March 8 Open Thread | 49 comments (48 topical, 1 editorial, 0 hidden)

What would a eurozone-wide sovereign default look like?

by nanne (zwaerdenmaecker@gmail.com) on Mon Mar 8th, 2010 at 04:45:46 PM EST
[ Parent ]

Gory. 80 million German heads would explode.

More seriously, it depends very much on how targeted it is. If you simply walk away from all sovereign bonds and let the chips fall where they may, then there's a realistic possibility that you'll break the global monetary system. And even if you don't, the hysterical children on the capital markets almost certainly would.

A more targeted default... that's a different kettle of fish, and depends very much on how you do it, how you justify it and how many of the hysterical children you manage to put out of business in the first blow.

- Jake

If you only spend 20 minutes of the rest of your life on economics, go spend them here.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Mon Mar 8th, 2010 at 05:58:29 PM EST
[ Parent ]

Re: March 8 Open Thread (4.00 / 3)

JakeS:

there's a realistic possibility that you'll break the global monetary system.

Again.

How can you break something that already belongs in an asylum? I suppose you could have an extended period of Extreme Bad while something better had the chance to organise itself.

But I still think controlled demolition followed by a rewrite of the rules is the best way to avoid future crises.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Mon Mar 8th, 2010 at 07:06:47 PM EST
[ Parent ]

Re: March 8 Open Thread (none / 0)

Without that extreme bad theres no incentive to do any better at all.

Any idiot can face a crisis - it's day to day living that wears you out.

by ceebs (ceebs (at) eurotrib (dot) com) on Tue Mar 9th, 2010 at 06:51:39 AM EST
[ Parent ]

Re: March 8 Open Thread (none / 0)

Not "break the monetary system" as in "causing a prolonged depression."

I meant "break the monetary system" as in "causing wheat to not be shipped from Ukraine because the seller doesn't trust the buyer's escrow service."

Having the largest (and arguably most trusted) GDP on the planet simply walk away from its sovereign debt overnight is not "controlled" in any version of the English language with which my thesaurus is familiar.

- Jake

If you only spend 20 minutes of the rest of your life on economics, go spend them here.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Wed Mar 10th, 2010 at 06:26:07 AM EST
[ Parent ]

Re: March 8 Open Thread (none / 1)

That's why, to answer nanne's original question, "an Eurozone sovereign default" is more likely to "look like" internal Euro inflation and external Euro devaluation.

En un viejo país ineficiente, algo así como España entre dos guerras civiles, poseer una casa y poca hacienda y memoria ninguna. -- Gil de Biedma

by Migeru (migeru at eurotrib dot com) on Wed Mar 10th, 2010 at 06:34:26 AM EST
[ Parent ]

Re: March 8 Open Thread (none / 0)

That would not be easy on the countries who have debt denominated in other currencies.

- Jake

If you only spend 20 minutes of the rest of your life on economics, go spend them here.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Wed Mar 10th, 2010 at 06:51:08 AM EST
[ Parent ]

Re: March 8 Open Thread (none / 1)

It depends on whether you understand "broken" as "not working as advertised" or "not working at all".

En un viejo país ineficiente, algo así como España entre dos guerras civiles, poseer una casa y poca hacienda y memoria ninguna. -- Gil de Biedma

by Migeru (migeru at eurotrib dot com) on Wed Mar 10th, 2010 at 06:35:15 AM EST
[ Parent ]

Re: March 8 Open Thread (4.00 / 2)

Or how optimistic you are about the overall stability of the system.

People still seem to think the system is not just workable, but almost the best of all possible worlds - even though it explodes regularly, with increasing oscillations.

I think that's quite an unusual point of view.

Wheat continues to be shipped from the Ukraine for the moment, but that's not a consolation if you're one of the long term unemployed in the US, or about to become one of the long term unemployed in Greece.

Politics aside, the most pressing criticism of the system is that it simply doesn't work for many people, and is close to not working for anyone.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Wed Mar 10th, 2010 at 07:02:02 AM EST
[ Parent ]

Re: March 8 Open Thread (none / 1)

I don't entertain any illusions as to the stability of the current system, under the current management.

However, as much as the "nuke and pave" solution appeals to the part of my brain that's schooled in engineering, there is an appalling number of things that could go Seriously Wrong with that strategy.

And if you're in a political position to prevent disastrous fallout, you are also in a position to engineer a new system without having to nuke and pave.

- Jake

If you only spend 20 minutes of the rest of your life on economics, go spend them here.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Mon Mar 15th, 2010 at 07:41:42 PM EST
[ Parent ]

March 8 Open Thread | 49 comments (48 topical, 1 editorial, 0 hidden)

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