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Option one, banks will join in the rescue effort and the ECB will allow for a temp default of greece. Ewald Nowotny hinted this today. Option two, "Eurobonds"

by skyhyve 15y ago

Option one, banks will join in the rescue effort and the ECB will allow for a temp default of greece. Ewald Nowotny hinted this today. Option two, "Eurobonds" will be issued. This will allow Germany to lend money for Greece at a very low interest. (costs Germany a lot of money as their national interest will be increased, last resort) Option three, some of the debt will be dropped and reissued as longer ten year loans releasing the choke hold. Paul Achleitner from allianz hinted. Option four, EFSF will buy Greek bonds. Unemployment rates went down in Greece from 16,2% to 15,8% last month. Which hints their economy is growing a bit. There's talk of a banking tax, which let banks pay a small % to help build a buffer for these situations. I'm personally more worried about the United States then the euro zone.

ristretto 15y ago
regarding unemployment, i would very much doubt the economy is growing, and it's not going to grow for a good 1-2 years. Unemployment drops in the summer months because of tourism, too.
nhaehnle 15y ago
Unemployment rates went down in Greece from 16,2% to 15,8% last month. Which hints their economy is growing a bit. Careful: The implication "unemployment rate goes down => economy is growing" is not true in general. The rate of unemployment is always defined relative to the active part of the population, where active means either employed or looking for work. In extreme downturns, as Greece has experienced, the participation rate naturally drops because people become disillusioned. This can have the bizarre effect that the unemployment rate drops even though the total number of jobs actually decreases. So the absolute number (and then also the rate) of unemployed decreases not because the unemployed become employed, but rather because they become economically inactive (i.e., they give up). I am not sure if this is what is happening in Greece, but I wouldn't be surprised if it was. The interfaces of most national statistics institutions are really horrible, so I haven't looked at the numbers. I assume you got those numbers out of some newspaper or similar, and I just wanted to point out that especially in extreme economic circumstances, reporting only the unemployment rate is irresponsible - but unfortunately, that's what most media is. Final thought: Comparing the United States to the Eurozone is to misunderstand the nature of the beasts. Both have a common currency, but the US has a significant central monetary sovereign. The Eurozone has no monetary sovereign. The differences this implies are enormous.

by skyhyve 15y ago

ristretto 15y ago

regarding unemployment, i would very much doubt the economy is growing, and it's not going to grow for a good 1-2 years. Unemployment drops in the summer months because of tourism, too.

nhaehnle 15y ago

Unemployment rates went down in Greece from 16,2% to 15,8% last month. Which hints their economy is growing a bit. Careful: The implication "unemployment rate goes down => economy is growing" is not true in general. The rate of unemployment is always defined relative to the active part of the population, where active means either employed or looking for work. In extreme downturns, as Greece has experienced, the participation rate naturally drops because people become disillusioned. This can have the bizarre effect that the unemployment rate drops even though the total number of jobs actually decreases. So the absolute number (and then also the rate) of unemployed decreases not because the unemployed become employed, but rather because they become economically inactive (i.e., they give up). I am not sure if this is what is happening in Greece, but I wouldn't be surprised if it was. The interfaces of most national statistics institutions are really horrible, so I haven't looked at the numbers. I assume you got those numbers out of some newspaper or similar, and I just wanted to point out that especially in extreme economic circumstances, reporting only the unemployment rate is irresponsible - but unfortunately, that's what most media is. Final thought: Comparing the United States to the Eurozone is to misunderstand the nature of the beasts. Both have a common currency, but the US has a significant central monetary sovereign. The Eurozone has no monetary sovereign. The differences this implies are enormous.