miércoles, 22 de junio de 2011

What would it happen if a country leave the euro?

I have seen and read an article on the reference hypothesis and I would like to crumble it point to point to have that you say. The article in question belongs to Fernando Diaz Villanueva and published in Digital Freedom. Of him he comes off that the exit of the little less than catastrophic serious euro I say just the opposite. 

If Greece, Portugal, Ireland or Spain presented suspension of payments (pure and hard default, without rescue partially) the following thing serious, necessarily, to be left the unique currency. It is a new scenario that would affect to the whole country. These would be the main consequences. 

1. - devaluation of the currency 

The euro would disappear to leave place to a new drachma, a new peseta or a new shield. The new currencies would be born devaluated with regard to other foreign currencies as the euro or the dollar, what would cause: 

- More competitive exports: abroad they would be necessary less Eurus (or dollars) to buy products. A similar effect would take place in the tourism.  

This at the moment would go very well since to Spain in tourism we are a world power and as the main factories with important manpower storing are of multinational character they would be suddenly under better conditions in front of the other European factories. Give it - location of signatures as Sony, Sharp, Yamaha, and others had not been necessary because our salaries would make comfortable to those of the Europe of the east. 

- More expensive imports: the cared products would be more expensive. As Greece, Portugal or Spain they care all the petroleum and the gas that consume, practically the energy and the transport they would be shot of price.  

If certain, but it would be not necessarily harmful completely. Obligatorily he would decrease the consumption of external products and the internal consumption would be nationalized increasing the production of national products. And the imports of matters cousins would raise in price in function of the real devaluation of the new currency, he would be necessary to make a study because maybe the final cost of our scale of payments would not be unbalanced as much as it can be thought. 

- Inflation: does he/she not necessarily have to be given an inflationary scenario. It would depend on the types of interest that fixes the central banking. 

Totally of agreement here would have to know that monetary politics would adopt the BdE I calculate that we would leave to 3,75% of interest of the money that is to say 2 points above the Euribor that undoubtedly would continue being the reference. This should allow to maintain a similar inflation to the current one between 3,5 and 4% as first objective. 

- Debts: to pay the debts would be more expensive, since many would stay nominated in Eurus. The debtors would have to buy Eurus reassessed to redeem their debts. 

I don't agree, as much the passive ones as the assets should suffer a revaluation according to the parity of the new currency on the other ones so if I owe 1,000 € and I have a capital of 2000 € my debt it is of 50% of my capital if when transforming the figures to my new currency this it is located in 168 Ptas. / € my countable situation will be debt 168000 Ptas. And my capital will be 336000 Ptas. Then the equivalence is the same one. 

2. - types of interest 

The types of interest would have to ascend unavoidably to avoid an inflationary hairspring and to try to moderate the flight of capitals. 

I imagine that they would follow the differentials maintains the sovereign debt with the German this never changed already it was this way before now and while Germany is Germany it didn't change. 

- Financing: the banking would restrict the credit severely; since it would be more conditioned to the external financing that compensates the lack of internal saving. With the most expensive money, of more difficult access and with more risk in the credit operations the interests would grow for families and companies. 

I don't believe that the situation went to worse than the one that there are now the small banks they would have less since pressure they would move but internally and better its clients would have less possibilities to go outside so they would probably increase its business of national character, the two big Spanish banks neither he would make them tickle 75% of its business it is already outside of this problem they would simply take its power station of operations to the most advantageous country and they would continue acting as if such a thing.  

- State: the Government would have serious problems to be financed in the markets of sovereign debt. 

That would depend that is to say on the conditions of the accounting of the state of the countable deficit of the Spanish state in percentage if he moves in the same current parameters or the improvement that it would improve them sure and also of the additional guaranties of the Spanish treasure Other foreign currencies, gold, etc.asi like of their new GDP.  

- Creditors: the banking would have to pay its debts in the international markets in Eurus, this would cause that demands, in turn that its debtors make the own thing. It would be given, because, a towering risk of widespread delinquency. 

In no way the banks would have debts in Eurus in Dollars in Swiss Francs and in the foreign currencies that they wanted they would no longer be forced to the Euro they remember that we have abandoned him, their debtors would pay with the foreign currencies that in turn contributed it is alone question of equivalences it would not alter the risk more than now if the figures and the payment way. 

- Debtors: the families and the companies would be before a really black panorama. They would receive their revenues in the new currency, but they must pay their old debts in Eurus. 

It has already been explained before the debts they transform to the new currency and they are paid with the same currency, likewise the wages that would be adjusted to the quantities in Ptas. resultants of the conversion with regard to the value in front of the euro that is to say the family that now wins a wage of 1000 € it would pass to charge 168,000 Ptas. 

- Increase of costs: the devaluation would cause the ascent of the prices of the cared products, with special incidence in the petroleum. - Export: the company’s exporters would be the only ones that would obtain revenues in foreign currencies. Their sales could increase. 

The most probable thing is that they would be balanced it is but the necessity to lower costs would make that manufactures more products in the country again and above we would reduce the unemployment, but I will tell them a thing they know the cheap ones that they would be for example WW. The SEAT. And to AUDI the Q-3 made in Barcelona

- Debts: the forks of debts nominated in Eurus would have bigger problems to pay them.  

This will depend on their revenues and of where he/she carries out their business if it exports a lot or a little. 

- Creditors: the banking lives off external financing to grant credit in the interior. The exit of the euro would mean the end of the access easy to the external financing, for what many creditors would demand quicker paying-offs and in Eurus. 

- Delinquency: the banks would see increase their delinquency indexes. 

- He escapes of capitals: as you he/she is seeing in Greece that that has savings tries to put them safe, in Eurus, abroad. In the case of an exit of the euro this flight would be intensified. 

These if they would be a little disoriented but I have already said before the big ones have enough resources it was and it is more I believe that it would alleviate them not to depend so much of the Spanish market. And I am not so sure of that of the flights of capitals, the one that you begins to disintegrate the area euro, doesn't find me him to guarantee that he escapes the capital toward her, and if one makes a good action of offer of guaranteed products and with good profitability we would already see that it would happen. 

You look I see it totally on the contrary and I don't mean with this that we leave the euro. But that that if I tell them it is that to the Europe of the Euro it doesn't scare them that Greece, Portugal, and mainly Spain, have to throw of the Euro. If not that we leave us the euro of so many pressures and let us work the same as before. That that if it would be very harmful it is that tosses us of the European Community, politics. 

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