Talking stocks, trading, and investing in general

[idfnl]



The Germans know a thing or two about hyperinflation

Indeed. In the early 20's it got so bad that kids used money as toys.

 

[brokencycle]

The Germans know a thing or two about hyperinflation - curious to see how the rest of the EU reacts to this.

I'm also not a finance guy, so I've just been a fly on the wall reading the news.

Germany's history with hyperinflation is why the PIGs want their own currency: Germany will never allow the loose monetary policy that they want due to their debt bubble.

 

[ramuman]

Damned if you do, damned if you don't.

 

[brokencycle]

Indeed. In the early 20's it got so bad that kids used money as toys.

They went through multiple currencies in a short period: Papiermark, Retenmark, and Reichsmark. The Reichsmark was issued at 1RM = 1x10^12 Papiermarks (10^12 is tera so it is roughly the difference between one character of data and a modern HDD)

 

[brokencycle]

That's not happening.

Who would lend them euros for a debt to be paid back in Drachmas? There would be terrible conditions attached and it would have to be secured.

Nothing prevents them from printing a massive amount of Drachmas and converting them to Euros, but it would likely cause hyper inflation and devalue the Drachma faster than they could print it.

At that point they'd be better off defaulting. Not sure anyone wants to tell the Germans to come and take what they're owed though.

I agree about external debt, but things like pension benefits for said 25 year old government retirees could be converted into Drachmas and they could pay them significantly less a result.

 

[djblisk]

Nike just missed on earnings. UA getting hit too.

 

[horndog]



I still have a TVIX position .

That position today:

 

[MSchapiro]

That position today:

I bought XIV and ZIV yesterday. Paid off well today.

I agree about external debt, but things like pension benefits for said 25 year old government retirees could be converted into Drachmas and they could pay them significantly less a result.

Sure, but their revenues would still be in Drachma while their debts are in Euros. It would get harder and harder to pay back the debt.

 

[idfnl]



They went through multiple currencies in a short period: Papiermark, Retenmark, and Reichsmark.  The Reichsmark was issued at 1RM = 1x10^12 Papiermarks (10^12 is tera so it is roughly the difference between one character of data and a modern HDD)

Makes Zimbabwe look downright fiscally responsible.

 

[idfnl]



Sure, but their revenues would still be in Drachma while their debts are in Euros. It would get harder and harder to pay back the debt. 

Exactly this. Greece is already a third world country save for it's proximity to Europe, there isn't much hope for them unless they take 10 or 20 years of tough love with the EU.

You know, the more you look at the state of nation states, for example the fragility index, the sadder a state of affairs it becomes. There are only 5 countries in the world that are debt free. Its an incredible number. I know the argument that some debt is healthy, but that belief has always rubbed me the wrong way.

 

[ThinkDerm]



Exactly this. Greece is already a third world country save for it's proximity to Europe, there isn't much hope for them unless they take 10 or 20 years of tough love with the EU.

You know, the more you look at the state of nation states, for example the fragility index, the sadder a state of affairs it becomes. There are only 5 countries in the world that are debt free. Its an incredible number. I know the argument that some debt is healthy, but that belief has always rubbed me the wrong way.

which 5 are debt free?

 

[idfnl]



which 5 are debt free?

Ready for a chuckle?

Lichtenstein, Palau, Brunei, Virgin Islands, and Macau

I suppose the lesson is to have a small territory which you can govern carefully. Reality is, all these 5 are fairly prosperous.

 

[ramuman]

I wonder what pre WWII strip clubs in Germany were like. You can't just make it rain, and even making it cat 5 hurricane likely wasn't enough.

 

[brokencycle]



Exactly this. Greece is already a third world country save for it's proximity to Europe, there isn't much hope for them unless they take 10 or 20 years of tough love with the EU.

You know, the more you look at the state of nation states, for example the fragility index, the sadder a state of affairs it becomes. There are only 5 countries in the world that are debt free. Its an incredible number. I know the argument that some debt is healthy, but that belief has always rubbed me the wrong way.

I know exactly what you mean, but the theory is you can outgrow the debt, right? It is kind of like leveraging debt in personal finance. Take a mortgage at 3% and put your money in the stock market because it will earn more than you pay.

Still I agree with your feeling.

I bought XIV and ZIV yesterday. Paid off well today.


Sure, but their revenues would still be in Drachma while their debts are in Euros. It would get harder and harder to pay back the debt. 

Again that would be only for external debt, right? They could reduce their internal debt such as pensions by paying out in drachmas which could be devalued.

 

[idfnl]



I know exactly what you mean, but the theory is you can outgrow the debt, right? It is kind of like leveraging debt in personal finance. Take a mortgage at 3% and put your money in the stock market because it will earn more than you pay.

Still I agree with your feeling.

That's a quaint theory, but a country like Spain has a corrupt system and a lazy work culture (how many times have you heard of a hard working Spaniard?), I have trouble seeing how it can happen. They'd have to give up their midnight dinners on Tuesday, 6 weeks of paid vacations, and their political system full of graft would basically have to be dismantled. Good luck.

And Greece is even worse.