Author Topic: Eurozone ist kaput  (Read 2575 times)

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Offline redbox

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Eurozone ist kaput
« on: 12:15, 20 September 11 »
Take a look at this:


http://www.bbc.co.uk/news/business-13366011


Interestingly, the UK's deficit in 2010 was as bad as Greece.


The big wow is Ireland.  They really are in trouble.

Offline Bryce

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Re: Eurozone ist kaput
« Reply #1 on: 12:57, 20 September 11 »
Interesting, but a little misleading, because it only goes up to 2010 and most of the measures and adjustments made to resolve these issues only starting kicking in after that. Having debts and deficits is only a problem if you don't have a way out of it. So the countries in the worst state aren't those with the biggest debts, rather those who don't have a serious plan to correct the issues.

The big dip in 2009/2010 for Ireland was mainly due to the government trying to buy up all the banks to make them state bodies and stabilise them, ie: a one-off payment, not general running costs. The picture for 2011 looks completely different.

Bryce.

Offline Gryzor

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Re: Eurozone ist kaput
« Reply #2 on: 13:36, 20 September 11 »
Before reading the article, I should say there are details now coming up in Greece about how the total amount of debt was manipulated to appear *higher* than it actually was in order to facilitate imposing austerity measures; all at the behest of the IMF, Eurostat and the ECB.

It's absurd to say that Greece is the source of EU's problems: it amounted to some 2% of the total European debt (and borrowing in 2010 amounted to 1.5%). If we assume that this is high enough to bring the whole house of cards down then we must admit there's something really, really rotten in the kingdom. Which, of course, is more than true.

Ok, I read the article; it only presents one side of the problem. It fails to mention accumulated debt and economic outlook/prospects.

Of course, you can't go on borrowing for ever. But the problem is, everyone owes money! I think it's obvious that everyone (the Americans, foremost) are living way beyond a natural equilibrium and money supply does not correspond to any real level of resources. Borrow, print, borrow, print - one of the reasons for the Great Crash of '29 was that people had discovered credit and were buying everything on borrowed money. When credit dried up the economy was at an artificial high - and they actually had to start returning their refrigerators, cars and radios, leading to a demand crash.

Ireland (though I've not really read much on it) is on the same path as Greece: measures that do nothing to promote the economy but, au contraire, plunge it deeper and deeper with no hope of recovery - just to save whatever meager billions can be saved now.
[Edit] Bryce replied as I was typing this, but I think I covered your post too :D Greece actually extended a sort of bailout to Greek banks to the tune of €28bn (!!!!!!!) a couple of years back, I don't see this making things any better. With Ireland going for a deficit of €20bn IIRC for 2011 it all looks rather depressing...

Offline redbox

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Re: Eurozone ist kaput
« Reply #3 on: 13:47, 20 September 11 »
Yes, it isn't up-to-date, but it does show a nice representation of why things are going so horribly wrong.


On the radio this morning I heard an interesting interview with an economist who said that the problem with the EU is that it has 17 finance ministers, 17 financial policies etc and basically he was proposing a complete 'federal' europe as the only solution.  He was saying this not to advocate it, just to make it very clear that this is the only way that the EU could possibly work and that is why it is currently failing.  His argument did fall down somewhat though because he said this is why the US was stronger (1 finance minister, things can be changed quickly) and their situation isn't exactly rosy...!


I too don't think that Greece is 'the problem'.  I think all of the countries are the problem.  They all have their own domestic problems - for example, they said on the TV news last night Greece has huge problems with tax evasion in it's population and public sector wages are really high compared to private sector equivalents - and all of this needs to be sorted before anything can be done collaboratively.  And imposing blanket economic rules (the euro) on many a differing nation was always going to lead to trouble.


The only seemingly good idea to have come from it is the eurobond where as EU debts are rolled into one bond which can be bought and sold.  At least it will stop the speculators and agencies such as Standard & Poors playing around with everyone's credit ratings like as happened today with Italy.  But again, the devil is in the detail and it would have some interesting challenges should it come to be.




Offline Bryce

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Re: Eurozone ist kaput
« Reply #4 on: 13:56, 20 September 11 »
Eurobonds are such a bad idea, I don't even want to think about it. S&P and the others will still play their games and the Eurobond will be valued by the worst performer in the Eurozone. So all countries would be penalised for one countrys bad economics. The u.s. would love this, because they could then influence all of Europes finances by manipulating just one bond, and justify it by focusing attention on the worst performer.

Bryce.

Offline Gryzor

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Re: Eurozone ist kaput
« Reply #5 on: 13:59, 20 September 11 »
With all due respect, that economist was (most possibly deliberately) ignoring a big issue. Studying for my economics degree (and because I had a thing for economic development) I read quite a bit about optimal economic areas and optimal currency areas. What he is saying is, by itself, true, but the problem is that Europe is NOT such an area. This means that each member state is at a different point of their economic cycles, with different needs and different problems. So, what is best for Germany (just an example) could be catastrophic for a peripheral country, like Greece. It's utterly stupid to face the 17 economies as being the one and same. So, maybe (and that's just a maybe, not even a guarantee) if there was a central finance or economics ministry the overall figures could be better, but the inequality would widen, obviously at the expense of the smaller members.

And, you're 100% about the US point - I really wouldn't like to live in the US right now, with 46 million persons under the poverty level, 50 million without health insurance and another 50 million people living off food stamps. With a gigantic debt in the hands of the chinese, spending on wars all over the place and the few ultra-ueber-mega-rich sucking the life out of everyone else.

Actually it's a big lie that wages in the public sector are high in Greece. It's a lie that's being repeated to justify cuts, cuts and more cuts. The truth is that there are many who have really high wages but most earn very little. And guess whose wages are being cut...

The Eurobond - well, I'm ambivalent. While it would provide for a short breath I don't think it would settle things, and eventually it would probably lead to a more central breakdown. Whereas, if EU was wise, it could deal with peripheral crises in a piecemeal method, taking it all in would provide a huge leverage for speculation against the Euro. Why not just declare the agencies' practices illegal instead? There has been much talk about it, but of course...

[Edit] Frak, Bryce AGAIN replied as I was typing this, and again I think I'm covering that post :D

Offline redbox

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Re: Eurozone ist kaput
« Reply #6 on: 14:33, 20 September 11 »
What he is saying is, by itself, true, but the problem is that Europe is NOT such an area. This means that each member state is at a different point of their economic cycles, with different needs and different problems. So, what is best for Germany (just an example) could be catastrophic for a peripheral country, like Greece. It's utterly stupid to face the 17 economies as being the one and same. So, maybe (and that's just a maybe, not even a guarantee) if there was a central finance or economics ministry the overall figures could be better, but the inequality would widen, obviously at the expense of the smaller members.


You are saying the same thing as him, except he was portraying it with a huge dose of irony (hard to convey in a written forum post).  The only way it will work is the way in which it will never work, for the very reasons you've gone on to explain  :)


@Bryce - exactly the point.  If countries like Germany and France want this kind of EU then they need to realise that the pain will eventually have to be shared, and a eurobond will force this.

Offline Bryce

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Re: Eurozone ist kaput
« Reply #7 on: 14:54, 20 September 11 »
Ah Gryzor, we think alike, I just type faster :D

@Redbox: Germany and France have a few advantages through the Euro, but so also have the other countries, so I don't think it's only DE and FR that want the EU to continue as it is. Ireland wouldn't have developed it's infrastructure so much over the years if it hadn't been for all the Euro subsidies they have been getting. The UK has also done quite well out of being in the EU. But Eurobonds aren't the answer, no matter what kind of EU you'd like to have.

Bryce.

Offline Gryzor

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Re: Eurozone ist kaput
« Reply #8 on: 16:22, 20 September 11 »
@redbox: ah, ok, maybe I misunderstood what he was trying to convey (yeah, irony doesn't fare well online).

Bear in mind that not even single countries are optimal areas; thus you have, within the same countries, regions that are poor and regions that are rich. Areas that are booming and others that are slumping. Even there, policy cannot be the same.

As long as we think that policy begins and ends with economics or finance then we're doomed.

@Bryce: I just type more :D

Interestingly, what you say about Ireland is what is being said about Greece. But keep in mind that all this is waaaay too fresh. We're only talking about less than ten years of a common currency, for instance. And, already, those changes in Greece are being rolled back - and actually we are already quite behind the level where we were when all the 'positive' stuff started.

Offline steve

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Re: Eurozone ist kaput
« Reply #9 on: 17:56, 20 September 11 »
The UK pays more to Europe than it receives which is why the only people who want the UK to be in Europe are those who receive money from Europe.

Offline Gryzor

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Re: Eurozone ist kaput
« Reply #10 on: 18:20, 20 September 11 »
I don't think any of the smaller countries wants the UK to join the EU. As a Greek, I've been cheering at UK's refusal to commit suicide. It's the big players that want to drag her in...

Offline TFM

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Re: Eurozone ist kaput
« Reply #11 on: 22:15, 21 September 11 »
The UK pays more to Europe than it receives which is why the only people who want the UK to be in Europe are those who receive money from Europe.
The same is true for France and Germany (which pays to most money).
TFM of FutureSoft
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Offline deepfb

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Re: Eurozone ist kaput
« Reply #12 on: 22:47, 21 September 11 »
The UK pays more to Europe than it receives which is why the only people who want the UK to be in Europe are those who receive money from Europe.


GB Pound has acted as a safe-haven currency for many time -somebody may say from the beginning of capitalism :-D


The problem is that it's very expensive for the British domestic market to bear this role, and you have dramatically experienced this in the UK -your industry being the main victim of the policy of having a solid currency. If Euro survives for some more years, if some countries owning large reserves of petrol and/or gas decide to sell their production in Euro instead of Dollars as a part of a geopolitical strategy (Russia, Iran, Libia, Argelia, Venezuela, each having good reasons to confront USA... or China), some reserves in GB Pounds may move to Euro and the UK may be forced to enter the monetary union. This is not to happen in a few years, but may occur in a medium term.


And for the amounts that the UK, France or Germany (or Denmark, or Holland) are providing to the UE -this is not a waste of money, this is an investment. And the benefit for your companies is greater than your loss: from Malta to Croatia, from Greece to Portugal, the majority of all profitable medium and large bussiness are in hands of British, French or German companies (from Tesco to Carrefour, from Unilever to Siemens, from Vodafone to ING).


So let's not face this issue as a national confrontation, but as it actually is, has been and will be: a class war, companies against workers.
« Last Edit: 22:51, 21 September 11 by deepfb »

Offline Gryzor

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Re: Eurozone ist kaput
« Reply #13 on: 10:24, 22 September 11 »
Here's a nice article on Greece defaulting. A bit simple and I don't agree 100%, but it's good enough.

Offline Gryzor

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Re: Eurozone ist kaput
« Reply #14 on: 14:20, 23 September 11 »
Germany Has 5 Trillion Euros of Hidden Debt, Handelsblatt Says.
Just to refresh our memory, Greek debt is about €340bn.


Oh, this will be fun...

Offline Bryce

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Re: Eurozone ist kaput
« Reply #15 on: 14:26, 23 September 11 »
His calculation method is completely bogus. If you start counting shortfalls in pension funds and future social securities then every European countrys debt is twice the amount being discussed at the moment. This is pure panic-mongering press.

Bryce.

Offline Gryzor

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Re: Eurozone ist kaput
« Reply #16 on: 14:36, 23 September 11 »
I respectfully disagree. A debt is a debt is a debt. There's external debt and internal debt. In Greece such debts are accounted for and counted in. That is why, for instance, the practice of pushing back wages (from the beginning of the month to the end of the month, in order to show less expenses, accounting wise, at the end of the year) is, as you said, bogus - these will be wages owed, and hence would be debt.

Offline Gryzor

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Re: Eurozone ist kaput
« Reply #17 on: 12:56, 25 September 11 »
Actually, I just found the article. The man doesn't say the debt is such; he has merely calculated that with the current economic and financial plans it WILL reach that figure. Why it was translated the way it was is beyond me...

Offline Bryce

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Re: Eurozone ist kaput
« Reply #18 on: 13:32, 25 September 11 »
Sensationalistic Headlines tend to sell more copies of the Magazine.

Bryce.

Offline Gryzor

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Re: Eurozone ist kaput
« Reply #19 on: 13:33, 25 September 11 »
The headlines saying so appeared on other online sources, and were quickly copied by everyone else...