I dont believe that is meaningful. If Greece leaves the EMU what is Germany going to do, send tanks to Athens? The whole legal framework has been trashed, they are doing whatever they want these days
Does this suprise you, Daal? Your tone suggests so. Is this not a global phenomenon policy makers will use every tool at their disposal to keep the world from reentering a second great depression as occured in the 30's or so they claime. If this means a few rules need to be bent, so be it right?
i do not think they are trying to keep the eu together because they think it will stop the recession but because it makes them more powerful. they are all trying to be the leader of a federal system. they don't care if there is a recession it makes them more powerful in some ways. people have less money to fight back. they have to become soldier and fight for the government. a military federal system is made. it is one outcome.
I don't know about that because national sentiment is rising (particulary in Germany obviously and in the southern countries also) and political power for those who oppose the status quo is there to grab. Those in charge are aware of this and will have to move forward carefully. I think, as always, the banks had politicians by the balls and warned them they were going to start to collapse and shut down soon if nuclear option was not taken. And obviously politicians did what they felt was necessary and who could blame them... Which politician would want to see his citizens being wiped out during his term? We as a western society have forgotten about the art of accepting the consequenses of failed policies. That's something for African Banana nations. I am no different mind you but at least I am aware of it.
Well, I'm in the camp that believes the US government did not let LEH fail but rather we had a situation where the legal framework made it very hard to save them given the lack of authorities the UST secretary had, and the results were dramatic. This EU situation is just amazing, they are ignoring every rule possible. It doesnt seem like they can run on any type of constraint because they will just ignore it
Martinghoul, I have this kind of silly question really but individual countries in the EU do actually print money themselves but the amount is restricted by orders from Frankfurt I presume. So, in theory Greece could print half a billion 500 Euro notes and ship them over to their foreign creditors could they not? From Wikipedia: 'Legal tender or forced tender is an offered payment that, by law, cannot be refused in settlement of a debt, and have the debt remain in force.' "National laws may also impose restrictions as to maximal amounts that can be settled by coins or notes." Arer you aware of such restrictions being implemented out of precaution for places like Greece to act accordingly? I know it's really silly, not an option at all, but it has been bugging my mind for quite some time now regardless. All is fair in love and war, right. Thanks in advance for any answer.
Well, yes, in theory the national central banks (NCBs) are the ones actually printing (and receiving the seigniorage income). However, the flip side is that the NCBs contribute capital to the ECB. ECB is also the entity distributing all income to the NCBs. Moreover, banks (i.e. the monetary transmission channel) operate solely through the ECB (i.e. your collateral and reserves are with the ECB, rather than your NCB). All this means that the NCB can print whatever it wants, but it won't actually help much. Obviously, if you're talking about the NCB violating all the rules then anything is possible, but then, if I had to guess, they'd forfeit their contribution to ECB's capital. Obviously, all bets are off if things completely break down. I'll have to think some more about this, but that's it, off the top of my head.
Check this from Joachim Fels: Euro Wreckage The whole thing is interesting, and Fels has recently argued that it's far more likely a country like Germany would leave than a country like Greece. But page 4, the paragraph "Check Your Notes and Coins" is relevant to what you guys are batting around. Note as well that at the time Fels wrote this the smaller countries like Spain were mad at France and Germany for violating the SGP. Round & round we go...
Yes, I've actually read this piece from Fels a couple of days back. It's a bit short, to be honest. Moreover, in various follow-up discussions, he's gone to great lengths to stress that the breakup of the EMU is not their central scenario and they're just exploring the outliers.
I read the original two (there were two) years ago, and they were a lot more detailed. It caused a bit of a sensation, since it meant a respectable mainstream guy was questioning the durability of the euro. The part about the NCBs still issuing the notes and still actually carrying out open market operations at the direction of the ECB was the part that stuck in my memory, as it shows that all the apparatus for reverting to a national currency is still in place. Which is interesting.