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Thread: PIIGS, Shillings and Pence.

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    Politics.ie Member LeDroit's Avatar
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    Default PIIGS, Shillings and Pence.

    The PIIGS are all in sh!t as we know. Portugal, Ireland, Italy, Greece and Spain all have massive exchequer deficits, eye watering national debt and negative growth. They are so far away from balancing the books that swingeing budget cuts are having little effect on their deficits but are pushing them further into negative growth, ie recession. Unemployment in all of the PIIGS is 15-25% when you factor in those on the dole, on training courses and those who don't appear in the stats, the self employed and those 'unfit/too sick' to work.

    Basically they are so far in the hole they can't see the light. None of them have a plan to reduce their deficit or unemployment that doesn't involve Growth but none of them can grow because they can't afford their public sector costs and can't reduce their private sector costs, all because they're in the Euro. They are stuck because they can't devalue. Every other country in history in these circumstances has only escaped by devaluing. Devaluing allows them to borrow less to pay the same figure to their PS and yet their exports will be cheaper helping the all important export market in the private sector.

    A lot has been said about Ireland pulling out of the Euro. It's a conversation happening in all of the PIIGS but a return to the escudo, punt, lira, drachma and peseta would badly affect business across the EU by introducing exchange rate uncertainty and indeed reintroduce exchange rate speculation. Individual currencies could collapse. However, they all do need to devalue. It has to be preferable to a default and an ECB/IMF bailout. The EU simply could not afford to bail out all of the PIIGS one after another.

    So, instead of a return to individual currencies and fluctuating exchange rates what about introducing a separate currency for the PIIGS, devalued against but tied to the Euro? Call it the Oink! Lets say it's a 20% devaluation, and constantly held there by the ECB. You get the devaluation the PIIGS need while maintaining exchange rate stability.

    Any takers?
    "A govt big enough to give you everything you want, is strong enough to take everything you have" Thomas Jefferson

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    Politics.ie Member Interista's Avatar
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    What would happen to existing bank deposits? Would they be converted to 'oinks' overnight, thus losing 20% of their value? Or would they remain in Euro?

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    Politics.ie Member LeDroit's Avatar
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    Quote Originally Posted by Interista View Post
    What would happen to existing bank deposits? Would they be converted to 'oinks' overnight, thus losing 20% of their value? Or would they remain in Euro?
    Converted into Oinks but at their current value, ie if you had €100 you'd wake up with 120 Oinks.
    "A govt big enough to give you everything you want, is strong enough to take everything you have" Thomas Jefferson

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    Politics.ie Member 'orebel's Avatar
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    Quote Originally Posted by LeDroit View Post
    Converted into Oinks but at their current value, ie if you had €100 you'd wake up with 120 Oinks.
    125 oinks?
    "It is important therefore that I clarify to the House that in the first instance there are significant monies within Anglo-Irish to take the strain of loan losses arising over the next three or four years, before State support is engaged." Brian Lenihan 15/01/09

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    Politics.ie Member Interista's Avatar
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    Quote Originally Posted by LeDroit View Post
    Converted into Oinks but at their current value, ie if you had €100 you'd wake up with 120 Oinks.
    And since the 'oinks' would be pegged to the Euro you wouldn't risk watching your savings inflate away into nothingness?

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    Quote Originally Posted by LeDroit View Post
    Converted into Oinks but at their current value, ie if you had €100 you'd wake up with 120 Oinks.
    What about government debt? Converted to oinks too? At current value, or 1 for 1?
    We have turned the corner.I commend this Budget to the House. Brian Lenihan, 9 December 2009

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    Politics.ie Member Asparagus's Avatar
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    Tied to the euro?

    Be part of a subcurrency that is controlled by germany... no thanks when i cut myself i want Jacques and Klaus to bleed.

    If the oink is independent and we form a trading block with the other PIIGS then great. We'd be the fun Union.
    Portugal, Italy, Ireland, Greece and Spain... Par-tay!!
    ANGER IS A POLICY, GET OFF YOUR KNEES

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    Politics.ie Member jpc's Avatar
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    The single currency is a great idea.
    Allowing countries with power hungry chanchers in power who used the currency to fund splurges was/is the problem.
    There were obligations with entry to the Euro.
    The FFers took FA notice of that fact, and proceed to buy POWER and to hell with the concept of prudence in things fiscal, or the longterm CONSEQUENCES for the nation.
    Its only a chat, we ain't the world council.

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    Bulls make money, bears make money, pigs get slaughtered...............
    (Money never sleeps. gordon kekko)

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    Politics.ie Member richie268's Avatar
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    As a Country we are insolvent and we have known for a longtime that things are pear shaped in relation to our banks and our borrowing and a bit of pear sauce with our piigs is better than no sauce at all. Oink Oink!

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