One of the ways out is for the 'strong' countries (Germany, France, Benelux) to form a new currency and change to that, rather than push the weaker countries out individually. The really interesting question on this one is whether the Italians would be let in. Let's not the forget the Italians' role as the elephant in the sovereign debt crisis room (not that I argue here against Pete's thesis of it being a banking liquidity crisis still overlying).
While redenomination of Greek debt into new Drachmas would undoubtedly constitute a credit event, it would be interesting to see the technical analysis on what the Germans would have to do should they convert to the Super Euro (faster than a speeding rate cut, stronger than central banker). Wuuld conversion be an event, or keeping the current debt denominated in the devaluing old currency?
Pete: Hi again, I've been lurking for a while, but only posted last week when I found something to disagree with.
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Re: Euro
Date: 2010-05-20 05:13 pm (UTC)While redenomination of Greek debt into new Drachmas would undoubtedly constitute a credit event, it would be interesting to see the technical analysis on what the Germans would have to do should they convert to the Super Euro (faster than a speeding rate cut, stronger than central banker). Wuuld conversion be an event, or keeping the current debt denominated in the devaluing old currency?
Pete: Hi again, I've been lurking for a while, but only posted last week when I found something to disagree with.