PIIGS, Shillings and Pence.

LeDroit

Well-known member
Joined
Mar 11, 2010
Messages
1,768
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?
 


Interista

Well-known member
Joined
Jun 23, 2009
Messages
4,123
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?
 

LeDroit

Well-known member
Joined
Mar 11, 2010
Messages
1,768
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.
 

'orebel

Well-known member
Joined
Nov 13, 2009
Messages
20,150

Interista

Well-known member
Joined
Jun 23, 2009
Messages
4,123
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?
 

DCon

Well-known member
Joined
May 5, 2009
Messages
5,889
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?
 

Asparagus

Well-known member
Joined
Apr 7, 2010
Messages
4,823
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!!
 

jpc

Well-known member
Joined
Jun 14, 2007
Messages
4,252
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.
 

ARCUS

Active member
Joined
May 24, 2010
Messages
103
Bulls make money, bears make money, pigs get slaughtered...............
(Money never sleeps. gordon kekko)
 

richie268

Well-known member
Joined
Sep 14, 2007
Messages
2,145
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!
 


New Threads

Popular Threads

Most Replies

Top