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Author Topic: Eurocollapse, PIIGS, and capital controls  (Read 3645 times)
billyjoeallen
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June 22, 2011, 04:27:32 AM
 #1

It's generally understood that the European Central Bank is merely prolonging the inevitable financial collapse of insolvent countries on its periphery. Giving governments emergency loans when they haven't gotten their spending under control licks the can down the road, but solves nothing. Eventually, the countries of Greece, Ireland, Italy, Spain and Portugal are going to default on their sovereign debt, which in turn will destroy the large international banks holding their I.O.U.s.

We don't know when this will happen exactly, but it will likely happen within a few years if not sooner. This would be a seismic event and might take down the entire global financial system. It's beyond the scope of this post to discuss if this would be a good or bad thing for the global economy in the long term. What is terribly important is for us to recognize the risk and determine the best course of action to take AS INDIVIDUALS when TSHTF. 

When Greece defaults, the government will be able to obtain few if ANY additional loans and even those loans will be at usurious (loan shark) rates. The Greek government will be forced to function on only the money it can obtain through taxation. IT WON'T BE ABLE TO DO THIS. The government will start to crumble. Riots will intensify and capital flight will become torrential. To prevent a run on the nation's banks, capital controls will be implemented. People will be legally prevented from taking their money out of the country.  In desperation, they will physically cross the borders with cash hidden in their shoes. If they get caught, they will lose all their money at a minimum. It's possible they could even be imprisoned.

This isn't theory. This has already happened in some places such as South Africa. It won't just stop in Greece. Debt contagion and capital controls will spread from country to country as the dominoes fall.  People in these countries need to learn about Bitcoin, the best way to safeguard against capital controls.

What's the best way to warn these people of the dangers and to educate them about how Bitcoin could be the solution?   

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Jaime Frontero
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June 22, 2011, 05:14:00 AM
 #2

1. learn greek.

2. locate the financial blogs that seem appropriate.

3. PROFIT!!!
hugolp
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June 22, 2011, 05:55:49 AM
 #3

There is always the option of inflating like hell to save the greeks. In fact, that is exactly what the ECB wanted to do but the european population dont want to pay with higher prices for the mess the greeks got into (which is understandable). But the european politicians and the bankers want to save the greeks so they can keep paying the debts they own.

I have always said that the ECB will talk tought to keep the central-european population happy, but at the end of the dayt it will bail out the PIGS no matter how much inflation it has to create. It will talk tough, but it will NOT act tought.

Either way, default or inflation, Bitcoin is a very good option. I have met a greek in the OTC chat room. There is an european one: #bitcoin-otc-eu . I am sure you can find someone from Greece there.
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June 22, 2011, 06:08:04 AM
 #4

I tend to think Bitcoin is in a very early stage still, and unfortunately cannot work in the coming collapse of our countries.

Think that the value that people (at large) assign to Bitcoin is the value of the exchanges, and the exchanges need the current banking system to be able to work. This is the only way at the moment to spread adoption and usage.

If Greece collapses, the banking system goes out the window as well, so who would have a way to objectively determine the value of a bitcoin? What good would it do to get a 100$ quote for a BTC on Tradehill, if I cannot actually execute this trade because fiat money cannot be moved around since banks are closed for business.

It takes years of wide adoption for a new currency to get a balanced fair value on the market. We've had this in Greece with hyperinflation after the German Occupation in WW II. People were giving out a gold sovereign for a pair of shoes or half a dozen eggs, because they could not negotiate prices, since they did not know what the fair value of gold was.

So, all in all, this is a nice thought, but like our bailouts it's "too little, too late". And Jaime's post above shows exactly how we are being treated (no offense to you Jaime). Last thing we want is another bailout, from Bitcoin miners this time. Wink All those who are "saving" the country right now, are in it for the sweet deals.

We might just as well get a hard-backed currency and give up our Internet connectivity. Simple and tried.

In any case, time will tell. I might be wrong.

I am thinking of proposing to the admins a Greek subforum, I just don't have that many posts to support my position.


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Jaime Frontero
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June 22, 2011, 05:06:26 PM
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I tend to think Bitcoin is in a very early stage still, and unfortunately cannot work in the coming collapse of our countries.

Think that the value that people (at large) assign to Bitcoin is the value of the exchanges, and the exchanges need the current banking system to be able to work. This is the only way at the moment to spread adoption and usage.

If Greece collapses, the banking system goes out the window as well, so who would have a way to objectively determine the value of a bitcoin? What good would it do to get a 100$ quote for a BTC on Tradehill, if I cannot actually execute this trade because fiat money cannot be moved around since banks are closed for business.

It takes years of wide adoption for a new currency to get a balanced fair value on the market. We've had this in Greece with hyperinflation after the German Occupation in WW II. People were giving out a gold sovereign for a pair of shoes or half a dozen eggs, because they could not negotiate prices, since they did not know what the fair value of gold was.

So, all in all, this is a nice thought, but like our bailouts it's "too little, too late". And Jaime's post above shows exactly how we are being treated (no offense to you Jaime). Last thing we want is another bailout, from Bitcoin miners this time. Wink All those who are "saving" the country right now, are in it for the sweet deals.

We might just as well get a hard-backed currency and give up our Internet connectivity. Simple and tried.

In any case, time will tell. I might be wrong.

I am thinking of proposing to the admins a Greek subforum, I just don't have that many posts to support my position.



it's a good idea.  quite timely - and a good riff off Bitcoin and current affairs.

you don't need 'posts' to support a good idea - all you need is the idea.

send a PM to theymos...
billyjoeallen
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June 22, 2011, 09:20:21 PM
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I tend to think Bitcoin is in a very early stage still, and unfortunately cannot work in the coming collapse of our countries.

Think that the value that people (at large) assign to Bitcoin is the value of the exchanges, and the exchanges need the current banking system to be able to work. This is the only way at the moment to spread adoption and usage.

If Greece collapses, the banking system goes out the window as well, so who would have a way to objectively determine the value of a bitcoin? What good would it do to get a 100$ quote for a BTC on Tradehill, if I cannot actually execute this trade because fiat money cannot be moved around since banks are closed for business.

It takes years of wide adoption for a new currency to get a balanced fair value on the market. We've had this in Greece with hyperinflation after the German Occupation in WW II. People were giving out a gold sovereign for a pair of shoes or half a dozen eggs, because they could not negotiate prices, since they did not know what the fair value of gold was.

So, all in all, this is a nice thought, but like our bailouts it's "too little, too late". And Jaime's post above shows exactly how we are being treated (no offense to you Jaime). Last thing we want is another bailout, from Bitcoin miners this time. Wink All those who are "saving" the country right now, are in it for the sweet deals.

We might just as well get a hard-backed currency and give up our Internet connectivity. Simple and tried.

In any case, time will tell. I might be wrong.

I am thinking of proposing to the admins a Greek subforum, I just don't have that many posts to support my position.

It doesn't matter that Bitcoin is in the early stages. Greeks can buy bitcoin for Euros NOW and they should, because later it will be too late. The refugees will be able to trade Bitcoin for whatever local currency they need. If they choose to stay in Greece, then they will need physical euros or gold but capital controls won't be their biggest problem.

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timmeyh
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June 22, 2011, 10:53:50 PM
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One of the huge things that will suffer if the € collapse is the $ since it's kept lower than the € to generate more european revenue.
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June 22, 2011, 10:58:52 PM
 #8

This isn't theory. This has already happened in some places such as South Africa. It won't just stop in Greece. Debt contagion and capital controls will spread from country to country as the dominoes fall.  People in these countries need to learn about Bitcoin, the best way to safeguard against capital controls.

What's the best way to warn these people of the dangers and to educate them about how Bitcoin could be the solution?   

I am from South Africa and what you talk about here I cannot relate to? When did this happen in South Africa ?

This might be bit of topic but if you are going to point to South Africa without actual proof Id prefer you dont.

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June 23, 2011, 01:39:03 AM
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If Greece collapses, the banking system goes out the window as well, so who would have a way to objectively determine the value of a bitcoin? What good would it do to get a 100$ quote for a BTC on Tradehill, if I cannot actually execute this trade because fiat money cannot be moved around since banks are closed for business.

Would you rather have the banks closed and all your savings disappear, or the banks closed and your savings safe in a deflationary currency? Just because the banks are closed today does not mean they will be so tomorrow.
billyjoeallen
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June 23, 2011, 05:18:45 AM
 #10

This isn't theory. This has already happened in some places such as South Africa. It won't just stop in Greece. Debt contagion and capital controls will spread from country to country as the dominoes fall.  People in these countries need to learn about Bitcoin, the best way to safeguard against capital controls.

What's the best way to warn these people of the dangers and to educate them about how Bitcoin could be the solution?   

I am from South Africa and what you talk about here I cannot relate to? When did this happen in South Africa ?

This might be bit of topic but if you are going to point to South Africa without actual proof Id prefer you dont.

I refer to Ilana Mercer of Ilanamercer.com. If you search her archives, you will find her 1st person account of her escape with her life savings in her shoes. Or message her. She will confirm the story.

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3phase
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June 23, 2011, 05:43:29 AM
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Well, I can only say watch this space.

We are about to soon find out how Bitcoin would work in the case of a sovereign default and all that goes with it.

Maybe this will turn out as a big historical record for this community.

I'll keep you posted.


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hugolp
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June 23, 2011, 05:59:44 AM
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Well, I can only say watch this space.

We are about to soon find out how Bitcoin would work in the case of a sovereign default and all that goes with it.

Maybe this will turn out as a big historical record for this community.

I'll keep you posted.

What you should try to do is convince a community of farmers to accept bitcoins. If people can buy food for bitcoins then they will have a powerful reason to use bitcoins, sepcially during a collapse.
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June 23, 2011, 06:06:19 AM
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This isn't theory. This has already happened in some places such as South Africa. It won't just stop in Greece. Debt contagion and capital controls will spread from country to country as the dominoes fall.  People in these countries need to learn about Bitcoin, the best way to safeguard against capital controls.

What's the best way to warn these people of the dangers and to educate them about how Bitcoin could be the solution?    

I am from South Africa and what you talk about here I cannot relate to? When did this happen in South Africa ?

This might be bit of topic but if you are going to point to South Africa without actual proof Id prefer you dont.

I refer to Ilana Mercer of Ilanamercer.com. If you search her archives, you will find her 1st person account of her escape with her life savings in her shoes. Or message her. She will confirm the story.

You do know whatever she talks about is absolute horseshit right? And what does her ordeal have to do with financial meltdown?

I find it fascinating that she had to "escape with her money in her shoes" from South Africa, must have been some paradigm shift cause the other 99.9% didnt have to ESCAPE, her story sounds like absolute FUD to sell a book.

I see she had to escape as a daughter of anti-apartheid activist and Im sure there had to be parts of the government back then in the 60'-70' that would chase down activitist but again what you describe about financial meltdowns and comparing south africa as example is completely wrong since back then our Rand traded better than the Pound due to the gold standard pretty much favouring us outright.

This discussion is about market/currency crashes and using that era for your example is strange, since as I said, have a look at the Rand value back then and you would find it was the absolute opposite.

As a white women I can assure you from apartheid pov she had a good life, Apartheid in SA ended effectively around 1985 where blacks and whites allready started living among each other except there was a huge cultural and economic gap still (ie. white rich and black people would live in similar neighbourhoods)

Lots of the information received in mass media in america is absolute bullshit propaganda, apartheid in SA didnt end in 1994, that was just the start of turning over the country to the majority(xhosa in this case) and had nothing to do with the proclaimation overseas that SA slave camp apartheid era is over.

I think you should read up more from other sources who doesnt have a financial benefit aka ilana mercer is selling a book, and find out more about when/what and where about South African history and youd be surprise to learn about what happened back then and what is happening now.

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June 23, 2011, 08:28:49 AM
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What's the best way to warn these people of the dangers and to educate them about how Bitcoin could be the solution?   

So instead of the government steal the money through inflation or forced exchange for drachmas, you propose they should voluntarily give up their money now to the holders of bitcoins. Brillant !
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June 23, 2011, 11:45:50 AM
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The South African economy has been pretty stable - no great shakes but no collapse.  Huh

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June 23, 2011, 12:21:21 PM
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What you should try to do is convince a community of farmers to accept bitcoins. If people can buy food for bitcoins then they will have a powerful reason to use bitcoins, sepcially during a collapse.

Exactly what I was thinking. My mother actually lives in a village, and we have already discussed moving in with her if trouble gets unbearable. There is a community of farmers and animal breeders there, which would be the best possible scenario to start working with alternative currency. Getting as close as possible to native food production seems very important in such times.

I had a talk with some people there few months ago and they told me verbatim:

"If there is an economic collapse, and subsequent riots, hyperinflation, etc. do you think any one of us will be loading a truck with products and come to Athens to sell them? No fucking way!"

I was also thinking that a localised attempt (say within a 25km radius) would have much better chances, because there is already a "web of trust" in the society there. Trying to work with bitcoins in a city like Athens (4M people) or the whole country seems too futile to start with, too much risk, too many unknowns.

Thanks for sharing your thoughts !!!

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June 23, 2011, 12:28:20 PM
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The South African economy has been pretty stable - no great shakes but no collapse.  Huh

Capital controls can be imposed for other than economic reasons. In the mentioned case, it was political, but  the two are never entirely separate. The post-apartheid government was concerned about capital flight, but they relaxed the controls when  the danger passed. Note what actually happened: the government gave the illusion of freedom, but they put the chains on when there was a danger of people actually exercising that freedom. I'm not picking on South Africa. Almost all governments behave this way.

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June 23, 2011, 01:02:06 PM
 #18

A default from the PIGS would be the optimistic grand-finale for this tragedy. I am not that optimistic, I think the chances of the BCE monetizing the Greek debt are high, what would be worse.

My "optimistic hope" is regarding other euro-zone countries, whose populations have made clear they do not want to bailout foreign governments. I wonder if the Finish for example would attempt to leave the euro-zone. And if they did, what would be the consequences? Would other countries follow? If Germany drops the euro, it's the end of the common currency... and the Germans are precisely those who are paying the most to bailout these broken governments.

Here's a very interesting text about the euro, and why it is a self-destructive system: http://mises.org/daily/5331/The-EMU-as-a-SelfDestroying-System

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June 23, 2011, 01:08:18 PM
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The South African economy has been pretty stable - no great shakes but no collapse.  Huh

Capital controls can be imposed for other than economic reasons. In the mentioned case, it was political, but  the two are never entirely separate. The post-apartheid government was concerned about capital flight, but they relaxed the controls when  the danger passed. Note what actually happened: the government gave the illusion of freedom, but they put the chains on when there was a danger of people actually exercising that freedom. I'm not picking on South Africa. Almost all governments behave this way.

I understand your not picking on South Africa however I think you are very naive on what you think you know about South Africa as reported by one person you seem to believe whole heartedly.

You didnt respond to me regarding the value of the Rand to other world currencies during the period you mentioned Ms Mercer fled with cash in her shoes? The Rand was more valuable at this time than any of the other world currencies, did her book tell you that aswell?

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June 23, 2011, 04:12:25 PM
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There are only two commodities that can help the average Greek preserve their purchasing power right now: gold and silver.  I would wager Bitcoin is unknown by 99% of the population.

The irony of the Greek people's reactions over their nation's dire financial state is that they themselves and their democratically elected government caused the problem.  They cheated their way into the Euro by hiding their debts (courtesy of Goldman Sachs) and continue to look upon Europe to save them while tax evasion remains a virtual national sport.  The whole 'Greece is the cradle of Democracy, Plato, Socrates, etc' angle won't save them either.  The rest of Europe only cares about Greece as their banks are emroiled in the whole mess.

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