didikai

The shit is flying around in Europe. Just wait till it hits the fan.

Editha

I'm with Steve on the question of whether Greece would have to leave the EU if it abandoned the Euro. So, apparently is the BBC.. It's true, as Alan says, that treaties can be renegotiated, but it is not obvious to me why the EU would agree to enabling a bankrupt Greece to remain a member.

Alan2005

Greece leaving the EU, Euro or both or neither isn't really the issue anyway. While it's interesting to debate the whys and wherefores - it's just a symptom of the real problem which is that greece has too much debt and a default of some kind is inevitable.

Until all such losses are forced out into the open and onto balance sheets nothing is going to be resolved. Continued bailouts will only make things worse in the long run.

Edit: Having said this, my personal view is that greece more or less has to leave the euro simply to reprice it's economic output correctly - it's not going to grow otherwise. I accept that this would force a radical change in what the EU is; but so what? The euro is failing - now it's just a matter of throwing good money after bad.

MarylandNed

Yep - actually quite a number. 10 of 27 EU countries DON'T use the Euro. Also, there are countries outside the EU that do use the Euro.

In addition, there are countries outside the EU who are not using the Euro and who have access to the single market through the EEA.

Alan2005

I read somewhere (can't remember where - sorry) that the Albertan oil industry was predicated on the arbitrage between the price of oil and the price of natural gas.

From a financial perspective, I assume oil bosses know what they are doing, but this seems precarious on first glance. What happens if natural gas prices go up relative to oil? Won't that, eventually, make the tar sands uneconomical regardless of the absolute cost per barrel of oil?

I can understand this just being a case of oil companies cashing in while they can. However, is there something that I'm not getting - i.e. is there some reason why the long term ratio between the price of oil and the price of natural gas will remain high enough for this arbitrage to continue.

Steve_

Well my memory must be better than yours (or I'm older) because I remember all the hyperbole about the Maastricht Treaty when it was going through the British Parliament.

It's hard to imagine how such a major part of the treaty could be renegotiated at this point. It would require consent from all EU states.

Steve_

But of those ten, seven are required to meet the convergence criteria and adopt it. In fact so are Denmark and Sweden, but their adoption date is fluffy. Denmark is in the ERM, so they can only allow the Krona to move so much against the Euro, so in essence they sort of use it already.

The countries outside the Euro that use it aren't officially allowed to use it, except for Andorra and Monaco I think, which are tiny.

The problem with being an EFTA country, i.e. you're allowed to trade freely with the EU is that in order to do that you have to adopt many of the EU trade practices into domestic law, but because you aren't in the EU, you have no say in how they are formulated, which is one of the major political issues in Switzerland. They keep having to adopt European directives but they're not formulated with Swiss interests in mind.

All the EFTA countries however are in Schengen, but the UK and Ireland are not.

Steve_

Housing market cools in Vancouver and Toronto.

$700,000 is the average house price in Vancouver? Yikes.

Alan2005

You keep talking about the treaties as if they can magic up some money and solve the problems in the Euro.

Ultimately there are only three choices open to greece:

1 - Leave the euro and defacto default via inflation.
2 - Stay in the euro, and actually default.
3 - Get the ECB to print some money and hand it over (essentially stealing money from all the other euro countries and people)

Once any of those has happened once, it will happen again.

Steve_

The cost of Greece leaving the Euro let alone the EU is too high for them to contemplate, they won't do it unless they're forced to do it, and to be forced to do it they would have to leave the EU. Clearly they won't agree to a treaty renegotiation on that point, so it won't happen, not legally anyway.

There is little support in Greece for the idea of leaving the Euro, so yes it will be a major mess for the EU to sort out but its the only real option.

How many options are open to Greece isn't the point really, many other EU states have similar problems, the question is what options are open to the EU.

They are gradually moving in the right direction, but public opinion in Germany is the real sticking point, it seems to me. Merkel has lost the ability to get anything dramatic through the Bundestag.

Actually just did a search and this was the first thing that came up: http://business.financialpost.com/20...zone-progress/

jimf

I don't know about the link between the price of gas and oil but I've certainly heard people complain about the low price of natural gas (those who are drilling for the gas that is). I get the impression there is an abundance of natural gas that has lowered the price.

Steve_

Yes, which is a point I keep making to Enmax and Direct Energy when they send sales people around to my house and it completely non-pluses them.

"If you sign up with us now, you can get a fixed rate for gas!"

"Why would I want a fixed rate for gas, the price is going down?"

"Is it?"

"You know that half the people in this city work in the oil and gas industry, right?"

Alan2005

Really? Perhaps you can spell this out exactly what you mean by this.

Alan2005

Right now yes, but how long will this last? I'm not an expert in the energy sector, but generally arbitrage situations don't tend to last very long.

douglasgrant

meh. might be much much longer than you think.

http://www.economist.com/node/21558432


shabhat!