Tuesday, September 06, 2011
A little monkey wrench into Rot & Pepe's honeymoon plans for Chamonix and Courmayeur
The cost of a weak country leaving the Euro is significant. Consequences include sovereign default, corporate default, collapse of the banking system and collapse of international trade. We estimate that a weak Euro country leaving the Euro would incur a cost of around EUR9,500 to EUR11,500 per person in the exiting country during the first year. That equates to a range of 40% to 50% of GDP. [..] The economic cost is, in many ways, the least of the concerns investors should have about a break-up. Fragmentation of the Euro would incur political costs. Europe’s “soft power” influence internationally would cease (as the concept of “Europe” as an integrated polity becomes meaningless). It is also worth observing that almost no modern fiat currency monetary unions have broken up without some form of authoritarian or military government, or civil war.
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3 comments:
Yeah, civil war in Europe and wild gangs of US citizens rampage in the US.
Which is likelier?
Both are events with low probability p, but, alas, p>0.01 in both cases. But, as usual, you make a logical fallacy (it's almost axiomatic you'll do that), in that you set up a red herring, by comparing an admittedly unlikely, yet terrifyingly possible event (civil war) to a much more mundane thing (mob rampage).
An honest (and logically coherent) comparison would be between mob rampage in, say, France or GB (recurring event, clearly recorded), and mob rampage in the US (somewhat existing, but not to the same level of intensity and mayhem as roasting Renaults in Pepea).
Alternatively, a comparison for the chances of societal breakup in countries with huge level of debt (say, Greece, Italy, and maybe the US pushing to get into that select club?) That would be comparing apples with apples, and oranges with oranges.
But that would be too much to ask. It's easier to throw meaningless boutades à la Pepe than making reasoned, logically consistent points, yes?
Wild gangs are already rampaging in the US.
p=1.
Also, the societal breakup is steaming along pretty well in the US.
Did you read the last Steyn piece you posted or did you shrink at the mental images of muffin tops and body shots?
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