Euro Area

[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]

@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.

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!

[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_fra...ke_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/...-question.html

will the EU have its Hamiltonian moment?

http://www.economist.com/blogs/charl...n-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/f...edemption.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.