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Forget 'GREXIT'; Meet 'GEURO'
The catastrophe that is Greece that has spawned the term 'Grexit' for its likely self-abdication (or dismissal) from the Euro remains a long way from being solved. Should the next elections go the way the opinion polls suggest, it seems highly likely that a government vehemently opposed to its own bailout terms and further austerity will stretch the patience of its 'core'-supports to a breaking point - even though they know the gun they hold is squarely pointed at their own forehead. However, Deutsche Bank's economics team see the potential for a third path - that of running a Greek parallel currency to the Euro (which they dub "GEURO") to represent government issued IoUs to meet current payment obligations. This would enable, in DB's view, Greece to engineer an exchange rate devaluation without formally exiting the EMU. With Greece unlikely to meet primary budget surplus targets envisaged by the TROIKA, and political will inside Greece hardly making an effort to do so - perhaps this is the 'compromise' that meets everyone's needs (in a strange way). Initially there would be a large depreciation (which Germany could use politically to claim - see 'they suffered' - and maintain circular support for the financial system implications of GREXIT) but at the same time Greek authorities would reclaim some semblance of control to stabilize or even strengthen (over time) their own GEURO against the Euro - leaving the door open to a return to the Euro at some point.
Recent opinion polls suggest that a new Greek government will be dominated by parties rejecting the Toika-led adjustment programme. In our view, however, the IMF and other euro area countries are unlikely to give in to pressure from Greece for a de facto end of the programme. The precedent of such an accommodation could lead to an erosion of adjustment efforts in other countries and eventually political pressure in Germany for EMU exit.
At the same time, however, Greece is unlikely to formally leave the euro, nor are the other euro area countries likely to abandon Greece entirely. The path of least resistance could be the stop of financial assistance to the Greek government and the continuation of payments for debt service and the stabilization of the Greek banks in a European “Bad Bank”.
In this case, a Greek parallel currency to the euro (which we dub the “Geuro”) could emerge when the government issues IoUs to meet current payment obligations. This would also allow Greece to engineer an exchange rate devaluation without formally exiting EMU. Initially we would expect a large depreciation, but the Greek authorities would have the power to stabilize or even strengthen again the exchange rate of the Geuro against the euro via prudent fiscal policy and structural reform so as to keep the door open to a future return to the euro.
Of course - this could enable Germany (or TROIKA) to maintain their financial assistance in a circular - we-give-you-money-to-fund-your-existing-obligations-to-us manner - while Greece uses the GEURO to manage its internal spending...
There would now be two parallel currency circuits in Greece: the euro circuit and the Geuro circuit. The former would be sustained by the euro deposits of and credits to companies in the export sector. After its initial shrinkage due to the emergence of the Geuro, the euro circuit would grow again on the back of the higher euro revenues of the export sector following its improved competitiveness. The Geuro circuit would be fed by Geuro issuance of the government to fund its primary budget deficit. It would then be in the hands of the Greek government to reduce the issuance of new Geuros by shrinking its primary deficit and thus to stabilize the exchange rate of the Geuro against the euro.
Thus, if reason prevails, Greece could formally remain in EMU, execute the exchange rate devaluation necessary to regain international competitiveness, and in the future decide for itself through issuance of Geuros, whether and over what time span it would want to return to a hard currency that is stable against the euro. It could eventually even return completely to the euro by repurchasing Geuros against euros.
The path of least resistance could be the stop of financial assistance to the Greek government and the continuation of payments for debt service and the stabilization of the Greek banks in a European “Bad Bank”. In this case, a parallel currency to the euro could emerge, allowing Greece a devaluation of its exchange rate without formally exiting EMU. It would be in the hands of the Greek authorities to stabilize the exchange rate of the parallel currency against the euro via prudent fiscal policy and structural reform so as to keep the door open to a future return to the euro.
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Sounds brilliant. Change the name of your currency from "Drachma" to "Greek Euro" and all is well, baby. This will work.
It would be funny if it wasn't so sad...
This will work in California as well, the Cali dollar, aka the "Jerrry Brown", will solve their deficit problems.
Hell, why stop there? How about the SNAP dollar for all the people on food stamps? Let them devalue their way into prosperity...the meth-head dollar, for my uncles...the "we just got screwed by taking a 125% LTV on our McMansion yuppie dollar"...the facebook dollar (wait- too soon? Does that still hurt some people?)
I'll stick with my American Silver Eagles and my double eagles. Those are dollars (and twenties) I can trust in.
Geuro? Could be pronounced like the Israeli's came up with this one.
How about the Andrex dollar, soft, strong and very, very long...
No seriously guys, these fuckers are running the show.
We're all dead.
I think UR talking about Trojan $. An intrusive yet globally-prophylactic currency that comes up short at times.
No I'm talking about the ones that comes on a roll in nice, easy-to-tear-off sheets, and don't make your arse sore.
and cute little puppies like to play with it also, at least in the adverts anyway...
Just call it the GYRO already!
As the saying goes... if it walks like a duck and looks like a duck, is a F*ing duck!!!
Oher coutnries have "export" currencies vs "domestic" currencies, all boils down to devalued currency.
Goodharts law: "Bad money drives out the good"
PS that chart doesnt seem to match with eurostats, and i needs to be compared to Germany, france spain and Italy
GEURO = full level desperation-driven stupidity of Deutsche Bank as they stare into the abyss of their crashing sov debt portfolio.
Call it Gyros. not Geuro!
I read the post some days ago about stamping the euros with the country of origin so there would be G-euros, S euros F euros which could float at their rates. I scratched my head wondering how this was different than having drachmas franks and such. Which would the Swiss peg their currency to I wonder. Today I wonder how much of a short squeeze you can get out of an idiot idea.
But as they are all the same Euros in peoples bank accounts everyone rushes to German ATMs to get D marked Euros, the only benefit will be to airlines flying to Germany and German hotel/motels.
get ready.. here comes the Geuro, Speuro, Peuro.. ahahahaha
'In this case, a parallel currency to the euro could emerge, allowing Greece a devaluation of its exchange rate without formally exiting EMU.'
Seems plausible and obviously needs consideration. Anything but the drachma at this point.
Why not allow all currencies including gold to circulate freely. Why limit it to two? It might be too much to ask of the greeks even though it would be good for them
Gold 'circulates' freely in Greece already. Barter and local currencies are on the up as well. Not sure what you're hinting at.
Just one important question? Will they get their own printing press or will they still have to rely on their masters fro money? If the greeks have a 1//3 of a brain they will never go for it
Beck - Guero
Qué onda guero?
Qué onda Jose?
See the vegetable man
In the vegetable van
With a horn that's honking
Like a mariachi band
In the middle of the street
People gather around
Put the dollar-dollar-dollar in the can
Ay güey!, que onda?
TJ cowboys hang around
Sleeping in the sidewalk
With a Burger King crown
Never wake 'em up
Mas cerveza
Til the rooster crows
Vatos de gallos
Qué onda guero?
Qué onda guero?
Qué onda guero?
Qué onda guero?
Mano Blancos roll with crowbars
singing rancheras on cheap guitars
Abuelitas with plastic bags
Walking to the church with the Spanish candles
Dirty borracho says 'que putas!'
Andale, Joto, your popsicle's melting
Run better run, da doo run run
Mara Salvatrucha in the midnight sun
Guero, where are you going?
Qué onda guero?
Guero, where are you going?
Qué onda güero?
Rampart boys with loaded rifles
Guatemalan soccer ball instant replays
Mango ladies, vendedoras
And a busstop singing
Banda macho chorus
Qué onda guero?
A donde vayas
Qué onda guero?
A donde vayas
¿Y donde encontrastes ese? en un hoyo
Alla en la Pico
Hey vamos a jugar futbol ahí en el Griffith park
La Pico and Vermont
La locura
Yeah now I'm going to LACC
I'm taking a ceramics class
See the vegetable man
James Joyce
Michael Bolton
Qué onda guero, where are you going?
Qué onda guero, where are you going?
Hey what's up guero?
"You doing pushups?"
No te veo guero!
El guero!
Que Pasa
Otra vero guero
I dunno I saw a puppet at Tang's
with a mullet and a popsicle.
Hey Guero
Que locura!
Chico
Hey Guero
Yeah Bro?
Hehehe, footlong?
Let's go to Cap'n Cork. They have the new yanni cassette
Sounds like a plan to me ... Germany gets what it really wants, which is no Greek default to its banks. Greece gets left to its own devices to sort their mess out without dragging the entire European banking system down with it ...
Of course by the end of the year we will also have to deal with a SEURO, a PEURO, an I1EURO, an I2EURO ...
What could possibly go wrong ...
C'mon now... just call it the GYRO
Call it the screwyou
Cuz if u have to accept it u gonna get the shaft
Yes, that's it...a parallel currency since we live in a parallel universe (of finance). This would give the bankster's yet another vehicle to debase, defraud, rehypothicate, and write default swaps. It's such a great idea that maybe California could issue some Calfiats to solve their budget woes.
We know the Greek gov't already runs two sets of books, proven (after the fact) when they joined the Euro and were so ably assisted by GS to run off-balance sheet debts. Most Greek businesses also run two sets of books to avoid paying taxes whenever possible. So does this simply formalize the status quo by establishing two types of 'money'?
Whatever. This just reeks of desperation. There is no clean way for Greece to exit the Euro, especially since most private debts will still be payable in Euros. Create the Drachma, geuro or use seashells... these debts will default if there is significant devaluation. There also is no mechanism to kick Greece out. So all those financial whiz kids that created this mess will have to live with it.
".....that of running a Greek parallel currency to the Euro (which they dub "GEURO") to represent government issued IoUs to meet current payment obligations."
Sounds like a bad currency / good currency plan just like all those wonderfully successful bad bank / good bank plans. Anything to kick the can further down the road.
Sounds like a great plan...
...for me to poop on.
I love how TPTB or tthe TBTF have a knack for coming up with solutions that are defined by how far the can is kicked. GEURO?!? Thats a drachma in a fancy dress!
Do something that is sustainable and get on with it! Oh, if that was the objective we wouldn´t have replaced real money with fiat? Sorry, didn´t think about that... Carry on engineering fifteen minute solutions.
+1
You're actually pretty smart for a Swede.
I have taken to appreciating these things for their humor value.
The Greek man on the street could give a shit as to how this debt is refolded, swapped, painted over and flipped. Mere mortals cannot begin to understand.
You can put perfume on a pig, it's still a pig.
Who came up with this idea? Bob Bruchetta?
Or Crusty the Clown
The cure for noeurosis- the New Drachma.
Long Live the Greek Euro!
http://silvervigilante.com
"What you've just said is one of the most insanely idiotic things I have ever heard. At no point in your rambling, incoherent response were you even close to anything that could be considered a rational thought. Everyone in this room is now dumber for having listened to it. I award you no points, and may God have mercy on your soul."
Seems appropriate.
This new plan takes quite a battering here.
Comment
If we look further into this we see an issue with the concept of people accepting IOUs which they know are going to be devalued! There is always a weakness in any plan which relies on people being consistently stupid. A big danger would be a refusal to accept the currency which would lead to it having two levels as it depreciated. In some ways if we think of real values there are echoes of Weimar Germany here.
This was expressed many years ago more formally by Thomas Gresham in what became called Gresham’s Law.
We see this proposal being supported by the banks which recent history informs us is likely to see their debts and liabilities valued more favourably than what the general poulation receives.
http://www.mindfulmoney.co.uk/wp/shaun-richards/why-a-parallel-currency-or-greuro-would-be-a-bad-idea-for-greece/
As ever the banks only want another bail out and do not care for Greece itself.
"even though they know the gun they hold is squarely pointed at their own forehead."
Hand over the money, or the greek gets it.
G-EURO ~ D - RACHMA ~ V - GINA ~ what the hell!!
Soooo......JPM is short the dollar then, right? Is that what caused the loss? Because that is what it looks like from here.
this is nonsense. they really think people will be dumb enough to stick to gov IOUs while they could continue to use EUR?
there are rumours Greece is experiencing reverse Gresham's Law (Thier's Law): http://en.wikipedia.org/wiki/Gresham's_law#Reverse_of_Gresham.27s_Law_.28Thiers.27_Law.29
Greek people stick to German-issued banknotes while paying taxes with Greece-issued. Y-series cotton-lien inedibles known as Greek euro banknotes are already Geuro. so this is happening already.
Good money drives out bad money when bad money is sure to devalue drastically (see Zimbabwe where USD replace their local cotton-lien inedibles). and since Greeks already screwed legal tender laws with barter, don't expect them to stick to gov IOUs. gov can't even collect taxes there.
can kicking. might buy another year for db
Not to worry Greece. The banksters are going to take care of you.
Europe's finest and brightest minds at work
late night eleventh hour hard-on "eureka"; "I've found the formula to save sheeple Grease, the Golden Fleece of Frankfurter wurst, and Potus-Agamemnon of DC."
What interested Archimedes when he shouted that word in his tub was that he could solve his King's problem about finding out if the crown offered to him by his subjects was made of true gold on not. Using the flotation principle Archimedes proved it was debased gold, not pure gold!
Eurocrats are now finding a way of proving that a debased Euro can save the true Euro by making Greece go Geurophile. I think the paedophiles in the VAticanly social network, Facebook's true original model, are xtremely jealous; they would love to have found a way of proving to the gnostic world that they are pure gold during the day with their fold and debased gold at night when they unfold the untold tail, all the while doing God's own work. O day and night, we do see the two faces of the same coin. A Sultan once said "you can sit two priests on the same carpet but never two kings". Let's see if we can seat two coins that work like night to day, in the same kingdom.
'Eureka!' or 'Archimedes and the Golden Crown'
Surely, not GEURO!
They myst mean GYRO!
Back in November, and again in February, I suggested the creation of a EuroSur currency (named because most of its participants would be southern European, although Ireland should be included). The EuroSur would be the secondary EU currency for the budget-challenged nations of the PIIGS.
The "well-managed" countries *currently* have no need of fiscal union, however the EuroSur countries could be obliged to adopt fiscal union, and thus the value of the EuroSur and its potential to be resorbed into the stronger monetary union would hinge on those countries' jointly developed reform thrusts. In other words, they can choose to keep each other honest or they can all suffer together.
There are many advantages to such an arrangement, while the disadvantage to Germany and the others would be that they would now be faced with the PIIGS as a debtor bloc, instead of a set of moles they could individually whack repeatedly one at a time. But that may not be such a big disadvantage.
Once roped together on the rock face, the PIIGS would likely find out what their limits are in terms of human achievement, and in a cooperative mode it might be more than any of them think.
This is like getting half pregnant...
The ultimate resolution of the GFC will surprise many. A similar world effort such as this will likely prevail. Spend and borrow in a fiat, save in something more 'substantial'.
All the downside of switching to the Drachma without gaining control of their own currency. Brilliant plan. Fucking brilliant.
Why not just be done with it and call the new currency the Gyro? It would be an instant hit. As in I'll gladly pay you a gyro on Tuesday for a gyro today.
http://agstock.blogspot.com.es/2012/05/reality-of-greece.html
Despite the large amount of money the troika sent to Greece, the Greeks did not just get it cut its budget according to signed.
Greece has to reduce 3 billion euros per year, which could do well if they so wish, but no, they just want to keep spending above their earnings, and this is only possible if you are U.S. and your currency is world reserves.
Gyrocopter, known as Greek ''Copter Crash Cash''.
http://www.youtube.com/watch?v=MVor2Xm8qg0
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