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Hm, if Greece defaults, probably Italy and Spain will follow soon after. At that point the EU will be dissolved and Germany (probably along with the Dutch and f

by atmosx 12y ago

Hm, if Greece defaults, probably Italy and Spain will follow soon after. At that point the EU will be dissolved and Germany (probably along with the Dutch and few others) might create a new "Union" with a very strong currency. At that point the countries of the South (and North? Ireland..?) will keep devaluing daily, while the markets will push Germany's new currency through the roof, turning exports virtually impossible. Unemployment will struck Germany and all hell will broke loose. Repercussions for the South will be devastating of course. That's not my preview. That's the scenario Varoufakis foresees and probably the author too. Makes a lot of sense to me, but Varoufakis might be wrong. Time will tell I guess. Just keep in mind that Greece, Italy and Spain are in dire straits anyway so the prospect of defaulting doesn't seem all that scary.

crdoconnor 12y ago
That sounds mostly accurate, but I still think Germany would try and push down the value of its currency to subsidize its exports. They have a long history of doing that.
- atmosx 12y ago
  Of course the government will try to somehow undervalue the new currency (probably by printing more - although historically German central bankers and Governments are not flexible like the Swiss for example), however doesn't depend on them. If everyone in Europe and abroad wants to park their assets in the new stable DeutscheMark, that alone could destroy exports. In the meantime everybody around (current markets of German products) will becoming a weak buyer.
NotableAlamode 12y ago
Are you kidding? You make it sound like Greece is doing everybody a favour by wasting EU money. Germany used to have its own currency and did very well exporting its goods. So does Japan, so does Singapore, so does Switzerland, so do Denmark and the US.
- coldtea 12y ago
  >Are you kidding? You make it sound like Greece is doing everybody a favour by wasting EU money. Maybe you should read up on the situation a little, instead of believing any old populist crap you read, because those comments border on racism.
  - andybak 12y ago
    The racism accusation is a little strong and isn't helpful to the debate. I do agree that the post you are referring to seems to be woefully devoid of any insight into the way the benefits that have accrued to the 'northern' economies and Germany in particular, from sharing a currency with Spain, Greece etc.
  - NotableAlamode 12y ago
    I do business in both countries and visit Germany and Greece regularly.
Atropos 12y ago
1) Spanish and Italian ten year bond yields are around 1,50, an all time low. Obviously the market doesn't think that Greece defaulting would have a huge impact on them. 2) Sweden and Switzerland both have strong currencies and are doing fine. Greece's problems have very little to do with the Euro: Look at rankings like the Doing Business Report, Transparency International's Corruption index, rankings of economic competitiveness - in all these rankings Greece is doing horribly! Look at the ARWU rankings of top 500 Universities worldwide (http://www.shanghairanking.com/ARWU2014.html http://www.shanghairanking.com/ARWU2014.html): Greece has 2 Universities in the top 500, Sweden has 11 and Switzerland has 7 (highly ranked) Universities. Look at patent filings, for example the US Patent office (http://www.uspto.gov/web/offices/ac/ido/oeip/taf/cst_all.htm http://www.uspto.gov/web/offices/ac/ido/oeip/taf/cst_all.htm): Sweden had 2413 patents filed in 2013, Switzerland had 2466 and Greece had 70 (!!!). Considering the countries comparable population size (Greece is biggest), this is a HUGE disparity!

by atmosx 12y ago

crdoconnor 12y ago

That sounds mostly accurate, but I still think Germany would try and push down the value of its currency to subsidize its exports. They have a long history of doing that.

atmosx 12y ago
Of course the government will try to somehow undervalue the new currency (probably by printing more - although historically German central bankers and Governments are not flexible like the Swiss for example), however doesn't depend on them. If everyone in Europe and abroad wants to park their assets in the new stable DeutscheMark, that alone could destroy exports. In the meantime everybody around (current markets of German products) will becoming a weak buyer.

NotableAlamode 12y ago

Are you kidding? You make it sound like Greece is doing everybody a favour by wasting EU money. Germany used to have its own currency and did very well exporting its goods. So does Japan, so does Singapore, so does Switzerland, so do Denmark and the US.

coldtea 12y ago
>Are you kidding? You make it sound like Greece is doing everybody a favour by wasting EU money. Maybe you should read up on the situation a little, instead of believing any old populist crap you read, because those comments border on racism.
- andybak 12y ago
  The racism accusation is a little strong and isn't helpful to the debate. I do agree that the post you are referring to seems to be woefully devoid of any insight into the way the benefits that have accrued to the 'northern' economies and Germany in particular, from sharing a currency with Spain, Greece etc.
- NotableAlamode 12y ago
  I do business in both countries and visit Germany and Greece regularly.

Atropos 12y ago

1) Spanish and Italian ten year bond yields are around 1,50, an all time low. Obviously the market doesn't think that Greece defaulting would have a huge impact on them. 2) Sweden and Switzerland both have strong currencies and are doing fine. Greece's problems have very little to do with the Euro: Look at rankings like the Doing Business Report, Transparency International's Corruption index, rankings of economic competitiveness - in all these rankings Greece is doing horribly! Look at the ARWU rankings of top 500 Universities worldwide (http://www.shanghairanking.com/ARWU2014.html http://www.shanghairanking.com/ARWU2014.html): Greece has 2 Universities in the top 500, Sweden has 11 and Switzerland has 7 (highly ranked) Universities. Look at patent filings, for example the US Patent office (http://www.uspto.gov/web/offices/ac/ido/oeip/taf/cst_all.htm http://www.uspto.gov/web/offices/ac/ido/oeip/taf/cst_all.htm): Sweden had 2413 patents filed in 2013, Switzerland had 2466 and Greece had 70 (!!!). Considering the countries comparable population size (Greece is biggest), this is a HUGE disparity!