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The Greek economy seems to be at the depression level, and I do not see much benefit for Greece to stay in euro. It will be other members who suffer more from Greece's abandonment of the currency, as they will face significant devaluation and a financial turmoil. Those members should better understand the external value of Greece's current efforts, however misguided I think they are.

Am I missing something?

I will become a patissier, God willing.

by tuasfait on Sun Feb 19th, 2012 at 10:28:51 AM EST
See here.

I'm not sure if their numbers make sense though. Earlier today the leading German economist Hans-Werner Sinn claimed that people who are arguing leaving the Euro would be very costly are mainly people who stand to lose lots of money if periphery countries start defaulting. So maybe the UBS balance sheet is full of crappy periphery bonds.

He also claimed the loans to Greece is just about saving Franco-german banks, that Greece isn't helped at all, that Greece should default, leave the Euro and should be extended loans to nationalize and recapitalise its banking sector. Which sounds perfectly reasonable to me.

   

Peak oil is not an energy crisis. It is a liquid fuel crisis.

by Starvid on Mon Feb 20th, 2012 at 02:18:20 PM EST
[ Parent ]
Hey, diary that or post a comment with links.

tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker
by Migeru (migeru at eurotrib dot com) on Mon Feb 20th, 2012 at 03:27:19 PM EST
[ Parent ]
Linky.

Peak oil is not an energy crisis. It is a liquid fuel crisis.
by Starvid on Wed Feb 22nd, 2012 at 05:52:33 AM EST
[ Parent ]
Spiegel: Top German Economist: 'Restructuring Greece Within the Euro is Illusory' (20 February 2012)
SPIEGEL ONLINE: So the euro countries shouldn't approve the aid?

Sinn: They should give them the money to ease their exit from the currency union. The Greek government could use the money to nationalize the country's banks and prevent the state from collapsing. The state and the banks must continue to function through all the turmoil that an exit will entail.

...

SPIEGEL ONLINE: Does the exit from the euro zone entail Greece going bankrupt?

Sinn: No, quite the reverse. The bankruptcy forces the exit. The Greeks will immediately leave if they don't get any more international aid because the bankruptcy couldn't be managed within the euro system. The state would be insolvent and the banking system too. The entire payments system would fall apart. The chaos can only be avoided if Greece leaves and the currency depreciates immediately.

...

SPIEGEL ONLINE: Why are the euro-zone countries so adamant that Greece must remain in the currency?

Sinn: This isn't really about the country. The Greeks are being held hostage by the banks and financial institutions on Wall Street, in London and Paris who want to make sure that money keeps on flowing from government bailout packages -- not to Greece, but into their coffers.

What, no banks in Düsseldorf involved?

tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker
by Migeru (migeru at eurotrib dot com) on Wed Feb 22nd, 2012 at 09:10:12 AM EST
[ Parent ]
Are there banks in Düsseldorf or Frankfurt?
by Katrin on Wed Feb 22nd, 2012 at 09:22:35 AM EST
[ Parent ]
Probably only tiny ones that don't matter.
by afew (afew(a in a circle)eurotrib_dot_com) on Wed Feb 22nd, 2012 at 11:45:19 AM EST
[ Parent ]

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