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Originally Posted by Kokukirin
A more accurate saying is a Euro "break up". If big economies like Spain and Italy default and exit from Euro, then eurozone is effectively broken up. It may return to individual currencies. Or it may end up with a smaller common currency among the healthier economies. But the Euro as we know it would be gone.
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Well, the British Pound as we knew it is also gone (once upon a time 12 Deutschmarks). If Spain and Italy default and exit, the Eurozone will still exist, it will merely be smaller. And when Croatia or others join it, it will be bigger again.
I shake my head at the hysterical nonsense which is spouted in various anglophile media. I could perfectly well imagining Greece dropping out eventually, yet noone will really care (but the Greek themselves, but sorry folks, you brought this upon yourself). And I see absolutely no NEED for Italy or Spain to contemplate it, because the ECB will eventually purchase their government bonds anyway when necessary. But even if they do, it's going to remain the currency of the European core. It would make no sense to change that for Germany, France, Austria, or the Benelux countries.
I'd also like to point out that all the handwringing and ohmygawding, the Euro stays still stable up 30% compared to the US dollar since its inception, and with an inflation rate of below 3%. At the peak of the terrible terrible crisis. And that all his earlier yelling and screaming notwithstanding, George Soros has recently invested 2 billion in Euro bonds (below market price due to the Corzine bankruptcy).
Yea, I'm totally in panic over here.
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When I said rescue packages, I meant bailouts AND austerity measures. Of course bailout money alone is not going to solve the problem. But the overall efforts were too little at the start, and investors remained lacking confidence. If a more complete package was implemented from the start, the market would have stablised much easier.
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Yes, and it would have immediately deflated ANY efforts by Club Med to get their budgets in order. Screw "the market", getting the numbers back where they belong is much more important. Because once this happens, "the market" will eventually follow suit anyway. But pleasing "the market" isn't going to make structural deficits go away. Look at America as an example.