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The post that was quoted here has been removedMy point is that during this recession the bigger economies have increased budget deficits and cut interest rates to the bone in order to stimulate their economies i.e. followed expansionary fiscal and monetary policies. But here they are insisting that a smaller country do the exact opposite when they know it will worsen the economic downturn in Greece and possibly throw it into depression.
EDIT: Here's the typical shenanigans you have when an organization's main focus is helping the rich:
A national bankruptcy in Greece would have a serious impact on Germany, where many banks have invested heavily in the high-yield Greek treasury bonds—after borrowing the money to buy the bonds from the European Central Bank (ECB) or other central banks at rates of 1-2 percent. Making money doesn't get much easier—as long as the Greeks remain solvent. (from your link)
So the ECB and other banks lent money at ridiculously low interest rates to big banks so the banks could buy Greek securities which have a high yield. Nice work if you can get it.
Originally posted by generalissimoSince it's an organization that seems to be all about increasing the power of Europe's financial elite it actually does the opposite:
You didn't have any point, you were just stating the obvious. FYI I do know creece is in the EU, I just don't understand why other countries should help out, or does EU membership guarantee financial help from other members?
European Union rules preclude the 27-member bloc from lending money to member states to plug holes in their budgets or bridge deficits. (from CFT's link)
Interdependence is key here. Greece defaulting is not simply a problem for Greece: the write-offs will necessarily hit European, and global, banking. (The problem is certainly not only limited to the eurozone; the UK holds around 20% of Greek bonds, for example.) If Greece did default and ultimately drop out of the euro, it would probably trigger a wave of exits (placed somewhere between choice and necessity for those dropping out) and competitive devaluations in the wake. In any event, Greece might suffer the very worst of competitive devaluation, however many other countries also left: currency collapse and hyperinflation would be real possibilities - and a decisive move back from '1st world status' (and the possibility of a military coup) would not be unimaginable.
If banks are deemed 'too big to fail', it's a safe bet to say the same will ultimately be said about Europe. If current proposals don't work, more will be done. (Of course, the real fun will begin when any concerted effort is made to get to grips with, yet alone reform, the Greek economy. Good luck with that.)
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The post that was quoted here has been removedWhat problem exactly?
Government bonds are a drop in the ECB's assets. Moreover, the ECB can't default, it's not a private institution. I bet that London banker just wants to improve the chances of his bets against the Euro. The main problem is for banks.
The ECB may play an important role here because it accepts Greek bonds as collateral for its loans, but that may change because of downgrading. But it's only a problem for the ECB insofar this affects monetary and financial markets.
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Originally posted by PalynkaGuess you didn't read or understand this:
LOL!
A national bankruptcy in Greece would have a serious impact on Germany, where many banks have invested heavily in the high-yield Greek treasury bonds—after borrowing the money to buy the bonds from the European Central Bank (ECB) or other central banks at rates of 1-2 percent. Making money doesn't get much easier—as long as the Greeks remain solvent. (from your [CFT's]link)
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Originally posted by no1marauderMy link? LOL!
Guess you didn't read or understand this:
A national bankruptcy in Greece would have a serious impact on Germany, where many banks have invested heavily in the high-yield Greek treasury bonds—after borrowing the money to buy the bonds from the European Central Bank (ECB) or other central banks at rates of 1-2 percent. Making money doesn't get much easier—as long as the Greeks remain solvent. (from your link)
Do you really think that the best policy for the ECB would be to raise interest rates? Or are you just being facetious about it being an institution devoted to increase the power of financial elites? If not, pray tell what your optimal interest rate choice would be that would not be partisan to the financial elites.
Edit - Also, interest rates go up when demand is low. If it was such a sweet deal, people would not be selling them at those rates.
Originally posted by PalynkaJesus, you get stupider every day. I was copying my prior post which you ignored. The "your link" referred to CFT's article which you would know if you had paid any attention to other people's posts.
My link? LOL!
Do you really think that the best policy for the ECB would be to raise interest rates? Or are you just being facetious about it being an institution devoted to increase the power of financial elites? If not, pray tell what your optimal interest rate choice would be that would not be partisan to the financial elites.
Edit - Also, interest ...[text shortened]... hen demand is low. If it was such a sweet deal, people would not be selling them at those rates.
Somehow I doubt that anybody but big banks are allowed to borrow from the ECB or anywhere else at 1 or 2 percent interest rate.
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Originally posted by no1marauderAnd no1 avoids straight answers. Shocking.
Somehow I doubt that anybody but big banks are allowed to borrow from the ECB or anywhere else at 1 or 2 percent interest rate.
Let's try again:
1. Optimal non-partisan rate?
2. Why is demand for these bonds so low if it's such a sweet deal?