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Companies clear cash from eurozone as Greece’s March 20 D-day nears

THE big crunch day on this Greek thing is March 20. That’s the day that they’ve got to pay back squiddely billions (erm, about £12 billion or so) of money they borrowed years ago.

Normally, governments don’t ever in fact pay back such money: what they do is issue new bonds to that amount, collect the money, then give it to the people with the old bonds. But there’s no one sane out there willing to buy more new Greek bonds, quite understandably, so they can’t do that.

So, they’ve got to agree a deal then borrow the money off the IMF and the EU so that they can pay these bonds back. Or, if they don’t make the deal, they can’t pay the bonds back and they’re in default. At which point half the European banking system starts looking very dodgy indeed and we get perhaps a replay of 2007/2008 all over again.

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Posted: 8th, February 2012 | In: Money | Comment


You Want to Know What’s Happening In the Eurozone….Yes, I Knew You Did

DO you want to know what’s happening in the EuroZone? Well, if you really want to know what’s happening over in Euroland then you should read this book:

A Monetary History of the United States, 1867-1960
Milton Friedman & Anna Jacobson Schwartz

Admittedly at near 900 pages including charts and references it is pretty hard going. But if you really want to understand, that’s where you need to go.

As and when you read it though you’ll need to remember a point. When Friedman starts talking about what the Federal Reserve did in the US before and during the Great Depression, he’s actually listing the whole set of things that they got wrong. When he says they made an error here then that’s exactly what the European Central Bank has been doing. Like, for example, raising interest rates because of the risk of inflation. We have a risk of deflation, of a depression, in front of us, not a risk of dangerous inflation.

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Posted: 29th, November 2011 | In: Money | Comment