There’s no need to put champagne on ice.

There will be no free lunch.

A star chamber would have to review an application for a new bailout and all EZ members would have to give their consent.

No updates on benchmarking ATMs on horizon.

Poor little Ireland: bankers raping nuns as they trample across Leinster!

Edgar
Please read the article for an answer! To everyone else, Greece will lose half its GDP and still face all its debt. Bit like Ireland really, as when the building demand does return, there will be no cpaital for banks to offer mortgages. (Only joking! Capital like that is made by fiat.)

Economic warfare has been practised by Europeans against the rest of the world, with the Americans eventually beating them at their own game. Now there is a fight back, with China, Taiwan,Korea joining in. Japan is a bit of a casualty, but doing OK since it is shrinking population. Debt per capita is rising a little ……

Merkel has recognized the inevitable. The Greeks won’t or can’t pay. Ireland has a very nice minister of finance who said that the Irish debt is manageable and that the paddies are quite happy to see an increase in taxes as services are cut to pay for the follies. However unfortunately democratic governments change…

If I was a German saver, I would worry that my job and my savings were at risk.

If I was An Taoiseach, I would be exploring the possibilities offered by the Chencellor. Default, devaluation and tighten fiscal policy. Have we got the cash from the ECB for the NAMA bonds yet!!!

Well, that and an unresolved tension at the heart of the Eurozone - is it the embryo of a fiscal union where the centre both stands behind, and has final control over, the members’ budgets, or is it a union of sovereigns where neither is the case? (Of course this ambiguity isn’t entirely unintentional; witness for example Joschka Fischer and the ‘inexorable “federal logic”‘.) Even now the German government is still chasing both hares, pushing deficit sanctions at the same time as it talks about allowing for default.

The self-interest of the banks and their agents, and its Siamese twin, the imperative to have no more Lehmans no matter what. Both of those goals require that the banks be protected from a Greek default, but it’s much easier to sell Germans on saving the Euro, or even saving Greece, than on saving SocGén. Also a touch of untenable EU hubris (”default in our glorious Eurogroup?”).

Mind you, the banks may have a point. Is anyone confident that even an orderly Greek default won’t be another Lehman?

“If we go down this road the entire periphery may as well ‘restructure’ in one go, and get it over with.” - I raised that possibility in the Sunday Business Post a couple of weeks ago. The instinct in Germany is to let Greece drop, but they worry about the consequences and who is going to get blamed, so now they are getting around to the idea of a structured default. They could handle Ireland and Portugal too but I am not sure about Spain and Italy.

The way in which the only plausible leaders the EU has seem to be making it up as they go along is alarming.

Banks with more deposits than they can place in profitable lending used to be able to easily justify having a bond trading desk. Now it appears that the bonds that have been bought weren’t as safe as expected, banks who sold bonds seems to have used softer (too soft) lending criteria and countries with deficits might have to restructure their debts. The profits for buying bonds might not be profits for much longer…..

In the current environment: What are the benefits of having a bond trading desk compared to either lending more where the bank has full control of the lending decisions and/or decrease the amount of deposits taken?

Lower the interest given to savers in Germany & France and maybe (unlikely but still) the savers might opt for spending instead, thus rebalancing the conomy a bit. Or maybe with lower cost of capital the banks in those countries might stop from going for the higher yield/risk bonds

If this is so, then it is interesting to consider how such a consensus emerged around the contrary hypothesis - that Greek default would somehow cause the euro currency to fracture, or represent a mortal blow to the EU itself.

Groupthink?

This article agrees. But doesn’t mention Ireland at all. A positive. Greece is said to need half of its GDP removed to be viable ….

Greece doesn’t have a currency problem It has a debt problem and an orderly default/restructuring/rescheduling is the only answer.