Cyprus-Forum.com

[Oceanside50]

Robin Hood, debts are repayable when theres inflation, the EU has just started the process of creating it in order to stimulate its economies..

PRESS RELEASE

22 January 2015 - ECB announces expanded asset purchase programme

ECB expands purchases to include bonds issued by euro area central governments, agencies and European institutions

Combined monthly asset purchases to amount to €60 billion

Purchases intended to be carried out until at least September 2016

Programme designed to fulfil price stability mandate

The Governing Council of the European Central Bank (ECB) today announced an expanded asset purchase programme. Aimed at fulfilling the ECB’s price stability mandate, this programme will see the ECB add the purchase of sovereign bonds to its existing private sector asset purchase programmes in order to address the risks of a too prolonged period of low inflation.

The Governing Council took this decision in a situation in which most indicators of actual and expected inflation in the euro area had drifted towards their historical lows. As potential second-round effects on wage and price-setting threatened to adversely affect medium-term price developments, this situation required a forceful monetary policy response.

Asset purchases provide monetary stimulus to the economy in a context where key ECB interest rates are at their lower bound. They further ease monetary and financial conditions, making access to finance cheaper for firms and households. This tends to support investment and consumption, and ultimately contributes to a return of inflation rates towards 2%.

The programme will encompass the asset-backed securities purchase programme (ABSPP) and the covered bond purchase programme (CBPP3), which were both launched late last year. Combined monthly purchases will amount to €60 billion. They are intended to be carried out until at least September 2016 and in any case until the Governing Council sees a sustained adjustment in the path of inflation that is consistent with its aim of achieving inflation rates below, but close to, 2% over the medium term.

T

https://www.ecb.europa.eu/press/pr/date ... _1.en.html

[Robin Hood]

T:

Robin Hood, debts are repayable when there’s inflation, the EU has just started the process of creating it in order to stimulate its economies

An interesting subject ………………..

Firstly, I think this applies to private debt, not government debt? They create MORE debt to pay off existing debts …………….. any businessman will tell you that does not work.

Now look at where this 60bn Euro’s a month is going! It goes straight to the banks so that they can increase lending (debt) at interest, by boosting their reserves. The ECB are going to buy bonds from Governments and a bond is an IOU. (Debt) They are also going to buy ‘Asset Backed Securities’ in other words they are going to buy up all the collateral provided to the now defunct bank Laiki and the NPL’s held by Cyprus banks, provided by borrowers that can no longer service the loans. The ECB are creating money out of thin air as debt, to get hold of the real wealth …….… basically anything put up for loan security that has real value.

This is Quantitive Easing but, instead of going to governments to create more jobs through Government spending, they buy Government bonds from the commercial (Privately owned banks) and the security they accepted against failed loans. The ECB will buy these ABS at a rate that will cover the interest the Banks have lost on these loans; they sell the assets purchased on to speculators at a profit and the speculators will come back to recover from their investment. Where does this benefit Greece ....or Cyprus come to that?

Everything that has been put forward so far, to help any economy recover, has been paid to the banks so that they can create more debt and an ever increasing debt burden on tax payers and the population in general. If Greece can overturn this system (which is going to be rough ride) they will be the winners at the end of the day and hence the Greek people will see stability as well as security.

Sovereign currency means money creation at NO DEBT, thus no interest either. As it is not created as a loan, there is NO DEBT so nothing to repay. Everything created remains in the local economy. A country with a sovereign currency cannot go into debt and cannot therefore go bankrupt.

Of course if you just create money ‘ad infinitum’, you will get inflation and then hyper-inflation so, it has to be carefully managed but I think Syriza/Tsipras/Varoufakis know very well how the system works.

[Paphitis]

At the end of the day, I would love to borrow money from the bank and not have to pay it back ever but it just don't work that way.

Wouldn’t we all? But, Sovereign currency allows the State to do just that and this is what the noises from Athens (and Iceland) are indicating!

Sovereign currency is created from nothing just as the commercial banks do it but it is not a loan and is spent into the economy by the State, free of all debt and as such incurs no interest. It is then recovered through direct taxes such as purchase tax/ VAT and is again reintroduced into the economy through the Government spending it. It goes around and around, unlike bank money which has to be created and then destroyed to allow the banks to lend it over again at interest! With a sovereign currency there is no need for income tax ........ it becomes defunct. It was only the introduction of the FED in 1913(?) that led to the introduction of income tax ......... the central bank needs it to recover the interest on the debt they created . The current system is debt slavery and all the time Greece remains in the Euro it will never be able to pay off its debts.

I think that Syriza are very cleaver bunch of people and aware of how the banking system works, unlike their Cypriot counterparts. All they have to do is face up to the bankers who will, without doubt, make it as difficult as possible for them to proceed and make it a success. If Greece does this then the Eurozone will collapse and other counties such as Cyprus, Spain, Portugal and Italy will follow suit and reintroduce their own sovereign currencies. I foresee the international banking cartels and the TBTF Banks making any such moves by Greece as difficult as possible and imposing sanctions as they have with Iran and Russia (among others) to bring them to heel! It will be interesting to see what comes out of Tsipras visit to Moscow?

I just hope Tsipras has the balls to take them on and that the Greeks look to the future and not just short term delusions about the Euro.

We might have our jargon all wrong but many countries have a sovereign currency. UK, Australia, China, Japan, USA etc etc.

The currencies are still floated and open to market fluctuations. The Central Banks have some control over its value by printing and releasing Treasury Billsand also through interest rates. Countries which export more than they import want a relatively cheap currency while other countries like Cyprus which import more require something like the defunct Cyprus Pound.

As far as I know, Iceland is also a Market Economy just like any other in the EU. The only difference is they defaulted and bankrupted their banks and started again. This is probably what Greece should have done only judging by the success of Iceland.

What it will mean is that they will probably force Greece to nationalize its banks and go back to the Drachma. I am sure it will be a rough ride and probably very painful with extreme hyper inflation in the short term. Who knows? It's unchartered waters with the only comparison being Iceland.

[Oceanside50]

T:

Robin Hood, debts are repayable when there’s inflation, the EU has just started the process of creating it in order to stimulate its economies

An interesting subject ………………..

Firstly, I think this applies to private debt, not government debt? They create MORE debt to pay off existing debts …………….. any businessman will tell you that does not work.

Now look at where this 60bn Euro’s a month is going! It goes straight to the banks so that they can increase lending (debt) at interest, by boosting their reserves. The ECB are going to buy bonds from Governments and a bond is an IOU. (Debt) They are also going to buy ‘Asset Backed Securities’ in other words they are going to buy up all the collateral provided to the now defunct bank Laiki and the NPL’s held by Cyprus banks, provided by borrowers that can no longer service the loans. The ECB are creating money out of thin air as debt, to get hold of the real wealth …….… basically anything put up for loan security that has real value.

This is Quantitive Easing but, instead of going to governments to create more jobs through Government spending, they buy Government bonds from the commercial (Privately owned banks) and the security they accepted against failed loans. The ECB will buy these ABS at a rate that will cover the interest the Banks have lost on these loans; they sell the assets purchased on to speculators at a profit and the speculators will come back to recover from their investment. Where does this benefit Greece ....or Cyprus come to that?

Everything that has been put forward so far, to help any economy recover, has been paid to the banks so that they can create more debt and an ever increasing debt burden on tax payers and the population in general. If Greece can overturn this system (which is going to be rough ride) they will be the winners at the end of the day and hence the Greek people will see stability as well as security.

Sovereign currency means money creation at NO DEBT, thus no interest either. As it is not created as a loan, there is NO DEBT so nothing to repay. Everything created remains in the local economy. A country with a sovereign currency cannot go into debt and cannot therefore go bankrupt.

Of course if you just create money ‘ad infinitum’, you will get inflation and then hyper-inflation so, it has to be carefully managed but I think Syriza/Tsipras/Varoufakis know very well how the system works.

Xristos Anesti

here is a quick rundown of what will happen to europe,which in fact, shows that the asset purchase program will lower the eu's deficit including Greece's and Cyprus..enjoy

[Robin Hood]

Paphitis:

We might have our jargon all wrong but many countries have a sovereign currency. UK, Australia, China, Japan, USA etc etc.

What is important is not so much that it is a sovereign currency per se, but that it is NOT a reserve or traded currency. Like when Cyprus decided on joining the Eurozone, it used a fixed rate against the Euro for the Cyprus pound. If the Euro went up so did the CYP and vice versa, but it was locked to the Euro and was thus effectively a Euro in purchasing power.

If Greece were to do this today but in reverse, it would sensibly use a ratio of 1;1 ….. 1 Euro would be the equivalent of 1 New Drachma. A Greek civil servant on say 35k Euro’s would still get 35k but it would be in Drachma’s. Any Euro’s circulating would be gradually withdrawn to pay off external debt, bank accounts would overnight be designated Drachma instead of Euro along with any Euro’s or other foreign currencies they earned through tourism/trade.

The Drachma itself would have no value except in Greece i.e. it would not be a traded currency. I have never accepted that inflation or collapse of the Drachma, or any other non-traded sovereign currency, would be an inevitability! There will be inflation in the price of imported goods because the Government would use imposed and graduated purchase tax/import duty to control the amount of luxury (non-essential) foreign imports. The cost of locally produced goods and services should see little in the way of price rises.


What makes me think Tsipras and his mates know what they are doing, is in this article: This is an interesting concept and both the US and Russia have used it in the past to exempt themselves from the debts of countries they have effectively invaded and conquered (Mexico/Texas, as an example)

(enter this in your browser)

"Odious Debt" has finally arrived: Greece to write off "illegal" debt.

[Paphitis]

Paphitis:

We might have our jargon all wrong but many countries have a sovereign currency. UK, Australia, China, Japan, USA etc etc.

What is important is not so much that it is a sovereign currency per se, but that it is NOT a reserve or traded currency. Like when Cyprus decided on joining the Eurozone, it used a fixed rate against the Euro for the Cyprus pound. If the Euro went up so did the CYP and vice versa, but it was locked to the Euro and was thus effectively a Euro in purchasing power.

If Greece were to do this today but in reverse, it would sensibly use a ratio of 1;1 ….. 1 Euro would be the equivalent of 1 New Drachma. A Greek civil servant on say 35k Euro’s would still get 35k but it would be in Drachma’s. Any Euro’s circulating would be gradually withdrawn to pay off external debt, bank accounts would overnight be designated Drachma instead of Euro along with any Euro’s or other foreign currencies they earned through tourism/trade.

The Drachma itself would have no value except in Greece i.e. it would not be a traded currency. I have never accepted that inflation or collapse of the Drachma, or any other non-traded sovereign currency, would be an inevitability! There will be inflation in the price of imported goods because the Government would use imposed and graduated purchase tax/import duty to control the amount of luxury (non-essential) foreign imports. The cost of locally produced goods and services should see little in the way of price rises.


What makes me think Tsipras and his mates know what they are doing, is in this article: This is an interesting concept and both the US and Russia have used it in the past to exempt themselves from the debts of countries they have effectively invaded and conquered (Mexico/Texas, as an example)

(enter this in your browser)

"Odious Debt" has finally arrived: Greece to write off "illegal" debt.

Not having a traded currency is something which probably doesn't work for the big economies. Germany would be a big example here. They are an export economy and they need to import many raw materials to keep their industry going.

How can that occur if the Euro was not a traded currency? What about China, Japan, Australia and USA? They all need a traded currency.

These currencies are usually tied to commodity prices. If commodities go up, they go up and vice versa if they go down.

Industry in Germany gains so many Billions every time the currency actually goes down. The same occurs in Australia. A strong Euro and strong Dollar is counterproductive to industry.

[GreekIslandGirl]

An interesting and topical take on Germany's failure to voluntarily pay her debt to Greece and carry out the moral imperative, from a great British ecumenical scholar ...

The eastern Orthodox churches finally split with the Roman Catholic western church in 1054, though the differences had been building up long before and have continued ever since. Among these, the eastern churches retained the Julian calendar – which is why, this year, Orthodox Easter falls on Sunday 12 April, a week later than for the western churches. More significantly, because of this great schism, eastern churches such as the Greek Orthodox church didn’t fall under the sway of a theory of salvation developed by St Anselm of Canterbury and his massively influential Cur Deus Homo of 1089, a book that radically altered the western understanding of Easter and, with it, a great deal of our moral hinterland. Indeed, the respective current attitudes towards debt of the Greek and German governments can be seen, to a remarkable extent, to track the eastern-western split over the meaning of Easter.

According to Anselm, and the Reformation thinkers that followed him, the story of Easter is basically God’s response to a debt crisis. The argument is this: human beings have sinned against God, thus incurring a debt that has to be paid. (If you think this shift from sin to debt is odd – and it is – remember we still speak of criminals as “paying back” their debt to society.) On this model, the scales of justice have to be balanced. Crimes must be paid for, with the level of punishment being proportionate to the level of offence. But the theological problem is that human debt is way too high – us being miserable sinners and all that – which means that we are totally incapable of paying back the required amount.

No, they say, salvation is not some bloody cosmic accountancy. It’s a prison break
This is why, says Anselm, Jesus comes to receive the punishment that is due to us and is crucified, thus repaying the debt on our behalf and levelling our account. Redemption, remember, is an economic metaphor. “There was no other good enough to pay the price of sin,” as many western Christians are singing this Eastertide. For evangelicals especially, this is the very essence of salvation. Sin is repaid. Hallelujah.

But this is absolutely not the eastern story of Easter. Indeed, no Greek Orthodox congregation will be singing about Jesus paying the price of sin during their Easter services. For one thing, they are not so obsessed with sin. And they don’t think that Jesus’s suffering (or anyone else’s) is the way it gets repaid. Indeed, it doesn’t get repaid. Which is why Greek Christian art, unlike western Christian art, doesn’t obsess with the bleeding crucified Jesus. For eastern theologians, Jesus’s mission is to break human beings free from their imprisonment to death. All the important action happens at the resurrection, not the crucifixion. For, if salvation is merely payback and this happens on the cross, there is no saving work left for the resurrection to do. No, they say, salvation is not some bloody cosmic accountancy. It’s a prison break. The emphasis is on Christ leaping from the grave not hanging on a cross. It is about life triumphant over death.

The western church typically criticises the eastern view for having a “free lunch” view of salvation. No pain, no gain, insists Anselm. The eastern church says that the west fetishises suffering and is more committed to some iron logic of cosmic necessity than to God for whom all things are possible.

Atheists such as Alexis Tsipras, the Greek leader, may think both of these are fantasies. But for present purposes that’s beside the point. It’s worth recognising that these two completely different stories support two contrasting moral worldviews and different attitudes towards economics in general and capitalism in particular. Tsipras – like me – is very much more in the Greek Orthodox camp when it comes to salvation. And the Lutheran minister’s daughter Angela Merkel is very much in the western one. He wants to leap free from death-dealing debt. She believes it must be paid back, no matter how much blood and pain is involved.

http://www.theguardian.com/commentisfre ... out-easter

[Oceanside50]

Interesting article. It may explain the reason greeks find a way out as soon as they jump into something

[Oceanside50]

Interesting article. It may explain the reason greeks find a way out as soon as they jump into something

...after all these years of economic reform the Greeks are seeing the light at the end of the tunnel. they (the Greeks)all have a plan to get out of this financial mess, the economy is improving unemployment is declining and there are 10 million business plans being developed. They can't wait to implement them but the Germans are holding the reigns on them . If I know Greeks this is the probable point of this mess that they would seriously contemplate their escape from the euro, that's why the Germans are retreating. This guy who wrote the article is very insightful.

[dodo]

What about the Greek occupation and plundering around the Mediterranean basin for milennia?

What the Greeks are doing/saying is INCREDIBLY childish, foolish, downright retarded of an elected group of people that should display much more common sense in their functions bestowed on them instead of all the populist gimmicks they've been trying thus far.