is unlikely to go that way. Countries would either leave the euro and remain in the EU, or leave both. Monetary independance is high on the agenda of pretty much every populist party in Europe.
Lazare 10y ago
> Can a country leave EU but keep the euro? Technically, yes, although you'd probably lose your seat on ECB. It's not like you can be stopped from using whatever currency you want; Kosovo and Montenegro have unilaterally adopted the euro, much as some countries (eg, Zimbabwe) use the US dollar. Of course, you have zero control over monetary policy, but then, just ask Greece how much control they have as an official member. :) As a practical matter, however, it's hard to imagine. Most of the reasons why a country would leave the EU would involve wanting more control, and a big part of that is likely to be wanting your own currency.

Mikeb85 10y ago

I'm curious how he figures a nation leaving the Eurozone would be 'required' to pay off their debts first. Wouldn't the debts just carry over anyway? It's not like a country leaving would necessarily default on their loans, just like staying in the Eurozone doesn't ensure timely payment of loans. Good luck enforcing this, especially when multiple countries vote for nationalist governments...

toomuchtodo 10y ago
Its actually pretty easy to enforce if you still need a trade partner. We'll just embargo your goods at the dock and charge you daily storage fees. (We as in countries exacting their pound of flesh). If you don't want an activity to occur, you must disincentivize it financially.
- Mikeb85 10y ago
  And how do you ensure compliance when half the Eurozone wants to exit? Yes, you can exact revenge against one rogue member, but several at the same time? Not to mention, ruining their economy also ensures you won't get paid. Will private creditors stand for that?
  - jimnotgym 10y ago
    That is not at all clear Mike. Even the French nationalists have dropped their calls to leave. This sounds opinion based
    - Mikeb85 10y ago
      Really? http://ici.radio-canada.ca/nouvelle/1012240/allemagne-marine-le-pen-europe-droite http://ici.radio-canada.ca/nouvelle/1012240/allemagne-marine...
      - pikzen 10y ago
        The plan to drop out of the EU was removed from the FN's website because it was the one measure that was too unpopular with their voter base. Of course, it may just be for appearances, but I guarantee you that any Frexit plan would start up a shitstorm the likes of which have never been seen, and I wouldn't feel safe in the Elysée

spikels 10y ago

Surprised to see this at the top of the page. Doubt HN is a good place to discuss this.

daveguy 10y ago
Agreed. I flagged it. Political issues without a technology aspect are not HN topics. I expect a lot of people will be upvoting political issues over the next few days.
- cardiffspaceman 10y ago
  Is there a high-quality discussion of this on reddit/r/worldnews or some other area of reddit? Absent that I don't think you'll do better than what I'm seeing here, realistically.
cm2187 10y ago
The only interesting things in this world are how Rust can do it better and how to negociate stock options in the silicon valley.
- closeparen 10y ago
  It's rarely a high-quality discussion when people who loudly profess their contempt for serious students and practitioners of the social sciences and humanities go on to make broad, confident claims about international relations, economics, and political philosophy. It's like a homeopathy forum discussing a medical research paper.
  - cm2187 10y ago
    I think you would be surprised by the diversity of HN readers. It has a much broader audience than just technologists.