Kyle Bass: Greece a failed state, Euro will collapse, Japan debt crisis next

[Beet]

No, that is not what I propose at all. Under my proposal the ECB's objective would be to balance the risks of controlling inflation and avoiding breakup, which is the natural result of recognizing both as serious risks. But if member states took decisions that would imply behavior of the ECB that would result in high inflation, those member states would not receive support and might be kicked out.

So, you will have countries continuously threatening break-up: as a matter of deliberate policy, not by accident.

LOL man. No one has threatened breakup in this crisis. Not a single one, despite, as you say, most commentators even saying that it is likely. Governments have continued to deny it.

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If it were bending all the way possible to avoid break-up, the interest rates of all the Euro countries would be the same - as low as Germany, essentially; and there wouldn't be any attempt to enforce austerity on anybody.

[ag]

No one has threatened breakup in this crisis.

Of course, they aren't: given the existing institutions, this would be mad. But you are proposing a RADICAL change in these institutions, aren't you?

Anyway, nobody is going to be threatening break-up w/ words (that would be counterproductive). They are simply going to borrow to the hilt and have the ECB deal w/ it. That's all.

[Beet]

No one has threatened breakup in this crisis.

Of course, they aren't: given the existing institutions, this would be mad. But you are proposing a RADICAL change in these institutions, aren't you?

Anyway, nobody is going to be threatening break-up w/ words (that would be counterproductive). They are simply going to borrow to the hilt and have the ECB deal w/ it. That's all.

No one is 'borrowing to the hilt' either. If anyone is, it's the United States.

My position is obviously a change from the status quo, but it's not nearly as far as full political union. Perhaps the David Cameron / Paul Krugman position. So no, it's not 'radical'.

[ag]

Obviously nobody is deliberately screwing around now: because they now they will be screwed if they ever do. You are proposing that nobody should ever be screwed. That's a radical change, in my view simply designed to blow the euro up.

It's a lot more radical than a political union. Greater political union would preserve and build on the euro integration. Letting countries get away with murder would blow it up (something I am not at all sure Cameron would be sorry to see).

[Beet]

Obviously nobody is deliberately screwing around now: because they now they will be screwed if they ever do. You are proposing that nobody should ever be screwed.

No, I am not proposing that nobody should ever be screwed. I am merely proposing that countries that have put forth a strong effort and credibly do not intend to screw around do not get screwed. Countries that don't put forth real effort should certainly be ejected, but that isn't the case with Greece at all.
[quote]

[ag]

Sorry, I accidentally pressed the wrong button and deleted part of your post. Absent minded idiot I am.
>>>>>
What's credible effort? And who will decide? Once you let the ginny out of the bottle, you'll never get it back in. Every effort will turn out to be credible.

And, clearly, previous Greek governments had been quite irresponsible: so, if you are ever going to find a test case of euro ejecting an irresponsible member , this is as good as any.

The problem of you being for "political union" is that there isn't even a small minority of Europeans who are currently advocating what it will take. This might happen - in another 50 years. That would be a good point at which Greeks could rejoin the euro (or the euro itself could be reintroduced, if it collapses now).

[Beet]

A credible effort is one that seems real. Do you think Papandreou, despite being in an impossible situation, did not genuinely intend to get Greece's budgets under control? Some things that we can look at are,
1. The effort caused a sharp reduction in the deficit to GDP ratio
2. The primary (ex-interest) deficit has come into low range (below 5 percent)
3. The effort caused a sharp increase in the unemployment rate into double-digits
4. The effort caused a sharp recession
5. The effort caused political loss to the politicians enacting it, as well as personal loss of prestige and national humiliation
6. The effort was unpopular, but undertaken anyway
7. The effort was sustained for years

Greece of the past 2 1/2 years passes all of these with flying colors. Prior to that, its irresponsibility was only made possible, and winked and nodded at, by the EC, including Germany, so it was hardly alone in its guilt. It was a collective guilt then. The consequences at the time were not well understood. In the past 2 1/2 years they have been, so that is the standard to judge by.

[Torie]

No, that is not what I propose at all. Under my proposal the ECB's objective would be to balance the risks of controlling inflation and avoiding breakup, which is the natural result of recognizing both as serious risks. But if member states took decisions that would imply behavior of the ECB that would result in high inflation, those member states would not receive support and might be kicked out.

It is always good to try balance the risks with the objectives and so forth, the problem here is just what is the proper balance. I get this feeling that nobody really knows with much more then a hope and a prayer confidence level. This nut is just a new one to come down the macro-economic pike in this ever more intertwined and leveraged financial world, where the line between banks and government becomes ever more blurred, and any kind of attempt at serious structural reform, causes a societal nervous breakdown, so the waters are uncharted, and the compass lost at sea, and the sky cloudy blocking out even the moon as a point of reference, much less Venus or the North Star, so one waits until one hits a rock to better locate one's position, as the seas flood into the lower decks.

[opebo]

...any kind of attempt at serious structural reform

I would like to present for debate the old idea that reform requires a lubricant... c*****s a*****s of h***n b***d.  We can't expect power structures to change unless those that created them and benefit from them are s*********d.

[Torie]

...any kind of attempt at serious structural reform

I would like to present for debate the old idea that reform requires a lubricant... c*****s a*****s of h***n b***d.  We can't expect power structures to change unless those that created them and benefit from them are s*********d.

You have a point opebo. Perhaps the best way for you to avoid death points is to have posting content along the following lines:  "****  ********* *** *** ***.  *** ****** ** ***." 

[opebo]

...any kind of attempt at serious structural reform

I would like to present for debate the old idea that reform requires a lubricant... c*****s a*****s of h***n b***d.  We can't expect power structures to change unless those that created them and benefit from them are s*********d.

You have a point opebo. Perhaps the best way for you to avoid death points is to have posting content along the following lines:  "****  ********* *** *** ***.  *** ****** ** ***." 

No doubt!  Though it presents quite a puzzle.  I think you were able to decipher mine, alas, I'm not able to decipher yours.