Good summary of the peso-ification process..leaving the Euro

Whether staying put or leaving the euro the economic effects will be very nasty.

voxeu.info/index.php?q=node/5326

Can someone send a copy of that excellent article to David mcWilliams et al?

could somebody also send it to the 2 brians without a brain so they set plans in place for a strategic default

In answer to a post in the Fine gael Sellout thread, this is about as clear as it gets I think wrt to leaving, mind you the big question for me is whether Ireland would be allowed to leave the EURO but stay in the Union, I cannot imagine Herr Aleman being to happy about continued support payments to Ireland in any currency or the NMCs being very comfortable about risks to tax structures as the Union took it’s revenge on Ireland.

Mind you, if you were planning to leave the EURO, then it would need to be rapidly executed and be preceeded by the guise of towing th eline, aka not going after the bondholders, allowing the nationalization of banks, etc.

Why would Ireland need a Punt Nua in anything other than electronic form for a while, could it not be pegged to the dollar or Sterling while the printing presses are ramped up, etc.?

Pegged to the dollar or sterling is fine if you’ve got the financial reserves to back it up. I can’t remember which Central European country it was. One of the ex-Yugoslavian republics I think, that maintained parity with the Euro in the early part of the last decade only by holding one real Euro for every single unit of it’s own currency that it issued.

If everybody expects the punt new to deflate to an undefined low then no one will want to hold it. Sure, you could try to mandate a peg, but nobody is going to sell sterling at that peg willingly just because the government says that is the rate. What you would end up with is exporters being forced to sell their hard currency earnings to the government at the pegged rate, forcing a sharp drop in export earnings being repatriated. Then the government has a dwindling supply of hard currency to sell to importers at the pegged rate. Consequently a black market blooms with huge differences between the official and street rate.

Argentina on the Cusp of Hyperinflation → seekingalpha.com/article/261362- … rinflation