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Answer: If you're Spain, 3 days.
http://www.bbc.co.uk/news/business-18405729
Eurogeddon redux. After getting a €100billion bailout on Friday, on Tuesday Spain's borrowing has hit euro-era records and unsustainable levels. Italy too is now back in the cross-hairs.
Surprise, surprise once more that another euro-fix of more loans hasn't fixed the debt crisis. No doubt we'll have another euro-conference next week after Greece's election this Sunday (my 30th birthday).
Where's Hazir when you need him to rescue Europe?
I think Hazir has seen the writing on the wall for his great European project and that is at least a great part of why he's gone. He doesn't want to eat the humble pie that goes with being comprehensively and categorically wrong.
Whether the project survives or not in the long term, I think the market is grossly overreacting here. It has a tendency to underestimate risk until the risk hit it in the face, and then it goes into all-out panic mode. If the EU manages to find a solution to this mess, I think the markets will move on to strangle some other country within a year.
The problem is this mess has been going on for five years without getting resolved. There is no evidence that the government have the ability or willpower to agree serious solutions.
The Euro was always a political and economic project and fundamentally flawed. Like communism it was founded on ideals and optimism and not reality and this is starting to feel a bit like the late 80s as reality is hitting.
So, let's say they didn't take the in retrospect catastrophically bad decision to allow Greece into the Euro. Where would be today?
Talking about Spain, Italy etc instead.Quote:
Originally Posted by Steely Glint
Yeah, but saying what.
I would honestly be curious to hear Hazir's views on this, though I generally got the sense he felt this was predictably without the ever-greater union he always wanted.
Candidly, I see this as an indictment of "social democracy" more than the Euro. The Euro has just made economic slowdowns and an entitlement/debt crisis into a full-blown fiscal crisis.
I think Spain's getting a bit of a bad rap here. Their debt-to-GDP is really not that bad yet (and they, like Ireland, had pretty reasonable debt and deficit numbers before the crisis). Rajoy has been fairly candid with the eurozone and markets about their deficit path, and he's made a credible attempt to reform labor markets and rein in local gov't spending. It hasn't had much of a chance to work yet, but much of Spain's current pain has to do with (1) poor eurozone growth as a whole, (2) one large bank in serious need of recapitalization (Santander and BBVA really don't need it, they're in decent shape and have a strong int'l presence), and (3) Greece. Most of that isn't their fault, and I think markets are being a bit unfair to Spain.
The real issue is that markets are afraid of a wide breakup of the eurozone. Now that they're pretty sure Greece will exit in the coming month(s), they're looking to the next most vulnerable members of the eurozone. While Spain is not insolvent, markets are assuming that a Grexit will be only the beginning of an avalanche. If that is so, Spain is likely to be among the first of the second group to exit the euro in order to regain competitiveness. I find it pretty cynical of markets, though, given that Spain has been making a credible effort to deal with their issues in order to remain within the euro.
There's no question that Spanish banks have problems - many of their smaller banks are complete disasters, and Bankia in particular desperately needs capital. But the real culprit here is not Spain - it is too-timid eurozone leaders and regulators. While this Greece mess was brewing years ago, they should have established a huge firewall to buffer any effects of a Grexit and reassure markets that the euro would still be around for the time being. There are any number of worthwhile reforms they could have done that would have halted this kind of panic - mutualization of debts, a 'banking union' with common deposit guarantees and lenders of last resort, etc. But a combination of German stubbornness and French preoccupation has let matters come to a head. Now there's little if any time to prevent utter disaster.
Saying that creating a new currency might have been a bad idea?Quote:
Originally Posted by Steely Glint
Germany is doing well, though. I think the problem is disparate political/national ideologies can't become a "unified bloc" just because they share a currency or central bank.Quote:
Originally Posted by Dreadnaught