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Ex-IMF Chief: Germany Should Leave The Euro, Not Greece
Submitted by KeepTalkingGreece,
In her euro-hegemonic role Germany failed to properly handle the Greek Crisis. What economics have been whispering among themselves after the scandalous Brussels Agreement of July 13th is now on the public discussion. One of IMF’s former European bailouts official, Ashoka Mody made it very clear in his article on Bloomberg on Friday morning: It’s Germany not Greece that has to leave the eurozone.
Germany not Greece should Exit the Euro
“The latest round of wrangling between Greece and its European creditors has demonstrated yet again that countries with such disparate economies should never have entered a currency union. It would be better for all involved, though, if Germany rather than Greece were the first to exit.
After months of grueling negotiations, recriminations and reversals, it’s hard to see any winners. The deal Greece reached with its creditors — if it lasts – pursues the same economic strategy that has failed repeatedly to heal the country. Greeks will get more of the brutal belt-tightening that they voted against. The creditors will probably see even less of their money than they would with a package of reduced austerity and immediate debt relief.”
Now the idea of a member country exiting the eurozone is not a taboo anymore. But would Greece leave the euro, it will be “possible followed by Portugal and Italy in the subsequent years, the countries’ new currencies would fall sharply in value, leaving them unable to pay debts in euros, triggering cascading defaults. Although the currency depreciation would eventually make them more competitive, the economic pain would be prolonged and would inevitably extend beyond their borders.
“But if, however, Germany left the euro area […] there really would be no losers,” Mody notes and explains his argument:
“A German return to the deutsche mark would cause the value of the euro to fall immediately, giving countries in Europe’s periphery a much-needed boost in competitiveness. Italy and Portugal have about the same gross domestic product today as when the euro was introduced, and the Greek economy, having briefly soared, is now in danger of falling below its starting point. A weaker euro would give them a chance to jump-start growth. If, as would be likely, the Netherlands, Belgium, Austria and Finland followed Germany’s lead, perhaps to form a new currency bloc, the euro would depreciate even further.
The disruption from a German exit would be minor.
Perhaps the greatest gain would be political. Germany relishes the role of a hegemon in Europe, but it has proven unwilling to bear the cost. By playing the role of bully with a moral veneer, it is doing the region a disservice.” ( full article Bloomberg).
Ashoka Mody was an assistant director at the International Monetary Fund (IMF), responsible for some of the bailouts required during the euro crisis. In his time at the IMF, Mody was in charge of the IMF’s Article IV consultations with Germany - those are the institution’s regular check-ups on each country’s economy. He was also responsible for engineering the IMF’s contribution to Ireland’s bailout.
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Nice personal PR, Ashoka.
With all these monkeys in-charge, Tsipras, Merkel, et al., which country will elect a robot as its leader FIRST?
I am R2-D2 and I approve this message! ;-)
Looney
This is essentially what I have been calling for for years on ZH. Ghordo says I'm wrong, and splitting the currency union would be a bad thing. I think history will prove me right.
Germany Should Leave The Euro
....keep talking. I'm really warming up to the idea.
... Ashoka is really saying ... "To know, is to know that you know nothing. I know nothing, therefore, I know."
Imagine the 50 U.S. states were 50 little countries and were part of the United Countries of America.
Can you imagine the chaos?
"Can you imagine the chaos?"
No.
It was that way until Lincoln made us the Centralized USA.
The slavery issue could have been resolved peacefully, as it was done in Great Britain.
why do ex-officio often say the obvious?
Dup
Before Lincoln was back in the old days when there were no welfare states and no Federal Income tax.
Some States currently get back more from the Fed then they put in and vice versa, it's just not advertised.
in 2014 , South Carolina got $7.87 from the Fed for every $1.00 they gave to the Fed.
Minnesota only got back 60 cents on their dollar, so they are carrying SC aka Greece
I'd like to see the state of Minnesota voters agree to that deal today as part of an agreement to join the union.
http://www.theatlantic.com/business/archive/2014/05/which-states-are-giv...
orez65:
The die had been cast WAY before Lincoln was born. Take a look at the circumstances under which the CONstituitional CONvention took place as well as the outcome of it.
http://www.thetruthaboutthelaw.com/the-peoples-case-for-what-happened-at...
Yeah, that's why I'm prepping.
So if Germany goes, who becomes the next sucker to take Germany's place?
Netherlands? How long before they would jump ship?
You would need two currencies, one for the producers and one for the non-producers.
Maybe North Eu (NEU) and South Eu (SEU)
Defintely not Netherlands. Probably for many reasons, but the most important being Germany being our biggest importer. Economies have been linked - even in the DM/NL era for a very long time (before WW1 as far as I know). Was thinking about FR myself, but htey are nearly backrupt themselves...
Well, yeah, splitting. I just want to live to see the day that Ghordo admits "You know, this whole damned Euro thing was a bad idea. We should never have done it." I think I'll have a long wait on that one.
Ghordo will never admit it. Ever. Even after it goes down, he'll bang on (assuming he hasn't jumped off the Louise Weiss' roof) that it was a great thing.
Northern Europe leaving and starting their own currency is the best thing that could happen to everyone in Europe, if only the worthless Euro Federalists would get out of the way.
His tombstone will read:
Here lies Ghordius. He and the Grim Reaper just had some policy differences.
I agree with the idea that Germany and the northern bloc should leave the euro. Their project (i.e. to pull the southern economies into the supposed discipline of the euro, making them more macro-stable, productive and, overall, better) has failed miserably and now the project is in the hands of southern interventionists, with Draghi at the helm of the ECB as their main exponent.
The problem with the idea of the northern bloc leaving and forming a new currency is the the idiots of southern Europe (and, yes, I am Spanish unfortunately) will also like to join it as they do not like to feel like 2nd-rate citizens. The clueless people of the southern bloc (i.e. the Greek saying no to austerity but wishing to stay in the euro) just do not know what they want...
It would have to be an economic union run by economists -- not politicians. If it could be pulled off -- it would be the world economics power for a long time to come.
surely you don't mean economies run by economists?!
let the economic union be determined by economics, yes, but please no, not economists
Germany set up the Euro so other European countries couldn't constantly devalue their currency away from them. I mean, that was THE WHOLE DAMNED POINT OF IT. Now they're the ones going to leave? I'm hitting the snooze button.
You change your email? I tried to send you one yesterday and it got kicked back.
Ummmmm.... no?
Not sure why that might have happened. I did get your email about TIS, I was just busy being a money-grubbing capitalist sucking up more AUM for myself yesterday. You know, stealing from the poor, giving to the middle class. Well, the upper middle class anyway.
You're a great American.
I'm exceptional.
Rothschilds should all die off, and the world would be a significantly much better place.
There would be no 9/11, no war, no debt, no satanic worshipping, no child sacrifice, no poverty, no false religion, no terrorists, etc.
That species of Reptilians has a loooong life span.
Blopper hath spoken...the truth.
Working on it
http://www.usmagazine.com/celebrity-news/news/nicky-hilton-changes-name-...
ASAP
Northern European countries should form their own new Euro called the super Euro. All the peripheral countries can then let their currency, Euro, fall to address their economic problems
I am a fan of the;
1) Thaler
2) T-Mark
3) NEURO
In that order.
This is just a variant on the cardinal Krugmanism "Heal thyself through devaluation".
What about the value of Germany's ever expanding euro-denominated assets?
Sacre bleu! What will France do!?!?
What they always do....capitulate.
Surrender.
Greece was given three chances to do the inevitable and default. They chose to fuck their people and come begging hat in hand for another bail out instead. If I were a Greek politician or a vacationing German banker, I'd be very nervous right about now.
Jeepers.
Neocolonialism is just as unprofitable in the long term than the good old gunboat kind.
Who coulda knowed?
Yes, toss the tossers, Germany, and throw the Untermenschen under a bus.
We've heard of Lebensraum, but twenty-eight countries is ridiculous.
Prime example of why IMF has been failing.
Ex-IMF is so stupid and naive its beyond understanding. The moment Germany leave euro, project is OVER. Does he actually believe other countries would kept incentive to be withing EU? How about production and valuation difference between France and Greece? And how about countries like Austria, Holland etc?
If Germany left, Austria, Holland etc would all follow. After those, France and Italy would lost its meaning to be IN and they still would be too different from such as Greece economically. So they would follow too. The very reason EU was appealing to all those countries was german/austrian style economics and sound money, although they instead become takers and didnt do shit about their countries.
Anyway, as I said before always check the source:
"Ashoka Mody, is an Indian-born economist." - wiki
Aside of looking ugly, it doesnt surprise me knowing where he come from. A country with some of the most serious economic problems PLUS the IMF - international institution of retards and usurers.
Maybe Northern Europeans should migrate to planet Mars---they're so superior to the rest of us. And take China with you. That way, you'll have an entire community of Makers and no Takers whatsoever.
Well soon enough you guys would be trying to get in and say we left the earth a mess.
Truth.
Northern European Union and Northern Euro.
Would be completely badass. That is some integration I can get behind.
a Northern EU can't happen without France or the UK. Why not? because Danes, Dutch,Finns, Belgians and others will want another heavyweight to counterbalance Germany.
Not Austria, I assure you
as if germany is going to give up the new reich... that's a good joke
Germans should go back to wearing NAZI uniforms since that would be moar truthful, haha.
Germans don't have the backbone to take this option - bcos 1. they'll have to face commerce with a currency representative of the (current) strength of their economy 2. they'll be an easy target as an isolated and quasi-schizophrenic political entity
"It’s Germany not Greece that has to leave the (sic) eurozone."
Unnatural Gas.
Only an IMF "official" could write something so galacticly stupid, and only a puppet media would print it.
The IMF is not a country, none of their self appointed "experts" were/are elected, and they are the only entity with a forecasting track record that is worse than CNBC's guests.
"Official" of what state/country? IMF-istan?
Won't happen
Germany exporters need a weak Euro not a super strong D-Mark
Great news for France.
The moment Germany leaves the EMU it is dead, as simple as that.
They are now at the stage of "Hitler in it's last bunker, suicide or not yet ?".
One of the culprit Keynesians that doesn't have a brain lending Greece billions of dollars.Notice that nobody wants to admit that over the years whether it was Merkel or anybody else in Europe that they were all proud as punch to get another country into their greedy little system basically at any cost.They didn't even care and even turned a blind eye to what Goldman Sachs did to get Greece in.It shows an attitude similar to the former Nazis that designed the economic strategy on Germany's behalf in order to control Europe through economics not through military action before they all kicked off.
It's been Jim Willie's contention for months now that Germany will leave the euro and is only awaiting the appropriate legal cover. Wonder if the golden jackass will be proven correct.
It is sensible. Germany would be joined by NL and AUS and could link a DEM with Sterling if it wanted. German manufacturers have plants outside Germany in the main and are allowed to file accounts in EUR even if the country went back to DEM.......I mean you can publish accounts in EUR in the UK if you want.
With Germany's demographic a harder currency is essential and a weaker one for Central Europe and the Club Med states. It is back to ERM and even then it was Germany that should have exited and allowed a trade deficit to fund the GDR rather than impose the costs on UK and Italy as it did in 1992
What are you talking about, without Germany, The Netherlands (and a couple more nations) the eur is dead.
Dead it tell you, dead. (just trying to find the movie reference on youtube).
Monty Python. John Cleese.
Why should Germans exit the Euro???
The Euro makes them competitive. Should Germany exit the Euro, its exports would collapse and its economy would follow swift...
They are not stupid, they will remain in sucking all the advantages of their position leaving only when nothing spoilable is left. They do their best interests.
It is the Southern people that are stupid and illogic. They are being fucked in every possible way, yet... they are still in the Euro...
A common misconception, if a country like Italy exits the Euro, its debt is redominated in the new currency. It is called LEX MONETA. Same is for most other nations. Greece doesn't have that option because "it was saved" by the EU, so if it exits most likely will have to pay back Euros or Dollars, not Dracmas, but this is happening only because it was "SAVED"?
"They are not stupid, they will remain in sucking all the advantages.."
I agree, Germany sucks.
We said that years ago.
No shit Sherlock?
But, but, but the 4th Reich is the only reason for the Euro. Without German hegemony, the Euro has no purpose.
"Italy and Portugal have about the same gross domestic product today as when the euro was introduced..."
Surely this is not true.
Apart from that, if Germany left the EZ it would help to stabilise the currency union. But what many people want is for the whole EZ circus to come crashing down and to bring the EU itself down with it.
So,I prefer Germany remains in the EZ until it crashes ;-)
All external trade is only barter.
All external trade is only barter.
Mark you barter exhange with a BANCOR. Then let you sovereign money float against said BANCOR.
The BANCOR is not really "general demand/pay to the bearer" as money. It is only a goods related exchange medium, and its volume is controlled relative to what a country can trade. In fact, it even has mechanisms to force trade into balance.
Countries should not be in currency unions. It is stupid and unnecessary.
Never let your money extend past your law.
If you do have external debts, they shoud be related to what your country can produce, to then pay down the debts. In other words, the debts are goods debts, not money debts. And also, the math behind the goods debts cannot be allowed to go exponential. Exponential curves don't fit into a natural growth world. Stupid monkeys with their bad thinking abound.
NO EXTERNAL DEBTS that are marked with or influenced by a foreign currency.
Continual bad economic thinking by the hairless monkey implies that he is at an evolutionary dead end. If the monkey cannot learn using his own history, then he is at a dead end.
sovereignmoney.eu
There would be no chaos if the US comprised of 50 little countries, the Republic was designed as such with power decentralized and States allowed to run their own affairs. The country is comprised of "have's" and "have not's" today, the "have's" subsidizing the "have not's".
50 little U.S. countries could easily trade goods using Bancors. Internal to each country would be sovereign money.
Computers would figure out the sovereign exchange rate relative to the Bancor.
If one country exports too much, they need to start buying. The opposite: if one country imports too much they lose their bancors and have to adjust their exchange rate down.
Large currency unions and trade blocks are a really bad idea. The mal formed money system and the monkey desire to control is the problem
But, think about it. If you are in Saudi, are you going to eat your oil? You need to trade with others. If you want a new Ferrari, you cannot conjure it into existence, you need to buy it.
Hang on to that 50 US countries concept, we need it badly.
Brilliant idea! Together with the Netherlands, Luxemburg, Finnland and Austria they should create the NEURO. Even Sweden and Danmark could join this club of ethical homogenity.
Germans will not be allowed to vote on leaving, academic brainstorm exercize.