Euro Area

[Sir Moody]

make your mind up - you declared the NHS free not so long ago :inquisitive:

look lets define it as it was probably intended when Kagemusha originally asked the question and you declared "everything" free

yes the NHS is paid for by taxes - but to the individual it is free - you don't pay directly for the care you recieve unless you chose to opt for private care - society pays via tax which is very indirect and pays for more than just the NHS

this is not true of the higher education system - the individual (and their parents) directly pay for the services rendered as well as indirectly via tax

whether they pay that back or not isn't the point - they are required to take out a loan to pay it

it isn't free

you would have been better saying free up until Higher Education

[Philippus Flavius Homovallumus]

make your mind up - you declared the NHS free not so long ago :inquisitive:

look lets define it as it was probably intended when Kagemusha originally asked the question and you declared "everything" free

yes the NHS is paid for by taxes - but to the individual it is free - you don't pay directly for the care you recieve unless you chose to opt for private care - society pays via tax which is very indirect and pays for more than just the NHS

this is not true of the higher education system - the individual (and their parents) directly pay for the services rendered as well as indirectly via tax

whether they pay that back or not isn't the point - they are required to take out a loan to pay it

it isn't free

you would have been better saying free up until Higher Education

To all intents and purposes it is as "free" as it ever was. There is no practical difference between the loan and the old grant, except that the graduate is the only one paying higher taxes.

For the NHS you pay National Insurrence, it is not "indirect", it comes out of your paycheck before even income tax. The Student loan works exactly the same way, but you only pay it if you actually go to university.

[Sir Moody]

we seem to be fundamentally disagreeing on what Free is when it comes to Government services - nothing is free and I do realise that

Free means the Government pays the "tab" for any individual service - for example if I were to develop cancer the NHS would foot the bill and society as a whole pays the bill back via taxes - while yes I would contribute to the payment via my own taxes I would have paid those regardless of the illness - this means the NHS is socially funded and thus is free

The University system of my parents age worked the same way - they received a grant which didn't have to be paid back - society would pay back the cost of their education via taxes (which of course they went on to pay themselves)

The new system doesn't work like that at all - you pay upfront for your education in the form of fees - in order to pay the fees you (unless you are independently wealthy enough) are required to take out a loan which will be paid back directly out of you pay packet once you reach a set income threshold - until that point the loan (because it is a loan) builds interest. While the Government still foots some of the bill the individual pays for his own education in some respect - i.e. it isn't entirely society funded - it isn't free

now I am going to stop now I hope I got my point across...

on a side note I don't disagree with the idea University students should pay the money back themselves (while I disagree with the loan system in place I am not against fees) I am fundamentally disagreeing with your statement to Kagemusha

[Furunculus]

I have to say that sometimes i dont get you Brits, to be more precise the conservative ones. How can you even compare French public spending or in matter of fact any spending on the continent to British spending? What does your government give back in return to the tax payer compared to any of the continental European governments?
While continental tax payers pay taxes to get free education, decent welfare and pensions. All i hear from you is howling of Thatcherism: Privatize everything!Run taxes to the ground!Anything for the market! Anything!:on_redcard:

it is quite elementary:

An advanced western economy, facing relative technological and demographic decline, should not be spending more than 40% of GDP lest it do serious damage to the long-term growth rate that will preserve the standard of living we enjoy for our children too:

http://ime.bg/uploads/OptimalSizeOfGovernment.pdf

If we accept that spending can fluctuate around 7%must look to spend just 33% of GDP at its peak, with a median value of no more than 36%.............. like we achieved in the nineties.

So to a degree we are going to have to get used to the idea of government doing less for us because having a public debt equivalent to 400% of GDP by 2040, and using 15% of GDP each year to service debt interest, is clearly not a happy future:

http://www.bis.org/publ/work300.pdf

so, if you cannot achieve everything you might like the state to do within a 'mere' 36% of GDP accept that it will do less, otherwise we will destroy the long-term growth that will preserve the standard of living we enjoy today for our children tomorrow.

[Vladimir]

so, if you cannot achieve everything you might like the state to do within a 'mere' 36% of GDP accept that it will do less, otherwise we will destroy the long-term growth that will preserve the standard of living we enjoy today for our children tomorrow.


Why does it seem that so many want to preserve the standard of living? Why not improve it? Preservation is stagnation is decline. Who's going to lead into the future?

[Kagemusha]

it is quite elementary:

An advanced western economy, facing relative technological and demographic decline, should not be spending more than 40% of GDP lest it do serious damage to the long-term growth rate that will preserve the standard of living we enjoy for our children too:

http://ime.bg/uploads/OptimalSizeOfGovernment.pdf

If we accept that spending can fluctuate around 7%must look to spend just 33% of GDP at its peak, with a median value of no more than 36%.............. like we achieved in the nineties.

So to a degree we are going to have to get used to the idea of government doing less for us because having a public debt equivalent to 400% of GDP by 2040, and using 15% of GDP each year to service debt interest, is clearly not a happy future:

http://www.bis.org/publ/work300.pdf

so, if you cannot achieve everything you might like the state to do within a 'mere' 36% of GDP accept that it will do less, otherwise we will destroy the long-term growth that will preserve the standard of living we enjoy today for our children tomorrow.

And why should i take the word of some Bulgarian economists as final word on the issue, or a research made by an investment bank? How do you create the correlation between percentage of GDP created by government spending and public debt percentage of GDP?

For example US is a country with very low government spending, akin to 38.9% of GDP, meanwhile their debt in comparison is 102.94% of their annual GDP. Another example is Sweden with Governmental expenditure of 52.5% of GDP, while their debt in comparison is 37.44% of their GDP.

So are you suggesting that Swedes are destroying their economy compared to US?

[Brenus]

“Why don't we base all policies on case studies... Because they are statistically worthless.” Yeap, statistic, good idea… I prefer human beings, sorry… Not worth that a 20 years old try to save a 2 months old baby, it is not rational.
And you probably know that statistics are in fact, manipulation (again see USSR, chapter GOSPLAN)

“Foundations want to increase their funds and reduce costs” What I said. So they will find that cutting staff has no effect what so ever on efficiency… They lie.
“As you said simple... So simplistic to be irrelevant.” Good use of vocabulary: Simple = simplistic. That was the subject of my research, use of vocabulary to twist and manipulate concept. Try again.

“Clearly nothing as base as facts are going to alter you”: Facts? You provide no fact. You mix facts and Statistic produced by those who have interest in the bargain… Well done. You and I have obviously a different definition of facts.

“Best you stick to what you've heard in the Mail and a mate at the pub said.” Ah, you are losing your temper: I can’t heard the Mail (again, use of vocabulary, not that good this time, even if using mate is quite good even if I don’t go to pub. Sorry.)
I could be as much insulting that you are but I won’t because insults dishonoured only the ones who use them (Confucius).
Sorry, I hate to be patronized.

“Everything that doesn't agree with you is clearly wrong.” Everything? No. If you come with real facts (you could have come with the improvement of technology that makes the need for staff less important) or even a good intellectual demonstration I will agree.As for facts, I was one who didn’t believe mobile phones would take off. I was clearly wrong. But coming with scorn and disdain don’t work with me.

[rory_20_uk]

To recap - anything that doesn't follow your views are wrong. All you have - or need is things that back up what you think.

Your example gave less drivers than trucks. If that's not simplistic, what is - given the previous topic was the running of a Foundation trust.

"Real" facts? what, exactly? Clearly none that are compiled by the DoH, the NHS or probably anyone who compiles them are sufficient.

Real facts?
Sorting out staff rotas so theatres that are in fact closed for the last 2 hours of shifts do not have a full compliment of nursing staff doing nothing.
Giving consultants electronic dictaphones in outpatient clinics and shedding the dictation pool - faster letters and more staff for general admin
Drugs that can be given faster - as opposed to an 8 hour stay, same dose in 15 minutes. Even allowing for set up time vastly increased patient throughput. staffing the same, as the first patient needs constant monitoring.

Oh, but I made these all up, right?

~:smoking:

[Furunculus]

And why should i take the word of some Bulgarian economists as final word on the issue, or a research made by an investment bank? How do you create the correlation between percentage of GDP created by government spending and public debt percentage of GDP?

For example US is a country with very low government spending, akin to 38.9% of GDP, meanwhile their debt in comparison is 102.94% of their annual GDP. Another example is Sweden with Governmental expenditure of 52.5% of GDP, while their debt in comparison is 37.44% of their GDP.

So are you suggesting that Swedes are destroying their economy compared to US?

it is simple, and related only casually to the same bad politics that results in enormous debt from running persistant deficits:

high spending, as a proportion of GDP, results in low GDP growth. it is that simple:

http://blogs.telegraph.co.uk/finance/andrewlilico/100016769/why-does-cutting-government-spending-mean-faster-growth/


I've said this quite often in the past, and when I do people sometimes ask why I believe economies grow faster if government consumption spending is less. After all, government consumption spending is one component of GDP, so on the face of it one might think that if the government consumes less, GDP will be less. There have been numerous studies conducted since the 1970s on the relationship between government spending and GDP and the finding is overwhelming* and clear**: once government spending rises above about 25 per cent of GDP, for each additional percentage point of GDP the government spends, growth is around 0.1-0.15 per cent lower per year.

* http://www.policyexchange.org.uk/images/publications/controlling%20spending%20and%20government%20deficits%20-%20nov%2009.pdf
** http://www.policyexchange.org.uk/images/publications/the%20cost%20of%20inaction%20-%20apr%2010.pdf

europe has got away with it for the last fifty years because of healthy demographics and a technological superiority that preserves high-margin return on business.

britain and france still have healthy demographic profiles................... but they are not what they were and we still have an increasing number of dependents to workers, but most of the rest of europe is shafted, germany, italy and spain included!

likewise, our technological advantage has similarly eroded, as evidenced by the fact that manufacturing makes up just 12% of GDP for both Britain and France. british IP is still cited in 13% of high-level research worldwide, can belgium say the same?

any other european nation deserves a BIG HEARTY "LOL" if it thinks it can continue with high gov't spending into the middle of teh 21st century........... unless it is intentionally trying to return the standard of living to sumething similar to bulgaria 'enjoys' today.

Britain will return to circa 38% of GDP in the next ten years, and stay there, and the result vis-a-vis our continental neighbours will be stark:
http://www.carnegieendowment.org/files/World_Order_in_2050.pdf
http://www.google.co.uk/url?sa=t&source=web&cd=1&ved=0CBkQFjAA&url=http%3A%2F%2Fwww.research.hsbc.com%2Fmidas%2FRes%2FRDV%3Fao%3D20%26key%3Dej73gSSJVj%26n%3D282364 .PDF&rct=j&q=HSBC%20the%20world%20in%202050%20pdf%5D&ei=4813TYTFFYy4hAfppaH-Bg&usg=AFQjCNFz0oZr7CF02AJkNDddtW2HyznvrQ&cad=rja&cad=rja
http://www.nber.org/~wbuiter/3G.pdf
http://www.arbuthnotgroup.com/uploads/9.1.12.pdf

[gaelic cowboy]

Kidding me, why don't you google the ESM.


Not ratified here and already broken in Spain the ESM is a busted flush.

[gaelic cowboy]

Someone googled the ESM yet. Gentlemem it's unacountable


It's a pipe dream and it's implementation could sink not just tte PIIGS but potentially even the core.

[Kagemusha]

Furunculus, You are simply toting the same Thatcherian principles i mentioned before in earlier post. You are bringing up ideas of certain click as some sort of "truth".

If your line of thought was without faults.Your equation would actually work, but it does not. If you look at the list of most competitive countries in the world.You see it dominated by countries that base their economies in mixed economy.Take a look:

http://www3.weforum.org/docs/WEF_GCR_CountryProfilHighlights_2011-12.pdf

The mantra about public spending in all its forms being bad and drive of privatization of as much of public spending as possible, is not a new thing. Some like to sing it, some dont. To me the future of Western economies is not lowering its standards in the level of other parts of world in order to compete in basic production and low profit manufacturing. It will do nothing but initiate a downward spiral for majority while creating a larger surplus for few.

To me the key to success in future is social mobility, so all the human resources available will be used as well as possible. For this we need good education chances for both youths and adults in terms of adult education, healthcare and good safety network against unemployment, so we will not alienate possible work force from the market. For all this we need public spending, as profit making companies are not able to ever fill this place, as it is against their very nature to divert resources from avenues creating immediate profit. Nor such should be ever even demanded from them.

[fret]

So are you suggesting that Swedes are destroying their economy compared to US?

Nothing to do with % GDP to Govt. spending ratio, but the Swedes did destroy their ecomony in the early 90's, pretty badly.

Dodgy speculative bank and stock practices and a housing bubble if I recall correct.

Hmmm, Im starting to see a pattern emerge here, I wonder if there could be a connection... :D

[Furunculus]

Nothing to do with % GDP to Govt. spending ratio, but the Swedes did destroy their ecomony in the early 90's, pretty badly.

Dodgy speculative bank and stock practices and a housing bubble if I recall correct.

Hmmm, Im starting to see a pattern emerge here, I wonder if there could be a connection... :D

not to mention that the swedish economy is greatly liberalised compared to where it was before the crash, and that they now spend around 45% of GDP (and declining) rather than the 55% of GDP in the pre-crash days.

http://www.spectator.co.uk/essays/7779228/swedens-secret-recipe.thtml

[Furunculus]

Furunculus, You are simply toting the same Thatcherian principles i mentioned before in earlier post. You are bringing up ideas of certain click as some sort of "truth".

If your line of thought was without faults.Your equation would actually work, but it does not. If you look at the list of most competitive countries in the world.You see it dominated by countries that base their economies in mixed economy.Take a look:


kaga, i have seen nothing to persuade that the statement below is not true:

once government spending rises above about 25 per cent of GDP, for each additional percentage point of GDP the government spends, growth is around 0.1-0.15 per cent lower per year.

plus, the points about demographics are definately a post thatcher phenomamen, and only serve to compound our growth problem.

[Kagemusha]

Double post.

[Vladimir]

In that case.Shouldnt the governments spending that magic 25% be the ones with most competitive economies? But they arent? How do you explain this oxymoron?

That's not a serious question, is it?

[Kagemusha]

kaga, i have seen nothing to persuade that the statement below is not true:


plus, the points about demographics are definately a post thatcher phenomamen, and only serve to compound our growth problem.

In that case.Shouldnt the governments spending that magic 25% be the ones with most competitive economies? But they arent? How do you explain this oxymoron? Lets look at countries with public spending in range of 25% of GDP:

Nicaragua,Fiji,Equatorial Guinea, Tanzania and Suriname. :laugh4:


That's not a serious question, is it?

Well if there is a ideal size of Public spending, why such percentage does not benefit the countries having such percentage?

[Sasaki Kojiro]

Is this a competition about how much you can get other people to pay for your education?

Europeans express their nationalism by comparing how progressive their social institutions are.

[Vladimir]

Well if there is a ideal size of Public spending, why such percentage does not benefit the countries having such percentage?

Actually my question wasn't a serious question. You obviously know that economies are incredibly complex and affected by a number of factors. You're also constructing a, strawman, is it? He stated that is the rough percentage for *best* growth (or least damage?), not that spending at that level equals prosperity.

Governments don't make money, they take it and spend it. The more it takes the more is lost through normal inefficiency. Even if a company or profit-making venture is wholly owned and controlled by a government it is still a business, and runs best under the private sector you despise.


Europeans express their nationalism by comparing how progressive their social institutions are.

I know, right? I don't like upsetting people but also don't understand how someone can be so interested in preserving their culture, or feel so entitled that they think it's right for someone to take so much by force, and give it to others based merely on citizenship.

[Furunculus]

In that case.Shouldnt the governments spending that magic 25% be the ones with most competitive economies? But they arent? How do you explain this oxymoron? Lets look at countries with public spending in range of 25% of GDP:

Nicaragua,Fiji,Equatorial Guinea, Tanzania and Suriname. :laugh4:

you do realise that competitiveness (however we choose to define it) and GDP growth are not in fact the same thing?

25% might create optimal growth, but it comes with many social downsides that most modern representative democracies will not accept, however, there is a recommended ceiling for a modern western economy linked in the pdf above. It said 40%. I haven't seen any evidence from you to persuade me that it is essentially wrong............................

if you wish to pick silly examples unrepresentative of aging and declining western nations then i shall pick one too; singapore.

there are four different projections of gdp out to 2050 linked above, let me know how well the high-spending contiental countries are faring forty years hence.

[Kagemusha]

Sasaki, thanks for pointing that out. I guess we have come a long way from medieval times. It could be that those two great butchers of 20th century have also helped a bit.:on_harhar:


Actually my question wasn't a serious question. You obviously know that economies are incredibly complex and affected by a number of factors. You're also constructing a, strawman, is it? He stated that is the rough percentage for *best* growth (or least damage?), not that spending at that level equals prosperity.

I have to plead guilty as charged. To me giving an abstract percentage and making it somehow "perfect" without further details.Is just too abstract to let pass. Im unlucky in that sense that i believe such percentage does not exist as there are several aspects to consider with public spending and the cultural aspects are one of the decisive ones.


Governments don't make money, they take it and spend it. The more it takes the more is lost through normal inefficiency. Even if a company or profit-making venture is wholly owned and controlled by a government it is still a business, and runs best under the private sector you despise.

With this line of thought for example Nordic countries would be among the poorest among the World. Or in matter of fact any countries with Social Market economies. Which means majority of "Western" Nations. Is this the case? And why it isnt? The government is what it is created for. In a sense i agree with you.In other sense i do not agree with you at all.
The Public government, both in national and local level is good for providing essential services. Like for example: Military, Police and firemen. Now i hope in this we can agree?

Why? In my opinion, because these services are not based on idea of profit, but decided by quality of service. As im an Euro Weenie and you are Yankee devil, we dont agree upon education, healthcare and quite likely unemployment benefits plus the other social political aspects of government. To me this is a cultural difference. The same applies with the UK conservatives in lesser sense.

So we are deadlocked in these issues. Other side claims that limiting the government spending to absolute minimum is guarantee for better efficiency. Other side doesnt. Let me ask you this question:

With a private service provider. From where does the profit stem from? If we say that profit constructs from the better efficiency of private firm compared to less efficient public provider. Do you in the end get the same service then i do? The only difference being that in my case the government with its lack of cost efficiency looses some of my money along the way, while in your case the difference goes to firm as a profit.

I can accept such scenario generally, but the nuances are what matter the world. Can government be just bit less wasteful in order to provide a superior service, can the need for profit in order to make the business profitable jeopardize the quality of service?

Interesting questions indeed, but unlike Furunculus i dont have a black and white "truth" to give about the issue. Btw i really dont hate private firms that much. Im after all a project manager for one myself. So i get paid for maximizing profits.:on_come:

[Furunculus]

Interesting questions indeed, but unlike Furunculus i dont have a black and white "truth" to give about the issue.
i stick with facts and figures. ;)

[Kagemusha]

you do realise that competitiveness (however we choose to define it) and GDP growth are not in fact the same thing?

25% might create optimal growth, but it comes with many social downsides that most modern representative democracies will not accept, however, there is a recommended ceiling for a modern western economy linked in the pdf above. It said 40%. I haven't seen any evidence from you to persuade me that it is essentially wrong............................

if you wish to pick silly examples unrepresentative of aging and declining western nations then i shall pick one too; singapore.

there are four different projections of gdp out to 2050 linked above, let me know how well the high-spending contiental countries are faring forty years hence.

I do understand that they are not. But do you understand that while you claim 25% spending allows optimal growth.The statistics say otherwise.It doesnt. Countries with such public spending are not growing optimally, as growth is build from large number of factors.

Now you give Singapore as example.Lets have a look:

percentage of public spending of GDP: 17.1%

percentage of debt of GDP: 118.2%

If anyone is interested similar figures with percentage of debt compared to GDP are sporting Ireland, Greece,Iceland and Portugal. So essentially Singapore is an Asian trade hub created with debt,just like some of the fore mentioned countries of Europe tried to become. And this is something we all should thrive for?

About 50 years.If we are still both alive then lets talk about it then.

[Vladimir]

SasakiSo we are deadlocked in these issues. Other side claims that limiting the government spending to absolute minimum is guarantee for better efficiency. Other side doesnt. Let me ask you this question:

With a private service provider. From where does the profit stem from? If we say that profit constructs from the better efficiency of private firm compared to less efficient public provider. Do you in the end get the same service then i do? The only difference being that in my case the government with its lack of cost efficiency looses some of my money along the way, while in your case the difference goes to firm as a profit.

I can accept such scenario generally, but the nuances are what matter the world. Can government be just bit less wasteful in order to provide a superior service, can the need for profit in order to make the business profitable jeopardize the quality of service?

Interesting questions indeed, but unlike Furunculus i dont have a black and white "truth" to give about the issue. Btw i really dont hate private firms that much. Im after all a project manager for one myself. So i get paid for maximizing profits.:on_come:

I was going to let you have the last word because your reply was so beautiful. However, because you asked...~;p Plus, keep in mind that I wholly support the people of each country being able to decide how their country is run; so long as they let people leave (Cold War, I'm old). I write from the basis that I want a thriving, not comfortable, Europe because we generally share the ideals I believe are right. Europe will never thrive with the culture you advocate.

Like you said, it comes down to cultural differences. Profit-making ventures are not there to solely provide a service. I don't want to get into the weeds about the role of the private sector vs government. What I want is for you people to start making history again. Flying cars would be nice but Europe, Scandinavia, whatever, should be more than a comfortable vacation spot.

[Kagemusha]

Vlad, If you want to contact the "thrive or die department" of Euro´s.You need to go and talk to the federalist loonies.With their Europa uber alles visions.:on_sing: Maybe im getting old, but my interest towards larger then life goals is fading.There is quite enough interesting things in normal life as it is.:bow:

[Brenus]

“Sorting out staff rotas so theatres that are in fact closed for the last 2 hours of shifts do not have a full compliment of nursing staff doing nothing.
Giving consultants electronic dictaphones in outpatient clinics and shedding the dictation pool - faster letters and more staff for general admin
Drugs that can be given faster - as opposed to an 8 hour stay, same dose in 15 minutes. Even allowing for set up time vastly increased patient throughput. staffing the same, as the first patient needs constant monitoring.”
See, when you want. It is not difficult. These are facts.

“To recap - anything that doesn't follow your views are wrong” Most of the time. Err, do you defend a position you know as wrong? If yes, it may explain things.

“Your example gave less drivers than trucks.” All right, I should have put more drivers and fewer trucks…
But you still don’t explain why this simple example is not efficient in showing that number of staff has an impact on operational decision. I could have taken from the Army (as not enough Troopers in Iraq or Afghanistan was one of the reasons of the spread of the insurgency). To me, it is obvious that if you have less nurses they won’t be able to talk and care of the patients. But you can dismiss this as it is my sister (being a nurse for 30 years) who told me and she is not statistic.

[Sarmatian]

i stick with facts and figures. ;)

Not meaning to derail, but what are you by trade?

[rory_20_uk]

“Sorting out staff rotas so theatres that are in fact closed for the last 2 hours of shifts do not have a full compliment of nursing staff doing nothing.
Giving consultants electronic dictaphones in outpatient clinics and shedding the dictation pool - faster letters and more staff for general admin
Drugs that can be given faster - as opposed to an 8 hour stay, same dose in 15 minutes. Even allowing for set up time vastly increased patient throughput. staffing the same, as the first patient needs constant monitoring.”
See, when you want. It is not difficult. These are facts.

“To recap - anything that doesn't follow your views are wrong” Most of the time. Err, do you defend a position you know as wrong? If yes, it may explain things.

“Your example gave less drivers than trucks.” All right, I should have put more drivers and fewer trucks…
But you still don’t explain why this simple example is not efficient in showing that number of staff has an impact on operational decision. I could have taken from the Army (as not enough Troopers in Iraq or Afghanistan was one of the reasons of the spread of the insurgency). To me, it is obvious that if you have less nurses they won’t be able to talk and care of the patients. But you can dismiss this as it is my sister (being a nurse for 30 years) who told me and she is not statistic.

I never said clinical staff.

And even with clinical staff, it is possible having nurses and doctor running around in circles completing pointless paperwork rather than patient contact. In cases such as this, sorting out the administrative mess might result in less staff - BUT those that are left can concentrate on patients rather than fighting the contortions of the system.

I would also say that a lot of what nurses do can be done by healthcare assistants - providing the human face to medicine - whilst the nurses can do what requires training, such as medication, wound treatment etc. Thus patient experience could be improved whilst costing less, as one can probably have two healthcare assistants instead of a nurse and still have a saving.

~:smoking:

[Brenus]

“Thus patient experience could be improved whilst costing less, as one can probably have two healthcare assistants instead of a nurse and still have a saving.” There, I agree. It not the cutting that makes the difference, it is the allocation of the workforce to the task they are trained for. The problem of course if the Conservative cut in the administrative staff, so the clinical staff is obliged to do the necessary paperwork. And you still need to have a dialogue from the surgeon with his patient time to time. However, in most of the cases, you don’t need a qualified nurse to bath a patient. But sometimes it is necessary, as in patients under heavy drugs…

[Sir Moody]

Actually my question wasn't a serious question. You obviously know that economies are incredibly complex and affected by a number of factors. You're also constructing a, strawman, is it? He stated that is the rough percentage for *best* growth (or least damage?), not that spending at that level equals prosperity.

Governments don't make money, they take it and spend it. The more it takes the more is lost through normal inefficiency. Even if a company or profit-making venture is wholly owned and controlled by a government it is still a business, and runs best under the private sector you despise.

except the UK is proof this isn't the case - we privatised most of our essentials (Water and Power) and while profits are high the service is WORSE and more expensive than prior to privatisation - even more telling the Water companies making the most profit are also the water companies who lose the most water through leaking pipes (and funnily enough the same companies currently looking at a hose pipe ban...)

and then there's the Rail system which has gone from being one of the best in Western Europe to one of the worst - funnily enough since Privatisation.


I know, right? I don't like upsetting people but also don't understand how someone can be so interested in preserving their culture, or feel so entitled that they think it's right for someone to take so much by force, and give it to others based merely on citizenship.

Call me odd but I'm happy to pay taxes in order to provide universal Healthcare to all citizens, even those who certainly couldn't afford it.

[rory_20_uk]

The problem with the rail system has more to do with the insane manner of privitisation than anything else. The companies prior to being nationalised worked very well - but don't let that stop you - and were divided into areas of the UK where one company controlled everything. Now they have a system where different companies control different systems and is a mess.

The private companies don't own these areas, they purchase the rights to run for a period, so there is no way to plan for the future as it might be a different company who is running it. What type of idiot invented this system? You might as well incentivise a system of government where it is sensible to spend a fortune of money on credit to create an artificial credit-fuelled boom to ensure that the next government has nothing and hence looks bad... Oh, we do... :wall:

The best? You do realise that we in the UK stuck to messy steam trains for decades after it was ditched for cleaner, more efficient electricity by most of Europe. When was that? When nationalised.

Sir Moody, correlation isn't causation. London's network is the oldest and hence most likely to leak. And all these leaks in a Victorian system didn't suddenly happen since privatisation, they were being ignored for decades before that as well.

~:smoking:

[Papewaio]

You could have less drivers then trucks if the idea is to have a percentage of the trucks in a maintenance pool.

[Sir Moody]

Sir Moody, correlation isn't causation. London's network is the oldest and hence most likely to leak. And all these leaks in a Victorian system didn't suddenly happen since privatisation, they were being ignored for decades before that as well.

~:smoking:

yes but the fact the companies that make the most money also leak the most boggles the mind - they would rather make more profits by charging more while enforcing a hosepipe caused by the lack of water - you would think at least one for these companies would start the process of fixing the leaks at the cost of short term profit loss and increased long term profits...

and FYI London isn't the worst leaker - its East Anglia

I'm not going to comment on the rail system... members of my family were Train Drivers and were forced into retirement when the Rail network was privatised - it may bias me a little...

[Furunculus]

Not meaning to derail, but what are you by trade?

Business development manager for a 3D animation company producing the marketing for engineering multinationals.

[gaelic cowboy]

Business development manager for a 3D animation company producing the marketing for engineering multinationals.

How did you swing that gig I thought you were a geologist or something

[InsaneApache]

The more I hear of Nige, the more I think he's talking sense.


https://www.youtube.com/watch?v=hJ6_Ey_MJV4&feature=player_embedded

[Fragony]

He's my hero, it is rare to find a politician who understands something. Why can't I vote for him. And who is that Flemish ferret who always looks like an owl that just dropped from his tree. Who are you, who elected you, by what mechanism.

Farrage always +infinite

The nation state + infinite

EU misunderstood Keynes. Just because there will be a lot of broken windows doesn't mean it's good for the economy

[Furunculus]

How did you swing that gig I thought you were a geologist or something

lol, never used my geology degree professionally.

after uni helped start up a engineering R&D firm creating electric recycling vehicles

did an e-business masters

then shifted to newly created 3D animation company, helped them find and grow a sales strategy.

i like technology and the culture of business start-ups, so if it seems a little random it works for me. :)

[Fragony]

Lol. If thet 7% raise for the EUSR can't be realised holding on to the 3% isn't all that important anymore. Dear eurocrats, I will come for you one day, and there will be no reason, I will kill you if if I have the chance.

[gaelic cowboy]

An article linkin Bob marley and the Euro financial crisis which for some reason is not up on the main website yet.


Financial Contagion
May 10, 2012

Posted in Articles | Irish Independent by David McWilliams
Thirty-one years ago this week the great Bob Marley passed away and ascended to the great Rasta heaven in the sky. For most of us, Marley was reggae and reggae was Marley. I remember the day he played in Dalymount in the summer of 1980. What I actually remember most (I was too young to go to the gig) was the lingering smell of ganga on the 7A bus that afternoon, as half of the ‘Noggin obviously skinned up on their way into town to pay homage the great man.

And paying homage is the right word, because it was the last outdoor concert Marley ever played. He died less than a year later. The cancer which had started in his toe, spread rapidly. Urban legend has it that Marley contracted an infection after injuring his toe playing soccer (by the way if you ever want to see an natural player with the ball at his feet, google “Bob Marley playing football”). The soccer story isn’t true.

Marley, who’s Dad was a white Englishman, suffered from a malignant melanoma found under the nail of his toe. It is speculated that because he was half-white living in the Caribbean, he was more susceptible to this type of skin cancer.

What is true was that his doctors suggested that he get his toe amputated. Marley refused on the grounds at Jah Rastafari stipulated that humans shouldn’t permit their own flesh to be cut. Marley’s life would have been saved had he had the amputation. Tragically the cancer spread and his health deteriorated rapidly leading to his tragic demise.

Watching the latest twists and turns on Europe’s road to financial calamity as each financial crisis mutates into a banking crisis and then into a bond market crisis and then into yet another capital flight crisis and ultimately, now to a political crisis, I am reminded of Bob Marley.

Financial market contagion, like contagious diseases, spread and mutate if you don’t deal with them early and decisively. They get worse, not better. This is the lesson of Europe in the past four years, and of the Asian crisis in 1997 and the Latin American debt crises in previous decades. In the case of Europe, a financial crisis first became economic and then jumped over to become a full-blown political crisis. The political scalp of Sarkozy is only the latest victim.

The European elite’s response has been to kick the can down the road as they say, in order to buy time and hopefully time will heal all. But time doesn’t heal at all. In fact it gives the contagion the time to mutate and become more virulent.

The more the EU pretends that peripheral countries are solvent the less people believe it. The infection rather than getting better gets more aggressive and it changes its nature, like mutating cells. It affects banks and companies, it then affects house prices and then it mutates back again to hamper economic growth. The faltering growth rates, drive up unemployment. Once unemployment starts to rise, politics falters and incumbents get kicked out.

Not only that, but big dreams of political integration and the like, seem really unnecessary and indicative of a deep disconnect between politics and the people. In these instances, the people just get fed up and tell their politicians to snap out of it via the ballot box.

Ultimately, Europe has four problems. The first is not enough growth; the second is too much debt; the third is no political leadership and the fourth is the political illegitimacy of the technocrats that have been installed to run the economies on the periphery.

Growth won’t return until the debt overhang is eliminated but the debt overhang will not be eliminated without growth. Unless of course, there is a managed default. The only way out of this growth and debt dilemma is some sort of default, somewhere fast.

In order to facilitate this the ECB will have to be involved and this means persuading Germans that the Euro will only be fixed and the continental economy put back together if the core issues of over-borrowing in the periphery and its handmaiden over-lending by the core is fixed. This must come through a mutual deal between the debtor and creditor countries. This is called co-responsibility.

The “fiscal compact” will not sort this. In fact, it will make the situation worse in the short-term because it will reduce growth rates in those very countries, which have too much debt. Eventually these populations, which are already showing their dissatisfaction at the polls, get fed up.

There’s a common misperception that countries default on their debt because they can’t pay back the money they’ve borrowed. This is rarely the case. For the most part, countries default because their citizens get sick of the hardships they have to endure because of onerous debt repayments. And it becomes politically impossible for governments to continue honoring their commitments to creditors. Default is a strategic decision.

One of the best books published in recent years of these financial episodes was a study of debts and defaults by Ken Rogoff and Carmen Reinhart called This Time It’s Different. These scholars point out that more than half the defaults by middle-income countries occur at levels of external debt relative to GDP below 60% Europe’s debt levels in the periphery are close to twice this.

History shows that “willingness to pay, rather than ability to pay,” as the authors put it, “is typically the main determinant of country default.”
As the crisis mutates and mutates all around Europe, the point at which the people will get fed up will come sooner rather than later. Contagion can only be stopped by decisive action. Buying time just makes the ultimate crisis much more disruptive.

When I hear politicians contenting the opposite, whether its about the fiscal compact or the growth by austerity argument, it strikes that they are smoking something stronger that the heads on the 7A in the summer of 1980.

[Sarmatian]

lol, never used my geology degree professionally.

after uni helped start up a engineering R&D firm creating electric recycling vehicles

did an e-business masters

then shifted to newly created 3D animation company, helped them find and grow a sales strategy.

i like technology and the culture of business start-ups, so if it seems a little random it works for me. :)

So basically, neither your education nor your business experience has anything to do with macroeconomics or political economy or anything that is even close to what we're talking about. So, how can you present a single opinion and be absolutely certain that it is right?

[Sasaki Kojiro]

Call me odd but I'm happy to pay taxes in order to provide universal Healthcare to all citizens, even those who certainly couldn't afford it.

What do you think of people who aren't? If you're odd are they normal?

[Sir Moody]

What do you think of people who aren't? If you're odd are they normal?

its a common turn of phrase over here in the UK - its basically short hand for "You can call me strange if you want but..."

Id actually say the Majority of people here favour Universal Health care.

[Furunculus]

So basically, neither your education nor your business experience has anything to do with macroeconomics or political economy or anything that is even close to what we're talking about. So, how can you present a single opinion and be absolutely certain that it is right?

call it arrogance Sarmatian; i'm clever enough to think i'm clever enough to take an opinion on finance and the political economy.

[Furunculus]

on the subject of lack of recognised expertise on the global economy, i found this from eighteen months ago:

https://forums.totalwar.org/vb/showthread.php?131848-The-continuing-battle-against-the-inevitable-Euro-area-default&p=2053231412&viewfull=1#post2053231412


The euro, as presently constructed is at fault, having a monetary union without a fiscal union is quite frankly retarded.

Having a fiscal union only works if your collective peopleS will accept a transfer union, to prevent imbalances tearing your 'single' economy apart.

Anyone fancy asking a hard working german how keen they will be to bail out portugal before christmas, having already bailed out ireland and greece?

Seems pretty on the money! ;)

[Sarmatian]

Any sufficiently large country has different fiscal rules for different regions/state/provinces.

If you think the fiscal policies are exactly the same in each state in the US, you've got another thing coming. If you think that Moscow regions has the same fiscal rules as Kamchatka, think again. If you believe that same rules apply in <insert Chinese interior state> as in Tianjin or Shanghai province, you're wrong again.

So, whoever thought of that "monetary union is only possible with fiscal union" doesn't really know what he's talking about.

[Furunculus]

Any sufficiently large country has different fiscal rules for different regions/state/provinces.

If you think the fiscal policies are exactly the same in each state in the US, you've got another thing coming. If you think that Moscow regions has the same fiscal rules as Kamchatka, think again. If you believe that same rules apply in <insert Chinese interior state> as in Tianjin or Shanghai province, you're wrong again.

So, whoever thought of that "monetary union is only possible with fiscal union" doesn't really know what he's talking about.

and i quote (from wiki, but what the hell):


Under fiscal union decisions about the collection and expenditure of taxes are taken by common institutions, shared by the participating governments. For example, in federal nations such as the United States, fiscal policy is determined to a large extent by the central government, which is empowered to raise taxes, borrow and spend.

A fiscal union being a transfer union, for precisely the imbalances you note above. What merkel proposes, her "fiskal union", is decidely not a transfer union and thus it will not work!

http://blogs.telegraph.co.uk/finance/timworstall/100017007/why-the-euro-is-doomed-to-fall-apart-it-was-an-incredibly-stupid-idea-in-the-first-place/


There is one further thing. It is possible to take an area which is not an optimal currency area and make it more so. This is what Lord Mandelson is talking about when he parrots the line about a "fiscal Europe". The idea is that if the rich areas send money to the poor areas then the effects of being lumbered with the wrong currency can be mitigated. As indeed they can: London sends vast amounts of money to the north of England and Scotland and this helps reduce the impact of the Pound Sterling itself not quite being such an optimal area.

Over larger areas and numbers of people, the US is regarded as a good example. However, it is worth looking at quite how much money has to be sloshed around America to achieve a single currency. Some would argue that it's the welfare state bit of the Federal government, perhaps plus the military, that does this. That's about 5 or 6 per cent of US GDP. Others argue that it's the whole of the Federal government that does it, around and about (outside current blowout deficit times) some 20 per cent of the entire economy.

Which is fine if that's your sort of thing. But now try and move this over to the European scenario. The US government, all levels of it, takes some 35 to 40 per cent of GDP. That's two fifths of everything that everyone produces in a year. And this is after they've done that fiscal sloshing around to make up for having a single currency.

Here in Europe, governments take 40 to 50 per cent of GDP, two fifths to one half, before they've started to chuck the cash around to pay for the vanity project of the euro. We'd have to take in tax another 5 to 20 percent of everything produced and ship it off to the poor countries to achieve what the Americans have: a single currency that doesn't cripple those poor areas.

Five per cent of the UK's GDP is £75 billion or so: that's more than all council tax and all business rates. Twenty per cent is £300 billion: more than all VAT plus all income tax.

Can we see any possible future in which we (or the Germans, the Finns or the Swedes) agree to pay such taxes so that we can build a Common European Home – or, if you like, to subsidise the countries which we really shouldn't have a common currency with?

No, quite. I can't, either.

Are you my family, whom i trust to look after me and mine in ackowlegement of the same commitment in return?
Or are you merely my neighbour?

Nothing. Else. Matters.

[Philippus Flavius Homovallumus]

Any sufficiently large country has different fiscal rules for different regions/state/provinces.

If you think the fiscal policies are exactly the same in each state in the US, you've got another thing coming. If you think that Moscow regions has the same fiscal rules as Kamchatka, think again. If you believe that same rules apply in <insert Chinese interior state> as in Tianjin or Shanghai province, you're wrong again.

So, whoever thought of that "monetary union is only possible with fiscal union" doesn't really know what he's talking about.

In the US and Russia the federal government takes in federal taxes and spends it in the poorest regions - the Barnett formula does the same for the UK - where regions of Wales, Scotland, the South West and North of England are basket cases.

The EU does this to a small degree with "infastructure" projects, but a much greater amount of German money would need to be spent in Greece, and not Germany, to make fiscal union work.

The Germans will not vote to be poor.

[Philippus Flavius Homovallumus]

http://www.guardian.co.uk/commentisfree/2012/may/15/greece-europe-calamity-exiting-euro

I think you know it's over when the liberal British elite no longer believe it.

[Furunculus]

http://www.guardian.co.uk/commentisfree/2012/may/15/greece-europe-calamity-exiting-euro

I think you know it's over when the liberal British elite no longer believe it.

Dear lord above, i am in agreement with simon jenkins:


For a while, Germany knew it was on to a good thing and cross-subsidised (and lent) to cover the gap, much as the British Treasury sustains the UK's poorer regions. But a continent is not a nation. It has diverse loyalties and obligations. Sooner or later the subsidies and the lending would stop. That day is now. The sceptics were right.

[Sarmatian]

and i quote (from wiki, but what the hell):
A fiscal union being a transfer union, for precisely the imbalances you note above. What merkel proposes, her "fiskal union", is decidely not a transfer union and thus it will not work!

I'm not familiar with the exact content of what Merkel is proposing, but the point is that euro-sceptic maxim "monetary union must be also a fiscal union" is bollox, pure and simple, and it doesn't exist anywhere in the world.

It's a wonder it managed to stick for so long with eurosceptics (which proves just how uninformed most eurosceptics are, they just need a cool mantra to parrot). Thank god they've changed it to "Ok, it works, but I don't want to pay a single dime to anyone outside my country". Helps their case much more.


http://blogs.telegraph.co.uk/finance/timworstall/100017007/why-the-euro-is-doomed-to-fall-apart-it-was-an-incredibly-stupid-idea-in-the-first-place/



Are you my family, whom i trust to look after me and mine in ackowlegement of the same commitment in return?
Or are you merely my neighbour?

Nothing. Else. Matters.

Are Scots your family? You weren't against sending them money and they may end up proclaiming independence. Are you in favour of kicking them out because the fact that they are merely considering a referendum shows they aren't really committed to look after you and yours in return?

[Furunculus]

I'm not familiar with the exact content of what Merkel is proposing, but the point is that euro-sceptic maxim "monetary union must be also a fiscal union" is bollox, pure and simple, and it doesn't exist anywhere in the world.

It's a wonder it managed to stick for so long with eurosceptics (which proves just how uninformed most eurosceptics are, they just need a cool mantra to parrot). Thank god they've changed it to "Ok, it works, but I don't want to pay a single dime to anyone outside my country". Helps their case much more.

Mentary Union does not work without Fiscal Union (inc transfers), because divergent economies have no mechanism to correct for that diversion. so no, it is far from bollox, you want the Euro to work then you'd better be willing to pony up 5% of GDP in perpetuity.
Alternatively, you might get away without the transfers is you have very harmonious neigbouring economies, germany and the netherlands for example. In that case, the Eurozone needs to weed out the weak countries that cannot thrive without transfers, viz the upcoming Grexit. But Greece is only the start!


Are Scots your family? You weren't against sending them money and they may end up proclaiming independence. Are you in favour of kicking them out because the fact that they are merely considering a referendum shows they aren't really committed to look after you and yours in return?

yes, the scots are my family, i consider myself british not english.

if scots vote for indepenence then they will have said they are not my family, in which case the sentiment dies, but i am not going to prempt their decision.

[Kralizec]

Mentary Union does not work without Fiscal Union (inc transfers), because divergent economies have no mechanism to correct for that diversion. so no, it is far from bollox, you want the Euro to work then you'd better be willing to pony up 5% of GDP in perpetuity.
Alternatively, you might get away without the transfers is you have very harmonious neigbouring economies, germany and the netherlands for example. In that case, the Eurozone needs to weed out the weak countries that cannot thrive without transfers, viz the upcoming Grexit. But Greece is only the start!

This mantra is based on conjecture, not empirical observation, and usually espoused by people (like you) who already were against the monetary union to begin with.

And how did you come up with the 5% (of GDP) figure? Did you just wrote that down to make your argument more dramatic or convincing?

[Sarmatian]

Mentary Union does not work without Fiscal Union (inc transfers), because divergent economies have no mechanism to correct for that diversion. so no, it is far from bollox, you want the Euro to work then you'd better be willing to pony up 5% of GDP in perpetuity.

It's bollox, there are mechanisms to correct that. Army of different EU funds (and many more not EU-related) stare you right in the face and thousands new ones can created if need be.


Alternatively, you might get away without the transfers is you have very harmonious neigbouring economies, germany and the netherlands for example. In that case, the Eurozone needs to weed out the weak countries that cannot thrive without transfers, viz the upcoming Grexit. But Greece is only the start!

The difference in GDP per capita between richest and poorest EU state is about the same as between richest and poorest US state.


yes, the scots are my family, i consider myself british not english.

if scots vote for indepenence then they will have said they are not my family, in which case the sentiment dies, but i am not going to prempt their decision.

What about family ties, language, common history, similar mindset... all those values you seemed to emphasize when you were talking about nation states? Are they all severed the moment Scots declare independence? Poof and that's it?

[InsaneApache]

If the jocks do secede then they will face the prospect from joining the Euro. Won't happen.

[Furunculus]

This mantra is based on conjecture, not empirical observation, and usually espoused by people (like you) who already were against the monetary union to begin with.

And how did you come up with the 5% (of GDP) figure? Did you just wrote that down to make your argument more dramatic or convincing?

with the greatest respect, the argument was made before the euro kicked off by people who looked at britain and german reunification and realised the consequence implicit, an argument that was shouted down by people who are looking VERY VERY stupid today.

i read it somewhere, can't find a source anymore. regardless, you could probably work it out roughly by looking at the german reunification tax, or the federal tax deviation as a proportion of total US government spending. All referred to in the Worstall blog post.


It's bollox, there are mechanisms to correct that. Army of different EU funds (and many more not EU-related) stare you right in the face and thousands new ones can created if need be.

The difference in GDP per capita between richest and poorest EU state is about the same as between richest and poorest US state.

What about family ties, language, common history, similar mindset... all those values you seemed to emphasize when you were talking about nation states? Are they all severed the moment Scots declare independence? Poof and that's it?
You don't know what you are talking about, for EU budgets occupy 1% of GDP and largely cycled back into member economies.

But. US. Federal. Spending. Is. Used. To. Account. For. This:
http://www.guardian.co.uk/commentisfree/2012/mar/21/united-states-europe-transfer-union

If they choose to reject that relationship, then yes, i will regretfully reallocate them into the neighbours pile. At which point i would object to the notion of an ongoing subsidy via a Barnett formula. I don't understand why this seems so controversial?


--------------

further reading on what a transfer union means for the EU:

http://www.dbresearch.com/PROD/DBR_INTERNET_EN-PROD/PROD0000000000276427/A+European+transfer+union%3A+How+large,+how+powerful,+how+expensive%3F.pdf

[Sarmatian]

You don't know what you are talking about, for EU budgets occupy 1% of GDP and largely cycled back into member economies.

But. US. Federal. Spending. Is. Used. To. Account. For. This:
http://www.guardian.co.uk/commentisfree/2012/mar/21/united-states-europe-transfer-union

If they choose to reject that relationship, then yes, i will regretfully reallocate them into the neighbours pile. I don't understand why this seems so controversial?


http://en.wikipedia.org/wiki/Structural_Funds_and_Cohesion_Fund
http://en.wikipedia.org/wiki/Regional_policy_of_the_European_Union

You're wrong. You are assuming that there need be a supranational organization with sole responsibility of transfering funds, taking from one place and pouring to another. Collecting federal taxes and redistributing them is not the only way of transfering money from richer to poorer regions.


Considering Scottish independence, it's controversial that your nation state isn't really that stable, that apparently it's open to same weaknesses as supranational states and that in fact, you can't depend on everyone to look after you and yours, which was your chief argument against supranational states, in this case EU.

[Furunculus]

http://en.wikipedia.org/wiki/Structural_Funds_and_Cohesion_Fund
http://en.wikipedia.org/wiki/Regional_policy_of_the_European_Union

You're wrong. You are assuming that there need be a supranational organization with sole responsibility of transfering funds, taking from one place and pouring to another. Collecting federal taxes and redistributing them is not the only way of transfering money from richer to poorer regions.


Considering Scottish independence, it's controversial that your nation state isn't really that stable, that apparently it's open to same weaknesses as supranational states and that in fact, you can't depend on everyone to look after you and yours, which was your chief argument against supranational states, in this case EU.
and................. you will have a point if they vote for independence.

i suspect they won't.

[Philippus Flavius Homovallumus]

Never mind Brit
http://en.wikipedia.org/wiki/Structural_Funds_and_Cohesion_Fund
http://en.wikipedia.org/wiki/Regional_policy_of_the_European_Union

You're wrong. You are assuming that there need be a supranational organization with sole responsibility of transfering funds, taking from one place and pouring to another. Collecting federal taxes and redistributing them is not the only way of transfering money from richer to poorer regions.


Considering Scottish independence, it's controversial that your nation state isn't really that stable, that apparently it's open to same weaknesses as supranational states and that in fact, you can't depend on everyone to look after you and yours, which was your chief argument against supranational states, in this case EU.

You cannot simply magic money out of thin air, it must come from somewhere - if the EU does not become a federal Union it will not raise direct taxes, and the Commission will still have to go to member nations (Germany) to ask for money. This is the issue - the current system DOES NOT WORK, as evidence by the fact that Greece is now in systemic collapse, never mind decline.

Why isn't Cornwall is systemic collapse, or Wales? The answer is that the central government takes in taxes and distributes them, and richer regions automatically give more tax because they have more wealth.

For the last twenty years the British Left has been resoundingly pro-Euro, you just have to look at BBC coverage in 2007 and 2012 to see that the arguments now being made are not born of natural scepticism.

Never mind Britain being unstable - government in Greece and Italy have collapsed.

[Kralizec]

with the greatest respect, the argument was made before the euro kicked off by people who looked at britain and german reunification and realised the consequence implicit, an argument that was shouted down by people who are looking VERY VERY stupid today.

i read it somewhere, can't find a source anymore. regardless, you could probably work it out roughly by looking at the german reunification tax, or the federal tax deviation as a proportion of total US government spending. All referred to in the Worstall blog post.

I don't see what your point is here. I take it you mean to draw a parralel with the wealth transfer between west-east Germany after the reunification but I don't see how the situations can be compared.

Being in a monetary union a country loses its ability to set out any sort of monetary policy in regards to the other member states. But they can still distinguish themselves by setting different taxation levels, moderate wages et cetera to keep their economies competitive. Obviously eastern Germany couldn't do this after the reunification, and neither can Cornwall or Wales for that matter.

It's obvious that glaring mistakes have been made in regards to EMU and that some things should have been done differently from the start - what I don't see is why a "fiscal union" is a requirement for things to work properly.

[Philippus Flavius Homovallumus]

I don't see what your point is here. I take it you mean to draw a parralel with the wealth transfer between west-east Germany after the reunification but I don't see how the situations can be compared.

Being in a monetary union a country loses its ability to set out any sort of monetary policy in regards to the other member states. But they can still distinguish themselves by setting different taxation levels, moderate wages et cetera to keep their economies competitive. Obviously eastern Germany couldn't do this after the reunification, and neither can Cornwall or Wales for that matter.

It's obvious that glaring mistakes have been made in regards to EMU and that some things should have been done differently from the start - what I don't see is why a "fiscal union" is a requirement for things to work properly.

Wages and living costs actually are a lot lower in Wales or Cornwall - between 1/2 and 1/3 what they are in London - it's not enough, so the Government pumps money in.

Same problem in Greece - in order to have the same kind of profit margins on goods as Germany you'd have to employ slaves, so Greece needs money just to keep the lights on. Litterally.

It was recently said that a currency area in the Anglo-sphere (principally the US, Canada, the UK, Australia and New Zealand) would make more sense than the Euro despite the geographical differences, because in addition to having the same language and legal systems (broadly) we also have similar living standards and working practices.

Greece and Germany are so unalike that a currancy that benefit one cannot but damage the other.

[Furunculus]

I don't see what your point is here. I take it you mean to draw a parralel with the wealth transfer between west-east Germany after the reunification but I don't see how the situations can be compared.

Being in a monetary union a country loses its ability to set out any sort of monetary policy in regards to the other member states. But they can still distinguish themselves by setting different taxation levels, moderate wages et cetera to keep their economies competitive. Obviously eastern Germany couldn't do this after the reunification, and neither can Cornwall or Wales for that matter.

It's obvious that glaring mistakes have been made in regards to EMU and that some things should have been done differently from the start - what I don't see is why a "fiscal union" is a requirement for things to work properly.

Because it isn't just what you spend your taxes on and how much, it is where you spend them in order to even out the imbalances that prevent one part of the economy from functioning within another.
Infrastructure - welsh road building
Social security - glasgow
Public jobs - north east
Procurement - harland and wharf
Failure to do so results in a divergent economy where the poorer parts struggle to live in a richer society, and poverty is compounded. Visit Greece today.

America knows this, it operates a transfer union, it succeeds. Can the same be said for the eurozone?

The reverse side of the fiscal union coin, a transfer union, and you can't dump public money on someone else unless theirnis a social compact permitting this.
This requires a political union, or put another way; a sense of shared familial sentiment.

Is there anything else I can instruct you upon? :)

[Sarmatian]

Never mind Brit

You cannot simply magic money out of thin air, it must come from somewhere - if the EU does not become a federal Union it will not raise direct taxes, and the Commission will still have to go to member nations (Germany) to ask for money. This is the issue - the current system DOES NOT WORK, as evidence by the fact that Greece is now in systemic collapse, never mind decline.

Why isn't Cornwall is systemic collapse, or Wales? The answer is that the central government takes in taxes and distributes them, and richer regions automatically give more tax because they have more wealth.

For the last twenty years the British Left has been resoundingly pro-Euro, you just have to look at BBC coverage in 2007 and 2012 to see that the arguments now being made are not born of natural scepticism.

Never mind Britain being unstable - government in Greece and Italy have collapsed.

You're missing the point - no one talked about creating money out of thin air. There are other mechanisms, outside having a federal or supranational tax, to transfer money from richer to poorer regions. Even in nation states, government doesn't rely solely on tax redistribution to transfer funds from one place to another, there are grants, funds, credits etc... There are literally thousands, both national and international, organizations that do just that.

Granted, tax redistribution is the simplest and most efficient way, but it is also most open to corruption - you're sending back just money. In case of various funds, you're investing in projects, new businesses, education, infrastructure, agriculture etc... which is slower but arguably more beneficial in the long rung.

Now, states aren't passive. If one option is closed to them they'll explore other options. At the moment, any kind of supranational tax is out of the question, but there are other ways to remedy that.

The current system doesn't work, huh? Keep in mind that when recession started, there was one system and now they're trying to create a different one. History thought us that there isn't a system or a state that's immune to recession.

[Papewaio]

A more resiliant network isn't just an increase in numbers it's an increase in diversity.

Southern Europe being culturally different to Northern Europe is a strength.

The biggest problem still is that capital moves far faster then a labour pool is willing too.

I do wonder how many people use credit cads more then cash. So why the hang up on having common currency? After the cost of a coffee is going to change across a city, a region let alone a country. So a single currency doesn't stop price variations. So as long as a credit card doesnt have huge fees for different currencies how are most people better off with a single currency?

[Fragony]

Wtque a strength? Did they catch the driver?

[Sarmatian]

A more resiliant network isn't just an increase in numbers it's an increase in diversity.

Southern Europe being culturally different to Northern Europe is a strength.

The biggest problem still is that capital moves far faster then a labour pool is willing too.

I do wonder how many people use credit cads more then cash. So why the hang up on having common currency? After the cost of a coffee is going to change across a city, a region let alone a country. So a single currency doesn't stop price variations. So as long as a credit card doesnt have huge fees for different currencies how are most people better off with a single currency?

Banks usually charge huge fees. You have to have either a foreign currency account or sometimes a local currency account in which case your bank will first convert the money and charge you, then send to a foreign bank to charge you again, usually with less favourable exchange rate, cause you can't choose in which bank you're gonna change your money as you're stuck with both your bank and a bank abroad. The additional fee you'd pay won't probably be less than 5% but could be much more.

Now, imagine a company in Austria that needs to buy parts for a machine from 5 different suppliers, one in Germany, one in France, one in Spain, one in Netherlands and one in Sweden. It has to convert its own currency to five different currencies, get everything and then calculate price for different currencies if it wants to sell in other countries. Add to that different stability of various currencies - Austrian schilling was tied to German mark, so not much problems there but Spanish pesetas and Italian liras weren't as stable which leads to issues like do you want to convert them right away to German marks or keep them, because you're gonna buy more parts from Spain and Italy. Is it better to change now and pay a bank fee twice (once for converting to German marks and once again to convert them to lira and pesetas) or keep them as they are in hope that they won't devalue more than you would pay for bank fees?

It's simpler, easier and more straightforward, which especially helps smaller businesses.

[Furunculus]

A more resiliant network isn't just an increase in numbers it's an increase in diversity.

Southern Europe being culturally different to Northern Europe is a strength.

The biggest problem still is that capital moves far faster then a labour pool is willing too.

I do wonder how many people use credit cads more then cash. So why the hang up on having common currency? After the cost of a coffee is going to change across a city, a region let alone a country. So a single currency doesn't stop price variations. So as long as a credit card doesnt have huge fees for different currencies how are most people better off with a single currency?

in part because a common currency comes with a homogenised borrowing rate.

what you don't get however is a homogenised political culture taking direction from a homenginsed society, so imbalances that in the past have been equalised by periodic devaluations vis-a-vis its neighbours must be done internally. In the absense of a transfer union this leads to very painful social costs from crippled services.

a single currency between the benelx nations and germany, possibly with austria and finland in tow, would have been a great idea. expanding it gradually over the the course of a generation to the nations with a political and economic culture that met with the requirements of the core would likewise have been a good idea.

note, a formalised systemic transfer union would not be absolutely necessary as the similarity would allow transfers to happen internally, but at the same time it would have been politically acceptable precisely because sufficient trust exists among that core.

however, a monetary union between 17 radically different economies without the mechanisms to enforce convergence was stupid then, is stupid today, and will be even more stupid for those continueing to argue in its favour as we watch euro-solidarity crumble in the months ahead.

the absolute crippling idiocy, the existance of which i really cannot understand, is the ideological support for the euro in the face of its inadequacies from people who approve of its aim of a post-nationalistic europe bathed in peace and tranquility.................... and yet fail to recognise that those flaws are bringing the very problems they sought to banish. namely; increased zenophobia, increased nationalism, more social unrest, less prosperity for all, much less prosperity for some, and a general reduction in welfare and well-being conducive to the worst kind of popular-extremes of political ideology.

well done them!

[Sarmatian]

the absolute crippling idiocy, the existance of which i really cannot understand, is the ideological support for the euro in the face of its inadequacies from people who approve of its aim of a post-nationalistic europe bathed in peace and tranquility.................... and yet fail to recognise that those flaws are bringing the very problems they sought to banish. namely; increased zenophobia, increased nationalism, more social unrest, less prosperity for all, much less prosperity for some, and a general reduction in welfare and well-being conducive to the worst kind of popular-extremes of political ideology.

well done them!

You really don't know what you're talking about, do you?

The problem with the economy isn't the Euro, it's the overborrowing, which worked fine when there was growth. Euro functioned great, raising in value constantly and still is more valuable than it was at creation. If you exchanged your pounds to euros when it was created and changed them back to pounds now, you'd be a richer man.

The whole idea that problems would be solved if all troubled economies (Greece, Spain, Portugal...) would switch back to their old currencies is completely and utterly idiotic. Yes, they could devalue them and plug the holes in the budget but that just means that their money would be worth less. Furthermore, it would have scared investors and bond buyers cause who wants a bond that's gonna be worth less than the paper it's printed on in 20 years? Nowadays, those who want to buy Spanish bonds worry about whether the government will be able pay the interest, with peseta back they would be worrying that even if the government can pay the interest, is it gonna be much smaller in addition.

Those countries, Greece especially, have only euro to thank to that their economies aren't tanking. If they do tank, common currency or no, it's gonna be felt in the rest of European countries cause European economy is very inter connected, which was the prime reason for a single currency, now and then. Yes, the reasons are practical, not idealistic.

Even if we agree that disbanding the Euro is the answer (which it isn't) it's a very complex, expensive and time consuming process to switch back to old currencies. Creating chaos across the continent, fear among investors and businesses is hardly a good way to ride through the crisis. Like trying to figure out who's supposed to inherit how much of a house that's on fire. Put the fire out first and deal then cause otherwise you won't have a house to inherit.

The Euro isn't the problem. It's just used by the europhobes to "show" why an united Europe is a bad thing. Personally, I'd rather deal with 27 different countries about my economy than having my "independent" economy go bust on its own.

[Philippus Flavius Homovallumus]

You're missing the point - no one talked about creating money out of thin air. There are other mechanisms, outside having a federal or supranational tax, to transfer money from richer to poorer regions. Even in nation states, government doesn't rely solely on tax redistribution to transfer funds from one place to another, there are grants, funds, credits etc... There are literally thousands, both national and international, organizations that do just that.

Granted, tax redistribution is the simplest and most efficient way, but it is also most open to corruption - you're sending back just money. In case of various funds, you're investing in projects, new businesses, education, infrastructure, agriculture etc... which is slower but arguably more beneficial in the long rung.

Now, states aren't passive. If one option is closed to them they'll explore other options. At the moment, any kind of supranational tax is out of the question, but there are other ways to remedy that.

The current system doesn't work, huh? Keep in mind that when recession started, there was one system and now they're trying to create a different one. History thought us that there isn't a system or a state that's immune to recession.

Bull.

"government doesn't rely solely on tax redistribution to transfer funds from one place to another, there are grants, funds, credits etc... "

All this is either idrectly funded by taxation, or underwritten by it.

The government has exactly one real way of generating income - tax. Even things like nationalised defence companies that sell weapons to other countries just fund the home-country's defence bill.

The EU is notorious for corruption, especially of "infastructure" projects, which only generate jobs as long as they are running anyway. Once the project ends, so do the jobs - they aren't a long-term solution to unemployment.

It ultiamtely matter not if the tax is "supranational" or collected locally. You still require a central executive and central treasury to take in funds and distribute them, and it must be done at a Federal level because anything less simply takes too long. Look at the stupid time it took to send Greece a relatively paltry sum, why because the various bodies had to agree and it didn't work because there is no central oversight to garrentee more money.

The Euro doesn't work - it is a currency union without a fiscal union.

[Furunculus]

You really don't know what you're talking about, do you?

The problem with the economy isn't the Euro, it's the overborrowing, which worked fine when there was growth.

And you really cannot read, can you?


in part because a common currency comes with a homogenised borrowing rate.

What you don't get however is a homogenised political culture taking direction from a homenginsed society

Ergo, you get overborrowing from weak peripheral countries who spent ten years riding on Germany's ticket, using that 'slack' to give themselves nice social-benefits which their developing economies could not support, thus destroying their productivity*, knackering the export potential, and hollowing out their industries.


The whole idea that problems would be solved if all troubled economies (Greece, Spain, Portugal...) would switch back to their old currencies is completely and utterly idiotic. Yes, they could devalue them and plug the holes in the budget but that just means that their money would be worth less. Furthermore, it would have scared investors and bond buyers cause who wants a bond that's gonna be worth less than the paper it's printed on in 20 years? Nowadays, those who want to buy Spanish bonds worry about whether the government will be able pay the interest, with peseta back they would be worrying that even if the government can pay the interest, is it gonna be much smaller in addition.

No one is saying that escaping the eurozone will be easy or pain-free, what is being said that internal devaluation cannot regain external competitivness without causing revolution, and the only other solution is a perpetual transfer union which france and the netherlands are completely unwilling to entertain.

p.s. no one wants to buy spanish bonds because they just really want to, they buy them because the risk/reward works in their favour vis-a-vis some other contries bonds. at the moment there is very little reward and enormous risk viz the utter scalping of private sector bond holders in greece necessary to preserve the ECB - ergo no one wants spanish bonds.


Even if we agree that disbanding the Euro is the answer (which it isn't) it's a very complex, expensive and time consuming process to switch back to old currencies. Creating chaos across the continent, fear among investors and businesses is hardly a good way to ride through the crisis. Like trying to figure out who's supposed to inherit how much of a house that's on fire. Put the fire out first and deal then cause otherwise you won't have a house to inherit.

And you judge this to be a worse solution to the welfare and wellbeing of the southern periphery than a decade of grinding internal devaluation leading to high unemployment, static growth, and poor services? i question your motives for suggesting this, particularly as a self-proclaimed internationalist..... Surely it is my job as a nasty nationalist right-winger to callously disregard the plight of 'others'?


The Euro isn't the problem. It's just used by the europhobes to "show" why an united Europe is a bad thing. Personally, I'd rather deal with 27 different countries about my economy than having my "independent" economy go bust on its own.

ARE YOU MY FAMILY?

Rinse and repeat until the message has sunk in.

Let me know when rich europe is willing to underwrite the public-services of poor europe.

Until then i am going to uproarously laugh at every person who continues to blindly defend the failed political model the foundations of which are being undermined by the economic model they believe will bolster it.
Each and every time a disaster occurs i will roflmao! not at their misfortune, but at the foolishness of the people who caused it via their blind faith.

Testing: "roflmao!"

Excellent, it's working.



* pages #7 and #9 for the remedial reading class:
http://www.levyinstitute.org/pubs/wp_651.pdf

[gaelic cowboy]

Unless the ECB is unshackled from inflation ideology and made to stand behind every bank and deposit in the Eurozone this only ends with the breakup of the Euro.

[Furunculus]

yes, that is the other element of the equation:
1. Fiscal policy - via transfers of various means, in addition to the collective spending caps which merkel terms her "fiskal" union.
2. Monetary policy - looser money to encourage germans to spend more and drive up pay-bargaining agreements a little via inflation to even out the competitiveness gap.
unfortunately, the paymaster (germany) isn't up for either measure in sufficient quantity.

[rory_20_uk]

Which is to say - until Germany and other productive countries are provide to work their arses off to send money to others to not work then this isn't going to be able to continue.

~:smoking:

[Sarmatian]

Bull.

"government doesn't rely solely on tax redistribution to transfer funds from one place to another, there are grants, funds, credits etc... "

All this is either idrectly funded by taxation, or underwritten by it.

The government has exactly one real way of generating income - tax. Even things like nationalised defence companies that sell weapons to other countries just fund the home-country's defence bill.

Bollox. First of all, governments have other means of generating revenues, like owning shares or entire companies, bonds etc etc... but it is indeed mostly tax.

Second of all, no one's arguing that tax isn't the prime source of income for governments. What we're talking about once the government collect said income, can it distribute it to other countries without a need for a supranational body. The answer is, yes it can.

Furunculus is stuck because he read in the torygraph that a "transfer union" is needed.


The EU is notorious for corruption, especially of "infastructure" projects, which only generate jobs as long as they are running anyway. Once the project ends, so do the jobs - they aren't a long-term solution to unemployment.


You don't "finish" infrastructure, there's always something else to do, otherwise you'd see big building companies going bust every other month. The added benefit is that other businesses get to use that infrastructure.

Of course, infrastructure isn't the only thing EU's investing in.


It ultiamtely matter not if the tax is "supranational" or collected locally. You still require a central executive and central treasury to take in funds and distribute them, and it must be done at a Federal level because anything less simply takes too long. Look at the stupid time it took to send Greece a relatively paltry sum, why because the various bodies had to agree and it didn't work because there is no central oversight to garrentee more money.

Of course, central treasury and a central executive is indeed the most efficient way but it is not the only way, and since it is off limits at the moment, other avenues should be explored.

The problem with the money lent/given to Greece, ie. it took so long, wasn't that it was complicated to decide and collect the money but because it took so long and it was so hard for Greece to agree to a very strict austerity measures and very strict fiscal rules, which is basically committing suicide in political terms.


The Euro doesn't work - it is a currency union without a fiscal union.

Didn't we went through this already? Even Furunculus moved on and decided that a "transfer union" is now needed.



And you really cannot read, can you?

That, sir, is an insult. Mind you, I was the best in reading in my class in elementary school and was voted "most likely to learn all the letters eventually".


Ergo, you get overborrowing from weak peripheral countries who spent ten years riding on Germany's ticket, using that 'slack' to give themselves nice social-benefits which their developing economies could not support, thus destroying their productivity*, knackering the export potential, and hollowing out their industries.

Exactly, my good man. It started before the common currency and continued with the common currency. Now, for extra points, which two countries hold majority of the Greek debt and what happens with that if Greek defaults?


what is being said that internal devaluation cannot regain external competitivness without causing revolution Sarcasm off, might be my English but I don't understand what you're saying here.


p.s. no one wants to buy spanish bonds because they just really want to, they buy them because the risk/reward works in their favour vis-a-vis some other contries bonds. at the moment there is very little reward and enormous risk

And your solution to that is to increase the risk and lessen the reward???


And you judge this to be a worse solution to the welfare and wellbeing of the southern periphery than a decade of grinding internal devaluation leading to high unemployment, static growth, and poor services? i question your motives for suggesting this, particularly as a self-proclaimed internationalist..... Surely it is my job as a nasty nationalist right-winger to callously disregard the plight of 'others'?

And this is where you're lost. Southern states would have been much worse off with a return to their former currencies, so the liberal in me has no trouble supporting.



ARE YOU MY FAMILY?

Rinse and repeat until the message has sunk in.

Hold your horse, there. We still aren't sure if Scots are your family.


Let me know when rich europe is willing to underwrite the public-services of poor europe.

Germany, first and foremost, since it's the strongest industry and needs markets to export to. Anyway, most Germans still support the Euro. You, as a self-proclaimed nasty nationalist right winger should rejoice, since it will make German economy weaker and your beloved nation state can profit from it.


Until then i am going to uproarously laugh at every person who continues to blindly defend the failed political model the foundations of which are being undermined by the economic model they believe will bolster it.
Each and every time a disaster occurs i will roflmao! not at their misfortune, but at the foolishness of the people who caused it via their blind faith.

You do that, and refuse to acknowledge any facts that may come in the way of your roflmaoing.

[gaelic cowboy]

Which is to say - until Germany and other productive countries are provide to work their arses off to send money to others to not work then this isn't going to be able to continue.

~:smoking:

No this is not required unless you continue preventing the ECB from acting systemically as is currently the system.

[Philippus Flavius Homovallumus]

Sarmation - it is not only the Torygraph talking about a transfer union, and we established during the Mayoral Election that Furunculus is more widely read than that.

Technically - a government can simply "give" money to another government, either as Aid or as a loan. In practice, governments are subject to their electorates and we have seen from recent German elections that the policy of even loaning money to countries like Greece is deeply unpopular and cannot be continued because the governments that lend will simply be voted out of office. On top of that - actually organising the loans to Greece has been agonisingly slow, so slow that they have not worked.

In order to function as a working economy Greece, and Italy, and Portugal, and Spain must be able to borrow from the money markets or Germany must borrow on their behalf.

That requires either debt union or a transfer union - most likely both.

The root of the problem is that the countries share a currency but not their debts. So long as Greece has debt four times as expensive as Germany which is must use a weak Mark to sell it cannot buy back it's own debt to lower the price. Prior to the currency union, if you wanted to buy German deby you did it in Marks and you bought Greek debt in Drachma. When you sold the Greek debt you had to sell the Drachmas back to the Greek bank to buy the Marks to buy German debt with; the Greek Bank could then use those Drachmas to buy Greek debt and offset the price.

Now, when you seel Greek debt the Euro's you used to buy it go not to the Greek bank, but straight to the German one when you buy erman debt. So Greece becomes ever poorer.

[gaelic cowboy]

Bollox. First of all, governments have other means of generating revenues, like owning shares or entire companies, bonds etc etc... but it is indeed mostly tax.

Revenue is not the problem the problem is the balance sheet.



Of course, central treasury and a central executive is indeed the most efficient way but it is not the only way, and since it is off limits at the moment, other avenues should be explored.

The only avenue being explored is internal devaluation which leads to worse balance sheets.


The problem with the money lent/given to Greece, ie. it took so long, wasn't that it was complicated to decide and collect the money but because it took so long and it was so hard for Greece to agree to a very strict austerity measures and very strict fiscal rules, which is basically committing suicide in political terms.

Greece wouldnt have half as bad a problem if while being bailed out the ECB cut the value of the outstanding bonds it owns.


Exactly, my good man. It started before the common currency and continued with the common currency. Now, for extra points, which two countries hold majority of the Greek debt and what happens with that if Greek defaults?

Except before the a central bank could take steps to improve or even fully rescue it's own banking system.

In contrast nowadays it is prevented from this action and essentially no one is in charge but the governments which really means taxpayers.



Sarcasm off, might be my English but I don't understand what you're saying here

He means that continual austerity in order to sustain essentially german growth will lead to potential revolution in the South.


And your solution to that is to increase the risk and lessen the reward???

Actually the risk is highest now thats why no one will buy them.


And this is where you're lost. Southern states would have been much worse off with a return to their former currencies, so the liberal in me has no trouble supporting.

The only people really worried about this are bankers all across the world who stand to lose out on bond and loan repayments.


Hold your horse, there. We still aren't sure if Scots are your family.

But in Scotland the Bank of England stands behind a regional bank



Germany, first and foremost, since it's the strongest industry and needs markets to export to. Anyway, most Germans still support the Euro. You, as a self-proclaimed nasty nationalist right winger should rejoice, since it will make German economy weaker and your beloved nation state can profit from it.

The German economy is still far more dependent on inter european trade than the average man on the street thinks. Continual hammering of Euro area economies in pursuit of unattainable Debt to GDP targets will eventually weaken there economy anyways.

[Furunculus]

Didn't we went through this already? Even Furunculus moved on and decided that a "transfer union" is now needed.

And i quote:

The reverse side of the fiscal union coin, a transfer union......
Because it isn't just what you spend your taxes on and how much, it is where you spend them in order to even out the imbalances that prevent one part of the economy from functioning within another.
Infrastructure - welsh road building
Social security - glasgow
Public jobs - north east
Procurement - harland and wharf


Exactly, my good man. It started before the common currency and continued with the common currency. Now, for extra points, which two countries hold majority of the Greek debt and what happens with that if Greek defaults?
France and Germany, but i fail to see how this is relevant to the fact that Greece overborrowed because it was able to tap a homogenous euro-rate that was far lower than it would normally have been granted?


Sarcasm off, might be my English but I don't understand what you're saying here.
If greece cannot devalue externally it's only way to regain competitiveness is to devalue internally, in both the private and the public sphere, by shedding jobs and cutting costs, viz the reduced welfare for the growing unemployed.


And your solution to that is to increase the risk and lessen the reward???
There is no reward because the risk is already so big that people won't invest. A bond rate of 6.5% is already an unsustainable debt trajectory for any nation, ergo, it is not a serious economic proposition for anything but temporary economic suicide, and won't get better as long as the euro keeps peripheral nations locked in a primary deficit. Time to start again.


And this is where you're lost. Southern states would have been much worse off with a return to their former currencies, so the liberal in me has no trouble supporting.

temporarily terrible, rather than persistantly awful. that is the choice greece has.


Hold your horse, there. We still aren't sure if Scots are your family.

there may be some uncertainty here but we can be damn sure that the answer is "no" in germany given that Merkel cannot agree to eurobonds or a transfer union, at least while greece is a member, lest she be turfed out of office.


Germany, first and foremost, since it's the strongest industry and needs markets to export to. Anyway, most Germans still support the Euro. You, as a self-proclaimed nasty nationalist right winger should rejoice, since it will make German economy weaker and your beloved nation state can profit from it.
sure germany loves the euro, as it is now, for it gets more exports through trading in a currency that is artifically depressed as a result of pooling with its neighbours. it SHOULD agree to loose money and transfers for right now it is basically taking advantage of its neighbours, but then that answers the question; "are you my family". the answer is "no".


You do that, and refuse to acknowledge any facts that may come in the way of your roflmaoing.
what facts?
let me know when greece avoids exiting the euro, and when spain avoids needing a bailout before the end of the year.

[rory_20_uk]

Where does money to the ECB come from - when the ECB gives money, it has to be backed by someone the Markets trusts.

Clearly this can't be the same people who are being lent the money - although of course they do have obligations to give some money they have been lent back to the lent to them. So, the vast majority of the"real" money needs to be those with money. Germany et al give backing to the ECB, then the ECB buys up Greek debt at artificially low rates.

An accounting trick to disguise the fact Germany et al are giving money to Greece.

~:smoking:

[gaelic cowboy]

Essentially it can now be seen that one of the big selling points of the Euro in the begining ie the removal of currency differentials was in fact a massive mistake.

They sold it to people as good for business but failed to inform them that the central bank would no longer be responsible for the banking system.

Essentially the ECB is more like one of those payday loan sharks companies with adds on daytime telly.

[gaelic cowboy]

Where does money to the ECB come from - when the ECB gives money, it has to be backed by someone the Markets trusts.

No one lends the ECB any money as it controls the press to print it.


Clearly this can't be the same people who are being lent the money - although of course they do have obligations to give some money they have been lent back to the lent to them. So, the vast majority of the"real" money needs to be those with money. Germany et al give backing to the ECB, then the ECB buys up Greek debt at artificially low rates.

Germany only needs to back bailout bonds that are sold on the open market it does not actually have to give actual money to anyone.


An accounting trick to disguise the fact Germany et al are giving money to Greece.

But this only needs to happen because the lender wants to be paid back for earlier loans. The real problem is the ECB will not mark down it's own loans and so it is forcing austerity on Greece and requiring Germany to lend to Greece.

This is all so that Greece can pay both of them back while not risking ECB bonds or cash.


This is seen for the madness it is outside the Euro hence the terrible bond yeilds and up and down currency valuations. Unless the ECB is brought under some form of political control and forced to act to end this crisis it will continue to trundle along.

The reality is this problem is solvable overnight but no one is ready to reach that door yet.

[rory_20_uk]

No one lends the ECB any money as it controls the press to print it.

Every currency has to be backed by something, else it is worthless. The ECB may be able to print money, but it still backed by the countries in the EU. This means in essence it is backed by the strong countries such as Germany.

If the ECB books losses then the losses will be passed on to the member countries. The Germans are not happy to pay for Greeks to have a higher quality of life.

~:smoking:

[rvg]

The real trouble will start when Germany gets fed up with this circus and decides to leave the Eurozone.

[Fragony]

The real trouble will start when Germany gets fed up with this circus and decides to leave the Eurozone.

Hopefully they will, we will follow. Netherlands is too small to make a fist alone

[Furunculus]

agreed, the best possible outcome is for germany and the netherlands will leave, the rump of the eurozone will devalue in consequence, and the pressure on the PIGS will lessen signifiantly.

good post on what germany needs to do to save the eurozone, and the likelyhood of it being willing to do so:

http://www.telegraph.co.uk/news/worldnews/europe/eu/9272353/Are-the-Germans-destined-to-save-the-euro.html

[Fragony]

The idealists are the problem, they will never accept that they were wrong. They will just go on with it. Einstein had something wise to say about insanity.

[gaelic cowboy]

agreed, the best possible outcome is for germany and the netherlands will leave, the rump of the eurozone will devalue in consequence, and the pressure on the PIGS will lessen signifiantly.

And lose all those exports to the rest of the Eurozone which accounts for 40% of there total exports with another 20% thrown for the rest of Europe.

[Furunculus]

they are strangling their neighbours anyway with their low labour costs and competitve (by german norms) currency.

the euro has turned germany's neighbouring countries from growth markets to stagnant swamps, not exactly a sustainable option for healthy german exports in the long term.

i see german mechatronic precision machine-tools regualarly, it is not something that will just migrate elsewhere if its gets 5% more expensive, german exports will at worst be no better off five years down the line if they leave.*




* my guess - not backed up by any particular empirical evidence or wizardly forecasting.

[gaelic cowboy]

i see german mechatronic precision machine-tools regualarly, it is not something that will just migrate elsewhere if its gets 5% more expensive, german exports will at worst be no better off five years down the line.

Yes it can migrate.

sure dont they already threaten there own workforce with expanding to Eastern Europe in order to achieve wage restraint.

[Furunculus]

are you typing on a smartphone because that came out a little garbled? :)

[Kagemusha]

Furunculus while you are big fan of US born global capitalism.It is childish to impose your personal preference as truth.~:)

Maybe for example you should analyze why germany with its leftist social politics is fourth largest nominal gdp in the world with only bit over then 80 million people? I know already that your answer is that UK surely will be larger economy then Germany after next two decades.Thatcherians said the same two decades a go, but it didint happen.Why?

[Fragony]

Oh lollipop, exodus of the rich in France. What is it with lefties not understanding that recources aren't infinite. You can't take it for granted that the money will never run out, we have to find a cure for the addiction of other people's money. For our children. There will be mass starvations if we do not act right now.

Someone build a moneymill-park

[rory_20_uk]

Germany currently is purchasing its own stuff. Its currency is prevented from rising by being in the Euro. Currently the debts are hidden in the EU.

The UK spends an increasingly large amount on Social Services / Social Care. It is going up over inflation by the year. The norm is people stay in school until 18, and 50% until 21+. People are paid to stay in the South of England where prices are vast, which keeps prices high and ensures that they remain unemployed as the loss of benefits is above any job they could get. Moving to the cheaper north would depress wages and help new companies get a cheaper workforce. Such policies are unthinkable. Quite leftist policies where money is thrown around and then people scratch their heads that unemployment remains high.

Currently there is an outcry that people might be moved off disability allowances. Currently, people are on it for life without a review - ever. The numbers on it are also increasing. Reducing numbers by many appears to be unthinkable.

The problem is there is little if any return on investment. In Germany there is a large manufacturing base. This means persons leave University able to work in high-tech manufacturing. In the UK, reading / writing /timekeeping and dress code appears to be asking too much. Oh, and of course there are loads of jobs that are beneath people. Such as manual work / manufacturing. Everyone wants to be a middle manager in the office with the company car and good paycheque as they've got a degree. Who makes things?

I don't know how this cultural shift can be made.

~:smoking:

[Sarmatian]

Who makes things?


The Chinese.

[gaelic cowboy]

Every currency has to be backed by something, else it is worthless. The ECB may be able to print money, but it still backed by the countries in the EU. This means in essence it is backed by the strong countries such as Germany.

If the ECB books losses then the losses will be passed on to the member countries. The Germans are not happy to pay for Greeks to have a higher quality of life.

~:smoking:

No the euro is not backed by gold or countries it merely has a value that everyone agrees it has in short German has paid no one any money.

[rory_20_uk]

No the euro is not backed by gold or countries it merely has a value that everyone agrees it has in short German has paid no one any money.

That must be unique in all monetary systems in the world in the history of manking that is has no backing by anything at all.

Germany has paid no one any money, as we all live in the delusion that everything will get paid back. Which it is by lending money so that the last set of debts can be paid off.

~:smoking:

[gaelic cowboy]

That must be unique in all monetary systems in the world in the history of manking that is has no backing by anything at all.

Germany has paid no one any money, as we all live in the delusion that everything will get paid back. Which it is by lending money so that the last set of debts can be paid off.

~:smoking:

no it's quite common actually that is how fiat money works.

Germany has paid no one any money and they risk no money bailing anyone out because the risk of non-payment lies with Eurozone banks.

Each government is responsible for it's own banks and that is unique for a currency where the central bank will not stand behind the banking system.

[Kagemusha]

no it's quite common actually that is how fiat money works.

Germany has paid no one any money and they risk no money bailing anyone out because the risk of non-payment lies with Eurozone banks.

Each government is responsible for it's own banks and that is unique for a currency where the central bank will not stand behind the banking system.

And you as British,how does it concern you at all?So why do we few Irish and British members rambling over and over again about how Euro is a lost case when you havent even experienced it. Maybe Britain should apply as next state of US? As that is how insignificant your economical value is.

[HopAlongBunny]

gaelic has it right; fiat currency is worth whatever the market says its worth. Nominally the central bank controls fluctuations, but their power is limited when faced with a real crisis of confidence.

The Euro benefits from "collective defence" in case of a crisis, but really only some of the collective can afford that sort of intervention.

[Kagemusha]

nevermind.. Please start talking about euro and EMU if your country is actually part of it.

[Philippus Flavius Homovallumus]

And you as British,how does it concern you at all?So why do we few Irish and British members rambling over and over again about how Euro is a lost case when you havent even experienced it. Maybe Britain should apply as next state of US? As that is how insignificant your economical value is.

gaelic is Irish, and therefore inside the Eurozone.

Britain has worse debt dynamics than France - but because we have a central bank and central debt together we can exert pressure on the markets. Greece has to borrow on it's own, but it shares a currency with Germany - so the Greek Central Bank is hamstrung and the ECB won't stand behind Greece the way Greece needs it to.

There is also the problem of trust, this is what Furunculus means when he says "family" - the Germans don't believe that if they give the Greeks lots of money the Greeks will then cut spend, so the Germans aren't willing to give.

Sarmation has referenced Scotland several times and he has a point - the SNP has managed to erode trust through high-spend policies financed by English taxpayers to the point that now a majority of the English are unhappy with the status quo and increasingly apathetic about Union.

One point worth noting is that the British (read English) taxpayers would probably accept Britain taking on a share of Irish debt (through low-cost loans) if Ireland left the Euro and pegged to the pound. Such a transfer would be necessary because the pound is also a very strong currency, but it would probably fly here - sadly I doubt it would fly in Ireland.


gaelic has it right; fiat currency is worth whatever the market says its worth. Nominally the central bank controls fluctuations, but their power is limited when faced with a real crisis of confidence.

The Euro benefits from "collective defence" in case of a crisis, but really only some of the collective can afford that sort of intervention.

Theoretically, the Euro is backed by 17 countries - but 3 of those are already effectively bankrupt and the remaining 15 are in varying amounts of trouble. The consensus building now is that "collective defence" requires a "collective debt" to be effective, i.e. Eurobonds. The problem with this approach is that, again, there is a lack of trust. Germany is concerned that the debter nations will use lower borrowing rates to halt or reverse austerity - thereby raising the cost of the Bonds further, which Germany will have to bear.

[ICantSpellDawg]

nevermind.. Please start talking about euro and EMU if your country is actually part of it.

We should extend this line to American policy as well? Oh, that's right, the complete collapse of your economy would impact us, just like the ramifications of our economic and foreign policy affect you and give you a reasonable right to comment on them. Nope, we should keep posting. There is more than one reason why the British decided to stay out of this system, maybe you should have listened to them a bit more in the first place.

So, when do the fireworks start? I've got my popcorn in the microwave.

Didn't we solve similar problems by allowing Hamilton's plan (http://en.wikipedia.org/wiki/First_Report_on_the_Public_Credit) to take on all State debts as Federal? That was a rather simple move, it just required sacrifice from the responsible economies and a loss of free will from the profligate, moronic State economies. You shouldn't have gotten involved in the common currency market unless you wanted to lose you national identity and sovereignty at some point, so what's the hold-up now? Wistfulness or just denialism?

[Kralizec]

Because it isn't just what you spend your taxes on and how much, it is where you spend them in order to even out the imbalances that prevent one part of the economy from functioning within another.
Infrastructure - welsh road building
Social security - glasgow
Public jobs - north east
Procurement - harland and wharf
Failure to do so results in a divergent economy where the poorer parts struggle to live in a richer society, and poverty is compounded. Visit Greece today.

America knows this, it operates a transfer union, it succeeds. Can the same be said for the eurozone?

The reverse side of the fiscal union coin, a transfer union, and you can't dump public money on someone else unless theirnis a social compact permitting this.
This requires a political union, or put another way; a sense of shared familial sentiment.

Except that the EMU memer states have been functioning as financially independent nations for a long, long time before they introduced the Euro. All the troubled EMU countries are larger in population than the average American state, nevermind Glasgow or Wales. I remain unconvinced that being part of EMU, in itself, has made it absolutely impossible for them to ever be able to foot their own bills- which seems to be the core of your argument.

A pretty big part of the problem is that some southern countries, Greece in particular, have seen large increases in wages over the past decades while Germany and several other northern countries have deliberately limited wage increases to safeguard their competitive edge. Obviously not being able to devaluate the currency stops souther countries from devaluating their wages, but that just means they lack a solution for a problem that needn't have existed in the first place.
It's worth noting that in Germany there have been several large wage increases the past few months; which might be the first step to solve this kind of problems in the longer term.


in part because a common currency comes with a homogenised borrowing rate.

Not necessarily; allthough it's obvious that in this case it did happen: being in the EMU has allowed "weaker" countries to borrow at excellent interest rates for a long time. In the case of Spain, whose government finances were pretty solid actually, it contributed to the housing bubble. However a lot of anti-EMU activists extend this argument to blame the Euro for the fact that the Greek government borrowed a buttload of cash and ran -5% deficits even in the "good years". Which is incredibly stupid.

[Furunculus]

Furunculus while you are big fan of US born global capitalism.It is childish to impose your personal preference as truth.~:)

Maybe for example you should analyze why germany with its leftist social politics is fourth largest nominal gdp in the world with only bit over then 80 million people? I know already that your answer is that UK surely will be larger economy then Germany after next two decades.Thatcherians said the same two decades a go, but it didint happen.Why?
it is not chilish at all, and my view is not based on some abstract in economic dualism, it boils down to this.

are you my family.
will germany pay for greece in perpetuity
will greeks accept grinding austerity for the next decade to please the germans
if the answer to both the above is not "yes" then a currency union won't work at the bottom of the economic cycle.
because there is no mandate for contentious policy.

------------------------------------------------------------

two good quotes from non-tory (since that clarification seems necessary for people to look at it without shouting "tory stooge"):

nick clegg -

"Whilst I have a huge amount of sympathy with German taxpayers and German politicians who are reluctant, understandably because Germany is the paymaster of the European Union, to entertain these ideas, I fear that they are unavoidable."

"It is not sustainable to believe that the eurozone can thrive through fiscal discipline alone - it also has to, at some level, include an ability to either share debt or to deal with shocks in one part of the system or the other through fiscal transfers."

ed balls -
"In the end... somebody has got to persuade Germany that this is a catastrophe for Britain, Europe and the world and that Germany has got to change course,"

"The problem is, the German people went into the eurozone 10 years ago on the clear promise that they weren't going to bail out Italy and the central bank wasn't going to play this role. Both things have got to change."

http://www.telegraph.co.uk/news/worldnews/g8/9278873/Cameron-tells-Greece-to-accept-austerity-or-quit-the-eurozone.html

[gaelic cowboy]

And you as British,how does it concern you at all?So why do we few Irish and British members rambling over and over again about how Euro is a lost case when you havent even experienced it. Maybe Britain should apply as next state of US? As that is how insignificant your economical value is.

I am not British.


nevermind.. Please start talking about euro and EMU if your country is actually part of it.

I am Irish so I believe I have as much right as the next man to big up or rubbish EMU.

At the minute every solution put forward to solve Irelands banking problem has been a sticking plaster.


One point worth noting is that the British (read English) taxpayers would probably accept Britain taking on a share of Irish debt (through low-cost loans) if Ireland left the Euro and pegged to the pound. Such a transfer would be necessary because the pound is also a very strong currency, but it would probably fly here - sadly I doubt it would fly in Ireland.


I dont believe there would be as much opposition to a sterling peg as you think PVC it is not the same as how the Euro does or doesnt work.

It was also the way the currency was always run before and there was no problem until the ERM debacle (which was also a pie in the sky euro thingy)

On the plus side for the UK apparently every man woman and child in the state is worth 3000 to Britain in goods and services and were a more important trading partner than China to the UK.

The main danger is to Britains banking system as both Ireland and the UK have lots of business in each others jurisdiction from shops to banks and insurance blah blah etc etc.

[Furunculus]

clegg to the german electorate:
http://www.spiegel.de/international/europe/spiegel-interview-with-british-deputy-prime-minister-nick-clegg-a-834120.html

i would be delighted to see ireland adopt a sterling peg.

[gaelic cowboy]

i would be delighted to see ireland adopt a sterling peg.

Well of course you would seeing as it would safegaurd your investments and loans which would be paid in something other than monopoly money.

However I think it would be likely to peg only in the sense that sterling is lower than the Euro so it's not neccessary to actually peg say for 1 Punt to say 1,20 Pound.


The other more cynical reason is that Ireland exiting the Euro means the country most likely to achieve it's austerity confidence bailout ends up proving austerity confidence bailouts dont work. (a secret hope of some british eurosceptics)

If we get to the stage that Ireland has to leave the Euro then the entire thing is basically crashing by that stage in my view.

Amazingly even now this whole thing can dissappear in a puff of smoke and yet the "People Who Know" or "Serious People" continue with policy that only ends in default, breakup, mass unemployment and there own eventual electoral defeat.

It amazes me how much this Euro crisis is about everything but what it is actually about.

[Furunculus]

The other more cynical reason is that Ireland exiting the Euro means the country most likely to achieve it's austerity confidence bailout ends up proving austerity confidence bailouts dont work. (a secret hope of some british eurosceptics)

along similar lines, but less cynically, if you believe as i do:

That the fundamental problem is none of the nations of eurozone feel sufficient familial sentiment with [all] of the other nations of eurozone. Thus common governance will not be considered legitimate for it cannot be [both] representative of [and] accountable too [all] the peoples of europe. This problem is compounded by the nature of the EU where national governments deliberately fail to seek the consent of their people when they divest the authority to govern, lent temporarily to them by the people, to an unrelated and unresponsive third party. It ceases to be government by the people, for the people. The further you go down this road the greater the civil unrest will result, and if your ambition is to add to the sum of wellbeing and welfare of the peoples of europe then no sane man can support ever-closer-union. If we were talking about ever-closer-union between germany, the benelux nations, austria, and perhaps finland then this would not be a problem.
The people of europe have to decide whether they are [a] single people with [a] shared destiny.

Then ending the foolish project (to entomb us all in euro-love), before we arrive at revolution is very much to be desired.

[Philippus Flavius Homovallumus]

http://www.telegraph.co.uk/comment/columnists/borisjohnson/9278862/Europe-is-driving-full-tilt-foot-on-the-pedal-into-a-brick-wall.html

Boris has been to Athens - he didn't like it much.

[Kralizec]

http://www.telegraph.co.uk/comment/columnists/borisjohnson/9278862/Europe-is-driving-full-tilt-foot-on-the-pedal-into-a-brick-wall.html

Boris has been to Athens - he didn't like it much.

Britain doesn't have a stake in the Greek issue. And Boris is an egotistical clown with a bad haircut, who should stick to being a glorified public transit manager in London. Let's leave it at that.

[Kralizec]

"Whilst I have a huge amount of sympathy with German taxpayers and German politicians who are reluctant, understandably because Germany is the paymaster of the European Union, to entertain these ideas, I fear that they are unavoidable."

"It is not sustainable to believe that the eurozone can thrive through fiscal discipline alone - it also has to, at some level, include an ability to either share debt or to deal with shocks in one part of the system or the other through fiscal transfers."

I like Clegg. He is clearly a man of great intellect and sophistication - he speaks and understands Dutch. But even a great man can be wrong occasionally.


"In the end... somebody has got to persuade Germany that this is a catastrophe for Britain, Europe and the world and that Germany has got to change course,"

"The problem is, the German people went into the eurozone 10 years ago on the clear promise that they weren't going to bail out Italy and the central bank wasn't going to play this role. Both things have got to change."

The Spiegel had a good article in their latest issue about Italy's entry in the Euro (amongst other things). I'm not sure if it's on their international section as I read the original German article. Kohl initially had great reservations about taking in Italy, but France made it clear that they wouldn't proceed unless Italy was accepted as well. His bargaining position wasn't particulary great as Germany technically wasn't adhering to the deficit/debt criteria at the time. Then, in an uncharacteristic (for Italy) show of determination Prodi brought back Italy's deficit within tolerable levels and thus qualified for entry. After all the relevant decisions had been made however, Prodi was forced to repeal several of his measures to appease his commie allies in the Italian parliament. Kohl however was confident that they'd pull their act together at some indeterminate point in the future.

OTOH, Italy so far has managed to avoid a bailout. Greece, which was admitted under Schroder's tenure as chancelor, well...

[InsaneApache]

I like Clegg. He is clearly a man of great intellect and sophistication - he speaks and understands Dutch. But even a great man can be wrong occasionally.

Clegg! A great man! :laugh4:

He's the end of a bell.

[Kralizec]

Well, that part was more than a little tongue-in-cheeck.

I do like him though, allthough I confess I don't follow everything he does. You probably know more about him and his policies than me, but then again, you dislike the vast majority of politicians.

[InsaneApache]

What on Earth is there to like about politicos? They cause problems then come up with the wrong solution. The Euro being a prime example.

As for Cleggy, I'll bet you a pound to a penny he loses his seat in the next election. Look up his pledge of tuition fees. The end of a bell indeedy.

[Furunculus]

i like clegg, he is trying to make his party a party of government, which is not quite the same thing as a party of protest as the point-five party in a two-pint-five party system.

you only count as one of the big two in britain, clegg knows this, but he also has to evolve his party past the disparate collection of wingnuts willing to adopt any policy no matter how incoherent as long as it triangulates sufficiently in their particular constituency.

[Kralizec]

What on Earth is there to like about politicos? They cause problems then come up with the wrong solution. The Euro being a prime example.

As for Cleggy, I'll bet you a pound to a penny he loses his seat in the next election. Look up his pledge of tuition fees. The end of a bell indeedy.

Furunculus and I agree; your argument is irrelevant.

~;)

[Fragony]

Oh yay 40.000.000.000 down the drain :2thumbsup:

[gaelic cowboy]

Britain doesn't have a stake in the Greek issue.

Britain has always had a stake in this issue it's just not the same as yours.

[Sir Moody]

And Boris is an egotistical clown with a bad haircut, who should stick to being a glorified public transit manager in London. Let's leave it at that.

I quite like Boris as a politician - he says what he is thinking and doesn't care about the party line at all (whenever DC has to have a photo moment with Boris he always seems to wear this "please god what is he going to say now" look :laugh4:)

of course I suspect Boris is just a new type of Spin - he knows people don't trust the parties any more and so does his best to set himself apart while not going far enough to get kicked out...

[Brenus]

The funniest thing is there is no possibility to kick a country out of the Euro… The only possibility (very hard) is to a country to leave…
Then, you have the technicalities: Print money (3 years?), change, debt, and who will pay for the Greek Euros, etc…
Funny that none of the “experts” who are telling as that either Greece will be expelled or will quit speak about the how. Then, if the debt still exists, in Euro, to go to drachma will change absolutely nothing. The debt will be 1 drachma, 1 week after 2 drachmas, 3 weeks after 100 drachmas for 1 Euro. Then you have to print new banknotes…
So, thanks to the stupid liberal/conservative policy, after 9 austerity plans that failed one after one and the increasing of the Greek debt, the only solution is to carry on. Like the medieval doctors, our good experts bleed the weak body to purge the bad humours. Doesn’t work? Well, at least the banksters and the Agencies are making money…

[InsaneApache]

I'd put it down to the imbeciles who started the Euro in the first place.

Remember politicians are not your friends. They are our enemies.

[Furunculus]

The funniest thing is there is no possibility to kick a country out of the Euro… The only possibility (very hard) is to a country to leave…


if greece does not meet the terms of the bailout plan it will not recieve the next tranche of german wonga.

if it does not have the wonga then it is instantly insolvent (it really is insolvent already), and needs to default.

if it defaults then it almost certainly needs to do this outside the eurozone.

if it does leave then all debt written in greek law will be devalued, and in all likelyhood europe will assist with debt held under foriegn law as it will mostly be 'owned' by european banks.

it is quite simples really. there are no good choices, but there is a choice between temporary agony and grinding depression.

[gaelic cowboy]

if greece does not meet the terms of the bailout plan it will not recieve the next tranche of german wonga.

if it does not have the wonga then it is instantly insolvent (it really is insolvent already), and needs to default.

if it defaults then it almost certainly needs to do this outside the eurozone.

if it does leave then all debt written in greek law will be devalued, and in all likelyhood europe will assist with debt held under foriegn law as it will mostly be 'owned' by european banks.

it is quite simples really. there are no good choices, but there is a choice between temporary agony and grinding depression.

They will see it crash in flames before they pluck the courage to help Greece leave.

The EU will have to take charge of any programme for Greece to leave in order to prevent an even worse default.
The next day Irish Spanish and Portugese bonds prices will be heading for orbit as the principle of a country leaving will have been proved.

Basically there stuck with the Greeks and they cant even stop them printing Euro if they want.

[Furunculus]

eurocrats have spent 18 months bailing out the boat until it reaches sight of land, and that time has been well used by banks to deleverage from greece and for the markets to price in the cost of a greek exit.

if it happens, it will be no lehmans.

there are no good choices, but there is a choice between temporary agony and grinding depression. and the choice will be made by the greek electorate.

good article from the economist:

http://www.economist.com/node/21555916


They say that they want to keep the euro intact—except, perhaps, for Greece. But northern European creditors, led by Germany, will not pay out enough to assure the euro’s survival, and southern European debtors increasingly resent foreigners telling them how to run their lives.

This has become a test of over 60 years of European integration. Only if Europeans share a sense of common purpose will a grand deal to save the single currency be seen as legitimate. Only if it is legitimate can it last.

[gaelic cowboy]

eurocrats have spent 18 months bailing out the boat until it reaches sight of land, and that time has been well used by banks to deleverage from greece and for the markets to price in the cost of a greek exit.

if it happens, it will be no lehmans.

there are no good choices, but there is a choice between temporary agony and grinding depression. and the choice will be made by the greek electorate.

good article from the economist:

http://www.economist.com/node/21555916

But if the precendent is there why would I buy EFSF or ESM bonds on the open market.

If Greece leaves then the whole system from the bailout bonds and even the currency is called into question.

[Furunculus]

the bundesbank appears to believe it achievable, i have no reason to disbelieve them.

i don't claim that it will be nice or easy, quite the opposite, but the world will not end, and the result has a good chance of creating a better outcome for all.

likewise, i don't claim that greece must leave, the hideous-strength of ever-closer-union has long defied common sense.

are you my family?

if greece is out that is a question to which germany may be able to answer "yes", in which case the euro has a future. a small price to pay, that might not otherwise be paid.

[gaelic cowboy]

the bundesbank appears to believe it achievable, i have no reason to disbelieve them.

i don't claim that it will be nice or easy, quite the opposite, but the world will not end, and the result has a good chance of creating a better outcome for all.

likewise, i don't claim that greece must leave, the hideous-strength of ever-closer-union has long defied common sense.

are you my family?

if greece is out that is a question to which germany may be able to answer "yes", in which case the euro has a future. a small price to pay, that might not otherwise be paid.

The Bundesbank talks an awful lot of :daisy: if you ask me, they have no way of knowing where this ends.

Far simpler to just unleash the ECB to back up all banks and let things ride.

[Vladimir]

So is Germany trying to keep these countries in the Euro to artificially keep the price of their exports down? It seems like their products would get a lot more expensive if the Euro shed the dead weight.

[Furunculus]

The Bundesbank talks an awful lot of :daisy: if you ask me, they have no way of knowing where this ends.

Far simpler to just unleash the ECB to back up all banks and let things ride.

for sure it is far simpler, beign able to ignore the will of your people and do as you please is so much easier.

that said, it gets a little awkward when you have to explain to lots of people (germans) who think they exist within a representative democracy (and don't want a debt-union)......

remember that we approach this coming crisis in large part because no one is certain that greek people can tolerate an additional ten years of grinding recession without seeing the country fall to extreme-populist politics and/or revolution!

greece was supposed to be able to return to the markets in short order, but the yield remains punishingly high because markets don't have confidence that greece won't default.

this is not some dry economic argument, no indeed, it is raw visceral emotion which is the heart of all politics.

[edit]

this pic amusingly demonstrates the core of the problem:

http://blogs.telegraph.co.uk/news/danielknowles/100160501/solutions-to-the-eurozone-crisis/

[gaelic cowboy]

for sure it is far simpler, beign able to ignore the will of your people and do as you please is so much easier.

that said, it gets a little awkward when you have to explain to lots of people (germans) who think they exist within a representative democracy (and don't want a debt-union)......

remember that we approach this coming crisis in large part because no one is certain that greek people can tolerate an additional ten years of grinding recession without seeing the country fall to extreme-populist politics and/or revolution!

greece was supposed to be able to return to the markets in short order, but the yield remains punishingly high because markets don't have confidence that greece won't default.

this is not some dry economic argument, no indeed, it is raw visceral emotion which is the heart of all politics.

[edit]

this pic amusingly demonstrates the core of the problem:

http://blogs.telegraph.co.uk/news/danielknowles/100160501/solutions-to-the-eurozone-crisis/

I wish someone would explain to these "Germans" the papers keep referencing that worrying about hyperinflation in a balance sheet recession is daft. Everything keeps coming back to how a few greedy banks dont want to be held accountable for there own poor investments.

Allied with spineless eurocrats and a laughable central bank structure were in basically the black hole of calcutta.

If the system is devised to to prevent aid then it also should be designed to prevent capital flows. (but then it wouldnt be a common currency then now would it)

[Furunculus]

I wish someone would explain to these "Germans" the papers keep referencing that worrying about hyperinflation in a balance sheet recession is daft. Everything keeps coming back to how a few greedy banks dont want to be held accountable for there own poor investments.

Allied with spineless eurocrats and a laughable central bank structure were in basically the black hole of calcutta.

If the system is devised to to prevent aid then it also should be designed to prevent capital flows. (but then it wouldnt be a common currency then now would it)
i think this paradox is what the "taregt2" payment regime was designed for; to slide these balance of payments issues under the radar of the german electorate.

[Brenus]

@ furunculus: All is good. The Euro zone is made by Countries that signed a Treaty.
No Country is more equal than another.
If Greece tell bankers “I will not pay the debt” others counties can’t kick Greeks out.
If others Countries( their banks) said "all right we cut the money", Greeks can says “just do it and we will have fun” as this will be the immediate collapse of 3 majors French Banks and 2 Germans.
And Greece still will be in Euro.:yes:

[Furunculus]

So is Germany trying to keep these countries in the Euro to artificially keep the price of their exports down? It seems like their products would get a lot more expensive if the Euro shed the dead weight.

not quite so explicitly as far as the german electorate is concerned, but to paraphrase boris johnson; they are pro cake, and pro eating it!

[Furunculus]

@ furunculus: All is good. The Euro zone is made by Countries that signed a Treaty.
No Country is more equal than another.
If Greece tell bankers “I will not pay the debt” others counties can’t kick Greeks out.
If others Countries( their banks) said "all right we cut the money", Greeks can says “just do it and we will have fun” as this will be the immediate collapse of 3 majors French Banks and 2 Germans.
And Greece still will be in Euro.:yes:

but there is no common liability allowed in the treaty, and cash (the printing thereof) is managed by the ECB.

greece won't have a choice when it doesn't receive its next tranche of bailout cash in june................. and then can't pay hundreds of thousands of civil servants in july.

the answer to that being: default, exit euro, allow newly sovereign greek central bank to print cash.

again, this is not a good solution, or an easy one, but it might be the least bad solution.

[Brenus]

Well, Greece has the choice to refuse to pay the debt. This would greatly improve its finances balance. Then what? General Collapse of the Euro, including the German one (domino effect).
Going out of the Euro in keeping the debt makes no sense for Greece. The problem is not the Euro, the problem is the debt. Leaving the Euro won't resolve the problem of the debt.
So, solution is political.

[rory_20_uk]

Well, yes. Getting into the mess political as the politicians spent money they didn't have. Sorting it out is at least in the medium / long term is getting into the habit of not doing this again. Even if the Germans et al do decide to support their economy ad infinitum where they lend money so they can be paid back their existing loans and also pay salaries - technically not loosing money as long as the Ponzi scheme continues - they'll be unlikely to do is a second time.

~:smoking:

[Furunculus]

Default sarmatian, default.

It 'probably' won't kill the euro, and if it does then the euro didn't not have the commitment necessary for a future anyway. Europe's fault, not greece's.

[Brenus]

"as the politicians spent money they didn't have": You mean, as the banks did? Because, if I remember well, the Politicians had to bail out the Banking Private Sector, the House Market System in USA, and Private Pensions Companies (at least to pick up the bills for the ones who trust Eron). To easy to blame the "states". The Private Market was too greedy, and Politicians too incompetent... Common point: They all believe in Capitalism and Free Market:laugh4:

[Fragony]

Well you heard wrong, people tend to forget that banks weren't allowed to refuse risky mortages in problematic area's according to the community reinvestment act.

[rory_20_uk]

When governments give out their bonds and guilts, what happens to them? Banks buy them! Often the banks are required to do so.

Then a Government with what not so long ago had been a AAA rating cuts their money by 70%. And guess what? They need a bail out!

They believe in the illusion of a free market. They don't want one. Everyone blames the rating agencies for cutting levels too late, but all the nations make a massive fuss when theirs are cut. Few countries should ever be on AAA - as if everyone is the same until a few months before a selective default and massive bail out, what is the point?

Free Markets would require lean economies to compete against others. We may be more developed and efficient, and we have a much higher standard of living. As others develop and invest we have to do something beyond increase Social Service and pension payouts as all this does is make what we do more expensive.

If we don't want a free market, I take it we focus internally? That would require a massive reduction in the style of living as the cost of most things rockets. But like the greeks the concensus is for bigger handouts from the states (money, education, healthcare, housing), lower taxes, lower prices and of course ideally a reduction in the deficit.

~:smoking:

[Furunculus]

Well you heard wrong, people tend to forget that banks weren't allowed to refuse risky mortages in problematic area's according to the community reinvestment act.

In addition to keeping interest rates too low thus fueling booms in countries that didn't need them. Ireland, Spain, and arguably Britain spring to mind.

[Philippus Flavius Homovallumus]

Well, Greece has the choice to refuse to pay the debt. This would greatly improve its finances balance. Then what? General Collapse of the Euro, including the German one (domino effect).
Going out of the Euro in keeping the debt makes no sense for Greece. The problem is not the Euro, the problem is the debt. Leaving the Euro won't resolve the problem of the debt.
So, solution is political.

The problem is actually that the debt in in Euro's, it's like Greece having it in Marks.

If it was in Drachmas they could print them and that would have lowered the debts two years ago.

The problem is the same as it always was - the solution is the same as it was 2 years ago.

[Furunculus]

another classic for the "BigF" is always right library:

http://www.nytimes.com/2012/05/26/world/europe/german-reunification-pains-inform-stance-on-greece.html?smid=fb-share


“The limit of German brotherhood extended to East Germany, and they saw what happened with two trillion euros over the past 20 years,” said Michael C. Burda, an economics professor at Humboldt University in Berlin. “And these are people they love. They don’t consider the Greeks their brothers.”

ARE YOU MY FAMILY?

[gaelic cowboy]

Well you heard wrong, people tend to forget that banks weren't allowed to refuse risky mortages in problematic area's according to the community reinvestment act.

Doesn't matter Frag they wouldn't have refused giving the mortgage anyway.

The banks believed they had found a way to mitigate the risk by selling on these subprime mortgages on the open market.

[Philippus Flavius Homovallumus]

ARE YOU MY FAMILY?


Look - we all get the point, will you stop saying it now please?

Like all slogans it has passed it's sellby date.

[Fragony]

Doesn't matter Frag they wouldn't have refused giving the mortgage anyway.

The banks believed they had found a way to mitigate the risk by selling on these subprime mortgages on the open market.

I am sure the sales-guys had a good laugh, but these mortages would have been denied otherwise. To blame the market to be causing this is kinda off, it were the politicians who set it in motion

If there is no consequence there can be no free market, hands off and we will be fine

Leave us alone

[Furunculus]

Look - we all get the point, will you stop saying it now please?

Like all slogans it has passed it's sellby date.

sure d00d, you only needed to ask. :)

................... now for all of the rest of you! :x

[gaelic cowboy]

I am sure the sales-guys had a good laugh, but these mortages would have been denied otherwise. To blame the market to be causing this is kinda off, it were the politicians who set it in motion

If there is no consequence there can be no free market, hands off and we will be fine

Leave us alone

No they wouldn't have got denied Frag.

You have to remember back to what was really going on here plus people who are not prime candidates are not always a bad investment.

The banks needed to grow and one area that was badly served was in subprime which often this includes the self employed. The bank knew these were risky-ish but then figured we will sell the mortgages on the open market and essentially hive off the risk.

The problem was and is that no one really knew the risk and so therefore they couldnt possibly know a fair price for the contracts.

Governments essentially decided to not regulate these things because essentially it was felt the market knew best.

In effect they did leave them alone.

[Fragony]

No they wouldn't have got denied Frag.

You have to remember back to what was really going on in this case remeber People who are not prime candidates are not always a bad investment.

The banks needed to grow and one area that was badly served was subprime often this includes people the self employed. The bank knew these were risky but then they hit on a new plan we will sell the mortgages on the open market and essentially hive off the risk.

The problem was and is no one really knew what the risk really was and so thereefore they couldnt possibly know a fair price for the contracts.

Governments essentially decided to not regulate these thing in reality because essentially it was felt the market knew best.

In effect they did leave them alone.

Of course they would have denied these loans, why would you put money where there is hardly a chance you will get it back. Banks don't play dice, it is the government that is guilty

[gaelic cowboy]

Of course they would have denied these loans, why would you put money where there is hardly a chance you will get it back. Banks don't play dice, it is the government that is guilty

Your forgetting that by selling them as mortgage backed securities they didnt have any risk anymore, unfortunately the banks often bought these type of contracts from other banks. Essentially they all ended up buying contracts they couldnt know the risk on which meant there were unknown ticking timebombs left everywhere.

They were of course supposed to be rated by the various agencies like Moodys or Fitch etc etc but they couldn't possibly know what the correct risk was. Also the banks tended to chop up both high grade to low grade loans and then sell them together. This was basically an impossible thing to rate or as near as makes no difference anyway.

I know you want to blame governments for subprime mortgages etc etc but in reality there were really only guilty of not regulating. Essentially the Financial industry believed they had lessened the risk so there was no need for any regulation.

And also just because a loan is not prime does not mean it is automatically risky Frag.

[Fragony]

You are much more knowledgable about the subject so I won't argue with you

[Kagemusha]

with your
We should extend this line to American policy as well? Oh, that's right, the complete collapse of your economy would impact us, just like the ramifications of our economic and foreign policy affect you and give you a reasonable right to comment on them. Nope, we should keep posting. There is more than one reason why the British decided to stay out of this system, maybe you should have listened to them a bit more in the first place.

So, when do the fireworks start? I've got my popcorn in the microwave.

Didn't we solve similar problems by allowing Hamilton's plan (http://en.wikipedia.org/wiki/First_Report_on_the_Public_Credit) to take on all State debts as Federal? That was a rather simple move, it just required sacrifice from the responsible economies and a loss of free will from the profligate, moronic State economies. You shouldn't have gotten involved in the common currency market unless you wanted to lose you national identity and sovereignty at some point, so what's the hold-up now? Wistfulness or just denialism?

With your monopoly money how do you even dare to interfere. Dollar is bancrupt.Even with its current low point euro/emu area is stronger then dollar. You invented this idea of living of debt and likes of fururnculus still continue shouting the mantra. US debt will be equal to US GDP in less then 10 years and everybody and few others know it already.

So i understand that you would like nothing better then euro to fail, but its not happening anytime soon.

Just take good care of yourselfs my big brother from other side of pond when china owns 2/3rds of your national debt.:on_stress:

[Philippus Flavius Homovallumus]

with your

With your monopoly money how do you even dare to interfere. Dollar is bancrupt.Even with its current low point euro/emu area is stronger then dollar. You invented this idea of living of debt and likes of fururnculus still continue shouting the mantra. US debt will be equal to US GDP in less then 10 years and everybody and few others know it already.

So i understand that you would like nothing better then euro to fail, but its not happening anytime soon.

Just take good care of yourselfs my big brother from other side of pond when china owns 2/3rds of your national debt.:on_stress:

The Euro area is in recession, the US is recovering.

The US Dollar is also a reserve currency.

The US has viable natural resources to exploit - and a strong industrial base (not as strong as it was, admittedly).

The Euro-Area is much weaker than the US, it lacks political cohesion, economic output is depressed and falling, and it is not a reserve currency.

In other words: You're wrong, which is why everyone will by Us Bonds and nobody wants Greek ones, or Italian, Spanish, Portugese, or Irish ones much either.

[Kagemusha]

it is not chilish at all, and my view is not based on some abstract in economic dualism, it boils down to this.

are you my family.
will germany pay for greece in perpetuity
will greeks accept grinding austerity for the next decade to please the germans
if the answer to both the above is not "yes" then a currency union won't work at the bottom of the economic cycle.
because there is no mandate for contentious policy.

------------------------------------------------------------

two good quotes from non-tory (since that clarification seems necessary for people to look at it without shouting "tory stooge"):

nick clegg -


ed balls -

http://www.telegraph.co.uk/news/worldnews/g8/9278873/Cameron-tells-Greece-to-accept-austerity-or-quit-the-eurozone.html

Yes.

You are definitely not my family. I dont give a shite about you. Although i do give for my countrymen and even europeans in general, not just leeeches like you.

B) Germany and not just germany is and has been paying and continues to pay.

c) my question is, are you a leech like Irish right wing capitalist or a English one?
If English. Il atleast have some respect for you. If I rish none.

[Kagemusha]

The Euro area is in recession, the US is recovering.

The US Dollar is also a reserve currency.

The US has viable natural resources to exploit - and a strong industrial base (not as strong as it was, admittedly).

The Euro-Area is much weaker than the US, it lacks political cohesion, economic output is depressed and falling, and it is not a reserve currency.

In other words: You're wrong, which is why everyone will by Us Bonds and nobody wants Greek ones, or Italian, Spanish, Portugese, or Irish ones much either.

Economical strength is compared by GDP, please take a look.You think continental europe and its holdings is bare wasteland? Like is said, please join the US. British products will get cheaper along the way.

[Kagemusha]

The Euro area is in recession, the US is recovering.

The US Dollar is also a reserve currency.

The US has viable natural resources to exploit - and a strong industrial base (not as strong as it was, admittedly).


The Euro-Area is much weaker than the US, it lacks political cohesion, economic output is depressed and falling, and it is not a reserve currency.

In other words: You're wrong, which is why everyone will by Us Bonds and nobody wants Greek ones, or Italian, Spanish, Portugese, or Irish ones much either.

btw who is buying US bonds? please elaborate?Except china ofcourse

[Furunculus]

Yes.

You are definitely not my family. I dont give a shite about you. Although i do give for my countrymen and even europeans in general, not just leeeches like you.

B) Germany and not just germany is and has been paying and continues to pay.

c) my question is, are you a leech like Irish right wing capitalist or a English one?
If English. Il atleast have some respect for you. If I rish none.

gee kage, that's a lot of anger right there.

i'm not sure why it is aimed at me, as i am only pointing out the flaws in a political project that was masquerading as an economic one...................... and i grant you; then saying "i told you so" when collapse arises from the contradictions.

i realise being smug isn't a very attractive character trait, but i don't see how i merit so much vitriol?

you do realise my most of my objection to 'the project' was precisely because i didn't see other people inventing a family identity they didn't have, and thus the euro would create precisely the ill-feeling that we are watching spread across the continent right now.

if ever-closer-union had stopped with mastricht then we might instead be happy neighbours right now rather than resented drunk uncles/feared violent patriarchs.

but i truly feel if this foolishness is not publicly ridiculed then we will continue on chasing our tails inventing ever more elaborate post-national constructs to circumvent the even-mounting public discontent at illegitimate government. someone has to do it, and i have manfully signed up for the job. to much opprobrium it might be added! :)

this is my objection.

so tell me why my (english) ingrate self generates such ill-feeling? is it because the emperor does not like being told that he is wearing no clothes......

and why am i a leech? my country signed up to the single market, not a federal union.

[InsaneApache]

The banks needed to grow and one area that was badly served was in subprime which often this includes the self employed. The bank knew these were risky-ish but then figured we will sell the mortgages on the open market and essentially hive off the risk.

This.

Aided and abetted by all those 'loveable progressive' politicians. Nincompoops the lot of them.

[Philippus Flavius Homovallumus]

Economical strength is compared by GDP, please take a look.You think continental europe and its holdings is bare wasteland? Like is said, please join the US. British products will get cheaper along the way.

GDP measures output not base strength. In any case the US is still the world's largest economy and the Eurozone's GDP is currently contracting, Europe is getting poorer, US GDP is expanding, the US is getting richer.

China is buying US bonds, yes, but so is Norway, Britain - everyone is buying them.

They are buying them quicker even than they are buying German debt.

The US has also not seen governmental collapse, like Greece, Italy and the Netherlands.

The US has economic problems - but it also has a responsible Federal Bank and it issues only one bond for it's debts vs the 17 for the Eurozone.

Edit: Oh, and "European Union GDP" includes we British "leeches" - given that Britain alone accounts for over 2.4 billion of EU GDP "Continental" Europe is a palty ~150,000 ahead of the US, and falling.

Edit 2:

Link: http://en.wikipedia.org/wiki/List_of_countries_by_GDP_(nominal)

[Philippus Flavius Homovallumus]

I'd also like to know what makes us "leeches" and not the debtor countries in the Eurozone - except the Irish, who are apparently bastards to Kage for some reason.

[HopAlongBunny]

My take on this is, even if things worked perfectly Greece would default.

Assuming perfect labour mobility, people would move from the depressed areas (Greece, Spain, Portugal etc.) to where the jobs are.

Germany benefits from declining wages as labour flows in, cheapening its manufactures and boosting its productivity Hurrah!

Greece is faced with a declining need for new debt as population flows ease the demand on its resources, but is faced with a declining tax base to service what was already viewed as an unsustainable level of debt.

It took centuries to get the "fiction" of Britain, Germany, France etc to work. It took a lot of negotiation, violence and failure to get those to work; Europa will be no different.

[Tellos Athenaios]

Philip: government collapse is a bit of a strong word for what happened in the Netherlands. To have something collapse you first need it to be in some shape or form that can actually collapse. The Dutch government never was in such shape or form, and the Euro does not have anything to do with that.

[Philippus Flavius Homovallumus]

@Phil (https://forums.totalwar.org/vb/member.php?u=22133)ip: government collapse is a bit of a strong word for what happened in the Netherlands. To have something collapse you first need it to be in some shape or form that can actually collapse. The Dutch government never was in such shape or form, and the Euro does not have anything to do with that.

Yes collapse is a bit strong, but it still represents a worse situation than even the debt deadlock in the US. Kage wants to paint the EU as economically stronger than the US - but the EU lacks a central government to make sure debts etc. are paid when a State's government breaks down.

It doesn't directly have anything to do with the Euro (although Wilders walked out over FU) but it contributes to the argument that the Euro area is weak politically.

[Tellos Athenaios]

Yes collapse is a bit strong, but it still represents a worse situation than even the debt deadlock in the US.

Nope. Suddenly assorted parties on the right found out that it is better to deal with left wing parties than right wing populists. Which is better for the Netherlands and better for the EU as the resulting agreement on the budget is much better at the cost of ignoring a couple of populist talking points. Plus, the populists don't get the credit, which hopefully translates into less votes come the election.

[Philippus Flavius Homovallumus]

Nope. Suddenly assorted parties on the right found out that it is better to deal with left wing parties than right wing populists. Which is better for the Netherlands and better for the EU as the resulting agreement on the budget is much better at the cost of ignoring a couple of populist talking points. Plus, the populists don't get the credit, which hopefully translates into less votes come the election.

Sorry?

What was that?

I'm afraid my brain is no longer capable of processing positive news from the Eurozone.

Still - there is still Greece et al.

[Tellos Athenaios]

Sorry?

What was that?


A budget was negotiated without the PVV, and will be implemented by a care taker government. Not nearly as bad as an abdication of responsibility and all pretense at adulthood while holding a country hostage with the threat of a default, which is what the deadlock in the USA amounted to.

[Philippus Flavius Homovallumus]

A budget was negotiated without the PVV, and will be implemented by a care taker government. Not nearly as bad as an abdication of responsibility and all pretense at adulthood while holding a country hostage with the threat of a default, which is what the deadlock in the USA amounted to.

I can't hear you!

La La La!

:hide:

[Fragony]

40 billion euro's that we will have to borrow ourselve, and it is not comming back

[gaelic cowboy]

You are definitely not my family. I dont give a shite about you. Although i do give for my countrymen and even europeans in general, not just leeeches like you.

B) Germany and not just germany is and has been paying and continues to pay.

c) my question is, are you a leech like Irish right wing capitalist or a English one?
If English. Il atleast have some respect for you. If I rish none.

Stuff you an all too Kagemusha ye cant even admit when you have made a huge mistake politically.

The Euro was and and still is a political creature and it's current crisis is also caused by and sustained by politics.





Banks here lent so much money they no longer used the Irish deposit base but instead got it from German, French and various other Euro banking eejits who went crying for the price of there Lotto ticket back.

[gaelic cowboy]

Economical strength is compared by GDP, please take a look.You think continental europe and its holdings is bare wasteland? Like is said, please join the US. British products will get cheaper along the way.

I never seen a country yet that gets to spend it's GDP.

GNP is the key

[Philippus Flavius Homovallumus]

I never seen a country yet that gets to spend it's GDP.

GNP is the key

He's wrong anyay - Eurozone GDP is below US GDP.

[gaelic cowboy]

He's wrong anyay - Eurozone GDP is below US GDP.

And interestingly the US is a country that has a higher GNP than GDP or at least it did the last time I checked.

[Furunculus]

another good one from the ECFR:

http://ecfr.eu/content/entry/how_france_and_germany_can_make_europe_work


“The weakness of the system is not about spending and how to promote growth, but about legitimacy”, said a [german] finance ministry official.
It may be possible to put off treaty change for a few more years. But the provisions of the Fiscal Compact, the pressure on Germany, the weaknesses of the Lisbon Treaty and the imperative need to give the eurozone strong, representative and accountable political authorities will ensure that the issue returns to the agenda sooner than many expect.

[Beskar]

Being honest, the real method to solving this would be for the ECB to simply buy the debt of Greece. I am sure lots of investors would be willing to sell their debt on for a low price just to make some return. Then the ECB simply kills off all interest payments so the only money Greece pays to the ECB for the debt simply reduces the total debt amount. (Debt only increases/decreases via Euro inflation)

As for austerity measures, simply start getting a Euro-wide average, lets say, Greece has to have the same retirement age as the Germans. Therefore, Greece is only being asked simply to align itself to the other powers within the Eurozone.

This would make repayments completely affordable for Greece and the "Euro is saved".

Now start doing this for the other countries such as Spain, Ireland, Italy with the ECB slowly buying, consolidating and cancelling the inter-eurozone debt. This is what I would have done economy wise near the start of the crisis.

As I said donkeys ago, lets say Furunculus owes me £100 and I owe him £90, we simply cancel the debt out so ultimately Furunculus just owes me £10 which is a significant reduction for his expenses.

[gaelic cowboy]

Being honest, the real method to solving this would be for the ECB to simply buy the debt of Greece. I am sure lots of investors would be willing to sell their debt on for a low price just to make some return. Then the ECB simply kills off all interest payments so the only money Greece pays to the ECB for the debt simply reduces the total debt amount. (Debt only increases/decreases via Euro inflation)

As for austerity measures, simply start getting a Euro-wide average, lets say, Greece has to have the same retirement age as the Germans. Therefore, Greece is only being asked simply to align itself to the other powers within the Eurozone.

This would make repayments completely affordable for Greece and the "Euro is saved".

Now start doing this for the other countries such as Spain, Ireland, Italy with the ECB slowly buying, consolidating and cancelling the inter-eurozone debt. This is what I would have done economy wise near the start of the crisis.

As I said donkeys ago, lets say Furunculus owes me £100 and I owe him £90, we simply cancel the debt out so ultimately Furunculus just owes me £10 which is a significant reduction for his expenses.

It's a way to solve it but admitting that the ECB needs to buy the debt is not something politicians are willing to admit to there own electorates yet.

Essentially everyone is pro cake and pro eating it.

[Beskar]

Essentially everyone is pro cake and pro eating it.

I agree. Especially when they want to lend "aid" to Greece in the form of a loan with added interest. (which puts them more in debt).

The problem isn't the euro or even the concept of a single currency, ultimately in my opinion, these are actually good things. What is the issue with the EU especially it is rift with self-interest and corruption. These are the major issues which need to be resolved otherwise anything just ends up down the toilet.

[Philippus Flavius Homovallumus]

The problem isn't the euro or even the concept of a single currency, ultimately in my opinion, these are actually good things. What is the issue with the EU especially it is rift with self-interest and corruption. These are the major issues which need to be resolved otherwise anything just ends up down the toilet.

The issue is not the concept of the EU, per se, the issue is the structure of the EU.

There is an argument against the EU in principle, that the larger a State the more poorly governed and more corrupt it is - the US gets around this by having State and Federal Government and even then the Federal level has a lot of problems right now.

The EU has a different problem though, and it comes back to the democratic defecit and complete lack of popular support for the current situation. If every step for closer integration had come via plebicite then the EU would not be as far along as it is now. This is why the politicians are loathe to increase democratic accountability, they rightly fear that the EU will vote to unravel itself if it is allowed to vote.

The Euro is a key example of the problem, Greeks and Germans would never choose to be in a currency union - it makes little economic sense currently - but they were never actually given a choice.

So now here we are - what should have been done, as I said however many years ago this thread was started now, is eject Greece from the Euro and then bail it out. If it had been done two years ago Greece, and therefore everyone else, would be back to growth because the weak Drachma would make it the No. 1 tourist destination for everyone, including the Germans.

[Sarmatian]

Being honest, the real method to solving this would be for the ECB to simply buy the debt of Greece. I am sure lots of investors would be willing to sell their debt on for a low price just to make some return. Then the ECB simply kills off all interest payments so the only money Greece pays to the ECB for the debt simply reduces the total debt amount. (Debt only increases/decreases via Euro inflation)

That's a bit unfair. Why kill the interest for Greek debt and not do it for the Portuguese debt? You overspend and overspend and instead of tightening the belt you're rewarded for it and others who've just overspent are expected to pay back the interest?


As for austerity measures, simply start getting a Euro-wide average, lets say, Greece has to have the same retirement age as the Germans. Therefore, Greece is only being asked simply to align itself to the other powers within the Eurozone.

Which is basically what's being asked of Greece but Greeks are in the middle of refusing it.


Now start doing this for the other countries such as Spain, Ireland, Italy with the ECB slowly buying, consolidating and cancelling the inter-eurozone debt. This is what I would have done economy wise near the start of the crisis.

As I said donkeys ago, lets say Furunculus owes me £100 and I owe him £90, we simply cancel the debt out so ultimately Furunculus just owes me £10 which is a significant reduction for his expenses.

It doesn't work that way cause different debts have different repayment dynamics and different interests. Furunculus owes you 100 with a total 10% interest over the next 20 years, which means he's supposed to pay you 5.5 pounds yearly for the next 20 years. Your 90 pounds, on the other hand was loaned, at 30% interest and is due next year which means come January the 1st, Furunculus needs to pay you 6 pounds and will get from you 117 pounds.

It's not in Furunculus' best interest to accept the deal to swap debts.




So now here we are - what should have been done, as I said however many years ago this thread was started now, is eject Greece from the Euro and then bail it out. If it had been done two years ago Greece, and therefore everyone else, would be back to growth because the weak Drachma would make it the No. 1 tourist destination for everyone, including the Germans.

Problem with this is that even with weak drachma, Greece has no chance to get enough money from tourism to cover its debt, which is in euros, and trade deficit, not to mention reduced demand for Greek bonds and multiple companies going bust because of the inflation.

[Beskar]

That's a bit unfair.

No it isn't. Greece loses the ability to actually take out loans other than via the ECB who offered to deal with their current situation. As I said later, this can be opened and offered to other nations.


It's not in Furunculus' best interest to accept the deal to swap debts.

As I said, Self-interest.

Either way, I said ECB to take the debts and sort it out anyway, to get rid of such things.

Sometimes doing the right thing means losing out.

[Philippus Flavius Homovallumus]

Problem with this is that even with weak drachma, Greece has no chance to get enough money from tourism to cover its debt, which is in euros, and trade deficit, not to mention reduced demand for Greek bonds and multiple companies going bust because of the inflation.

Yes, but they already have all these problems. Like I said, Drachma - then bailout. What we will now have, though, is bailout and then Drachma.

[Sarmatian]

As I said, Self-interest.

Either way, I said ECB to take the debts and sort it out anyway, to get rid of such things.

Sometimes doing the right thing means losing out.

Yes, self-interest. Your hypothetical example works fine on paper, but let's say that amounts aren't 100 and 90, but 100,000 and 90,000 respectively. Let's say that Furunculus owns a small business where two of his children work and he needs that money to keep afloat in these difficult times.

In this case he has to choose whether he and his children lose their jobs and their incomes or to give you more money... Not a difficult choice really.

Or to give you another example, Furunculus might owe banks or other businesses some money and he's must get it. Or he needs it to finish his house and stop paying rent.

You can't really cancel out debts that easy.


Yes, but they already have all these problems. Like I said, Drachma - then bailout. What we will now have, though, is bailout and then Drachma.

If they accept the measures there would be no need to go back to drachma.

I don't think you guys fully appreciate the gravity of the Greek inflation if drachma is reintroduced. We're not talking 10%, 20%, 30% percent a year, but 50%.... 100%.... 500%...... sky is the limit really.

No economy can function in that kind of inflation. Besides businesses going bust, it's even easier for corruption to spread...

We might see massive violence, uprisings, potentially revolution... none of that sits well with the biggest Greek export - tourism.

[Furunculus]

As I said, Self-interest.


You say self-interest, i say self-identity.

The crucial feature of indirect democracy is the perception of representation, the collective trust in shared aims and expectations that allows the people to put their destiny in the hands of another, safe in the knowledge that even if ‘their’ man doesn’t get the job then the other guy will still be looking after their best interests.

The manner in which this trust is built is the knowledge that you and ‘he’ have a history of cooperation, and that your respective families likewise have a shared social and cultural history of cooperation, all of which allows you to trust that when adversity strikes ‘he’ will act in a predictable and acceptable way.

A nation-state being effectively a collective agreement that a people are a family, who have sufficient trust in each other to accept indirect governance from representatives of the prevailing will of a majority, it is also a collective agreement to work together for the benefit of the whole rather than the individual. In short it is a marriage which results in a transfer union.

[Philippus Flavius Homovallumus]

If they accept the measures there would be no need to go back to drachma.

I don't think you guys fully appreciate the gravity of the Greek inflation if drachma is reintroduced. We're not talking 10%, 20%, 30% percent a year, but 50%.... 100%.... 500%...... sky is the limit really.

No economy can function in that kind of inflation. Besides businesses going bust, it's even easier for corruption to spread...

We might see massive violence, uprisings, potentially revolution... none of that sits well with the biggest Greek export - tourism.

The Greek economy can't function as-is.

You don't know the level of inflation, neither do I, but what we do know is that the current situation serves to extract money from the country whilst still causing all the problems you have mentioned. I think the Greek economy is still contracting in double digits currently - potential revolution is already on the cards and violence is usually beget by poverty of which Greece has already entered the grinding kind.

Greece is rapidly entering Third-World status here and there is simply no way they can cut their way back to growth.

[Furunculus]

the problem is as it has always been:

http://lindleyfrench.blogspot.co.uk/2012/05/europes-new-german-question.html

will the EU have its Hamiltonian moment?

http://www.economist.com/blogs/charlemagne/2012/05/future-european-union-part-2

[Fragony]

The Greek economy can't function as-is.

You don't know the level of inflation, neither do I, but what we do know is that the current situation serves to extract money from the country whilst still causing all the problems you have mentioned. I think the Greek economy is still contracting in double digits currently - potential revolution is already on the cards and violence is usually beget by poverty of which Greece has already entered the grinding kind.

Greece is rapidly entering Third-World status here and there is simply no way they can cut their way back to growth.

If they sink to third to third-world status we can use the development aid budget for it. Kinda tempting. The hundredextramillionthousans of directors of NGO's won't agree of course

[Philippus Flavius Homovallumus]

If they sink to third to third-world status we can use the development aid budget for it. Kinda tempting. The hundredextramillionthousans of directors of NGO's won't agree of course

I hate myself for laughing.

[Greyblades]

I kick myself for not getting the joke :P

[Beskar]

I kick myself for not getting the joke :P

Basically there was a consensus from all the nations to funnel a percentage of their GDP (I believe it is 0.75%?) to help develop infrastructure and aid to Third World countries in order to better the conditions in those areas. The facepalm side of it is that much of the money ended up going to nations such as Serbia and Turkey which are 'relatively rich' / middle-income nations.

Fragony was saying the benefit of Greece being classed as third-world is that the money from this funding could go there instead, which means for north and western nations, they don't get "charged anymore" for helping Greece as the money is simply reallocated from that. Which is why Fragony said it is tempting.

The NGO reference is referring to those oxfam, cadfod, etc adverts on TV, as these charities receive money from the funds to provide aid in their areas of concern. These NGO would get upset as they would lose out on a lot of money as it ends up reallocated to Greece.

[Furunculus]

0.7% gnp

was a funny suggestion of frags. :D

----------------------------------------------------------------

will this be enough?

http://www.telegraph.co.uk/finance/financialcrisis/9298180/Europes-debtors-must-pawn-their-gold-for-Eurobond-Redemption.html


The plan splits the public debts of EMU states. Anything up to the Maastricht limit of 60pc of GDP would remain sovereign. Anything over 60pc would be transfered gradually into the redemption fund. This would be covered by joint bonds.

Italy would switch €958bn, Germany €578bn, France €498bn, and so forth. The total was €2.326 trillion as of November but is rising fast as Europe’s slump corrupts debt dynamics. The sinking fund would slowly retire debt over twenty years, using designated tithes akin to Germany’s "Solidarity Surcharge".

In effect, Germany would share its credit card to slash debt costs for Italy, Spain and others. Yet it is the exact opposition of fiscal union. While eurobonds are a federalising catalyst, the fund would be temporary and self-extinguishing. "The fund is a return to the discipline of Maastricht with sovereign control over budgets," said Dr Benjamin Weigert, the Council of Experts’s general-secretary.

The ingenious design gets around the German constitutional court, which ruled in September that the budgetary powers of the Bundestag cannot be alienated to any EU body under the Basic Law -- the founding text of Germany’s vibrant post-War democracy.

The fund implies a big sacrifice for Germany. Its interest costs on joint debt would be much higher than today’s safe-haven rate of 1.37pc on 10-year Bunds. Jefferies Fixed Income says it would cost 0.6pc of German GDP annually.

[gaelic cowboy]

Yes, self-interest. Your hypothetical example works fine on paper, but let's say that amounts aren't 100 and 90, but 100,000 and 90,000 respectively. Let's say that Furunculus owns a small business where two of his children work and he needs that money to keep afloat in these difficult times.

In this case he has to choose whether he and his children lose their jobs and their incomes or to give you more money... Not a difficult choice really.

Or to give you another example, Furunculus might owe banks or other businesses some money and he's must get it. Or he needs it to finish his house and stop paying rent.

You can't really cancel out debts that easy.



If they accept the measures there would be no need to go back to drachma.

I don't think you guys fully appreciate the gravity of the Greek inflation if drachma is reintroduced. We're not talking 10%, 20%, 30% percent a year, but 50%.... 100%.... 500%...... sky is the limit really.

No economy can function in that kind of inflation. Besides businesses going bust, it's even easier for corruption to spread...

We might see massive violence, uprisings, potentially revolution... none of that sits well with the biggest Greek export - tourism.


As long as the ECB does nothing to squash this thing like a bug then this problem will not go away.

The balance sheets of banks will not be saved by heaping more debt onto already indebted sovereigns.

Essentially Greece needs to be allowed renege on it's debt or else no one will get any money back at all.

[Beskar]

will this be enough?
http://www.telegraph.co.uk/finance/financialcrisis/9298180/Europes-debtors-must-pawn-their-gold-for-Eurobond-Redemption.html

That actually sounds like what I was proposing, but more limited. Perhaps the EU should have courted me for advice those years ago when I said about it on these forums.

[gaelic cowboy]

EU Weighs Direct Aid to Banks, Euro Bonds as Crisis Antidote (http://www.bloomberg.com/news/2012-05-30/eu-weighs-direct-aid-for-banks-common-bonds-as-crisis-antidote.html)




The European Commission called for direct euro-area aid for troubled banks, and touted a Europe- wide deposit-guarantee system and common bond issuance as antidotes to the debt crisis now threatening to overwhelm Spain.

The commission, the European Union’s central regulator, sided with Spain in proposing that the euro’s permanent bailout fund inject cash to banks instead of channeling the money via national governments. It also offered Spain extra time to squeeze the budget deficit.

The use of the rescue fund to recapitalize banks “might be envisaged” and would “sever the link between banks and the sovereigns,” the commission said today in Brussels. Jose Barroso, the commission’s president, said “it is important to use all possibilities offered in terms of flexibility.”

Proposals for more liberal use of European bailout money are likely to face resistance in creditor countries such as Germany, Finland and the Netherlands, the scenes of growing taxpayer opposition to more aid.

Signs of stress multiplied in financial markets today. Italy missed its target in a bond auction, driving its 10-year yields as high as 6.01 percent, the highest since Jan. 31. The yield was at 5.95 percent at 2:10 p.m. in Brussels. Doubts over the health of Spain’s banks pushed up Spanish 10-year yields as high as 6.70 percent, the highest since Nov. 28. That yield was last at 6.62 percent.

‘Exceptionally Tense’
After more than two crisis-filled years and 386 billion euros ($480 billion) in loan pledges to Greece, Ireland and Portugal, “markets remain exceptionally tense and vigilant and confidence is still weak,” the commission said.

The euro has tumbled 6 percent in May, hit first by concern that Greek voters will reject bailout conditions, then by worries that Spain will be forced to fall back on a European lifeline. The currency pared today’s decline after the commission floated the bank-recapitalization ideas. It last bought $1.2441.

Spain, the 17-nation euro area’s fourth-largest economy, is trying to simultaneously plug holes in regional budgets and detoxify its banks, all while struggling to lift the economy out of

Germany Leads Opponents
Current EU plans call for the 500 billion-euro European Stability Mechanism, set to start up in July, to funnel bank-aid money through national governments and, ultimately, require those governments to pay it back.

Germany is spearheading resistance to direct European financing for banks because that would let governments bypass the conditions set for full aid programs, such as deeper budget cuts and more European intrusion into economic management.

“Direct help for banks is out of the question, that won’t fly,” Norbert Barthle, the budget spokesman in parliament for Chancellor Angela Merkel’s Christian Democratic Union, said in an interview yesterday. Finland is in Germany’s camp, Martti Salmi, a Finance Ministry official, said in a telephone interview today.

The commission appealed for a “banking union” that would more tightly integrate supervision and create a pool of European funds to clean up banks with cross-border exposure and segregate their underperforming assets.

“It’s hard enough to bail out local banks let alone non- domestic banks,” said Harvinder Sian, a London-based fixed- income strategist at Royal Bank of Scotland Group Plc. “A crisis lesson so far is that big ideas coming from Brussels or the guys taking the money are noise up until the point that the Germans get on the same page.”

Transparency
Part of the solution lies in “correct and transparent risk recognition” instead of putting off the reckoning, the commission said. In the wake of the European Central Bank’s unprecedented 1 trillion euros in long-term loans, some banks are still using the funds to buy sovereign bonds, binding them more closely to financially shaky governments, the commission said.

The central bank’s “accommodative” monetary policy with interest rates at 1 percent limits its scope for spurring the economy, the commission said. It estimated on May 11 that the euro economy will contract 0.3 percent in 2012.

The debt crisis contributed to a greater-than-expected slump in economic confidence in the euro area in May, data showed today. The commission’s index of executive and consumer sentiment fell to 90.6, the lowest since October 2009, from a revised 92.9 in April.

More Austerity?

In an assessment by staff economists, the commission said there is little room for deficit-plagued countries to push back planned savings to a later date. Such an easing-up would be punished by markets, it said.

“Member states which face high and potentially rising risk premia do not have much room for maneuver to deviate from their nominal fiscal targets, even if macroeconomic conditions turn out worse than expected,” according to the document.

Still, Economic and Monetary Commissioner Olli Rehn said Spain might be granted an extra year, until 2014, to bring its deficit down to the limit of 3 percent of gross domestic product.

The commission would only make that concession if Spanish Prime Minister Mariano Rajoy’s government delivers a “solid, two-year budget plan for 2013 and 2014,” Rehn told reporters.

Credibility Factor
The commission, which gained new powers to police national budgets in response to the crisis, is trying to crack down on deficits without imposing policies that crimp the economy.

“Credibility of consolidation is one of the key factors,” it said.

The commission kept alive the debate over common borrowing by euro-area governments, already rejected by Merkel as at best a goal for the long term and not a way out of the current turmoil.

Debate over euro bonds flared at last week’s summit of European leaders, the first for French President Francois Hollande after he took office vowing to challenge the German- dominated budget-cutting creed that has marked the crisis response.

Ideas include a debt-redemption fund proposed by Germany’s council of economic advisers and different types of “stability bonds” sketched out by the commission last year. The commission is now working on more concrete proposals.

Passage of a deficit-limitation treaty and the adoption of two laws that further enhance central oversight of national budgets will help pave the way toward common bond sales, the commission said.

“The successful application of the new economic governance framework already in force and in the process of being put in place may be a significant step towards fulfilling the preconditions for common issuance,” the commission said.


The ECB will shoot this down right quick I expect.

[Fragony]

Highly inlikely that we will be playing even if Germany caves in.

The good part about the crisis, we have a 33% rise of foreign students, and there is more than enough work for them here. The problem here in the Netherlands isn't unemployment we are short on hands. So this is good for us. But not for southern-europe, how will they ever have a chance of recovering if the young and talented have no reason to stay there. The PIGS are truly doomed.

[Furunculus]

The only question that matters, exposing the central flaw of the project:

http://blogs.telegraph.co.uk/finance/matspersson/100017577/spain-cant-even-control-spending-in-its-regions-so-how-will-brussels-control-spending-in-portugal-spain-or-italy/

"If Spain’s governance model – based on a series of delicate compromises to reconcile different cultures and historical experiences – is so sensitive to any move in the direction of more centralisation, how easy will it be for the Eurozone to achieve fiscal federalism amongst 17 countries, with vastly different parliamentary and economic models, government structures, and cultural preferences?"

[Fragony]

Flaw in te project isn't economical, it's idealism. Barosso and that Rompuy guy who always looks like an owl that just fell out of it's tree will want to unite Europe in a socialist superstate at all cost. The 12th of september we will have new elections and the EU is on the menu. While I have always had respect for Wilders I would never vote on him but now I will. We need to get out of the EU or get dragged down by the garliczone.

[Philippus Flavius Homovallumus]

This was an interesting piece from Hannan: http://blogs.telegraph.co.uk/news/danielhannan/100161825/euro-enthusiasts-are-blinded-by-their-bigotry-and-prejudice/

I largely concur - in the UK not supporting the EU and Euro was seen as a sign of "anti-Europeanism" or just "bigotry" - I have been there myself.

I suspect it is the same on the Continent - especially in Germany.

Don't mention the War! Just use it as a stick to beat Fritz for all eternity.

[Fragony]

Over here they call you a 'populist' if you aren't 100% sure about Europe. That those who they call populists get it right each and every time is meeted with europhiles being united in silence.

[Furunculus]

a reason for ireland to vote "no":
http://www.davidmcwilliams.ie/2012/05/31/the-fiscal-treaty-will-only-make-things-worse

[gaelic cowboy]

a reason for ireland to vote "no":
http://www.davidmcwilliams.ie/2012/05/31/the-fiscal-treaty-will-only-make-things-worse


As it is I think the government will scrape by in the vote but it will barely do so.

[Furunculus]

does look that way.

[Fragony]

a reason for ireland to vote "no":
http://www.davidmcwilliams.ie/2012/05/31/the-fiscal-treaty-will-only-make-things-worse

Tne Irish will be the receivers. Here we supposed to absolutely adore giving away 40.000.000.000 to the EU, and they haven't even mentioned the worst part, that these 40.000.000.000 are just a pledge to loan 260.000.000.000 more

[gaelic cowboy]

Tne Irish will be the receivers. Here we supposed to absolutely adore giving away 40.000.000.000 to the EU, and they haven't even mentioned the worst part, that these 40.000.000.000 are just a pledge to loan 260.000.000.000 more

Well dont let them do it then Frag we must pray Ireland rejects the treaty so it is impossible for the ESM to lend to Ireland next year.

I have said a hundred times now that merely transfering these debts to soverigns is not working.

Time for a new solution.

[Fragony]

Well dont let them do it then Frag we must pray Ireland rejects the treaty so it is impossible for the ESM to lend to Ireland next year.

I have said a hundred times now that merely transfering these debts to soverigns is not working.

Time for a new solution.

First out, tnen forward. Keep the euro as a currency allongside our own, perfectly possible no? Let the euro fall and things will recover in th south, and here we won't even notice it

[Sarmatian]

Let the euro fall and things will recover in th south

And here is the core of all mistakes. No, they won't. They'll become worse.

Euro's not the cause of the crisis, dismantling it is not the solution, especially not for the countries like Greece.

[Fragony]

And here is the core of all mistakes. No, they won't. They'll become worse.

Euro's not the cause of the crisis, dismantling it is not the solution, especially not for the countries like Greece.

If we have our own currency then why not, we just keep the euro to pay for cocktails in the south.

[Sarmatian]

If we have our own currency then why not, we just keep the euro to pay for cocktails in the south.

Because the Greek debt isn't in drachmas, it's in euros. They have to pay it back in euros. They can't print drachmas to pay it.

Their import is bigger than their export, tourism included, which means constant inflation. Equilibrium will be reached when they stop importing more than they export, which means lower living standards in the end.

They've been living above their means for a looong time. Tightening the belt is what awaits them, euro or drachma.

[Fragony]

Because the Greek debt isn't in drachmas, it's in euros. They have to pay it back in euros. They can't print drachmas to pay it.

Their import is bigger than their export, tourism included, which means constant inflation. Equilibrium will be reached when they stop importing more than they export, which means lower living standards in the end.

They've been living above their means for a looong time. Tightening the belt is what awaits them, euro or drachma.

Kthbye these debts, we take our loss, we move on.

[gaelic cowboy]

And here is the core of all mistakes. No, they won't. They'll become worse.

Euro's not the cause of the crisis, dismantling it is not the solution, especially not for the countries like Greece.

Yes it is the cause of the crisis sure Greece is only a piddliing little bit of the entire eurozone and yet it is causing pure panic.

The reason is both electorates nad these "Market People" are only waking up to the fact the entire structure of the currency is defective.

As long as the present structure is maintained then Bailouts will not work as they presently are supposed to work.

[gaelic cowboy]

Because the Greek debt isn't in drachmas, it's in euros. They have to pay it back in euros. They can't print drachmas to pay it.

Their import is bigger than their export, tourism included, which means constant inflation. Equilibrium will be reached when they stop importing more than they export, which means lower living standards in the end.

They've been living above their means for a looong time. Tightening the belt is what awaits them, euro or drachma.

The you just have to draw a line under a bad investment in Greek private or public debt.

If you try to force Greec to attempt to pay these debts back you end up endangering the whole dam thing.

[gaelic cowboy]

If we have our own currency then why not, we just keep the euro to pay for cocktails in the south.

They told us currency differentials in value and interest rates were a bad thing between European countries.

now we know thats total lies and in fact outright idiocy.

[Fragony]

They told us currency differentials in value and interest rates were a bad thing between European countries.

now we know thats total lies and in fact outright idiocy.

You agree with a splitup, i will take your advice over an eurocat's dream of unicorns and rainbows every time.

Time to get serious imho, no matter how nasty it will be for some, we have no obligation whatsoever don't count on me. France lowers the pension age to 60, I say we go for 70 just to get out of the Great Suffocation. It is worth it imho.

[Philippus Flavius Homovallumus]

Because the Greek debt isn't in drachmas, it's in euros. They have to pay it back in euros. They can't print drachmas to pay it.

Their import is bigger than their export, tourism included, which means constant inflation. Equilibrium will be reached when they stop importing more than they export, which means lower living standards in the end.

They've been living above their means for a looong time. Tightening the belt is what awaits them, euro or drachma.

Greece may still be stuck paying debt in Euros but it will be able to sell it in Drachmas, that's the point.

Anyway, as Galic said, this isn't just about Greece - it's about the whole structure, Greece is just where the pus is nearest the surface.

[gaelic cowboy]

Yes, self-interest. Your hypothetical example works fine on paper, but let's say that amounts aren't 100 and 90, but 100,000 and 90,000 respectively. Let's say that Furunculus owns a small business where two of his children work and he needs that money to keep afloat in these difficult times.

In this case he has to choose whether he and his children lose their jobs and their incomes or to give you more money... Not a difficult choice really.

Or to give you another example, Furunculus might owe banks or other businesses some money and he's must get it. Or he needs it to finish his house and stop paying rent.

You can't really cancel out debts that easy.



If they accept the measures there would be no need to go back to drachma.

I don't think you guys fully appreciate the gravity of the Greek inflation if drachma is reintroduced. We're not talking 10%, 20%, 30% percent a year, but 50%.... 100%.... 500%...... sky is the limit really.

No economy can function in that kind of inflation. Besides businesses going bust, it's even easier for corruption to spread...

We might see massive violence, uprisings, potentially revolution... none of that sits well with the biggest Greek export - tourism.

There will be inflation for things like energy but apart from that it wouldnt be half as much as you think.

Hyperinflation has only every happened where you try to sustain a link with say the dollar or the gold standard within a depreciating currency. In this case the unsustainable link is the Euro which requires the economy to be deflated in order to pay interest.


All that really needs to happen is for the debt to be repudiated this will lessen the need for extra money supply to be created. Since the debt is unsustainbale anyway it should just be wrote off and the ECB should cover any Eurozone bank losses.

Hyperdeflation is every bit as bad as hyperinflation if not worse cos it's eroding confidence in the the currency with outsiders and northeren electorates.

[gaelic cowboy]

Greece may still be stuck paying debt in Euros but it will be able to sell it in Drachmas, that's the point.

Anyway, as Galic said, this isn't just about Greece - it's about the whole structure, Greece is just where the pus is nearest the surface.



If this craic continues it will rot the guts of the spanish banking system and then we all of us will be in a World of :daisy:

Already I have seen figure quoted on bloomberg of 66 billion removed in april from spanish banks, likely both domestic and foreign multinationals safeguarding there accounts. It happened here too before the bailout our banks kept requiring emergency liquidity in order to sustain deposits for ordinary households. The ECB didnt like been on the hook hence the bailout.

Unfortunately for ireland we were small so they could ignore us, but listen to the talk now of banking unions etc etc direct lending to institutions from bailout funds, these are precisely the sort of measures that should have been implemented 2-3 yrs ago.

It would have stopped at Greece if it had been done earlier.

Also lets remeber the fiscal treaty actually doesnt do anything to fix the rotten state of eurozone banks, in fact it has nothing to say about them amazing seeing as they are at the core of both symptom and disease.

[Fragony]

For teh Dutchies, teh professor already predicted this in 1996 http://www.nieuwelan.nu/nieuws/fortuyn’s-profetie-over-griekenland-spanje-uit-1996 and they laughed at him, demonised him, and murdered him by proxy.

Who is right now

And now that Flemish ferret who always looks like an owl that fell out of his tree and his Portugese waiter and a German booksalesman come with a new plan, MOAR Europe.


"Let me be clear: there is no way back for the euro, only the way ahead towards more integration."

Que? Did I ever vote on you? Who are you? How did you get there? By what mechanism?


Insanity: doing the same thing over and over again and expecting different results.
Albert Einstein, (attributed)
US (German-born) physicist (1879 - 1955) #

[Furunculus]

A senior EU official said even Germany's Social Democrats are cooling on eurobonds. "They looked at the polling data and shivered. The German people are not willing to send money into a bottomless pit,"
http://www.telegraph.co.uk/finance/financialcrisis/9311190/Global-slump-alert-as-world-money-contracts.html

[Fragony]

http://www.telegraph.co.uk/finance/financialcrisis/9311190/Global-slump-alert-as-world-money-contracts.html

It would cost Germany and the Netherlands their tripple a status if we go for that. What does biggest supporter do, France lowers the retirement age when it should go up. Having to pay for the socialism, people are really fed up with it over here. Letting the socialism feed upon itself is an increasingly common thought here

[gaelic cowboy]

It would cost Germany and the Netherlands their tripple a status if we go for that. What does biggest supporter do, France lowers the retirement age when it should go up. Having to pay for the socialism, people are really fed up with it over here. Letting the socialism feed upon itself is an increasingly common thought here

Hmm time for an all night summit where we agree to another summit later on, then everyone can vote the Irish can vote on a new treaty that ignores the actual problem.

Yes worrying about a budget deficit in Austria, France or wherever else you care to mention will solve banks runs in Spain, Italy or Cyprus.



edit

'Risk premium' shows Spain locked out of markets: minister (http://www.rte.ie/news/2012/0605/technically-impossible-to-bail-out-spain-minister.html)

We are :daisy: these clowns have let Spain fall off a cliff they dont have enough money to bail her out, bailin knockout.

G7 to hold emergency euro zone talks, Spain top concern (http://www.rte.ie/news/2012/0605/g7-to-hold-emergency-euro-zone-talks.html)

This thing could actually go down now for it will only take one wrong step or press leak, I never in my wildest dreams believed they actually would let this happen. Foolishly I thought they actually were fearful of a eurogeddon collapse, :daisy: hell it is like refusing to evacuate when a row of terraced house catches fire.

Are we even on the same planet as these people.

[Brenus]

"Insanity: doing the same thing over and over again and expecting different results." Do you mean e.g. 9 Austerity Plans for Greece and an even bigger debt than when it all started?

"France lowers the retirement age when it should go up" Why it should go up?" To kill people before retirement as it is happening in the 8 European Countries that just did it? That is a solution to resolve the pension, I grant you this. But for the youth unemployment, I doubt.
Of course 6 on 10 of the + 60 are yet out of job due to illness and employment. So to postpone retirement is just done in order to cut on cost, not because "we live longer so we have to work longer". Welcome in the Liberal? Capitalist Financial world where Profits trump Humans.
We lived longer because we stop to work earlier but apparently it is not allowed to live old and Healthy for the average person.

[Vladimir]

http://www.telegraph.co.uk/finance/financialcrisis/9311190/Global-slump-alert-as-world-money-contracts.html

Really? I heard on the drive to work that they will pay for everyone, including Spain, partially by redistributing the debt. I suppose the EU is now a Marxist wet dream.

Also heard that Greece is expected to leave the Euro after the June 17 elections.

[Fragony]

"Insanity: doing the same thing over and over again and expecting different results." Do you mean e.g. 9 Austerity Plans for Greece and an even bigger debt than when it all started?

"France lowers the retirement age when it should go up" Why it should go up?" To kill people before retirement as it is happening in the 8 European Countries that just did it? That is a solution to resolve the pension, I grant you this. But for the youth unemployment, I doubt.
Of course 6 on 10 of the + 60 are yet out of job due to illness and employment. So to postpone retirement is just done in order to cut on cost, not because "we live longer so we have to work longer". Welcome in the Liberal? Capitalist Financial world where Profits trump Humans.
We lived longer because we stop to work earlier but apparently it is not allowed to live old and Healthy for the average person.

Face your new reality mia muca the fat days are over and it's going to hurt really badly if you expect anything from the government, they don't have the money anymore. So you better work a little harder, better accept that you will be working for a longer time, and better accept that you are screwed anyway and might just have to fight for your life.

[gaelic cowboy]

Really? I heard on the drive to work that they will pay for everyone, including Spain, partially by redistributing the debt. I suppose the EU is now a Marxist wet dream.

Also heard that Greece is expected to leave the Euro after the June 17 elections.



I expect the reply to redistribution of debt will be something along the lines of "Get Stuffed" or whatever the equivalent is in German.

They cant afford to bailout Spain and they cannot help the Spainish banks unless they bailout Spain.

Course it would be simpler if people just admitted these banks are broke and there never paying back the debt.

Unless the ECB/ESM/EFSF is allowed to stuff as much monopoly money down every eurozone bank as required this only ends in "I Told You So"

[Fragony]

I expect the reply to redistribution of debt will be something along the lines of "Get Stuffed" or whatever the equivalent is in German.

They cant afford to bailout Spain and they cannot help the Spainish banks unless they bailout Spain.

Course it would be simpler if people just admitted these banks are broke and there never paying back the debt.

Unless the ECB/ESM/EFSF is allowed to stuff as much monopoly money down every eurozone bank as required this only ends in "I Told You So"

And than what, Spain is old sick and nearly dead just like all of the Mediteranian. Their youths are comming here because we do have jobs for them, it is bleedin to death. I have no idea what can save the garliczone from becomming a nightmare.

[Philippus Flavius Homovallumus]

"Insanity: doing the same thing over and over again and expecting different results." Do you mean e.g. 9 Austerity Plans for Greece and an even bigger debt than when it all started?

Well yes, but that also applies to "borrow to pay for everything and it won't cause a debt crisis."


"France lowers the retirement age when it should go up" Why it should go up?" To kill people before retirement as it is happening in the 8 European Countries that just did it? That is a solution to resolve the pension, I grant you this. But for the youth unemployment, I doubt.
Of course 6 on 10 of the + 60 are yet out of job due to illness and employment. So to postpone retirement is just done in order to cut on cost, not because "we live longer so we have to work longer". Welcome in the Liberal? Capitalist Financial world where Profits trump Humans.
We lived longer because we stop to work earlier but apparently it is not allowed to live old and Healthy for the average person.

When people often live to 100 a retirement age of 60 means those people spend 60% of their lives on welfare as either juvaniles or pensioners. A retirement age of 70 makes that 50%.

Not everybody lives to retirement - some people have heart attack at 50 or die of cancer at 20, drawing your pension is not an automatic right. The pension is just there to support you once you can no longer support yourself and most people CAN still support themselves at 70, and certainly at 65.

[rory_20_uk]

5775

Life expectancy has shot up (note suppressed zero).

5776

And the state is spending more and more on the Welfare state. Oddly, there is not a massive upswing under Labour and a savage cut under the Conservatives. There is just a rise (barring predicted figures for the next 3 years where we shoot down to levels of suffering not seen since 2008 - possibly even before!)

~:smoking:

[gaelic cowboy]

And than what, Spain is old sick and nearly dead just like all of the Mediteranian. Their youths are comming here because we do have jobs for them, it is bleedin to death. I have no idea what can save the garliczone from becomming a nightmare.

The question of "And then what" makes no sense if you think about it for a second because recessions End eventually Frag.

[rory_20_uk]

And than what, Spain is old sick and nearly dead just like all of the Mediteranian. Their youths are comming here because we do have jobs for them, it is bleedin to death. I have no idea what can save the garliczone from becomming a nightmare.

The "nightmare" that they live is with a health service that over 90% of the population don't have, wages multiples greater than the world average and labour laws that are vastly better than most. They also get state pensions and unemployment benefit again things that are unheard of in many countries.

Theoretically, getting back up is simple - reduction in standards of living due to reduced state aid, reduced salaries and a reduced social safety net. Work longer for less and work will quickly come. Does anyone want that? Of course not! We all want to earn more as we get older, to give our children more, to live longer in nicer conditions. We are, frankly, spoilt.

In other parts of the world working a 12 hour shift on a landfill site is a job for literally the whole family. Collecting human waste as fertiliser to sell? Yup, that's done. Others people collect sulphur out of a volcano. Sure, the fumes will fry their lungs in a matter of years ( a wet cloth only does so much) but their alternative is to starve to death now.

~:smoking:

[Fragony]

The question of "And then what" makes no sense if you think about it for a second because recessions End eventually Frag.

Not if we also have to finance multiculture, that burden wasn't there in past recoveries. There are too many mouths to feed there are too many people who don't add anything. It cannot be sustained in the end. Once the shops won't get the deliveries anymore there will be trouble and it's unrealistic that the aging population of the garlic zone can do anything to prevent that. I think this is just the beginning and that we have yet to see how nasty it can get.

[Brenus]

“Also heard that Greece is expected to leave the Euro after the June 17 elections.” Yeah, heard that as well. The problem is of course nobody explains how. All these experts just forget one little useless thing: There is no provision in the Lisbon Treaty to oblige Greece to do so. That will be fun. So Greece can cancel all payments of the debt and still be part of the Euro. What the banks will do about it? Do you think negotiation will start? I do. Because if Greece defaults, the German and French banking system will collapse, then the Euro collapse then Europe collapse, then USA collapse.
And to whom the Chinese will sell the I-pad and I-phone and others I? Not to their workers, not paid enough… That is the beauty of it…

“Face your new reality mia muca the fat days are over and it's going to hurt really badly if you expect anything from the government, they don't have the money anymore.”
Of course that is not the reality, darling. That is ideology, capitalistic one. Never our countries were so rich and produce more. It is time to land, love. The poor riches will have to give back some of the bonuses, shame… The Governments have no money because they gave it to their Friends exemption to pay taxes and Fiscal Evasion. Strong with the weak and weak with the Strong... I give you it is easier to bully handicapped on their wheelchair than Millionaires... Just a question of courage...
Obviously, riches created no job at all (see Greece). So, a re-think will be done. Old IMF and banksters solutions didn’t work and never did…

“So you better work a little harder, better accept that you will be working for a longer time, and better accept that you are screwed anyway and might just have to fight for your life.” Tell the Riches. They might think it is time to stop the greed culture… They might have to leave countries and fight for their lives… They never did really, work I mean…

“I have no idea what can save the garliczone from becoming a nightmare”:
Quite easy: ECB become equivalent of the Federal Bank, give loans to Greece (between 2 to 4 % of EU GDP) and other States at 1 % (like for Private Banks), this stop all speculation. Negotiate with proper concern and not greed for recovery and not short term profit. Put the responsible for the mess (Capitalistic Banksters and their Politician accomplices) in jail for thievery, robbery and all charges you can find.
Put more democracy in the EU (hard but not impossible).

“The pension is just there to support you once you can no longer support yourself and most people CAN still support themselves at 70, and certainly at 65.” That is funny because European Statistic tells exactly the opposite. I repeat: 6 of 10 over 60 (and probably 55 for the less qualified) are out of job for health or unemployment.
The same tells that in Germany the life expectation in going down for the first time in history. And surprise, it is true in all countries that made people works longer (so be in jobless subsidies that are less than pensions). So less food, less access to health care, choices between heating and heating, increase in suicide, welcome in the Civilisation…

[gaelic cowboy]

Not if we also have to finance multiculture, that burden wasn't there in past recoveries. There are too many mouths to feed there are too many people who don't add anything. It cannot be sustained in the end. Once the shops won't get the deliveries anymore there will be trouble and it's unrealistic that the aging population of the garlic zone can do anything to prevent that. I think this is just the beginning and that we have yet to see how nasty it can get.

Well yes it could get very bad when the Bratwurstzone gets even older and keeps demanding the younger South keep chopping it's garlic in half.

[Greyblades]

Welp its a good thing that us Brits have a good fallback of reopening the coal mines again, generatinng new jobs and an exportable resource at the same time. Oh wait, conservative govenment, nevermind, pass the suicide pistol.

I've been given a new viewpoint on the current social econimic system and I currently think it makes my viewpoint better than everything else, sue me.

[rory_20_uk]

“The pension is just there to support you once you can no longer support yourself and most people CAN still support themselves at 70, and certainly at 65.” That is funny because European Statistic tells exactly the opposite. I repeat: 6 of 10 over 60 (and probably 55 for the less qualified) are out of job for health or unemployment.
The same tells that in Germany the life expectation in going down for the first time in history. And surprise, it is true in all countries that made people works longer (so be in jobless subsidies that are less than pensions). So less food, less access to health care, choices between heating and heating, increase in suicide, welcome in the Civilisation…

What is the rate in countries where there is not unemployment benefit / health benefit or pension? Otherwise is it people are unable to work or view than on balance they'd rather not and take the money.

And you are assuming that firstly that increasing life expectancy year on year is just to be expected, and secondly that the sole cause is working longer, not any other of the myriad health related problems.

~:smoking:

[Fragony]

Well yes it could get very bad when the Bratwurstzone gets even older and keeps demanding the younger South keep chopping it's garlic in half.

We are not the problem, we are on the producing side of the sphere. Don't forget that we are the third biggest food exporter in the world and that's just the Netherlands, we'll live. The garlic zone really has to reconsider a few things, work as long as we do here and don't take anything for granted especially.


http://en.wikipedia.org/wiki/Netherlands#Economy

http://www.dutchdailynews.com/the-netherlands-is-world’s-largest-exporter-of-fresh-vegetables/

We are not as small as it seems

Also consider this

'The country continues to be one of the leading European nations for attracting foreign direct investment and is one of the five largest investors in the United States.'

We are tied to the dollar, our doom is also theirs, we can play hardball

[Philippus Flavius Homovallumus]

“The pension is just there to support you once you can no longer support yourself and most people CAN still support themselves at 70, and certainly at 65.” That is funny because European Statistic tells exactly the opposite. I repeat: 6 of 10 over 60 (and probably 55 for the less qualified) are out of job for health or unemployment.
The same tells that in Germany the life expectation in going down for the first time in history. And surprise, it is true in all countries that made people works longer (so be in jobless subsidies that are less than pensions). So less food, less access to health care, choices between heating and heating, increase in suicide, welcome in the Civilisation…

Oh piffle.

My Grandfather worked until 70, Grandmother likewise - my father is still working at 61...

6 out of 10 over sixties are not out of work here - it's not an age issue it's a cultural issue, or a general health issue. The suggestion that people become uselss at 60 because they are not longer able to work is not only absurd but also offensive and docially divisive.

There are plenty of times throughout history when life expectancy has gone down, the industrial era for example, so don't pull that one.

German life expectancy has risen rapidly since 1972, a recent drop in the last few years therefore means little.

Graph: http://www.google.co.uk/publicdata/explore?ds=d5bncppjof8f9_&met_y=sp_dyn_le00_in&idim=country:DEU&dl=en&hl=en&q=germany+life+expectancy#!ctype=l&strail=false&bcs=d&nselm=h&met_y=sp_dyn_le00_in&scale_y=lin&ind_y=false&rdim=region&idim=country:DEU&ifdim=region&tstart=-302144400000&tend=1244156400000&hl=en_US&dl=en&ind=false
(http://www.google.co.uk/publicdata/explore?ds=d5bncppjof8f9_&met_y=sp_dyn_le00_in&idim=country:DEU&dl=en&hl=en&q=germany+life+expectancy#!ctype=l&strail=false&bcs=d&nselm=h&met_y=sp_dyn_le00_in&scale_y=lin&ind_y=false&rdim=region&idim=country:DEU&ifdim=region&tstart=-302144400000&tend=1244156400000&hl=en_US&dl=en&ind=false)
France Graph: http://www.google.co.uk/publicdata/explore?ds=d5bncppjof8f9_&met_y=sp_dyn_le00_in&idim=country:DEU&dl=en&hl=en&q=germany+life+expectancy#!ctype=l&strail=false&bcs=d&nselm=h&met_y=sp_dyn_le00_in&scale_y=lin&ind_y=false&rdim=region&idim=country:FRA&ifdim=region&hl=en_US&dl=en&ind=false

How long, on average, should people draw a pension from the stae for?

ten years? Fifteen? If the latter answer, then France's pension age should rise to 66, if the former, 71.

[Vladimir]

Are you trying to reason with an Old School socialist? Someone who believes a Greek collapse will lead to a global collapse has left reason behind.

[gaelic cowboy]

We are not the problem, we are on the producing side of the sphere. Don't forget that we are the third biggest food exporter in the world and that's just the Netherlands, we'll live. The garlic zone really has to reconsider a few things, work as long as we do here and don't take anything for granted especially.


http://en.wikipedia.org/wiki/Netherlands#Economy

http://www.dutchdailynews.com/the-netherlands-is-world’s-largest-exporter-of-fresh-vegetables/

We are not as small as it seems

Also consider this

'The country continues to be one of the leading European nations for attracting foreign direct investment and is one of the five largest investors in the United States.'

We are tied to the dollar, our doom is also theirs, we can play hardball

The problem is still in the banks and no ammount of production will save those banks.

[Fragony]

The problem is still in the banks and no ammount of production will save those banks.

All money has long be detracted from the Southern banks we don't have anything on it really. Same goes for Germany. Good luck without us

[gaelic cowboy]

All money has long be detracted from the Southern banks we don't have anything on it really. Same goes for Germany. Good luck without us

you still dont get it do you Frag.

In a common currency like the Euro the banks are bailed out by each national government at the insistence of the ECB with no debt haircuts.

Removing your currency from southern banks does not remove the liability of the southern bank to pay back any debt.

Unfortunately these liabilities are too great hence we have bailouts because people dont want to crystalise the losses.

The longer this goes on the more dominoes will fall and when dominoes fall unless you take a few out it doesnt stop.

[Fragony]

you still dont get it do you Frag.

In a common currency like the Euro the banks are bailed out by each national government at the insistence of the ECB with no debt haircuts.

Removing your currency from southern banks does not remove the liability of the southern bank to pay back any debt.

Unfortunately these liabilities are too great hence we have bailouts because people dont want to crystalise the losses.

The longer this goes on the more dominoes will fall and when dominoes fall unless you take a few out it doesnt stop.

You don't get it, we already pulled back all investment in the south and all the money to pay for it. The Netherlands does not not need the European union we get along with Germany and the UK just fine. The rest of Europe is dead weight for us unless you get something out of being adventurous

[gaelic cowboy]

You don't get it, we already pulled back all investment in the south and all the money to pay for it. The Netherlands does not not need the European union we get along with Germany and the UK just fine. The rest of Europe is dead weight for us unless you get something out of being adventurous

You pulled back accounts and investments but the debts are still owed and crucially can still be booked in the Netherlands assets.

If the debt is not paid it will become by default a loss but who knows who has debt where and with who. Just cos netherlands has no money in Garlictown does not mean it's not exposed to a liquidity shock.

If a Dutch bank lent to an Austrian bank then in turn the Austrians might have a liability with a Spanish bank, if the Spanish bank falls then it is in the lap of the gods that the Dutch bank doesnt go too.

We cannot know where this will end if we try to either run away from it or smash the Eurozone, but my point has been all along that it's precisely were we are headed so far.

My belief is they should start putting plans in place to scrap it, but they wont do that so likely it will crash and burn us all.

[Fragony]

I think a lot of the big countries are secretly liking us for holding some things back

[gaelic cowboy]

I think a lot of the big countries are secretly liking us for holding some things back

They havent a clue what there at sure there just startled rabbits in cars headlights, we think all this inaction and prevarication is strategy and tactics when in fact it is more denial and wishful thinking.


We will wake up one morning to see banks runs everywhere cos they changed or people feared a currency change over a holiday weekend.

[rory_20_uk]

Given that currently all money in the EU is interchangable, and that countries' currencies will depreciate if they leave why not have all one's money in a german bank account and transfer small amounts when required to the local "bank". What possible reason does one have in leaving all one's money in a Greek bank (or even as Greek notes) where one could wake up and find you've lost 30-50% of your purchasing power overnight.

Is there a drawback to this that i am missing? Even if the interest rate was a percentage point or so lower, I'd accept this until the Troubles are over.

Who would in their right mind lend money to these banks? Should the Government borrow more for the banks? Except that they can't. Thus other governments have to give them money and take on the risks that the locals are sensibly refusing to take.

~:smoking:

[Brenus]

“And you are assuming that firstly that increasing life expectancy year on year is just to be expected, and secondly that the sole cause is working longer, not any other of the myriad health related problems.”
Err, no. I didn’t assume that life expectancy will always increase. What I was not expecting was to be shorter…
Then, the only circumstances in the 8 countries have in common is the increase of the working life: Because, in fact, we are better treated in Europe than we never have been: Better food, healthy life, social welfare, health and safety things in workplace, no more children in factories, less pollution due to no more old fashion industries, better life…

“My Grandfather worked until 70, Grandmother likewise - my father is still working at 61...” My grand-father died at 55, my father at 51. There are no male from my family who crossed the 60. My uncle might in few years, but notice he was an engineer, whereas my grand-father worked in the Railways and my father was soldier then worker… Oh, wait, perhaps there is a cause to effect factor…

“The suggestion that people become useless at 60 because they are not longer able to work is not only absurd but also offensive and docially divisive.”
For you the only use of human being is to work? You live in a strange world.
Sorry, I have other dream for elderly people than to work until they die. The time to walk with the grandchildren, to share with them a part of the journey, or with the nephews and nieces… Small pleasures, ambitions fulfilled, to enjoy a sun set, when you look behind and have the time to share, building memories to your younger family who, if you are lucky, will remember me like I remember my grand-father and father I had to know so shortly.
I gave to my country time in the Army, I worked all my adult life (and I am still working), sometimes for nothing as a volunteer, I am not asking for a favour. I am asking the State to fulfil the contract I signed when I paid my taxes and my pension.

“Someone who believes a Greek collapse will lead to a global collapse has left reason behind.” Explain how it will not? I gave no the reason it might if wrong decisions are taken. Tell me how the collapse of 5 major banks in France and Germany will not shake the system and can’t produce what I am saying?
The Collapse on one Currency in Germany produced a War, if you remember… Or learn.

[gaelic cowboy]

Given that currently all money in the EU is interchangable, and that countries' currencies will depreciate if they leave why not have all one's money in a german bank account and transfer small amounts when required to the local "bank". What possible reason does one have in leaving all one's money in a Greek bank (or even as Greek notes) where one could wake up and find you've lost 30-50% of your purchasing power overnight.

Is there a drawback to this that i am missing? Even if the interest rate was a percentage point or so lower, I'd accept this until the Troubles are over.

Who would in their right mind lend money to these banks? Should the Government borrow more for the banks? Except that they can't. Thus other governments have to give them money and take on the risks that the locals are sensibly refusing to take.

~:smoking:

You can indeed do that because capital controls are illegal in the EU.

Some people in Ireland actually did this before the bailout.

On the question of who would lend to these banks the answer in reality is that no one should bar the ECB. They should just print a pile of monopoly money and drown everyone in liquidity. The reality is there wont be inflation anyway cos most of the money will just dissappear out the back door to fill holes in balance sheets.

[rory_20_uk]

“And you are assuming that firstly that increasing life expectancy year on year is just to be expected, and secondly that the sole cause is working longer, not any other of the myriad health related problems.”
Err, no. I didn’t assume that life expectancy will always increase. What I was not expecting was to be shorter…
Then, the only circumstances in the 8 countries have in common is the increase of the working life: Because, in fact, we are better treated in Europe than we never have been: Better food, healthy life, social welfare, health and safety things in workplace, no more children in factories, less pollution due to no more old fashion industries, better life…

It is likely that there will be slight year on year variation. If in the next 10 years the graph I posted above shows a consistent fall then that is concerning. You are again stating correlation as causation. You are also assuming that everything you have stated improves live expectancy and also that we have better food and a healthier life when we are becoming as a nation more obese with a higher calorific intake. Better life? Just a statement all alone by itself.

Good thing you don't work in my industry. We have to have referenced evidence as opposed to merely stating opinion as fact.

~:smoking:

[Philippus Flavius Homovallumus]

“My Grandfather worked until 70, Grandmother likewise - my father is still working at 61...” My grand-father died at 55, my father at 51. There are no male from my family who crossed the 60. My uncle might in few years, but notice he was an engineer, whereas my grand-father worked in the Railways and my father was soldier then worker… Oh, wait, perhaps there is a cause to effect factor…

My Grandfather was an Anti-Air gunner and engineer during the war, blown up twice, after the war (and before) he was an electrian, worked on building sites etc. My father joined the merchant navy at 15 and worked on everything from tankers to sailing ships - he once spent 3 days on a burning wreck trying to put it out, then he became a sheep farmer and after that packed up a bus driver. HIS father was an engineer and died of a heart attack at 46 or there abouts.

So your family is predisposed to die young, that's unfortunate. I know a chap, every man in his family dies of a massive heart attack at 46, he is the first man in his family, on his father's side, to still be alive at 50 in living memory. The Pesion age is not designed for people who die young.

As I said, some people die at 20 from cancer, some at 40, the State has a responsibility to the whole of society though - not you as an individual.

[Brenus]

“You are also assuming that everything you have stated improves live expectancy and also that we have better food and a healthier life when we are becoming as a nation more obese with a higher calorific intake. Better life? Just a statement all alone by itself.”
Are you assuming that I assume that McDonald is healthy Food? You put words on my mouth.

I don’t know in which industry you work but I hope it is not essential to just have a simple view on: XIX century, life expectation, XX century, life expectation, then to conclude that the XX is better than the XIX. I probably don’t have your power of analyse and stay on the surface, but, as a humble historian, I may have the opinion is our life is better than the one of our ancestors.
Now, it is your right to think that London of the XIX was better, as the water was so polluted than population had to drink beer, when childrenwere working in factories and young girls selling their virginity was the top to do, I beg to disagree.
If you want to compare with even the second half the XX century, we can.

It is true that we can become obese, privilege that was reserved only for few privileged castes not so long time ago. If we die from cancer, it is because we don’t die of hunger. You might analyse that it is not a progress, I do think it is. We have alzheimer because we live long enough to be able to get it. I do understand that in your opinion it might not be a real progress…

You just brush aside facts that don’t support your view. I do the same, but I don’t pretend different.

“the State has a responsibility to the whole of society though - not you as an individual.” A State is a political construction, a contract for a community to have common rule. If you don’t think a State has to protect his weaker member and care for the population, but to be an autonomous beast so we don’t have the same idea of what is a State.
So, why do you pay taxes? To give good money to Politicians?

[Furunculus]

“Also heard that Greece is expected to leave the Euro after the June 17 elections.” Yeah, heard that as well. The problem is of course nobody explains how. All these experts just forget one little useless thing: There is no provision in the Lisbon Treaty to oblige Greece to do so. That will be fun."

Brenus, whenever has the euro obeyed any rule stood in the way of ever closer union?