# Spain leaving the euro?



## mike kelly

I've asked this before but in the light of the current crisis, I think the question is more pertinent than ever:

Is there a danger of Spain leaving the Euro? Already some German politicans are talking of expelling Greece from the Eurozone. It could soon be Spain's turn.


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## jojo

mike kelly said:


> I've asked this before but in the light of the current crisis, I think the question is more pertinent than ever:
> 
> Is there a danger of Spain leaving the Euro? Already some German politicans are talking of expelling Greece from the Eurozone. It could soon be Spain's turn.



I dont think it can afford to leave the euro. What I think may happen is that the Euro will become divided - I dont know how, but already there are some Germans who will only use "German Euros" (WTF???) But I dont think the situation can go on like it is. The Euro hasnt been the raging success that they thought and its a good job the UK didnt join, altho I often wonder if that why the labour government have allowed the pound to stay low against it - are they planning to join if they get into power??? They're stupid enough!!!!!!

Jo xx


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## mike kelly

jojo said:


> I dont think it can afford to leave the euro. What I think may happen is that the Euro will become divided - I dont know how, but already there are some Germans who will only use "German Euros" (WTF???) But I dont think the situation can go on like it is. The Euro hasnt been the raging success that they thought and its a good job the UK didnt join, altho I often wonder if that why the labour government have allowed the pound to stay low against it - are they planning to join if they get into power??? They're stupid enough!!!!!!
> 
> Jo xx


Good points, but is there a danger of Spain being expelled from the Euro?


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## jojo

mike kelly said:


> Good points, but is there a danger of Spain being expelled from the Euro?


Who would expel them?? Do you mean from the currency or the EU? 

Potyugal, Italy, Greece and Spain are in trouble thats for sure, Its all a mess and unchartered territory. I think what will happen in the fullness of time is that the euro will become a divided currency with PIGS using one version and the others using the other. I think then the PIGS euro would have to devalue significantly - if that makes sense. But until the day of reckoning comes, its just gonna bob around becoming more and more difficult.

Jo xxx


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## gus-lopez

mike kelly said:


> Good points, but is there a danger of Spain being expelled from the Euro?


I didn't think you could be expelled from the Euro ? From the EC , yes. Spain would have to choose to come out & how that would be accomplished, God only knows !


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## gus-lopez

jojo said:


> Who would expel them?? Do you mean from the currency or the EU?
> 
> Potyugal, Italy, Greece and Spain are in trouble thats for sure, Its all a mess and unchartered territory. I think what will happen in the fullness of time is that the euro will become a divided currency with PIGS using one version and the others using the other. I think then the PIGS euro would have to devalue significantly - if that makes sense. But until the day of reckoning comes, its just gonna bob around becoming more and more difficult.
> 
> Jo xxx


Can't see how that would work, Jo. A sort of peasants euro. It would be easier for the Germans & French to leave & go back to their old currencies & leave the rest to make up their own interest rates.


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## mike kelly

jojo said:


> Who would expel them?? Do you mean from the currency or the EU?
> 
> Potyugal, Italy, Greece and Spain are in trouble thats for sure, Its all a mess and unchartered territory. I think what will happen in the fullness of time is that the euro will become a divided currency with PIGS using one version and the others using the other. I think then the PIGS euro would have to devalue significantly - if that makes sense. But until the day of reckoning comes, its just gonna bob around becoming more and more difficult.
> 
> Jo xxx


I mean that Germany could decide to expel Spain from the Euro (currency) due to the very high level of Spanish debt (as some German politicans now want to do to Greece).
Spain is one of the PIGS (Portugal, Ireland, Greece, Spain) and all of these countries have debt mountains which are dragging down the value of the Euro. If Germany has to bail them all out, Germany could itself become insolvent.


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## mike kelly

No chance of the PIGS having their own euro as it is the German back that they are riding on!


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## littleredrooster

mike kelly said:


> No chance of the PIGS having their own euro as it is the German back that they are riding on!


Bring back the good old Peseta I say,
and the good ole days when everything was cheap as chips.


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## mike kelly

littleredrooster said:


> Bring back the good old Peseta I say,
> and the good ole days when everything was cheap as chips.


yes, but any property you own would then also be worth as much as a couple of bags of chips


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## jojo

mike kelly said:


> I mean that Germany could decide to expel Spain from the Euro (currency) due to the very high level of Spanish debt (as some German politicans now want to do to Greece).
> Spain is one of the PIGS (Portugal, Ireland, Greece, Spain) and all of these countries have debt mountains which are dragging down the value of the Euro. If Germany has to bail them all out, Germany could itself become insolvent.



Germany cant expel Spain from the Euro any more than Spain can expel Germany, they're in a union of several countries, none of which are in the position to kick any other out without the backing of the rest of the union!! They have to find a way to split it. When that happens the only way I can see of "the PIGS" getting thru this is to devalue their "new" currency. This wouldnt be good for those who already have properties as investments, altho it may create a new economy that would grow and prosper - and sensibly this time??????????

But who knows. Predicting currencies is a gamble

Jo xxx


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## mike kelly

jojo said:


> Germany cant expel Spain from the Euro any more than Spain can expel Germany,


well, germany are the EU paymasters, if they left there would be no more EU. So I think they definitely can expel Spain (or any other country) from the Euro by threatening to leave themselves.
keep an eye on what happens to Greece, Spain could be next
Apart from property devaluation though, I think that Spain would be better off without the Euro. What benefits has the Euro brought Spain anyway?


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## gus-lopez

mike kelly said:


> yes, but any property you own would then also be worth as much as a couple of bags of chips


Not really , because the pound would soar against the peseta & the merry-go-round would be open again selling all the half- finished properties to the hoards flocking out of the UK. :clap2:Actually , that sounds quite good to me !


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## nigele2

jojo said:


> But who knows. Predicting currencies is a gamble


Oh so true  

I have a couple of thoughts:

I think if the Euro goes then the EU is finished in its current form (as Mike said above) and would need to be reborn. That would take years and for that reason the Euro is going nowhere 

But one way to dilute the PIGS factor is to rush further countries in. And that might create an incredible opportunity for the UK to make a killing. Entering the Euro at an incredibly favourable level might be accepted by the French/German axis if it saved the Euro. And of course Ireland (among the PIGS) would love the UK to be with the Euro more than most.

But IMHO the Spanish problem has little to do with the Euro. Corruption and Franco cronies rule whether you count in Euros or pesetas 

Is that Nick Clegg on his white stallion I see in the distance


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## nigele2

gus-lopez said:


> Not really , because the pound would soar against the peseta & the merry-go-round would be open again selling all the half- finished properties to the hoards flocking out of the UK. :clap2:Actually , that sounds quite good to me !


I'm with you Gus. Bring it on


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## mike kelly

gus-lopez said:


> Not really , because the pound would soar against the peseta & the merry-go-round would be open again selling all the half- finished properties to the hoards flocking out of the UK. :clap2:Actually , that sounds quite good to me !


not so sure about that. the reports of illegaly built properties being bulldozed would make me look at investing in coastal property in some other country. For investors, the currency risk would be much greater, as previously it was not unusual for Spanish governments to devalue the peseta.


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## Seb*

jojo said:


> I dont know how, but already there are some Germans who will only use "German Euros" (WTF???)


Where did you get that information from? Daily Mail? The Sun? Seriously ....

So and about "all the german politicians planning to kick Greece out": One politician from a minor party (CSU) was speaking up asking for Greece TO LEAVE. One voice of a minor politician from a back bench to get some publicity in the media.

I don't see the risk of Spain, Portugal and Greece being "removed" from the EU. It's a Union and they have to stick together even through bad times and this is what will happen in the long run, the richer countries will bail out the poorer ones.

Talking about germans being annoyed. It's quite a slap in the face that germans have to work until 67 to partly pay for the costs to bail out Greece. While greeks threaten with a general strike cause the government is trying to raise the average retirement age to 61 ... Germany is the big payer for Europe, them leaving would be a catrastophe for the EURO, but the risk of this happening is VERY low.


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## gus-lopez

Another thought occured to me is if Spain did come out & revert to the peseta, this in itself would create a mini-boom just like it did before the introduction of the euro as all the people with the ' bin-ladens' hidden under the bed would need to by some property, land , etc; in order to legalise their money.


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## mike kelly

gus-lopez said:


> Another thought occured to me is if Spain did come out & revert to the peseta, this in itself would create a mini-boom just like it did before the introduction of the euro as all the people with the ' bin-ladens' hidden under the bed would need to by some property, land , etc; in order to legalise their money.


can you explain what you mean? "bin ladens" under the bed?


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## jojo

mike kelly said:


> What benefits has the Euro brought Spain anyway?


Being in the EU has made Spain!!!! Its made an absolute fortune out of it!! The EU and the Eurozone are two different things. Britain is in the EU but not the eurozone

Jo xxx


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## mike kelly

jojo said:


> Being in the EU has made Spain!!!! Its made an absolute fortune out of it!! The EU and the Eurozone are two different things. Britain is in the EU but not the eurozone
> 
> Jo xxx


exactly, my question was about the Euro, not the EU


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## gus-lopez

Seb* said:


> Where did you get that information from? Daily Mail? The Sun? Seriously ....
> 
> So and about "all the german politicians planning to kick Greece out": One politician from a minor party (CSU) was speaking up asking for Greece TO LEAVE. One voice of a minor politician from a back bench to get some publicity in the media.
> 
> I don't see the risk of Spain, Portugal and Greece being "removed" from the EU. It's a Union and they have to stick together even through bad times and this is what will happen in the long run, the richer countries will bail out the poorer ones.
> 
> Talking about germans being annoyed. It's quite a slap in the face that germans have to work until 67 to partly pay for the costs to bail out Greece. While greeks threaten with a general strike cause the government is trying to raise the average retirement age to 61 ... Germany is the big payer for Europe, them leaving would be a catrastophe for the EURO, but the risk of this happening is VERY low.


Yes, my brother retired their @65 last year , after working there for 30 years. I think there's more chance of the wall going back up ( 25 % of Germans polled last year said they were better off before the wall came down, & they are still paying the 1% 're-unification ' tax ,introduced for 1 year in 1990 !! ) than coming out of the euro. This equality of retirement age should have been discussed & sorted out a long while ago so that you have parity amongst all countries. 
Did you know that if you are a bank employee in Italy that you can retire on a full pension after 20 years as it is classed as a dangerous job !!:confused2:


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## jojo

Seb* said:


> Where did you get that information from? Daily Mail? The Sun? Seriously ....


Altho I read the sun and the daily mail cos they're simple and easy reading for someone with my intelligence, but I didnt get that from there lol. I've got friends who know far more about money matters than I do and are quite au fait with currency dealings, they find it quite amusing how protective the Germans are over money and quite rightly so!!

Jo xxx


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## mike kelly

gus-lopez said:


> Yes, my brother retired their @65 last year , after working there for 30 years. I think there's more chance of the wall going back up ( 25 % of Germans polled last year said they were better off before the wall came down, & they are still paying the 1% 're-unification ' tax ,introduced for 1 year in 1990 !! ) than coming out of the euro. This equality of retirement age should have been discussed & sorted out a long while ago so that you have parity amongst all countries.
> Did you know that if you are a bank employee in Italy that you can retire on a full pension after 20 years as it is classed as a dangerous job !!:confused2:


great idea, europe should have a common pension system. that would greatly benefit people who have worked in more than one EU country


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## mike kelly

jojo said:


> Altho I read the sun and the daily mail cos they're simple and easy reading for someone with my intelligence, but I didnt get that from there lol. I've got friends who know far more about money matters than I do and are quite au fait with currency dealings, they find it quite amusing how protective the Germans are over money and quite rightly so!!
> 
> Jo xxx


well in germany, you have euro coins from all the Euro countries so i cannot see how this could be possible


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## gus-lopez

Bin-ladens, nickname the Spanish call 500€ notes , so called because once the Spanish print them & they are taken out of the banks they are hardly ever seen again in the monetary system. Up until 2008 ,Spain had the highest yearly production of 500€ notes of all the eurozone countries & the 2008 production was 53% up on the year before which was up 37% on 2007. There's billions out there in the black economy that ,very rarely, ever sees a bank , until they 're worn out!!


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## jojo

mike kelly said:


> well in germany, you have euro coins from all the Euro countries so i cannot see how this could be possible


Me neither! I'll ask next time I see them!!! 

Whatever happens tho, its pretty imminent. Theres some meeting this week with Greece and they're expected to officially ask for a loan to help them out. Spain have agreed to contribute to this???????????????????  So I think the "brown stuff" is about to hit the fan!!!

Jo xxxx


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## mike kelly

gus-lopez said:


> Bin-ladens, nickname the Spanish call 500€ notes , so called because once the Spanish print them & they are taken out of the banks they are hardly ever seen again in the monetary system. Up until 2008 ,Spain had the highest yearly production of 500€ notes of all the eurozone countries & the 2008 production was 53% up on the year before which was up 37% on 2007. There's billions out there in the black economy that ,very rarely, ever sees a bank , until they 're worn out!!



yes, but what has that got to do with reintroducing the peseta? The 500 euro notes would continue to be a valid currency


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## gus-lopez

mike kelly said:


> great idea, europe should have a common pension system. that would greatly benefit people who have worked in more than one EU country


When my brother was coming up for retirement , the Germans did all the paperwork necessary to claim for the 12 years he had worked in the UK.He gets that , in addition to his full German pension.


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## mike kelly

gus-lopez said:


> When my brother was coming up for retirement , the Germans did all the paperwork necessary to claim for the 12 years he had worked in the UK.He gets that , in addition to his full German pension.


good for him. Will the spanish do the same for me? Will pigs fly?


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## gus-lopez

mike kelly said:


> yes, but what has that got to do with reintroducing the peseta? The 500 euro notes would continue to be a valid currency


Yes, but if Spain reintroduced the peseta the hidden money (euros ) would be no use here & a lot of daily business here is done in cash that doesn't go through the books. The only real alternative to legalise the money would be to buy land, houses ,etc; to legalise it as the only other way would mean taking it out of the country to a euro zone country & if you haven't a bank account there , you're not going to open one.


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## mike kelly

gus-lopez said:


> Yes, but if Spain reintroduced the peseta the hidden money (euros ) would be no use here & a lot of daily business here is done in cash that doesn't go through the books. The only real alternative to legalise the money would be to buy land, houses ,etc; to legalise it as the only other way would mean taking it out of the country to a euro zone country & if you haven't a bank account there , you're not going to open one.


why not just change the 500 euro notes at a bank for pesetas? lots of countries don't require either id or a bank account to do this.


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## jojo

gus-lopez said:


> Yes, but if Spain reintroduced the peseta the hidden money (euros ) would be no use here & a lot of daily business here is done in cash that doesn't go through the books. The only real alternative to legalise the money would be to buy land, houses ,etc; to legalise it as the only other way would mean taking it out of the country to a euro zone country & if you haven't a bank account there , you're not going to open one.


It would be virtually impossible to reintroduce the pesata. It would be very costly and it would need careful planning over a long period of time! That said, there are still a huge amount of businesses and people who use the pesata in tandem with the euro - Quite illegal, but thats never worried the Spanish too much lol

Jo xxx


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## mickybob

mike kelly said:


> well in germany, you have euro coins from all the Euro countries so i cannot see how this could be possible


It's not the coins, it's the notes. The notes have a letter code in the bank note number that tell you what country it was printed in. I cant remember what they are, they were published in a newspaper over here when it was known the Germans were hording German printed notes. Just forund them on Wiki,National identification codes Code Country Checksum(1) 
in English in official language(s) 
Z Belgium België/Belgique/Belgien 9 
Y Greece Ελλάδα [Ellada] 1 
X Germany Deutschland 2 
(W) (Denmark) Danmark (3) 
V Spain España 4 
U France France 5 
T Ireland Éire/Ireland 6 
S Italy Italia 7 
(R) (Luxembourg) Luxembourg/Luxemburg/Lëtzebuerg (8) 
(Q) Not used 
P Netherlands Nederland 1 
(O) Not used 
N Austria Österreich 3 
M Portugal Portugal 4 
L Finland Suomi/Finland 5 
(K) (Sweden) Sverige (6) 
(J) (United Kingdom) United Kingdom (7) 
(I) Not used 
H Slovenia Slovenija 9 
G Cyprus Κύπρος [Kypros]/Kıbrıs 1 
F Malta Malta 2 
E Slovakia Slovensko 3 


Funny to see that X is Germany, when Tescos opened in my town, the self service till wouldn't take note with X on them. Were they trying to tell us something?


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## gus-lopez

mike kelly said:


> why not just change the 500 euro notes at a bank for pesetas? lots of countries don't require either id or a bank account to do this.


When Spain changed from the peseta to the Euro only money that was in your account on the day was cahanged , you couldn't walk in and say " I've just found this 20 million pesetas under the bed" can you change it ? Nor could you pay it in to your bank as they wanted to know where it came from & it couldn't be explained. 
The way they got round it was to buy land & build a house or nave or buy property ,all in cash. This could be then sold in the future & the money deposited ,legally, in the bank as profits from land or house sale. No one ever asked how it was bought in the first place . It's a bit more difficult for them now as total cash purchases have been outlawed, but not circumventable. 
The man I bought my house from only bought it to change pesetas into euros , legally. My neighbour, who was born in this house ( It was his mother who sold it to the chap I bought it from ) told me all about it some years after.
Yes you can walk in the bank & change a 500€ note but when there's 10's of 000's out there the queues would be horrendous, & they'd run out of pesetas.
What you can't do is pay in to your bank account more than 2999 €'s as then the bank has to notify the Hacienda.
Huge sums of money can't just reappear in the system without questions being asked.


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## VFR

I personally think that there is not the slightest chance of any EU member leaving the Central Bank's beloved Euro.
Greece was bankrupt on entry as they sold their souls via the IMF to gain entry to the Euro with the full knowledge (and no doubt backing) of the CB power brokers who set this club up to favour the Franco/German alliance (much like the EU)


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## jojo

playamonte said:


> I personally think that there is not the slightest chance of any EU member leaving the Central Bank's beloved Euro.
> Greece was bankrupt on entry as they sold their souls via the IMF to gain entry to the Euro with the full knowledge (and no doubt backing) of the CB power brokers who set this club up to favour the Franco/German alliance (much like the EU)



I agree, but I think that there may come a time in the not too distant future when Germany gets on its high horse and requests some kind of split

Jo xxx


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## mrypg9

playamonte said:


> I personally think that there is not the slightest chance of any EU member leaving the Central Bank's beloved Euro.
> Greece was bankrupt on entry as they sold their souls via the IMF to gain entry to the Euro with the full knowledge (and no doubt backing) of the CB power brokers who set this club up to favour the Franco/German alliance (much like the EU)


It's simply unrealistic to talk of Germany or any other EU state 'expelling' Greece or any other country from the Eurozone. Apart from there being no mechanism in the Maastricht Treaty to enable this - membership is for keeps - there is a more important and urgent reason. Banks in the euro area hold huge amounts of Greek government bonds: German banks some 14%, France 25% and the UK just over 4% of the total. One of the reasons that Germany and France have been reluctantly dragged into offering loans to Greece to enable it to meet its obligations over the coming year is that they do not want to face a situation where they are obliged to step in to prop up their banks. Overall, Eurozone banks hold some 70 billion euros of Greek bonds. So it's not surprising that the currency club's governments have announced firmer details of a bail-out. Plus the fact that this rescue package buys time and the world economy could be stronger in a few years time.
As for Spain and Portugal: foreign banks exposure to these two countries plus Greece amounts to 1.2 trillion euros. This might be too big a problem even for the IMF to deal with so Europe has a direct interest in making sure that contagion doesn't spread to Iberia!
As for Greece setting up a 'new' currency: this would be a logistical nightmare. Bonds, bank deposits, wages, all commercial contracts etc. etc. would have to be switched to the new currency. When the euro was introduced, it was planned in minute detail for years and with the cooperation of other states. And a country that had lost the confidence of investors in its public finance management would find it very hard if not impossible to reconstruct a sound financial system.
A managed default is imo a more likely fate for Greece and this would not be the end of the euro.
Yes, there will be public protest all over Europe at having to bail out idle tax-dodging Greeks who fiddled the books to qualify for euro entry. Two German academics have threatened to sue Merkel's Government for breaking the strict terms of Maastricht, even though all Germany and co. have done is to offer Greece loans at a spread well above their own. In effect, it will be a roll-over loan as the amount on offer is generally held to be a stop-gap measure rather than a solution. Greece has to get a grip on its public finances....if it can.
But as the sainted Margaret Thatcher used to say, There Is No Alternative and in this case TINA is right. If Greece goes, not only euro zone member states will suffer the consequences.


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## littleredrooster

mike kelly said:


> yes, but any property you own would then also be worth as much as a couple of bags of chips


Then thats the time to buy rather than worry about the selling value.
Did much the same in the previous recession.


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## mrypg9

jojo said:


> Altho I read the sun and the daily mail cos they're simple and easy reading for someone with my intelligence, but I didnt get that from there lol. I've got friends who know far more about money matters than I do and are quite au fait with currency dealings, they find it quite amusing how protective the Germans are over money and quite rightly so!!
> 
> Jo xxx


Currency dealings and buying/selling of Government bonds are different, though. 
I'm not sure what you mean by 'Germans are protective over money'. Germany has, I believe, a high ratio of personal savings to domestic consumption (is that correct, Seb?) and that in itself is a problem at a time when due to slack in the world economy demand for German exports has fallen.
As for people who know more about money matters....my son and my daughter-in-law both have very well-paid jobs in the City, working for banks. She is in 'wealth management' -that always makes me laugh as a job description- and has worked for small Swiss and German investment banks dealing with the assets of extremely wealthy individual clients. They are both reasonably intelligent and successful people yet I wouldn;t trust them to invest £10 for me.
Why? Because in this crazy unregulated financial climate a fortune teller with a crystal ball would be as much if not more use.
Just read about the U.S. Government v Goldman Sachs proceedings to see what kind of lawless jungle is the norm in the world of high finance.


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## mrypg9

littleredrooster said:


> Then thats the time to buy rather than worry about the selling value.
> Did much the same in the previous recession.


What may have been true in the UK at that time doesn't apply to a crisis caused by a Government with a huge public account deficit, though.
Like you, we have bought property assets cheap and sold dear over a couple of decades but that was because the value of those assets was maintained in a relatively stable currency against a backdrop of rising productivity...and we were lucky to bypass the negative equity stages.
Would you buy Greek bonds that are now rated as junk, however cheap they were?
I would never buy without an eye to future selling value. What would be the point? You could be left with....junk.
The only case where it could be advantageous is the depressed market in Spanish property. But who is to say that what you buy today might not be cheaper next week? Who knows when you've gone as low as you can get?
It's all a gamble.


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## mrypg9

mike kelly said:


> great idea, europe should have a common pension system. that would greatly benefit people who have worked in more than one EU country


That sounds like a good idea but in practice I can't see how it would work.
How would you iron out discrepancies between the varying stages of economic development and purchasing power in the different E.U. member states?
The Czech Republic, for example, has a median wage of around £5 -6000 a year, about a quarter that of the richer countries.
But then, I always say that if we are intelligent enough to invent weapons that can destroy civilisations without harming property (neutron bomb) then solving problems such as pension parity should be child's play...


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## gus-lopez

Oops, sorry computer error. It appears we've underestimated the unemployed.
El INE desvela que la tasa de paro superó en marzo el 20%. SUR.es


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## mike kelly

mrypg9 said:


> What may have been true in the UK at that time doesn't apply to a crisis caused by a Government with a huge public account deficit, though.
> Like you, we have bought property assets cheap and sold dear over a couple of decades but that was because the value of those assets was maintained in a relatively stable currency against a backdrop of rising productivity...and we were lucky to bypass the negative equity stages.
> Would you buy Greek bonds that are now rated as junk, however cheap they were?
> I would never buy without an eye to future selling value. What would be the point? You could be left with....junk.
> The only case where it could be advantageous is the depressed market in Spanish property. But who is to say that what you buy today might not be cheaper next week? Who knows when you've gone as low as you can get?
> It's all a gamble.


very good points. I wonder how long it will take Spanish property to recover from the current crisis.


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## mike kelly

jojo said:


> It would be virtually impossible to reintroduce the pesata. It would be very costly and it would need careful planning over a long period of time! That said, there are still a huge amount of businesses and people who use the pesata in tandem with the euro - Quite illegal, but thats never worried the Spanish too much lol
> 
> Jo xxx


how is it possible to use the pesetsa now?


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## gus-lopez

mike kelly said:


> how is it possible to use the pesetsa now?


No, I do't think Jo means "use" as in literally but as in pricing or conversation. Even here I know of Spanish agents who still have all house prices in pesetas on their computers & even converstaions with my neighbours you get told prices in pesetas. I can still go in shopshere & find prices on stickers in pesetas!  Good job I can work them out with no trouble.


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## mrypg9

mike kelly said:


> very good points. I wonder how long it will take Spanish property to recover from the current crisis.


Well, there are an estimated 1.6 million unsold homes on the market in Spain now. I seem to remember someone (Gus?) pointing out that that figure didn't include unfinished properties. So....how long is a piece of string?
There is a school of economic thought that explains the crisis in part on the misguided attempt to turn Spain into the Florida of Europe in that the property bubble was largely speculative and bound to fall under the usual rule of supply and demand. Instead the Government should have concentrated on reforming the rigid archaic labour structure and on encouraging venture capital to promote new green hi-tech enterprises.
I suspect that the assumed contribution of immigrants to the national economy has been overestimated and no figures have been produced to show just how much has been brought in. Most Brits here are not fabulously wealthy and although there are undoubtedly rural and semi-rural areas where small concentrations have contributed hugely to the local economy -hence the willingness of local Mayors to bend planning regulations -the overall picture will not be significant. One only has to consider the number of immigrants who don't even sign on to the padron, thus depriving local communities of much-needed revenue.
I read somewhere that one way forward for Spain could be to concentrate on 'quality' tourism, moving the focus away from the Costas to inland destinations of cultural significance. The Guggenheim Museum in Bilbao rakes in billions, apparently.
But I personally think that many Brits will turn to long-haul destinations for vacations, places such as New Zealand, the States and Malaysia, to name but a few. After all, if your flying is restricted to once or twice a year holiday travel, then even a flight of ten or more hours is seen as an enjoyable part of your holiday....for some people, anyway.


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## mike kelly

mrypg9 said:


> Well, there are an estimated 1.6 million unsold homes on the market in Spain now. I seem to remember someone (Gus?) pointing out that that figure didn't include unfinished properties. So....how long is a piece of string?


Ireland has a similar problem. A proposed solution is to bulldoze properties for which there is no demand. Could such an idea work in Spain?

There are also so many yound people here who live with their parents as they cannot afford their own homes. How does that square with all these unsold homes?


----------



## jojo

mike kelly said:


> Ireland has a similar problem. A proposed solution is to bulldoze properties for which there is no demand. Could such an idea work in Spain?
> 
> There are also so many yound people here who live with their parents as they cannot afford their own homes. How does that square with all these unsold homes?


What is strange in Spain is that (well in our area) they're building local social housing for such youngsters who cant afford to move out of their parents homes!! Altho the Spanish dont tend to leave home so readily as in the UK, they have more of a sense of family. However, what I cant figure out is why they dont use some of the millions of apartments, duplexes etc that are already built and sitting there empty and owned by the banks????? I know building more gives the construction industry something to do, but at what cost???

Jo xxx


----------



## mrypg9

mike kelly said:


> Ireland has a similar problem. A proposed solution is to bulldoze properties for which there is no demand. Could such an idea work in Spain?
> 
> 
> 
> 
> 
> 
> There are also so many yound people here who live with their parents as they cannot afford their own homes. How does that square with all these unsold homes?


Even bulldozing costs money but it might be preferable to the unsightly half-finished blocks.[/I]
As for Spaniards living with parents - if they can't afford to buy, no-one will give them a house. Can't imagine the cash-strapped Government purchasing them to rent at low cost to those in need. It's a money problem, not an excess of houses problem.


----------



## mike kelly

jojo said:


> What is strange in Spain is that (well in our area) they're building local social housing for such youngsters who cant afford to move out of their parents homes!! Altho the Spanish dont tend to leave home so readily as in the UK, they have more of a sense of family. However, what I cant figure out is why they dont use some of the millions of apartments, duplexes etc that are already built and sitting there empty and owned by the banks????? I know building more gives the construction industry something to do, but at what cost???
> 
> Jo xxx


Well, I have often heard that Spanish local politicans love to promote construction work of all kinds as they take a % of the cost involved and put it into their back pocket!


----------



## mike kelly

The current crisis reminds me of Norman Lamont and EMU back in 1992. If the markets decide that Greece does not belong in the Euro, then Greece will be out, one way or the other. This will have to have effects for Spain.


----------



## jojo

mike kelly said:


> The current crisis reminds me of Norman Lamont and EMU back in 1992. If the markets decide that Greece does not belong in the Euro, then Greece will be out, one way or the other. This will have to have effects for Spain.


I dont think they can do that tho. As the song says "you can check out any time you like, but you can never leave"!!!! Now a gold star who can remember who sang that???LOL

Jo xxxx


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## Xose

jojo said:


> I dont think they can do that tho. As the song says "you can check out any time you like, but you can never leave"!!!! Now a gold star who can remember who sang that???LOL
> 
> Jo xxxx


Talking of which - last I read, California were near to going bust, same for Florida.
What happens there then, do they leave the $ ?

Xose
P.S. Was it Steve Walsh?


----------



## jojo

Xose said:


> Talking of which - last I read, California were near to going bust, same for Florida.
> What happens there then, do they leave the $ ?
> 
> Xose
> P.S. Was it Steve Walsh?


Smartypants!!! 

Jo xx


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## gus-lopez

jojo said:


> What is strange in Spain is that (well in our area) they're building local social housing for such youngsters who cant afford to move out of their parents homes!! Altho the Spanish dont tend to leave home so readily as in the UK, they have more of a sense of family. However, what I cant figure out is why they dont use some of the millions of apartments, duplexes etc that are already built and sitting there empty and owned by the banks????? I know building more gives the construction industry something to do, but at what cost???
> 
> Jo xxx


Apparently they can ,or could. Some local councils will take them off the developer as VPO's ( vivienda protección official) but obviously there isn't the huge profit in it for the developer as they are sold on to qualifying people at not much over cost.

Referring to mrypg9's post I was reading recently that the Spanish reckon they need 50,000 new houses a year for the foreseeable future . That means they've already got 30 years worth half-built.


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## mike kelly

Xose said:


> Talking of which - last I read, California were near to going bust, same for Florida.
> What happens there then, do they leave the $ ?
> 
> Xose
> P.S. Was it Steve Walsh?


well New York went broke in the 1970s, the markets believe in the $ so such a question does not arise


----------



## jojo

mike kelly said:


> well New York went broke in the 1970s, the markets believe in the $ so such a question does not arise


But the markets invented the euro! Even if it was possible to "kick" a country out of the EU, they cant withdraw their euro currency

Jo xx


----------



## Xose

mike kelly said:


> well New York went broke in the 1970s, the markets believe in the $ so such a question does not arise


No, not today. But less than 6 months ago the $ was "going down the toilet. The € will be the new reserve currency....." etc., etc.

Funny old world isn't it?


----------



## mickybob

jojo said:


> But the markets invented the euro! Even if it was possible to "kick" a country out of the EU, they cant withdraw their euro currency
> 
> Jo xx



We will soon find out if they can kick countrys out of the euro.


----------



## jojo

mickybob said:


> We will soon find out if they can kick countrys out of the euro.


The two things are getting confused i think?? Theres the EU, which is the trading and coexisting set of countries. The Euro or Eurozone is the currency that most, but not all of them use! Its not even comprehendable to kick anyone out of a currency!

Jo xxx


----------



## mike kelly

jojo said:


> T Its not even comprehendable to kick anyone out of a currency!
> 
> Jo xxx


why not?


----------



## jojo

mike kelly said:


> why not?


Tell me how??

Jo xx


----------



## mike kelly

jojo said:


> Tell me how??
> 
> Jo xx


other countries say to greece, "We don't want you in the Euro anymore." That's it!


----------



## jojo

mike kelly said:


> other countries say to greece, "We don't want you in the Euro anymore." That's it!


The Euro is a currency! Its like the UK kicking gibraltar out of the pound! 

Jo xxx


----------



## mike kelly

jojo said:


> The Euro is a currency! Its like the UK kicking gibraltar out of the pound!
> 
> Jo xxx


"Although Gibraltar notes are denominated in "pounds sterling", they are not legal tender in the UK"


----------



## jojo

Look, the EU cannot simply kick out a country that owes it huge amounts of money, the EU is made up of several countries and is not allowed to simply disown one if it has financial difficulties. If it did that then it would have to kick out most of them, but they cant, they're a union and inextricably linked. Even the wonderful Germany is financially in a mess altho it wont admit to it. They are all one and as such they all have to carry each others burdens! I dont know what the answer is, but I do know that just telling Greece to leave isnt an option and something is going to have to happen to sort it out - maybe, as I've mentioned before, splitting the euro currency and devaluing the poorer one?? But thats not without serious issues and consequences - investors (the other EU members) would be seriously burned!!???



Jo xxx


----------



## country boy

Seriously; there is a rumbling 'Up North' within the corridors of power in Brussels (amongst the Northern Nations of the Euro Zone) that the " Club Med" nations might ultimately be forced to use a sort of second grade version of the Euro. I see this as definitely requiring the Nationalising of the Euro currency, ie each country to have it's it's own name on the Notes with different patterns etc. I can't see this working as one might just as well revert to Francs, Pesetas, and Deutchmarcs, but they are talking about it! Watch this space.
It would solve Spain's problems if it could de-value right now!!


----------



## mike kelly

country boy said:


> Seriously; there is a rumbling 'Up North' within the corridors of power in Brussels (amongst the Northern Nations of the Euro Zone) that the " Club Med" nations might ultimately be forced to use a sort of second grade version of the Euro. I see this as definitely requiring the Nationalising of the Euro currency, ie each country to have it's it's own name on the Notes with different patterns etc. I can't see this working as one might just as well revert to Francs, Pesetas, and Deutchmarcs, but they are talking about it! Watch this space.
> It would solve Spain's problems if it could de-value right now!!


Spain has always used devaluation to gain competitivness in the past, since the introduction of the Euro no reforms have been implemented to increase productivity.


----------



## littleredrooster

Fasten your seat belts,..loooks like we're in for a rough ride.
Spain's credit rating has just been downgraded and the Euro has taken a big hit as a result.


----------



## jimenato

> Originally Posted by Xose
> Talking of which - last I read, California were near to going bust, same for Florida.
> What happens there then, do they leave the $ ?
> 
> Xose
> P.S. Was it Steve Walsh?





jojo said:


> Smartypants!!!
> 
> Jo xx


You sure? I reckon it was Don Henley


----------



## jojo

jimenato said:


> You sure? I reckon it was Don Henley



Actually yes it was Don Henley, Joe Walsh never sings "the Eagles" songs, only his own, altho the band now do them in their set!!! 

Jo xxx


----------



## mike kelly

littleredrooster said:


> Fasten your seat belts,..loooks like we're in for a rough ride.
> Spain's credit rating has just been downgraded and the Euro has taken a big hit as a result.


pass the sick bag


----------



## country boy

littleredrooster said:


> Fasten your seat belts,..loooks like we're in for a rough ride.
> Spain's credit rating has just been downgraded and the Euro has taken a big hit as a result.


Having read S&P's reasoning for the downgrade, I can't fault it. As long as the current Zapatero regime continues it's Ostrich like approach to the country's finances, down the tubes we will go!









Read this:

http://estaticos.elmundo.es/documentos/2010/04/28/informe_sandp.pdf


----------



## mike kelly

country boy said:


> Having read S&P's reasoning for the downgrade, I can't fault it. As long as the current Zapatero regime continues it's Ostrich like approach to the country's finances, down the tubes we will go!
> 
> 
> 
> 
> 
> 
> 
> 
> 
> Read this:
> 
> http://estaticos.elmundo.es/documentos/2010/04/28/informe_sandp.pdf


a great description. Zapatero is terrible at managing the economy but would Rajoy do any better? well, I think he would


----------



## xxxxxxxxxxxxxdeanhankin

mike kelly said:


> well, germany are the EU paymasters, if they left there would be no more EU. So I think they definitely can expel Spain (or any other country) from the Euro by threatening to leave themselves.
> keep an eye on what happens to Greece, Spain could be next
> Apart from property devaluation though, I think that Spain would be better off without the Euro. What benefits has the Euro brought Spain anyway?



From the New York Times July 11 2002


In a country that stubbornly clings to many traditions, no one laments the death of the peseta.

While Germany, Europe's economic powerhouse, has stumbled since the introduction of the euro, Spain makes the case for euro bulls. After several years of watching their economy grow at a frenetic pace — at least by European standards — Spaniards exude an economic enthusiasm rarely seen in other Continental capitals. They have benefited perhaps more than any other Europeans from the euro and from the economic reforms that were required to usher it in.

Aid from the European Union — not directly linked to the euro but intended to help Spain catch up with other users of the single currency — has financed vast transportation and infrastructure projects to link this still-fragmented country more closely. Spanish incomes have risen to 84 percent of the European Union average from 75 percent seven years ago, a demonstration of the economic "convergence" envisioned by the euro's founders.

The replacement of the volatile peseta with the euro has also lowered borrowing costs to levels historically associated with the Deutsche mark. That has allowed Spanish companies to shake off the insular legacy of the Franco years and compete in a global economy — even if their exposure to Latin America is making some investors nervous. "Spain became credible by joining a credible club," said Guillermo de la Dehesa, chairman of the Center for Economic Policy Research.

Perhaps more than any other country in the 12-member euro bloc, Spain has worked to build on that credibility, analysts say.

At a time when some euro members' budget deficits are pushing up against the limits imposed under monetary union, the center-right government of Prime Minister Jose Maria Aznar has used lower borrowing costs and other savings to bring its budget into balance. The government continues to encourage investment and entrepreneurship through tax cuts and privatization and is tapping the private sector to help finance toll roads and other projects.

Economists say Spain has also taken the most aggressive steps to loosen up its rigid labor market, which has helped slash the unemployment rate to 11.4 percent in May from Depression-like levels of more than 20 percent in the early 1990s.

"From 1970 to 1995, Spain was unable to create a single net job, which is an achievement nobody could be proud of," Finance Minister Rodrigo Rato said. "From 1995 to 2002, it created 3.4 million jobs. We have changed the social situation."

To be sure, analysts say reform remains incomplete. And job growth has been fueled as much by outside aid and investment as by internal reform.

Still, the improved economy and the money flowing into their country have put young Spaniards with the right skills in an enviable position.

"For the last three years, I have gotten a raise without even asking," said Marcos Sanchez, 32, an engineer who designs bridges at Ferrovial SA, a big construction company working on a high-speed rail link between Madrid and Barcelona. "They're afraid of people leaving."


----------



## xxxxxxxxxxxxxdeanhankin

*What spain has got from being in the Euro*

A great deal I'd say


----------



## mrypg9

mike kelly said:


> The current crisis reminds me of Norman Lamont and EMU back in 1992. If the markets decide that Greece does not belong in the Euro, then Greece will be out, one way or the other. This will have to have effects for Spain.


As I posted earlier, that will not happen. What evidence do you have for your opinion?
The EMS was a totally different animal, no single currency and Lamont's mistake was entering at too high a rate.


----------



## mrypg9

Xose said:


> Talking of which - last I read, California were near to going bust, same for Florida.
> What happens there then, do they leave the $ ?
> 
> Think back to the crisis in New York City's public finances in the late 70s (or was it the early 80s?) which sparked the immortal NY Times headline : 'Pres to New York - drop dead!' when the city requested a bail-out. What happened? They got it because there was no alternative. And that is what will happen with the euro. Loans which will be in effect rollover subsidies or a managed default.
> As for saying that other countries will 'kick Greece out'....which countries? Certainly not those whose banks are exposed to Greek government bonds, chiefly France and Germany. Certainly not countries such as the Czech Republic, about to adopt the euro, and Slovakia, not Italy, not the Netherlands.
> Some of these posts talk about changing currencies as if no more were involved than changing your socks. How many currency changes have actually taken place in large economies?
> Yes, huge advantages would accrue to Spain if it had charge of its own currency and could devalue, which is basically what has happened to the UK £. Yes, the whole euro project could be said to have been unrealistifc from Day One, failing as it did to take cognisance of the differing strengths of the economies that adopted the single currency. But I have not read one argument supporting these assertions that Greece will be 'kicked out' of the euro zone. The Maastricht Treaty set up the euro zone as a no exit club. Membership is for life, for better or worse.
> 
> At the moment it seems it's for worse...
> What specific economic remedies would the deeply unpopular Rajoy pursue to cure Spain's economic ills, I wonder?
> I would be happy to place a large bet with anyone against Spain, Greece or any country leaving or being kicked out of the euro.


----------



## mrypg9

It is totally unrealistic to talk of Germany leaving the EU or the euro zone. Germany was after all one of the leading participants in the European Coal and Steel Community, the forerunner of the Common Market and with France the prime movers in the series of Treaties which have transformed the ECSC into the European Union. Successive British Governments of both Parties have failed to play an active role in Europe so it is no wonder that Germany and France run the show. Had we been a more active participant who knows what shape the EU might now have? We may have lost an Empire and not yet found a role but we still are one of the world's richest nations, a formidable military power and the City of London is the world's leading financial centre. We also have a considerable amount of what is called 'soft power'. 
The Single European Act which established free movement of goods, people and finance throughout the EU was drawn up (and signed by Mrs.T. who later claimed she had not fully understood its implications) was largely the creation of European transnationals who have benefitted hugely from the abolition of tariffs and the simplification of monetary transactions.
The EU is a vast and complicated tapestry, much too complex to unweave.
IMO it's also hugely undemocratic: like other transnational organisations such as the G8, GATT, the IMF, it is beyond the control of the ordinary voter in the member states which its decisions affect.


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## gus-lopez

This got me thinking about how many 500€ notes the Spaniards might have hidden . The best estimate I could find was here Spanish hoards of €500 notes could aid liquidity | World news | The Guardian

54 billion ,that's about a quarter of the UK debt!! Under the bed. :clap: 

If they reckon the black economy has a value of 23-25% of Spains overall GDP then that might be why there doesn't appear to be a 'crisis' in many places ! 
Imagine what a boost it would be if this lot could be got back in to the economy.


----------



## Guest

gus-lopez said:


> This got me thinking about how many 500€ notes the Spaniards might have hidden . The best estimate I could find was here Spanish hoards of €500 notes could aid liquidity | World news | The Guardian
> 
> 54 billion ,that's about a quarter of the UK debt!! Under the bed. :clap:
> 
> If they reckon the black economy has a value of 23-25% of Spains overall GDP then that might be why there doesn't appear to be a 'crisis' in many places !
> Imagine what a boost it would be if this lot could be got back in to the economy.


That's a fascinating article. I asked my (Spanish) OH about the article, and his comment was that this is why it's an error to raise taxes soon, just forcing things even more underground!


----------



## Pesky Wesky

This is where some of those 500 notes are

8.2 million Euro deal paid in 500 Euro notes

and people like Jaume Matas and his wife might know about a few more!!


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## mrypg9

So...Greece has its 'rescue package'. Other Eurozone member states -and others with banks with substantial Greek bond holdings -have rallied round to safeguard their own interests. But at best it will be a stop-gap as Greece's structural problems won't be solved in a year. More support will be needed and will be forthcoming, I've no doubt of that. Once again taxpayers are being asked to prop up banks.
Of course not a popular way to go and the Greeks will be on the streets in force to protest. But then I and many other Brits have seen the return on our investments dwindle to almost nil and the value of our £ income cut by a third - a double whammy in our case and that of thousands more immigrants to Spain and elsewhere. All over the world -apart from countries such as China, Brazil and India et al which found a 'third way' economic path avoiding the neo-con prescription - innocent parties are paying for the hubris and cupidity of the Washington Consensus school of economic thought.
Searching for evidence to support other posters' contention that 'Greece will be 'kicked out' of the Euro zone I can find only statements from various MB s and Ministers of the German junior coalition partner FDP. They do not carry much weight.


----------



## jojo

mrypg9 said:


> So...Greece has its 'rescue package'. Other Eurozone member states -and others with banks with substantial Greek bond holdings -have rallied round to safeguard their own interests. But at best it will be a stop-gap as Greece's structural problems won't be solved in a year. More support will be needed and will be forthcoming, I've no doubt of that. Once again taxpayers are being asked to prop up banks.
> Of course not a popular way to go and the Greeks will be on the streets in force to protest. But then I and many other Brits have seen the return on our investments dwindle to almost nil and the value of our £ income cut by a third - a double whammy in our case and that of thousands more immigrants to Spain and elsewhere.
> Searching for evidence to support other posters' contention that 'Greece will be 'kicked out' of the Euro zone I can find only statements from various MB s and Ministers of the German junior coalition partner FDP. They do not carry much weight.


...... so where does this leave the Spanish and Portugese problems. Will they get a rescue package, eventho Spain has pledged to help Greece, it can ill afford to??!!!

Jo xxx


----------



## mrypg9

jojo said:


> ...... so where does this leave the Spanish and Portugese problems. Will they get a rescue package, eventho Spain has pledged to help Greece, it can ill afford to??!!!
> 
> Jo xxx


Each of these has its own reasons for the markets' lack of confidence. Spain's main problem isn't raising money on the bond market - its last issue in March (I think it was) was successful. It is still one of the EU's largest economies. Spanish banks aren't over-exposed to Greek Government debt either.
Spain's problem is that the markets aren't convinced that the Spanish Government is doing enough to tackle its structural problems. The labour regulations which make it almost impossible for firms to shed useless, unproductive or even just plain surplus to needs workers is a major problem, leading to huge youth unemployment and poor skills training. The other major factor is the collapse of the 'Spain as Europe's Florida' project. The bursting of the speculative property bubble has been a major factor in halting economic growth and the rise in unemployment. People who bang on about the 'enormous' contribution we incomers make economically -although they don't produce figures to prove it -should weigh it against the costs of the property market collapse. On the whole, immigrants here are not fabulously wealthy and many don't contribute at all....black economy work in the immigrant communities, no tax paid, not on the padron..
At the end of the day there will have to be economic retrenchment, more than the increases in alcohol/tobacco duty already imposed and the planned 2% increase in IVA. Zapatero's Labour Minister has talked about measures to reform employment law.
Whether that will be enough to satisfy the markets remains to be seen.
The lesson to be drawn from this is that democracy as exemplified by the election process is a farce. Governments of all parties do what they are told by a handful of corporate financiers and global traders.
Joe and Jane Public get royally screwed in the end....


----------



## mike kelly

mrypg9 said:


> Each of these has its own reasons for the markets' lack of confidence. Spain's main problem isn't raising money on the bond market - its last issue in March (I think it was) was successful. It is still one of the EU's largest economies. Spanish banks aren't over-exposed to Greek Government debt either.
> Spain's problem is that the markets aren't convinced that the Spanish Government is doing enough to tackle its structural problems. The labour regulations which make it almost impossible for firms to shed useless, unproductive or even just plain surplus to needs workers is a major problem, leading to huge youth unemployment and poor skills training. The other major factor is the collapse of the 'Spain as Europe's Florida' project. The bursting of the speculative property bubble has been a major factor in halting economic growth and the rise in unemployment. People who bang on about the 'enormous' contribution we incomers make economically -although they don't produce figures to prove it -should weigh it against the costs of the property market collapse. On the whole, immigrants here are not fabulously wealthy and many don't contribute at all....black economy work in the immigrant communities, no tax paid, not on the padron..
> At the end of the day there will have to be economic retrenchment, more than the increases in alcohol/tobacco duty already imposed and the planned 2% increase in IVA. Zapatero's Labour Minister has talked about measures to reform employment law.
> Whether that will be enough to satisfy the markets remains to be seen.
> The lesson to be drawn from this is that democracy as exemplified by the election process is a farce. Governments of all parties do what they are told by a handful of corporate financiers and global traders.
> Joe and Jane Public get royally screwed in the end....


Thanks for the great post! Firms in Spain need to be able to get rid of unproductive workers, however if this is made easier I would see many companies using this as a lever to reduce salaries across the board as individual merit is rarely recognised in Spanish companies. Older workers in particular would bear the brunt of this. 
Lack of training is another problem. Many Spaniards over 40 do not have up to date computer skills and could easily be replaced by younger and cheaper workers.


----------



## gus-lopez

Whilst 'trawling' yesterday I came across an article on Greek tax where it said that in the last years tax returns, only 324 people in the wealthiest areas of Athens put down that they had swimming pools whilst satellite photos show there are 16,794 pools!!!! This loss to the Greek revenues is estimated to be 22billion €'s. 
The Greeks problem is similar to Spains , although far worse, in that putting up taxes does not generate a huge amount of extra income as most Greeks avoid as much tax as possible. It would tend to drive more people towards the 'black' economy. 
I saw an interview with some Greek theatre students yesterday, where they were saying that the corruption was endemic to the whole fabric of society. One lad said that his driving instructor told him that if he didn't pay a 'sweetener' to the examiner that he would have great difficulty getting a licence!

I read somewhere that of all Spanish taxpayers, @ the year end, 85% reclaim all the tax that they have been deducted !!


----------



## mrypg9

mike kelly said:


> Thanks for the great post! Firms in Spain need to be able to get rid of unproductive workers, however if this is made easier I would see many companies using this as a lever to reduce salaries across the board as individual merit is rarely recognised in Spanish companies. Older workers in particular would bear the brunt of this.
> Lack of training is another problem. Many Spaniards over 40 do not have up to date computer skills and could easily be replaced by younger and cheaper workers.


Yes, it won't be easy to change the mind-set that accompanies the 'job for life' culture.
If younger people don't enter the labour market the future will be bleak for older people in more ways than one. Lack of skills make some sectors of the Spanish i economy uncompetitive on the international market, true, but Spain as in the rest of Europe has an ageing population asnd someone has to be working to pay for those pensioners!!
As for safeguarding salary levels...I can't think of an instance where salaries have been reduced (watch the Greek space, though!!!). More likely a pay freeze.
That will be up to the Unions and individuals to sort out.


----------



## mrypg9

Market rumours: Spain will approach the ECB for support. But only rumours, so far.
Interestingly enough, Spain's public sector debt is 53% of GDP. The IMF opinion is that 60% is sustainable.
As the Chinese proverb wishes , we certainly live in interesting times.
My predictions: Greece will default, the ECB money will be diverted to cushion bank losses.
The UK election will result in a Tory/Lib Dem coalition, followed by a second election within a year the result of which will depend on the electorate's reaction to the emergency budget.


----------



## RagsToRich

gus-lopez said:


> I didn't think you could be expelled from the Euro ? From the EC , yes. Spain would have to choose to come out & how that would be accomplished, God only knows !


I do know.

You have to renegotiate treaties individually with every other member state.

That is the only way of getting out "legally".


----------



## mrypg9

RagsToRich said:


> I do know.
> 
> You have to renegotiate treaties individually with every other member state.
> 
> That is the only way of getting out "legally".



Do you think that, after the wrangling over the Lisbon Treaty, there will be an appetite for further constitutional reform?
I have seen no evidence other than the remarks of an obscure MB from the FDP that there is any move to expel Greece from the Euro zone (can't be done) or the EU.
As I said, managed default is more likely.


----------



## toast

Most of the (PIGS)debt holders ( Germany to mention the biggest one) would have a huge impact if any of these countries would be expelled from the euro( same if France+ Germany decide to exit the Euro), the impact would be the same as the hold huge amounts of debt, that is why they cant afford to let any of them go...but of course is not free money, either we take the correct steps to reduce expenses or in 12 months Greece would be asking for more free "meal", so is important to give them money, but under tigth constraints....same with Spain and Portugal.....and same with the PIGGS(including GB which also has a huge increasing deficit.).
Difficult times.! but we have had worst times( just look at 199 with unemployment of 22%, and a awful scenario....but strong measures were taken by politicians and the recovery started.....until 2008!!)....they would prefere to be out of the euro...but they cant! we are all in the same boat!


----------



## mrypg9

toast said:


> Most of the (PIGS)debt holders ( Germany to mention the biggest one) would have a huge impact if any of these countries would be expelled from the euro( same if France+ Germany decide to exit the Euro), the impact would be the same as the hold huge amounts of debt, that is why they cant afford to let any of them go...but of course is not free money, either we take the correct steps to reduce expenses or in 12 months Greece would be asking for more free "meal", so is important to give them money, but under tigth constraints....same with Spain and Portugal.....and same with the PIGGS(including GB which also has a huge increasing deficit.).
> Difficult times.! but we have had worst times( just look at 199 with unemployment of 22%, and a awful scenario....but strong measures were taken by politicians and the recovery started.....until 2008!!)....they would prefere to be out of the euro...but they cant! we are all in the same boat!


But there is no mechanism for a country leaving or being expelled from the euro, as I keep pointing out. Euro zone membership is intended to be a one-way street. Countries can't just conjure up a new currency out of thin air. Who would have sufficient confidence in a country which was forced into adopting a new currency? Not even the racier hedge funds. What would happen to the assets of that country held by its overseas creditors?
Managed default is the most likely outcome, imo, with the 'rescue' money diverted to prop up the affected banks in other EU states exposed to Greek Government debt.
Merkel's dithering has increased the cost of the record package - the yield on Greek two-year bonds is astronomical. She should have used the media to tell the German people the unpalatable truth - that if Greece implodes, ordinary Germans will suffer the consequences, as will the rest of Europe, EU members or not.


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## JodiSte

I don't think that this is the right question to ask. The Euro is a currency and that is it. The debt of the UK will probably be higher (based on the BBC today) then Greece and Germany is not much better off. We are talking about a world-wide crises and leaving a currency does not mean that you are better off. The situation in Greece only shows that governments today cannot get away with stupid things as they used to. Greece has made major mistakes and in great part without the knowledge of its people. Now they are trying to fix it and the people have to suffer. No wonder they are on the street. But the European Commission has no idea how to handle this situation, but it is a good test for things to come and I am sure that the above mentioned countries and the UK are watching and planning their own escape out of this bad situation. Don't forget that the power of the big European countries lays on the smaller ones. 

In the end it proves that we need a different financial system. I don't want to start thinking about the pension situation which will come up soon and Countries like Germany, UK and France will be the hardest hit on that one.

The future of the European Union will be decided with this crises. If they can pull it through without anyone having to leave, it will have a good chance to a great future. I believe they can do it and I hope that Europe will grow stronger going through this.


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## mrypg9

JodiSte said:


> I don't think that this is the right question to ask. The Euro is a currency and that is it. The debt of the UK will probably be higher (based on the BBC today) then Greece and Germany is not much better off. We are talking about a world-wide crises and leaving a currency does not mean that you are better off. The situation in Greece only shows that governments today cannot get away with stupid things as they used to. Greece has made major mistakes and in great part without the knowledge of its people. Now they are trying to fix it and the people have to suffer. No wonder they are on the street. But the European Commission has no idea how to handle this situation, but it is a good test for things to come and I am sure that the above mentioned countries and the UK are watching and planning their own escape out of this bad situation. Don't forget that the power of the big European countries lays on the smaller ones.
> 
> In the end it proves that we need a different financial system. I don't want to start thinking about the pension situation which will come up soon and Countries like Germany, UK and France will be the hardest hit on that one.
> 
> The future of the European Union will be decided with this crises. If they can pull it through without anyone having to leave, it will have a good chance to a great future. I believe they can do it and I hope that Europe will grow stronger going through this.



I agree with everything you have said. 
As for a new, different financial system.....do you mean more regulation of financial institutions and a move away from the 'Washington Consensus' school of economic thought?
If so, again, I agree with you.


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## FinanceSpain

*Spain Leaving the Euro*

It's very very hard to leave the Euro.

There's a slim possibility Germany may leave, as they have the srongest case to do so.


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## mrypg9

FinanceSpain said:


> It's very very hard to leave the Euro.
> 
> There's a slim possibility Germany may leave, as they have the srongest case to do so.


Could you give reasons for that interesting opinion? What mechanism could be used in such a case? There is nothing in the Maastricht Treaty which could facilitate such an eventuality.
Germany was after all one of the strongest proponents of a single euro currency.
And what about the difficulties of creating a new currency? How would even a relatively strong state like Germany maintain market confidence in such a situation?
Germany's problems include low domestic demand. How would leaving the euro zone solve that problem?
It's a possibility so slim that it's highly unlikely.
But we live in very interesting times, so who knows??


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