What will end up happening to Greece?

[myp]

As the turmoil continues there are people making all sorts of suggestions and predictions as to what will happen to Greece. Another bailout could be possible (which would likely mean goodbye to some of Germany's current politicians' reelection hopes), but further austerity is likely needed for that and that is not going so well right now. Then there is the possibility that Greece just leaves the Euro and all the questions that come with that.

Anyone have any predictions of their own?

 

[DodgeFB]

Heck I don't know! Could this be the first major crack in the oh so wonderful "European Union"? I thought they would just all chip in and pay each others bills.

 

[David]

Anarchy as the gov't finally collapses with an eventual Communist (note the capitalization, I'm not getting into an ideological debate on this) gov't being established.

 

[mas24546]

If the Greece leave the euro, with what they will go?

 

[myp]

If the Greece leave the euro, with what they will go?

Most likely back to the Drachma.

 

[mas24546]

What about Greece default? bad or good for the gold?

As soon as Euro collapsed. The USD will also collapse automatically then you will see gold advance sharply..

 

[David]

What about Greece default? bad or good for the gold?

As soon as Euro collapsed. The USD will also collapse automatically then you will see gold advance sharply..

And then it'll collapse like it always does and everyone will get a painful reminder why we dropped it in the 1st place. Gold is 1 of the worst things you could base money on, it's just as 'worthless' as paper money and suffers the same speculation issues that oil does. Sure it looks like a good investment for 10-15 years but in the end it always gets too pricey to make any meaningful investments before crashing back to Earth leaving everyone ho doesn't sell at the start of the crash holding worthless pieces of scrap metal for the 5 or so years it takes for the price to start going up again.

 

[myp]

He didn't say anything about basing money on gold, David, but merely that it would go up and if his predictions come true that is certainly a possibility.

I do not think either the Euro or USD will end up collapsing here though- I think the EU has too much invested- what will happen is they will probably cut their losses and let Greece and possibly others walk (well they will probably be forced to anyway after they try to imprison Greece with more ridiculous bailouts which are really just high-interest loans in this scenario). The EU will undoubtedly be in some new form or structure in the next decade- it just can't last as it is (ah the naivety of the Euro dream). A Greek default is in the best interests of the people of Greece and in the worst interests of the banks that made loans to Greece- many of them in France and other EU nations which is why everyone but the Greeks seem to be so adamant on bailout.

 

[David]

He didn't say anything about basing money on gold, David, but merely that it would go up and if his predictions come true that is certainly a possibility.

I do not think either the Euro or USD will end up collapsing here though- I think the EU has too much invested- what will happen is they will probably cut their losses and let Greece and possibly others walk (well they will probably be forced to anyway after they try to imprison Greece with more ridiculous bailouts which are really just high-interest loans in this scenario). The EU will undoubtedly be in some new form or structure in the next decade- it just can't last as it is (ah the naivety of the Euro dream). A Greek default is in the best interests of the people of Greece and in the worst interests of the banks that made loans to Greece- many of them in France and other EU nations which is why everyone but the Greeks seem to be so adamant on bailout.

I know, I was simply pointing out how an increase in the price of gold wasn't actually a good thing as it'll end up pricing itself out of the market before crashing and burning. I then decided to expand on that point as I've seen a lot of talk about going back to the gold standard as of late.

 

[myp]

I know, I was simply pointing out how an increase in the price of gold wasn't actually a good thing as it'll end up pricing itself out of the market before crashing and burning. I then decided to expand on that point as I've seen a lot of talk about going back to the gold standard as of late.

What do you mean by pricing itself out of the market? You mean some investors will get priced out or...? Either way, I don't see why that is necessarily a bad thing for anyone other than those who use gold in production.

Also, historically, gold isn't near its highs in real terms.

 

[David]

What do you mean by pricing itself out of the market? You mean some investors will get priced out or...? Either way, I don't see why that is necessarily a bad thing for anyone other than those who use gold in production.

Also, historically, gold isn't near its highs in real terms.

Gold was smart to get into when it was selling for a few hundred dollars. Now that it's selling for thousands the amount you can buy is so limited (and if you have the money to spend you don't even need gold anyway due to other, safer investments) that it's not much use to invest any more. A major hike in the price (and this economy it doesn't need to be anywhere near it's record) and nobody but the extremely rich (who don't need gold) will be able to afford it. When that happens people stop buying gold, dealers find themselves sitting on tons (literally) of gold they can't sell and gold ends up crashing and burning as the law of supply and demand slams into it. As I said, gold is great for 15 years, crashes, takes 5 years to recover, rinse and repeat. If you can't get in on the ground floor it's a horrible investment and a gold backed currency is just idiotic (Who wants hyper-deflation every decade or so?).

 

[myp]

Gold was smart to get into when it was selling for a few hundred dollars. Now that it's selling for thousands the amount you can buy is so limited (and if you have the money to spend you don't even need gold anyway due to other, safer investments) that it's not much use to invest any more. A major hike in the price (and this economy it doesn't need to be anywhere near it's record) and nobody but the extremely rich (who don't need gold) will be able to afford it. When that happens people stop buying gold, dealers find themselves sitting on tons (literally) of gold they can't sell and gold ends up crashing and burning as the law of supply and demand slams into it. As I said, gold is great for 15 years, crashes, takes 5 years to recover, rinse and repeat. If you can't get in on the ground floor it's a horrible investment and a gold backed currency is just idiotic (Who wants hyper-deflation every decade or so?).

You are assuming that all gold investments purchased or bought are backed by physical gold- that isn't true (in fact the most popular ETF GLD has often been below their gold: price ratio and the investors of the stock of course never see any physical and then you have the futures contracts which have no physical in the present but only an agreement for the future). You also say that there are safer investments and while that is true, most safer investments also won't get you the same return as gold would have over the past year- even after it hit 1200 and the bubble talk grew. And that is even for the rich. Also, a comparison to the 80s bubble shows that today's gold is no where near that height when adjusted for inflation. And as for people not being able to afford gold- that too is not true because people don't buy in troy ounces usually. You can buy less. Heck, as usual the annual Indian wedding season has seen increased demand this year despite the high price and many of those buyers have way less money than the average American.

Again, I'm not arguing that it is good for a currency, but just saying that I don't think some of your predictions are valid. It could potentially still be a good investment depending on one's goals.

 

[Iolo]

The value of gold is a wonderful example of fetishism. Lenin said it would be a very useful material for making public urinals (if my memory serves me aright), and it isn't much use for anything else except bangles and beads. Who says humanity has no sense of tradition?

 

[myp]

The value of gold is a wonderful example of fetishism. Lenin said it would be a very useful material for making public urinals (if my memory serves me aright), and it isn't much use for anything else except bangles and beads. Who says humanity has no sense of tradition?

Value is subjective- it has been long established. What you said applies to paper money too.

 

[Iolo]

Value is subjective- it has been long established. What you said applies to paper money too.

And in a famine, clearly, we could eat either. It is not subjective but dependent upon the certainty that others will treat these valueless commodities as valuable, like art - which might have at least some claim to inherent value.

 

[myp]

And in a famine, clearly, we could eat either. It is not subjective but dependent upon the certainty that others will treat these valueless commodities as valuable, like art - which might have at least some claim to inherent value.

There is no such certainty- it is based on what people value and that is subjective. What has inherent value other than perhaps value itself?

It's the subjective theory of value.

 

[Iolo]

What has inherent value other than perhaps value itself?

Food, for a start. But, in a general way, value arises from the socially necessary labour time expended on commodities.

 

[myp]

Food, for a start. But, in a general way, value arises from the socially necessary labour time expended on commodities.

Food- no. I'll prove it- I might pay a $1 for an apple, but the guy who is allergic, places no value in apples and won't pay anything.

As for labor, are you suggesting that value is based on the labor behind it? The labor theory of value has long been disproven. Again, a quick proof:

2 cupcake makers are making the same cake. One spends an hour to make it, the other spends 3 hours. They are the same cake- the customer doesn't care who spent how much time to make it- he will pay the same amount for either cake. The labor put into it doesn't matter.

 

[Iolo]

Food- no. I'll prove it- I might pay a $1 for an apple, but the guy who is allergic, places no value in apples and won't pay anything.

As for labor, are you suggesting that value is based on the labor behind it? The labor theory of value has long been disproven. Again, a quick proof:

2 cupcake makers are making the same cake. One spends an hour to make it, the other spends 3 hours. They are the same cake- the customer doesn't care who spent how much time to make it- he will pay the same amount for either cake. The labor put into it doesn't matter.

Socially necessary labour time. Something you are allergic to isn't food for you. The Labour theory of value has never been disproved.

 

[myp]

Socially necessary labour time. Something you are allergic to isn't food for you. The Labour theory of value has never been disproved.

Something you are allergic to can absolutely still be food. It just shows that everyone won't place value on it. Take another example- different people like different foods- some value it more than others, some might hate how it tastes and won't eat it. There is no inherent value, it is subjective.

The labor theory of value has long been discredited- there are a couple of valid points in it, but the rest just aren't including the main premise. On socially necessary labor time- at the end of the day the consumer or whoever values an object because of what it is to them, not because of the labor put in, even if it is deemed socially necessary (which in itself is a vague and arguably subjective term). In other words, even the value of the socially necessary labor is subjective.