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[size=150:203v0k1i]Here’s how the euro could collapse –
by Max Julius

As officials hammer out a rescue package for Ireland, the single currency’s chances of survival have been thrown into doubt once again.

Doubts and denials
Politicians and economists began seriously to question the future of the euro in the wake of the EU-IMF bailout of Greece. As officials hammer out a similar aid package for Ireland, the single currency’s chances of survival have been thrown into doubt once again.

William Hague, the foreign secretary, has suggested the euro could collapse, saying he hoped it would survive, but adding ‘who knows?’

Fears that Portugal and even Spain may seek a rescue deal have heightened the speculation, causing the head of the European Union's bailout fund to insist there is ‘zero danger’ of the currency union breaking up.

‘No country will voluntarily give up the euro – for weaker countries that would be economic suicide, likewise for the stronger countries,' Klaus Regling was reported as saying.

Indeed, economists agree that although the euro’s prospects are more uncertain today than before the sovereign debt crisis erupted, it is unlikely to disappear. Nonetheless, as the possibility continues to be raised among the news media, we look at how a euro collapse could actually play out.

A north euro and a south euro
One of the most commonly mentioned scenarios is one in which Germany, the eurozone’s largest economy, leaves the monetary union.

Talk of such a move has grown in light of domestic anger in Germany at the possibility their bailout contribution will be used to fund early retirement for Greeks, or Ireland’s super-low corporate tax.

Professor Iain Begg, research fellow at the London School of Economics, noted that of the scenarios in which the eurozone breaks up, one where Germany defects and takes with it Austria and possibly Benelux – Belgium, the Netherlands and Luxemberg – was ‘slightly more probable.’

He also cited talk of a division of the eurozone into a ‘north euro’ and a ‘south euro.’ However, the professor said he was sceptical of a ‘deterministic view’ that sees the periphery and south as one category, and the north as another.

Dr Sean Holly, director of research at the University of Cambridge’s Economics Faculty, noted that since Germany is much more competitive than other parts of Europe, a reinstated deutschemark could appreciate against the euro, helping those countries that remain in the eurozon

By the time we've bailed out all these countries Britain will be bankrupt. Which EU member would help us though? None. Because we are not in the Euro!

We've always been a cash cow! Greece needs to sort their own debts out as do Spain....How many brits have been cheated by this lot? Let them stew in their own greed!!

What makes me annoyed by all this is that Portugal and Greece rejects the budget cuts and then expects everyone else to pay up. What a bl**dy cheek when everyone is facing cut backs and yet we're expected to help them out when they won't help themselves. It's the same a foreign aid. Stop paying it for a year, sort the uk out and then hopefully with more people back in work and the economy recovering the uk might then be able to afford it???? But should we ?

The Euro is the slowest train crash in history. A hundred years from now historians won't believe it was a good idea for Greece and Portugal to have the same currency as Germany. What happens when Spain needs a bail-out?

But it's not a bail out is it really! It's a loan to help pay existing loans which the country cannot afford to repay back.It's just delaying the inevitable.Dark,Dark days ahead......

The heat is on for Spain now, will they be the next to go cap in hand to the EU for money we ask ourselves. The Euro has a shelf life and it is slowly coming to an end!!

In the meantime:

[size=50:tlaz4yo1]Daily Telegraph

[size=150:tlaz4yo1]George Osborne: UK won't bail out Portugal

Britain has no plans to offer the Portuguese government a direct loan as it seeks an international bail-out, George Osborne insisted on Friday. In March, Jose Socrates, the Portuguese prime minister, resigned after the country's parliament rejected his bout of austerity measures.
The Chancellor said he remained focused on reducing the UK's budget deficit, which stands at about £122bn this year, as he spoke at a meeting of European finance ministers and central bank governors in Hungary.
"
I made it clear that unlike the Irish case the UK will not be making a bilateral loan to Portugal. British taxpayers' money will not be lent directly to Portugal,"
he said.

Jean-Claude Trichet, president of the European Central Bank, said he is ready to begin negotiating with the Portuguese government immediately - insisting the "
hard work"
should begin straight away. Mr Trichet said Portugal needed to agree a package containing "
ambitious fiscal adjustment"
in order to "
safeguard fully financial stability in Portugal and by way of consequence, in the eurozone"
.
However, he denied pressuring Portuguese banks to persuade the country's interim government to seek financial support. "
We didn't force the banks to do anything. We didn't force the government or the authorities in general to do anything,"
he added.
Mr Trichet's comments were made a day after the Portuguese government formally requested a bail-out, raising the prospect of pay cuts, reduced welfare benefits, labour market reforms and a bank recapitalisation. Analysts estimate Portugal will seek between €60bn (£52.9bn) and €90bn.

In March, Jose Socrates, the Portuguese prime minister resigned after the country's parliament rejected his bout of austerity measures. These were designed to stave off the bail-out, which was triggered by downgrades of Portgual's sovereign debt.
Jyrki Katainen, the Finnish finance minister, echoed Mr Trichet's comments, warning Portugal will have to face up to tough structural reforms to secure emergency funding from Europe and the International Monetary Fund. Anders Borg, his Swedish counterpart, said Portugal's government and opposition party must engage in serious negotiations.

[size=50:2wusd323]Sunday Telegraph

[size=150:2wusd323]What happens when Greece defaults
It is when, not if. Financial markets merely aren’t sure whether it’ll be tomorrow, a month’s time, a year’s time, or two years’ time (it won’t be longer than that). Given that the ECB has played the “final card” it employed to force a bailout upon the Irish – threatening to bankrupt the country’s banking sector – presumably we will now see either another Greek bailout or default within days.
What happens when Greece defaults. Here are a few things:
- Every bank in Greece will instantly go insolvent.
- The Greek government will nationalise every bank in Greece.
- The Greek government will forbid withdrawals from Greek banks.
- To prevent Greek depositors from rioting on the streets, Argentina-2002-style (when the Argentinian president had to flee by helicopter from the roof of the presidential palace to evade a mob of such depositors), the Greek government will declare a curfew, perhaps even general martial law.
- Greece will redenominate all its debts into “New Drachmas” or whatever it calls the new currency (this is a classic ploy of countries defaulting)
- The New Drachma will devalue by some 30-70 per cent (probably around 50 per cent, though perhaps more), effectively defaulting 0n 50 per cent or more of all Greek euro-denominated debts.
- The Irish will, within a few days, walk away from the debts of its banking system.
- The Portuguese government will wait to see whether there is chaos in Greece before deciding whether to default in turn.
- A number of French and German banks will make sufficient losses that they no longer meet regulatory capital adequacy requirements.
- The European Central Bank will become insolvent, given its very high exposure to Greek government debt, and to Greek banking sector and Irish banking sector debt.
- The French and German governments will meet to decide whether (a) to recapitalise the ECB, or (b) to allow the ECB to print money to restore its solvency. (Because the ECB has relatively little foreign currency-denominated exposure, it could in principle print its way out, but this is forbidden by its founding charter. On the other hand, the EU Treaty explicitly, and in terms, forbids the form of bailouts used for Greece, Portugal and Ireland, but a little thing like their being blatantly illegal hasn’t prevented that from happening, so it’s not intrinsically obvious that its being illegal for the ECB to print its way out will prove much of a hurdle.)
- They will recapitalise, and recapitalise their own banks, but declare an end to all bailouts.
- There will be carnage in the market for Spanish banking sector bonds, as bondholders anticipate imposed debt-equity swaps.
- This assumption will prove justified, as the Spaniards choose to over-ride the structure of current bond contracts in the Spanish banking sector, recapitalising a number of banks via debt-equity swaps.
- Bondholders will take the Spanish Banking Sector to the European Court of Human Rights (and probably other courts, also), claiming violations of property rights. These cases won’t be heard for years. By the time they are finally heard, no-one will care.
- Attention will turn to the British banks. Then we shall see…

Only time will tell but I think the Euro is the biggest problem we have in the eu and its this that in my opinion has a lot to do with the financial issues we presently have around the world.

nu2bg wrote:

Only time will tell but I think the Euro is the biggest problem we have in the eu and its this that in my opinion has a lot to do with the financial issues we presently have around the world.

[size=150:1638081b]I thought the following text was relevent to this topic

23 June 2011 Last updated at 23:56 Share this page
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Economists suggest this could be a defining moment in the future of the single currency Continue reading the main story
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A: Greek debt crisis
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How could crisis play out?

[size=150:1638081b]The single European currency is facing its biggest crisis since it was launched more than a decade ago.

The severe debt problems facing one of its members, Greece, have intensified the debate about the future of the euro, which binds together 17 members with some very different economic policies.

[size=150:1638081b]Will it survive, and if it does, what changes might have to be made to the currency pact?

While interest rates are set at a European level, taxes and spending are decided nationally.

Some have called for tough action by governments to make member economies more alike - so-called convergence.

Others say that eventually the eurozone will need to resemble more closely the US, with richer countries sometimes paying the bills of poorer ones through fiscal transfers.

willow say's I think we need one of these :Angel1:looking over us all