Me neither.
Brexit Negotiations proceeding, er...... well...... er....
- Thread starter JohnD
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Doggit
No that's the point; once you're in the Euro, you're stuck there. If they still had the Drachma, they could devalue it, and then more tourists would flock there for cheaper holidays, they'd sell more olive oil as it'd be cheaper. None of the above countries would be stonger under their original currencies, but they wouldn't have been given loans that they can't repay, and they'd still be in control of their own destinies, so do you give a kid the keys to a sweet shop, when you know they have a sweet tooth, or do you act as a responsible lender. Did Brussels know what they were doing, or were they just being negligently irresponsible.
Greece being let into the Euro, was just a expansion opportunity by Germany and France, and now they seem to think they are European rather than mediteranian. They brought little to the table, but money flowed into them to help them out, so that's the fault of Brussels.
Greece being let into the Euro, was just a expansion opportunity by Germany and France, and now they seem to think they are European rather than mediteranian. They brought little to the table, but money flowed into them to help them out, so that's the fault of Brussels.
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Doggit
The Tories expected to hoover up the UKIP votes in the GE, but found they went back to Labour, so although you keep harping on about the RWR Noseall, so many that voted for Brexit were from the left. There were thickos on both sides of the electoral spectrum, and on both sides of the Brxit debate, and I never cease to be horrified when I see people on Question time showing they just don't understand what it's all about, so no, I don't think you'll educate the thickos any time soon.
I'm in the middle ground. How are loony lefties meant to appease me?
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So why can't Greece just devalue its goods that it sells? What theoretic evidence is there that Greece would be better off without the Euro?
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Doggit
No you're not Noseall; you've said you're left of centre, and it's not about the left, nor the right appeasing you. I just pointed out that there were no justifications to call those who voted for Brexit, as Right Wing *******, and that you're continued use of the phrase, firmly suggests you are on the left, even though you try and deny it.
As Greece can't devalue it's currency, the only way that they could devalue their goods, would be to reduce the price of them, and that would be like you selling your materials for less that you paid for them. Doesn't work. The increase in our overseas trade when the value of the pound dropped, is proof that Greece would be better off outside the Euro.
As Greece can't devalue it's currency, the only way that they could devalue their goods, would be to reduce the price of them, and that would be like you selling your materials for less that you paid for them. Doesn't work. The increase in our overseas trade when the value of the pound dropped, is proof that Greece would be better off outside the Euro.
Are there any economic models out there to support this though?
What I am not convinced about is whether the likes of Greece would be in any better a position now had they forsaken the Euro in it's entirety, i.e. from day one.
Why would it amount to that? You said yourself that Greece depends upon things like olive oil and tourist destinations. These are home grown products. I remember back in the old days when Greece was as cheap as chips. A bit like some of the Eastern Bloc countries now. Why can't Greece just be cheap again?
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Doggit
Devaluing a currency, means that you're internal prices remain the same, so the economy carries on as before, but what you export becomes cheaper for other countries to buy, so they buy more of it from you. The downside, is that what you buy from abroad becomes more expensive, imported goods rise in price, and that increases inflation. The only way that Greece can become cheaper, and yet still remain stable internally, is to go back to the Drachma, but at a lower exchange rate than before.
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Doggit
Yes, us. the recent drop in the value of the pound, and the subsequent increase in our exports, and foreigners coming here for holidays, is the perfect example of what would happen, ans is the increase in inflation that is the knock on effect.
The European Central bank sets the interest rate for any loans they hand out, and because the rates were low, Greece borrowed heavily. Now they're are struggling to repay those loans, and having to borrow more just to keep up the repayment schedule. It's possible that they will never get out of debt. If they hadn't joined the Euro, they wouldn't have got those loans, so the downside would be that they would still have an antequated road system and hotels etc, but they'd be managing within their means.
Why don't they then?
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Doggit
They threatened to default on their loans a couple of years ago to try and get them reduced. They held the election and the Syriza party got elected on the basis of telling the EU where to go, and they then capitulated, and the playboy chancellor Yanis Varoufakis finally resigned. He now goes round the world lecturing other countries on where they are going wrong. It's more than likely that they will still default at some stage, or Germany will override the ECB, and say they are not pouring any more money down a bottomless pit.
That really doesn't answer my question though.
If Greece were to end up financially better off out of the Euro, why are they not reverting back to the Drachma - immediately? Surely this makes sense all round so that it puts them in a better position to pay off their debts?
If Greece were to end up financially better off out of the Euro, why are they not reverting back to the Drachma - immediately? Surely this makes sense all round so that it puts them in a better position to pay off their debts?
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Doggit
Because they are in the same position as we are. You feel we should remain the the EU for the benefits that it brings, and there are those in Greece that think the same as well, but it's the loans and the repayment schedule that's crippling them. Leaving the Euro will cause them a lot more distress than it will us because every time a country changes it's currency, businesses take the opportunity to put prices up, and this causes inflation. The Greeks would have to work out an exchange rate that increases trade and tourism, but doesn't increase prices too much. They'd also then be outside the customs union, and all of the other issues that we are arguing about. Oddly enough, they're the real ones that want their cake and eat it, not the brexiteers.
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Doggit
I was mulling this one over, and can't give you straight answer I'm afraid. They'd still need access to the single market, so can't walk away from their debts; but on the other hand, it's partially the debts that are crippling them, so they want to get rid of them. I think they'd go for a negotiated settlement of the debt, get the interest witten off, and extend the repayment period. Apparently, Greece wrote off a lot of the debt that Germany owed them after the war, so there's a precedent to what they want. The down side is that Merkel won't give in easily.
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