[lbo-talk] Prepare for riots in euro collapse, Foreign Office warns

Mike Beggs mikejbeggs at gmail.com
Tue Nov 29 19:21:17 PST 2011


On Wed, Nov 30, 2011 at 12:31 PM, James Heartfield <Heartfield at blueyonder.co.uk> wrote:


> Really? It’s that easy to launch a currency? Usually you need a big fund to back it. They used Marshall Aid to back the new Deutsch mark in 1947? And to launch the Euro took the consolidated funds of the European System of Central Banks. Lee Kuan Yew used Singapore’s accumulated Foreign Exchange – but it was an entrepot for goods exchanged between Malaysia, Indonesia, Europe, America and China, so had a lot of reserves.

Reserves are vital to maintain a fixed exchange rate - not so much for a floating currency. There's no doubt that a new drachma would be of pretty uncertain value though, and achieving stability would probably require austerity, not to mention the ramifications of revaluing private Greek euro liabilities, however that might be done. There is no easy way out.

Mike



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