As previously discussed, for all practical purposes there is no political support for leaving the euro. The various populations simply do not trust their own governments with their currency:
Greece’s Tsipras: We Want Euro, but Not Austerity
By Michelle Caruso-Cabrera and Jennifer Leigh Parker
May 10 (CNBC) — The head of Greece’s Radical Left Coalition, Alexis Tsipras, told CNBC Thursday that he will “go as far as I can” to keep Greece in the euro zone, despite declaring earlier this week that the Greek bailout agreement is “null and void” and should be abandoned.
Tsipras (pronounced SEE-Pras), who was unable to form a coalition government this week after his party came second in Sunday’s election, said a Greek exit from the euro zone would be “disastrous.”
Tsipras said he is willing to negotiate with the so-called troika — the International Monetary Fund , the European Union, and theEuropean Central Bank — to keep Greece in the euro zone.
The Greeks and their new “leaders” cannot bear the idea on cutting the handouts. They will do anything and everything to keep spending mountains of money on themselves and trying to let others pay for it. Good luck with the future..Investors have woken up to the Greek unrelenting greed.
@JBH, Mountains of money on themselves? I wish they would. It would be really good of they got out of the euro. But, as Warren noted, they don’t trust themselves. Heaven help them. Sooner or later they may need to get out of the euro, like it or not.
pretty hard to stop anyone from using any currency they want.
it’s more about the trade agreements, banking system liquidity from the ecb, etc.
@Jonf, Maybe they should send THEMSELVES a Trojan Hearse? With a note offering a bribe if they’ll let Pundora out of the box? 🙂
Or a Trojan Bourse. One that eats only Drachmas.
What faux? Because right now, what’s Minos is euros, but what’s euros is minus. Equitable Midas!
JBH, if Greece left the Euro and printed its own currency, it wouldn’t need handouts. This is not about welfare, it’s about a currency union that was designed to fail.
Hi Mr. Mosler
I hope you do not mind if I stretch this topic today to ask you about tax based bonds with regards to Italy and Spain. I am the the host of the debates you will be attending in Rimini, Italy on May 17-18 (http://www.itforum.it/itforum-2012-rimini/programma.html?mode=sale&data=all&mdresp=eea916c23581363550cdd68cc2668425) and I was trying to put toghether something written to give the public about your solution for Italian debt. You describe them as something to be triggered (issued) only in case of default. Why not issuing them also now for instance, when Italy and Spain as a state are under stress on the markets and pay double what a US family pays now for a 30-year mortgage (adjusting for the different maturity). It seems to me that if the tax based bond is available as a “bazooka” Paulson-style in the hands of the government in case default occurs they will have a heavy discount to par. If they are issued once a Gov decides it is paying already too much on the markets, like now, they are more useful and having more circulation should enjoy less discount. What is the problem with issuing them now for instance ?
Hi,
Yes, they are meant to be issued long before default.
They are ‘normal’ bonds but with one difference,
in the case of non payment (with these bonds non payment need not be called a default)
the bonds continue to accrue interest and the amount ‘overdue’ can be used for payment of Italian government taxes, fines, fees, etc.
Hope this helps and looking forward to seeing you!
Ok, but why can they be used for payment of Italian government taxes, fines, fees only in the case of non payment by the Italian state ? What is the downside if they are allowed to be used for settling taxes once they are issued ?
By the way, of 70something events at this financial markets fair in Rimini on May 17-18, to be attended by more than 10k people, your debate is the one more booked so far.
The previous Italian Finance Minister, Giulio Tremonti, who has shown some interest in MMT and has a book out very critical of international finance was around here (I am in Modena, where they make Ferraris) last week and I went to ask him to come to debate you on tax based bonds. I was going to put more details on your solution and send it around
@giovanni zibordi,
Will Warren’s debate be streamed or recorded?
@giovanni zibordi,
I don’t think the non repayment of the debt is a necessary condition to be able to settle your taxes, fines etc with these bonds. But doing so is probably not very interesting anyway.
Indeed, as a bondholder, as long as I have enough disposable cash, I’d rather hold on to these bonds (which bear some interest) and settle my taxes with cash.
When you buy this bond, you’re essentially buying a tax “voucher” with a face value that keeps growing until it is “rebought” by the treasury (when it pays back the debt + interests), or redeemed by you when you pay your taxes (again with interests).
The important thing being that, as a bondholder, I know for sure that the bond will always have some value, because regardless of the solvency of the government, I will always be able to use the bond to extinguish my tax liabilities to this same government.
exactly!!!
Yes, no problem if they are able to be used for tax payment at all times!
My proposal was for a way to get funded at low rates with the least possible change.
‘Mosler Bonds’ can be identical to current Italian bonds, with just a simple clause added to the indenture-
‘In the case of non payment, these bonds continue to accrue interest, and the stated value of principal and interest can be used to make any payments due to the Italian Government’ or something like that.
By the way, this and more was discussed on this website when I proposed it for Greece, by the way, and still on this website somewhere in the archives.
You might find those discussions interesting.
Thank you very much, it was too late yesterday to keep posting for me due to time zone differences, otherwise I would have come back
The debate in Rimini will be somehow taped and streamed, but I am not sure of the details, I am not part of the organization per se, I am a just a trader and economic blogger while I watch some trade (www.cobraf.com). But it will be a big audience in attendance I believe, like 7-800 people and should be fun
I was gonna summarize the Tax Bond proposal in Italian, on a one page leaflet and distribute a couple of thousands and I wanted to make sure of the details. Some peopole that were interested forwarded it to Italian economists and it seems the objections come from accounting issues, like the definition of cash in the governemnts income statements… I not was going to address them, because I believe are technicalities that any gov can solve by law. Also in Italy we have already a huge backlog of credits toward the gov (30 billions…) because it very slow to pay and there is a discussion about letting companies, that are going under now by the thousands, use them to offset their taxes. Again there is resistance because “experts” claim that the State will have less cash…!