Has Draghi saved the Euro?

Discussion in 'Politics, Religion, Social Issues' started by jeremy h, Sep 6, 2012.

  1. jeremy h macrumors 6502

    Joined:
    Jul 9, 2008
    Location:
    UK
    #1
    Well, it looks like Mario Draghi has pushed through the master plan to stabilise the Euro. The Germans seem very cross... Everyone else seems very pleased.

    Will it work? What do you all think? Is this the start of the unified European state?
     
  2. Happybunny macrumors 68000

    Joined:
    Sep 9, 2010
    #2
    A great question :D

    Only time will tell of course, but it does look like a major first step.

    Europe will have to unify more to really get out of the mess we are in, I think that between now and five years are critical. Common tax laws and common bank rates over all the Euro zone is the major goal. I believe there is a chance that my grand children will live in a true United States of Europe.
     
  3. niuniu macrumors 68020

    niuniu

    Joined:
    Mar 29, 2009
    Location:
    A man of the people. The right sort of people.
    #3
    My instinct about the OMTs is that they sound appealing and the markets responded well to the news so that's something (or ultimately nothing).

    I have only hope that the Euro works out. Greece doesn't seem to be doing much better, or perhaps that's how our press is reporting it to appease the Euro-skeptics.
     
  4. Happybunny macrumors 68000

    Joined:
    Sep 9, 2010
    #4

    I am being to think that Greece will have to leave the Euro. They cooked the books from the moment that they entered the single currency.
    Spain and Ireland were hit by a property bubble bursting, given time and help these countries can turn it around. But Greece is a corrupt den of thieves, and no amount of help will help.
     
  5. niuniu macrumors 68020

    niuniu

    Joined:
    Mar 29, 2009
    Location:
    A man of the people. The right sort of people.
    #5
    Certainly wasn't right for Greece to join the Euro. We would probably still be feeding them bailouts in or out of it. Though I would feel icky letting them leave, a bit like sentencing their ability to import or export to death.
     
  6. Ugg macrumors 68000

    Ugg

    Joined:
    Apr 7, 2003
    Location:
    Penryn
    #6
    Spain is still operating in many ways under the legacy of Franco. They'll need to make some major legal revisions and do something about how taxes are raised by localities. The banking industry needs an overhaul as do bankruptcy laws. There's also the issue of quasi-independence on the part of the regions. Spain also has a huge problem with its black market economy. I think Spain is where most of the 500 Euro bills end up.
     
  7. jeremy h thread starter macrumors 6502

    Joined:
    Jul 9, 2008
    Location:
    UK
    #7
    Perhaps I'm being thick here, but isn't the broad point of this plan to provide unlimited firepower (through printing money) to bail out debt of any nations in the Euro at the penalty of inflation for everyone. So now this mechanism exists why do countries like Greece now have to leave? Surely they can stay indefinitely - in the way poor areas (even though they're a financial drain) aren't ejected from a nation state?
     
  8. niuniu macrumors 68020

    niuniu

    Joined:
    Mar 29, 2009
    Location:
    A man of the people. The right sort of people.
    #8
    Technically yes, but I think any country applying for a bailout to meet the criteria for the OMTs still needs to get consensus from the other Eurozone countries. I'm not sure how easy that will be if inflation rises too high.

    Also this only applies to short term debts and may not be enough to save a country like Greece, the ECB's attempts before don't seem have done anything.

    Dunno will see, sounds good anyway. People who seem to know about these things are very positive although some papers are saying there may be a legal challenge in the works.
     
  9. 725032 Guest

    725032

    Joined:
    Aug 5, 2012
    #9
    I think this is a matter of wait and see... Time will tell
     
  10. Happybunny, Sep 6, 2012
    Last edited: Sep 7, 2012

    Happybunny macrumors 68000

    Joined:
    Sep 9, 2010
    #10
    That is not what is going to happen.
    When the ECB buys the State Obligations that money will be taken out of circulation. Absolutely no printing of money.

    The term used is "Monetary Outright Transactions"

    http://www.rtl.nl/components/financ...ecb-gaat-ongelimiteerd-obligaties-opkopen.xml

    Onder een obligatie-opkoop voorstel van de ECB zou de bank het staatspapier van lidstaten ongelimiteerd opkopen, waarbij deze opkopen daarbij 'gesteriliseerd' worden.
    Dit steriliseren zou gebeuren om de bezorgdheid over het drukken van extra geld weg te nemen. Dat meldt Bloomberg op basis van diverse bronnen binnen de centrale bank.
    Volgens de bronnen ontstaat zo een neutraliserend effect omdat de ECB het bedrag dat het betaalt voor de opkopen, tegelijkertijd ook onttrekt aan het financiele systeem, waardoor er een balans blijft in de geldhoeveelheid en de geldpers dus niet aangezet hoeft te worden.
    Onder het zogenoemde "Monetary Outright Transactions" plan wordt ook geen renteplafond ingesteld, bericht Bloomberg op basis van de bronnen.
    Het plan richt zich louter op het opkopen van staatsobligaties met korte looptijden tot maximaal drie jaar en niet op het opkopen van andere activa, melden twee van de bronnen. daarnaast.
    Volgens de bronnen zullen alle beleidsmakers binnen de ECB, uitgezonderd de Bundesbank, het voorstel van Draghi steunen.
    Marktvolgers hopen donderdag bij de bekendmaking van het rentebesluit meer te horen over de plannen van Mario Draghi. Tevens rekent men op een verlaging van het belangrijkste rentetarief naar 0,5% van 0,75%.
    De berichtgeving van Bloomberg geeft de euro woensdag een steuntje in de rug. De Europese munt is rond 14.45 uur $1,2601 waard, tegenover 1,2543 rond 12.50 uur.

    I can't find an English translation, and I've got a headache and am going to bed.

    Another day

    I found this partial translation about MOT
    Immediate action is out of the question. The ECB will only move when countries have signed up to their structural adjustment programmes, and that will take time. When the bond buying begins, the ECB will remove money from elsewhere in the system to ensure there is no increase in money supply. This process, known as sterilisation, is a small victory for the Bundesbank.
    .
     
  11. takao macrumors 68040

    takao

    Joined:
    Dec 25, 2003
    Location:
    Dornbirn (Austria)
    #11
    actually looking through the conditions imposed it looks like neither the southern european side nor the germans won ... which is a good thing

    i think the other european countries managed to reach an acceptable compromise which is a confidence building safety net and yet still some sort of punishment because of the ESM restrictions (after what is happening in Greece i suspect all governments are heavily motivated to keep their stuff in order ... nobody wants to get under the ESM umbrella voluntarily)

    IMHO it was about time for some serious commitment to the EU/Euro ... the last 3 years have been a series of cowardly "too little, to late" re-actions without making any serious decisions
     
  12. Ugg macrumors 68000

    Ugg

    Joined:
    Apr 7, 2003
    Location:
    Penryn
    #12
    It always takes the EU forever to right wrongs. This time around, the time it took probably caused a lot of damages, but the compromise I think was a good one. Sometimes the worse the situation is, the better the outcome.
     
  13. iGav macrumors G3

    Joined:
    Mar 9, 2002
    #13
    In short. No.

    The best description I have read so far was “robbing Peter to pay Paul”. :p

    Absolutely not yet. That's the next step, after this one fails.

    So really it's not actually unlimited then.

    That's because it has become something that it was never intended to be and is seemingly run by inept people that are completely incapable of facing up to the reality of the situation that the Eurozone finds itself in.
     
  14. Occamsrazr macrumors 6502

    Joined:
    Apr 26, 2012
    #14
    lol who thinks this was saving the euro? rofl

    this was about saving obama's bid for presidency... it has a shelf-life of months and then europe will be right back where it started or worse, but hey, obama will be reelected so *yay*
     
  15. Ugg macrumors 68000

    Ugg

    Joined:
    Apr 7, 2003
    Location:
    Penryn
    #15

    What?!?!? Where did that little fantasy come from?
     
  16. Occamsrazr macrumors 6502

    Joined:
    Apr 26, 2012
    #16
    probably from the same place as the fantasy that this dumb **** was gonna save the euro for more than a few months
     
  17. citizenzen macrumors 65816

    Joined:
    Mar 22, 2010
    #17
    There's a tremendous amount of distrust in "centralized government" in the United States ... an irrational amount of it IMO. What is the feeling in Europe and among the members here? If you did truly unify and centralize authority, what would be the result?
     
  18. Happybunny macrumors 68000

    Joined:
    Sep 9, 2010
    #18
    This is the problem at the moment the EU is broken and to fix it we all need to be on the same page. First off the countries that use the EURO will have to work together more closely. In 2013 plans are being made for more harmonisation of bank rates and charges. Getting our budgets in order and inflation down will be the top priority for 2013. The stubborn high unemployment rates are a worry in the Southern Euro Zone.
    If this can be achieved, or at least shown to be working the rest will follow. It will not be an easy ride, and my instinct tells me that it will only be the countries who use the Euro that will go this far. This question will dominate the EU for the foreseeable future. But at some point in that future the next logical step is true political union. This will take years to achieve.
     
  19. citizenzen macrumors 65816

    Joined:
    Mar 22, 2010
    #19
    But again I have to ask ... how does the average European react to this idea? Do they see it as an attack on their culture and nationality? Or are they more pragmatic and able to see the benefits?

    I realize the answer is both. But I'm curious what the overall feel is over this.
     
  20. Happybunny, Sep 8, 2012
    Last edited: Sep 8, 2012

    Happybunny macrumors 68000

    Joined:
    Sep 9, 2010
    #20
    Now that the EU and the Euro are in trouble there is of course a lot of negative reactions. There are many politicians saying that we should leave the Euro, but when these same politicians are asked about the cost of leaving the Euro, they are strangely silent. The Euro has to work because there is just no real way back that would not cost more than going forward.

    The average citizen of Europe is quite honestly fed up with the whole political mess. People are always ready to tell you what is wrong, but mostly do not have a solution. Of course every country at one time or another felt that they were not getting a fair deal out of the EU. Since the crises this has only got worse, of course when the EU was doing good back in 2005 there was less complaints, thats how life is. But they are just as sick of their own national politicians, when the EURO is stable a lot of the criticism will fade away. The EU was never a happy ship over flowing with love and kindness, but it worked because alone the European countries could not compete on the world stage.

    Together since 1950 we built a very high standard of living.

    http://en.wikipedia.org/wiki/European_Coal_and_Steel_Community

    They say what does not kill you, makes you stronger.
     
  21. jeremy h thread starter macrumors 6502

    Joined:
    Jul 9, 2008
    Location:
    UK
    #21
    So we're saying it's not actually unlimited. I have no idea how, if they're going to take money from elsewhere in the system, how this is going to work. Surely that's just another temporary bank bailout funded by further austerity?

    As far as I know any economy that has managed to crawl out of this sort of mess has done it via a mix of austerity and devaluation.

    This does sound like yet another great clang of a can being kicked even further down the road (particularly as Merkel seems to have decided to keep Greece in until after her election next year.)
     

Share This Page