Greece again

I read this morning's intelligence of a bargain -- we'll run into how long it lasts -- amongst interest. Here's a video central amongst Rick Santelli on the plain of study on CNBC (I can't appear to larn the embed to piece of work , hence y'all receive got to click the link.)

My principal thought: what well-nigh the banks? The infinitesimal Hellenic Republic reopens its banks , it's a fair bet that every individual inwards Hellenic Republic volition instantly caput to the banking concern too larn every cent out. The banks' assets are largely Greek loans , which many aren't paying -- why pay a mortgage to a banking concern that's already unopen too volition in all probability live out of draw of piece of work concern shortly anyway -- too Greek authorities debt; to a greater extent than frequently than non Treasury bills that exclusively gyre over because banks concord them. They can't sell either , hence the banks volition instantly live out of cash.

The bargain reported inwards today's papers actually barely mentions that problem. But that is the work of the hour.


Hellenic Republic is basically off the euro now. Being inwards the euro does non hateful that restaurants receive got euros. Being inwards the eurozone agency that banks utilisation euros , that y'all tin receive got euros out too conform international transfers using euros.

The economic scheme is paralyzed. The principal thing a bargain needs is a mode to reopen banks inwards a thing of days. Privatization too project laws are fine , simply that generates increment a yr from at nowadays at best. And raising taxes? They must live kidding.

I've read amongst involvement roughly proposals that the European Union receive got over the banks. The European Union takes on the bad assets , gives or sells the balance to large international banks , too these operate nether European Union rules -- non Greek regulators; they can't purchase whatever Greek debt , too Hellenic Republic can't taxation them.  It's expensive , yep , simply it's basically every bit shoot-the-hostage approach. H5N1 surgical physical care for economic scheme would assistance Greek finances. And too then the European Union tin allow the Greek authorities default if it wishes.  Saving the banks mightiness live a lot cheaper than saving the Greek authorities too the banks.

There are 2 master sins inwards the euro , neither having to produce amongst financial union. The outset is that each set down has its ain banks , too each authorities uses its banks every bit piggybanks to materials amongst authorities debt. European banking concern regulators too Basel regulations care for sovereign debt every bit jeopardy free. Then , if the authorities defaults , the whole banking organization is dragged downwards amongst it. The minute is the endlessly repeated fallacy that authorities default agency the set down must modify the units of its currency. If Chicago defaults on its debts , nobody thinks it must innovate a novel currency , or that Chicago's banks volition fail.

H5N1 currency wedlock needs a banking wedlock , or at to the lowest degree banks that are non stuffed amongst authorities debt. H5N1 currency wedlock needs to allow sovereigns default without changing currencies or paralyzing the banking too payments system. H5N1 currency wedlock needs a banking union.