SS Euro

[Suff]

Steaming full speed ahead towards the iceberg.

This is probably more visible to me than most as I get paid in Euro and repatriate it into £ in my UK bank accounts. So the ECB is looking like it's going to start Quantitative Easing with a statement due on Thursday at the monthly ECB meeting. The Euro is now trading at around €1.3 to the £ down from 1.23 when I took the job in June.

At the same time the Swiss National Bank just severed the self imposed peg with the Euro. Which means to me that they expect wild changes in the value of the Euro over the next few months as a result of QE.

Then the iceberg. The ECB will exclude Greece from the QE. Which means that the first and only true stimulus package to make the EU economy grow is being denied the Greeks. The statement will happen on Thursday. Did someone forget that the Greek elections are on Sunday? Or that this will massively play into the hands of Syriza? Or that, of the 74% of Greeks who support the Euro, this attempt to exclude the Greeks from the benefits of the Euro will play badly in the polls?

Or was it jus that the pressure finally hit the release valve and it was a case of blow the valve or blow the economy. Would one more month really have caused so much damage? It must do because I can't see any way that this message could possibly be interpreted by the Greeks as anything other than an attempt to "cast off" the Greeks from the core Euro Zone and make a two speed Euro. One for those who are doing well and one for those who are not. It may well be a case of "Portugal and Ireland don't bother applying" too.

I did say, those years before, that Greece was a matter of "when" not "if". It was believed that the austerity and draconian actions from the ECB would keep Greece in the Euro and that the electorate would "see the benefit" and vote to destroy their economy rather than leave a currency which can do nothing for them but harm them over the next 100 years. Perhaps the people will be told the truth. That those who are lending them money are those that hold their debt and that the Greek economy is now in surplus. It is like the bank which holds your credit card demanding you take a loan out to pay off the interest on your credit card whilst paying back only a small part of the debt, rather than clearing the card and paying the loan. They get interest on the loan and they take high interest on the credit card. BUT, for the rest of your life and your children's lives...... In the end the only one's who win are the financial institutions to whom Greece are paying more interest than debt. Both on the bonds and on the bailout.

So we are back where we began in 2010. Greece is tottering on the Brink, her banks are looking for refinancing again, but they are being held back from the stream of money being poured into the EU. It's like dying, slowly, of thirst, whilst the rich pour water into the desert to hope that some crops will grow.

The ECB and the rich nations of the Euro believe they now have a stable enough climate that they can dictate to Greece without major impact to the Euro. They believe that the PIIGS will not leave and will always just do as they are told. However the jokers in the pack are Spain and Italy. You could take Portugal, Ireland and Greece and wrap them into the Spanish debt with room to do it all over again. Spain is back to elections again this year and one of the parties is talking that investors have to take a haircut (loss) on 1 Trillion Euro of debt. Given that causing a haircut is effectively a default, it's unlikely that they will do it for less than 75%, which is what Greece did with their debt. If Spain make that happen they'll be forced out of the Euro. Spain is approx. $1.3tn GDP, Italy is approx. $2tn GDP and even more in debt than Spain. Forget Portugal and Ireland, making a bad misstep with Greece this month could cause total havoc in the Euro because there is time to see the true impact of Greece getting the boot by the time the Spanish go to the polls.

Interestingly the only election which will not be influence the EU or the Euro, this year, is the UK elections. They don't care that much about us and we don't care that much about them. Which is a very revealing status as to staying in the EU, isn't it???

[Workingman]

So what's the big deal?
A country with a minuscule GDP is going to default - boo hoo.
Who actually cares?
There will come a point when all companies and countries will default. And even if they don't the Earth will still limit their ability to increase profits,

We are screwed.

Wake up, people. It makes no matter what we do we are in deep do-do. When the big crash happens, and it will, the survivors will be the poor with artisan skills. The spivs and their mates will be screwed.

Buy some land on a hill and build a house.

[Suff]

Buy some land on a hill and build a house.

More than two days walk from the nearest big city [check]
With ground to grow your own food [check]
Defensible [maybe]
Weapons [working on it]
Power self sufficiency [also working on it]


Reality is that if it all goes to hell, the spivs and their mates will leave the cities and take everything they can get their hands on, stop production of food in the country and kill whoever gets in their way. All whilst waiting for someone from somewhere to rescue them.

Then they will starve and die, taking everyone else with them except those who managed to get far enough away with enough supplies and skills to survive.

Sad but oh so true.... It is the world we live in today. "Entitlements". Translation? They're entitled to what you have. Just "because". Successive governments have fostered this illusion and it is now firmly fused into the belief's of our city dwellers...

However, having said that, there is no reason why those who are paid to keep us going should drive us off the cliff. Which is what the ECB is doing right now. It's not what a piffling small Greece will do to the economy. It is what the investors will do when they smell blood in the water. They will drive each of the vulnerable countries off the cliff, one by one, in the hope of making a small (or large), fortune in the process. Not caring how many they damage in the process.

The job of the ECB, the commission and the council, is to ensure that this does not happen. They are not doing their job...

[cromwell]

I don't think that the role of Goldman Sachs should be forgotten in all of this. Greece never qualified for the conditions set to join the Euro, but there was a big political push for them to do so. Goldman Sachs were brought in to get "creative" with the Greek accounts and next thing you know, it's welcome onboard the SS Euro for Greece.

Leaving aside all the politics I'm aware that there are millions of ordinary Greeks and Spaniards who never deserved the economic collapse, who never deserved massive unemployment rates but got them anyway.

[Workingman]

Today the IMF has revised its global growth forecast for the next few years downwards.

Yesterday it was revealed the 1% of the world's population has 99% of its wealth.

Tomorrow the SS Euro is going to print money like there's, well, no tomorrow.

And the Greeks will do what the Greeks will do.

I am glad that I do not have enough wealth or money to worry too much about these things. When the crash comes I might bump my elbow, but not much more. The problem will be avoiding all those from up above splattering the pavements.

[Suff]

The only reason the ECB is going to have to print quite so much money is that they didn't do it 4 years ago like all the other major economies. Basically Germany has deep reservations about printing money. After all, their last experience with that led to 8.5 million dead and a reputation in the world which will take hundreds of years to wash away.

However here is the point in case. Germany is not the EU and is not the Euro. It is no better than 25% of the EU economy and 1/3 of the Euro economy. Yet, it seems to have almost full veto on the workings of the ECB....

If nothing else it should highlight why Britain, Sweden and Denmark should never join. It should also tell the Greeks that they are much better off out until they finally fix their economy. Of course allowing Greece to absolve themselves from debt will destroy German wealth, gained on the back of EU debt. Which is another less forgivable aspect of the German refusal to print money.

I requested my December pay yesterday, it should have been paid Sunday. Mainly because I think the Euro is going to tank Thursday and Monday and I don't want to take the hit. It's already dropped more than 5c since I started in June last year. That hurts... Another 10 and I would be hurting a lot more.

[TheOstrich]

They've announced no UK interest rate rise for at least a year, apparently, as we try and avoid the icebergs out there ....

[Suff]

In reality an interest rate rise was on the cards. Until the Oil price tanked. Other prices continue to rise and core inflation without oil continues to rise, but the cost to households is dropping with the cost of oil. So no real need to raise rates just yet.

But it will come and when it does, this pause will probably make the path steeper and shorter to higher rates. In some ways it would be much better to grasp the nettle now, raise a small increment and get people used to it.

In the end they bottled it, possibly due to the election coming. That is going to cause more pain down the line somewhere.

Granted our economy does not stand alone and is tied, in a large part, to the EU. But our economy continues to outstrip the EU and continues to grow outside the EU. So our policies should not be wedded to the EU. If the EU, as expected, goes into another recession and order books fall, then the UK is going to push even more business outside the EU. Making the UK susceptible to other actions in the world. Something our monetary policy should be geared to.

At least the rate decision stopped the rot for me at the moment. My monthly loss stands at just short of £400. I expect that to deepen tomorrow.