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If Greece does go Bust?

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  • AndyGuil
    AndyGuil Posts: 1,668 Forumite
    Part of the Furniture 1,000 Posts Combo Breaker
    Mallotum_X wrote: »
    Germany has lots of DM sat in a warehouse ready to go? Really? any source for that?

    How did argentina deal with it last time? Presumably people in Greece will just keep using Euro notes and not accept any new currency?
    Germany have been printing the Deutsche Mark for sometime to be ready for a Eurozone break up.
    http://seekingalpha.com/article/302290-germany-is-already-printing-money-deutsche-marks

    Greece will have to use the Drachma, although they may use an overprinted Euro until that money is printed. The currency will be devalued severely.
  • Generali
    Generali Posts: 36,411 Forumite
    10,000 Posts Combo Breaker
    Mallotum_X wrote: »
    Germany has lots of DM sat in a warehouse ready to go? Really? any source for that?

    How did argentina deal with it last time? Presumably people in Greece will just keep using Euro notes and not accept any new currency?


    Argentina was in a position rather like the UK in the ERM in 1992 in that the Peso was pegged to the US Dollar.

    Greece is in a different place as it will need a new currency.

    Fortunately, the very first economic law will apply if Greece gets a new currency: bad money drives out good. People will hoard 'good money' (presumably the Euro) and spend the 'bad money' (presumably the Drachma) as the 'good money' is thought to be a better store of wealth.

    The good money ends up under the mattress with the bad money being used to pay bills, wages etc.
  • Mallotum_X
    Mallotum_X Posts: 2,591 Forumite
    Part of the Furniture Combo Breaker
    AndyGuil wrote: »
    Germany have been printing the Deutsche Mark for sometime to be ready for a Eurozone break up.
    http://seekingalpha.com/article/302290-germany-is-already-printing-money-deutsche-marks

    Greece will have to use the Drachma, although they may use an overprinted Euro until that money is printed. The currency will be devalued severely.

    Do you have a link to a real news website rather than a blog....

    Ordinary citizens will use whatever currency they want. If i was a greek citizen with this on the horizon then i would want to hang onto Euros, and use them as Euros, not anything else.

    Nothing to stop the government keeping any Euros they have as Euros, but new money would be printed as Drachma or whatever.
  • AndyGuil
    AndyGuil Posts: 1,668 Forumite
    Part of the Furniture 1,000 Posts Combo Breaker
    edited 16 February 2012 at 5:38PM
    Mallotum_X wrote: »
    Do you have a link to a real news website rather than a blog....

    Ordinary citizens will use whatever currency they want. If i was a greek citizen with this on the horizon then i would want to hang onto Euros, and use them as Euros, not anything else.

    Nothing to stop the government keeping any Euros they have as Euros, but new money would be printed as Drachma or whatever.
    All money in Greece will become separate from the rest of Greece and become identifiable (overprint). Anyone wanting Euros will have to pay for them (because overprinted Euro will not be worth the same as a Euro) and Euros will not be legal tender. You can already ID Greek notes anyway from the code on them.

    Links to the D.Mark
    www.ndtf.com/article/world/deutsche-mark-set-for-comeback-instead-of-euro-in-germany-115046
    https://www.express.co.uk/posts/view/255228/Mark-set-for-comeback-as-German-euro-crisis-deepens



    I'm sure there are more if you look.
  • wellused
    wellused Posts: 1,678 Forumite
    The problem will be that when it becomes apparent that Greece is to leave the euro all the Greeks will withdraw their Euro notes and get them out of the country as soon as possible to avoid them being overprinted, this will mean that their money keeps its present value.
    Watching newsnight it seems if you read between the lines that it is 90% sure that Greece will be invited to leave the euro and that the Germans will guarantee to give monetary aid while Greece gets it's own currency organised.
  • AndyGuil
    AndyGuil Posts: 1,668 Forumite
    Part of the Furniture 1,000 Posts Combo Breaker
    wellused wrote: »
    The problem will be that when it becomes apparent that Greece is to leave the euro all the Greeks will withdraw their Euro notes and get them out of the country as soon as possible to avoid them being overprinted, this will mean that their money keeps its present value.
    Watching newsnight it seems if you read between the lines that it is 90% sure that Greece will be invited to leave the euro and that the Germans will guarantee to give monetary aid while Greece gets it's own currency organised.
    That will cause a run on the banks, which is a big risk and high chance of this happening. There is not enough cash available to achieve this and it will cause large issues for the banks and socially.
  • Mallotum_X wrote: »
    How did argentina deal with it last time? Presumably people in Greece will just keep using Euro notes and not accept any new currency?

    There may still be some cash in circulation, but the vast majority of the population's wealth is in bank accounts and assets, and they will be immediately converted to the new currency. Banks will not pay out in Euros any more, even though the original deposits were in Euros.

    Those Greeks who have old Euro notes may be able to hold onto them for a while, and as devaluation bites, which it inevitably will, there will be a black market in buying with / exchanging increasingly valuable Euros for the new currency.

    You only have to read history to see how these things develop.
    A bank is a place that will lend you money if you can prove you don't need it.
  • wellused
    wellused Posts: 1,678 Forumite
    It will happen because anyone who had say a thousand euro in a Greek bank would be mad not to move it abroad where it will be worth a thousand euro whatever happens to Greece, why would any sane person leave a thousand euro to be devalued by overprinting?
  • AndyGuil
    AndyGuil Posts: 1,668 Forumite
    Part of the Furniture 1,000 Posts Combo Breaker
    wellused wrote: »
    It will happen because anyone who had say a thousand euro in a Greek bank would be mad not to move it abroad where it will be worth a thousand euro whatever happens to Greece, why would any sane person leave a thousand euro to be devalued by overprinting?
    It will have been happening. They have to do it before the default. It will cause a run on the banks and only a proportion of the country will actually be able to achieve it.
  • StevieJ
    StevieJ Posts: 20,174 Forumite
    Part of the Furniture 10,000 Posts Combo Breaker
    ILW wrote: »
    I would have thought that even that would take a few months to get sorted. Would the printers actually take on the job with no guarantee of getting paid?

    Don't you think it has been sorted already?
    'Just think for a moment what a prospect that is. A single market without barriers visible or invisible giving you direct and unhindered access to the purchasing power of over 300 million of the worlds wealthiest and most prosperous people' Margaret Thatcher
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