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On June 25 2013 08:38 Feartheguru wrote:Show nested quote +On June 13 2013 20:16 WhiteDog wrote:On June 13 2013 18:54 Aiobhill wrote:On June 13 2013 17:06 WhiteDog wrote:On June 13 2013 15:51 Aiobhill wrote:On June 12 2013 06:10 Gorsameth wrote:
Our economy is bad. lets put another 2500 people on the street so they cant pay there mortgage and get things even worse. The money these people get paid, has to be earned somewhere. Or rather, since Draghi is in money-printing mode, the value these people consume has to be created somewhere. If letting people continue to work and earn in jobs that don't add value to a society or a community would function longterm, we could all live in a selfulfilling socialist utopia. Could you define value and explain who or what type of activity, according to you, create or don't create value please. Gladly. They create a product, in this case most likely information and/or entertainment. If there is no private demand at current cost for this product or a consensus to introduce or raise taxes or fees to finance continued production, it seems the value created does not match the cost. It's not my definition or my decision, it's up to the people for whom the product is made or their representatives. Television, like school does not create a simple product. In economy, after the theorist who built the idea of the endogenous growth, we consider that such "product" are responsible for positive externalities - which means that the activity made by televisions is acting positively on the economic activity of others, but that "transaction" doesn't pass through the system of price (nobody paid for it). Television gives information to people (information are important for economy because it helps people makes efficient decisions) it also display knowledge, which develop human capital within the country. For a long time economists thought that public administrations and the likes had no real economic value, that there were just waste of money, but now they insist on the idea that investing in such administrations help firms to focus on production, and economist have actually empirically quantified the impact of an administration and public infrastructure on the economic growth. The fact that public televisions are corrupted is another matter entirely. Plus, you cannot product if there is no demand as you say. Cutting down job on a microeconomic level is just cutting working cost (which is a good thing in a competitive market, like today with the competition from china and those country with really low labor cost), but on a macroeconomic level it's cutting down the global demand. That is what is happening in Greece, you cannot cut thousands and thousands of job because they don't create "economic value" (as you defined it) without instantly destroying the demand and thus destroying your country (consumption is more than half the GPD of most developped country). The 2700 job they are cutting are not only cutting down "unproductive" jobs, it's also cutting down 2700 people consumption and thus cutting down the possible profit "productive" firms could make. So if we follow this logic, the government of Greece should hire every single unemployed person tomorrow to cut grass with nail-clippers and generate consumption to grow the economy?
Yes.
Paying people government money to do unproductive jobs does not add to the economy.
It does in a liquidity trap.
The consumption would have went elsewhere if they had not been 'given' away to the people doing these jobs. No it wouldnt, the paradox of thrift means all greeks would be worse off.
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Greece really doesn't have the option to pay people to do unproductive things - no one will lend them the money to do that. Same goes for the rest of the crisis countries really, so the issue's a bit of a red herring.
That said, what's currently happening isn't working very well. Leaders need to try harder to find productive things for people to do, find financing for those activities (public or private) or engage in more asset / debt write downs.
I don't think that playing the waiting game is going to cut it.
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Btw. in a way I find this 'blame game' tragically funny.
So what it comes down to is, that for example Spaniards are angry at Germans because Spanish banks do not like to give loans to Spanish people.
Spanish banks say :"We will only lend Spanish firms money again when Germans give up part of our dept to them. But in the meantime we rather give out loans to Germans, because, you know, it is more sensible."
This world is so twisted.
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On June 25 2013 07:30 JonnyBNoHo wrote:Show nested quote +Crime Gangs Look to Clean Up as Europe's Black Market Balloons
The financial crisis has fuelled a huge expansion of organized crime in Europe with 3,600 criminal syndicates now active across the continent, profiting even from such prosaic products as household detergents, the head of Europol has warned.
Rob Wainwright, director of the European Union's crime-fighting agency, said Europe's black market in counterfeit foodstuffs, pharmaceuticals and machine parts doubled to a value of about two billion euros in the early years of the recession. ...
When asked whether crimes such as these were hampering the EU's economic recovery, Mr. Wainwright said: "Yes, I think the short answer to that is yes . . . there is a deliberate exploitation of our global economic conditions to serve the illegal economy."
Other recessionary crime trends identified by Europol include an increasing willingness by companies to cut costs by using illegal labour, which has led to breaches of minimum wage guidelines and fuelled people-trafficking networks in more extreme cases.
Criminals are even making gains from governments' attempts to recover from the crisis: the decision by some member states to raise VAT has spurred a growth in fraudulent VAT claims which used to be concentrated on electrical products to a much wider range of goods over a bigger range of EU countries.
In the UK, for instance, the VAT rate increased in early 2011 from 17.5 per cent to 20 per cent, making any fake claim on this tax instantly more profitable. VAT fraud is now estimated to be worth 100 billion euros a year across Europe. ... Link
This is actually part of the hypocricy: Corruption (mostly bribes, reverse commission and neputism) is a big part of policy making in a significant part of EU.
Some countries are eating their own government with countermeasures, but since corruption is so institutionalized, it is mostly wolves watching sheep. OLAF (EU anticorruption agency) is not able to catch much of the black market. They are catching about 1-2 % of the budget as probably illegal and about the same in maybe illegal, while estimates at around 10-15 % of the EU money going to corruption is the official expectation of the extend. OLAF only cares about EU-money mind you...
As for the VAT: EU generally has high income taxes and to avoid the problems from that, other taxes are introduced or raised. Specifically some form of VAT has been one of the libertarian dreams to use to remove income tax completely.
In the case of EU it has been taken to heart and many countries are shifting taxes from income tax (one of the worst forms of taxations for the economy, it is said, but by what measures?) to VAT.
It is no surprise that fraud with VAT is increasing, especially in a time of widespread economic problems.
Moving taxation from income tax to VAT will worsen the economy in the short term, so the crisis can keep rolling. It is unfortunately a general belief among politicians that what is needed is starving the beast to incite growth. It may end up as an advantage in growth 30+ years down the line, but if it is causing a deepening of recession today, it may not be the time and the place for the measures, even though they may be necessary down the line. On the other hand, financial institutions are getting bailed out en masse.
It is kind of a political theory buffet: Take some austerity from conservatives, take some taxation move from libertarians, take some added bureaucracy from bureaucracy (not entirely a political philosophy per se., but look up Max Weber to get one of the only defences of it!) and take some bailouts from socialism. I think it is more and more clear that it is the worst from every ideology, but well.
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On June 25 2013 11:12 JonnyBNoHo wrote:
Greece really doesn't have the option to pay people to do unproductive things - no one will lend them the money to do that. Same goes for the rest of the crisis countries really, so the issue's a bit of a red herring.
That said, what's currently happening isn't working very well. Leaders need to try harder to find productive things for people to do, find financing for those activities (public or private) or engage in more asset / debt write downs.
I don't think that playing the waiting game is going to cut it.
Money needs to flow at a low cost out of Germany and into the troubled countries. Whether this is through direct transfers for a region wide unemployment program or investment, it needs to happen. Something that will spread the pain of these incredibly depressed economies out, since migration apparently isn't working well enough right now.
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"Money needs to flow at a low cost out of Germany and into the troubled countries."
Just no.
Why should the only country that follows the rules pay for thoose who didnt?
And what good is it if troubled countrys get out of a recession but then instead germany falls into one ? (wich it definatly will if large sums of monney will flow out of the country)
Germany struggled for 10 years+ to get things working again after the reunification, they already paid for pulling 16m people out of poverty (the former east germans) and they paid a hefty price for that.
Then rather just print monney and give it to the troubled countrys, but pulling monney from there where it is spend wisely and efficient, to put it into places where it is not spend wisely and effecient will only bring europe as a whole closer to poverty.
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On June 25 2013 19:17 Rassy wrote:
"Money needs to flow at a low cost out of Germany and into the troubled countries."
Just no.
Why should the only country that follows the rules pay for thoose who didnt?
And what good is it if troubled countrys get out of a recession but then instead germany falls into one ? (wich it definatly will if large sums of monney will flow out of the country)
Germany struggled for 10 years+ to get things working again after the reunification, they already paid for pulling 16m people out of poverty (the former east germans) and they paid a hefty price for that.
Then rather just print monney and give it to the troubled countrys, but pulling monney from there where it is spend wisely and efficient, to put it into places where it is not spend wisely and effecient will only bring europe as a whole closer to poverty.
Define "follows the rules."
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On June 25 2013 19:17 Rassy wrote:
"Money needs to flow at a low cost out of Germany and into the troubled countries."
Just no.
Why should the only country that follows the rules pay for thoose who didnt?
And what good is it if troubled countrys get out of a recession but then instead germany falls into one ? (wich it definatly will if large sums of monney will flow out of the country)
Germany struggled for 10 years+ to get things working again after the reunification, they already paid for pulling 16m people out of poverty (the former east germans) and they paid a hefty price for that.
Then rather just print monney and give it to the troubled countrys, but pulling monney from there where it is spend wisely and efficient, to put it into places where it is not spend wisely and effecient will only bring europe as a whole closer to poverty.
Wouldn't for example a raise in wages in Germany also be a form of money transfer? Makes Ger less competitve and increases consumption from weak countries. This way everyone benefits.
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Wages in germany could rise and it might be a good solution, i agree with that but thats something different then directly transfering monney from germany.
German wages already are rising btw, i thought the german metal workers got a 7% increase this year, dont know about other groups but i expect similar rises?
The other option would be off course to lower the wages in other countrys,instead of making one country less competitive make other countrys more competitive.Maybe some balance between the 2 needs to be found.
I dont know, am kinda sick of the whole economics thing. For now i like the idea of simply printing monney american style.
Let the euro vs dollar go back to 1/1 and combine this with expanding the euro zone with poland tjech and the baltics so that thoose countrys can absorb some of the extra demand for europroducts and the german economy wont overheat.
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On June 25 2013 20:12 RvB wrote:
Wouldn't for example a raise in wages in Germany also be a form of money transfer?
Of course it would. But that is not in our dear leaders game plan.
See, "everyone benefits" or "harmonize competitiveness" is not the goal (and never was). Any such thoughts are naive.
Every country wants a 'United Europe' only in the sense of a wolves pack, never in a sense of real unity.
This whole world economics game is about ripping off weaker countries not sharing with them.
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On June 25 2013 20:12 RvB wrote:Show nested quote +On June 25 2013 19:17 Rassy wrote:
"Money needs to flow at a low cost out of Germany and into the troubled countries."
Just no.
Why should the only country that follows the rules pay for thoose who didnt?
And what good is it if troubled countrys get out of a recession but then instead germany falls into one ? (wich it definatly will if large sums of monney will flow out of the country)
Germany struggled for 10 years+ to get things working again after the reunification, they already paid for pulling 16m people out of poverty (the former east germans) and they paid a hefty price for that.
Then rather just print monney and give it to the troubled countrys, but pulling monney from there where it is spend wisely and efficient, to put it into places where it is not spend wisely and effecient will only bring europe as a whole closer to poverty. Wouldn't for example a raise in wages in Germany also be a form of money transfer? Makes Ger less competitve and increases consumption from weak countries. This way everyone benefits.
No, this would not really work.
Germany would become less competitive on the world market, that is true. And maybe the Germans would consume more.
But there is no guarantee that this also means that the states that are in a recession would gain anything, since the Germans probably would just buy their goods from countries that are actually competitive (such as China, themselves, etc.).
The lack of an economy/industry that is competitive globally is what makes this recession so hideous.
Note: For the most part, Germany does not even compete on the world market with the countries that are in a recession. Or can someone tell me where to buy a greek car, spanish machinery, portugese chemicals..?
So, reducing Germany's competitiveness on the world market would solve nothing.
Note 2: Btw, I am not basically against increasing wages in Germany, since it could balance Germany's economy, which in my view relies to much on exporting goods and not on consumption of its citizens. But this does not really imrpove the situation in other countries, as I have pointed out.
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Well there is fiat and mercedes, but fiat is already alot cheaper then mercedes lol
Maybe big eu projects financed with printed monney could help the troubled countrys, like the usa building the hoover dam in the 30,s.
Something similar in europe could be done? (though make sure corruption wont kill it)
Build ports and hotels in greece for tourism, irrigation projects in spain for more farmland for whine and fruits and maybe huge solar plants?
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On June 25 2013 20:53 Rassy wrote:
Well there is fiat and mercedes, but fiat is already alot cheaper then mercedes lol
Maybe big eu projects financed with printed monney could help the troubled countrys, like the usa building the hoover dam in the 30,s.
Something similar in europe could be done? (though make sure corruption wont kill it)
Build ports and hotels in greece for tourism, irrigation projects in spain for more farmland for whine and fruits and maybe huge solar plants?
The problem is that a lot of these infrastructure projects have already been done in the last decades with help of EU funds. The best streets, highways, railways you can find in Europe are located in Spain, Greece, Portugal etc.
A funny side effect of this is the following:
Recently the prime ministers et al. decided to increase the fundings of the European Development Bank to fund infrastructure projects all over the EU. They did this as one project to counter the recession in the mediterranean states. But since this Bank has to fund projects based on the need for an improved infrastructure and not solely on the econimic situation of that region, in the end, most projects that were funded, were located in northern/mid Europe (i.e. NOT the recession states), because there the infrastructure really needed some improvement.
This happened, because there already is an excellent infrastructure in the states with a recession! There is just a huge lack of competitive industry/firms/corps in these states.
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On June 25 2013 20:42 Restrider wrote:Show nested quote +On June 25 2013 20:12 RvB wrote:On June 25 2013 19:17 Rassy wrote:
"Money needs to flow at a low cost out of Germany and into the troubled countries."
Just no.
Why should the only country that follows the rules pay for thoose who didnt?
And what good is it if troubled countrys get out of a recession but then instead germany falls into one ? (wich it definatly will if large sums of monney will flow out of the country)
Germany struggled for 10 years+ to get things working again after the reunification, they already paid for pulling 16m people out of poverty (the former east germans) and they paid a hefty price for that.
Then rather just print monney and give it to the troubled countrys, but pulling monney from there where it is spend wisely and efficient, to put it into places where it is not spend wisely and effecient will only bring europe as a whole closer to poverty. Wouldn't for example a raise in wages in Germany also be a form of money transfer? Makes Ger less competitve and increases consumption from weak countries. This way everyone benefits. No, this would not really work. Germany would become less competitive on the world market, that is true. And maybe the Germans would consume more. But there is no guarantee that this also means that the states that are in a recession would gain anything, since the Germans probably would just buy their goods from countries that are actually competitive (such as China, themselves, etc.). The lack of an economy/industry that is competitive globally is what makes this recession so hideous.
The fact that Germany - among many other like China, Taïwan, or some countries in the middle east - is having budget surplus (the only country in europe in 2012) and that, despite that, the wage are not moving a bit while the inequalities are rising does not seem to make a difference to you.
It's not a question of competition, it's a question of stability. Our system have no stability in this situation. You can continue to defend your own interest in this matter, but it will only lead to the end of this flawed system, and Germany will lost a lot economically because of it - Germany already lost a lot of credibility in Europe, if you consider how Greek or Spanish view their policy (not to mention french).
On June 25 2013 21:18 Restrider wrote:Show nested quote +On June 25 2013 20:53 Rassy wrote:
Well there is fiat and mercedes, but fiat is already alot cheaper then mercedes lol
Maybe big eu projects financed with printed monney could help the troubled countrys, like the usa building the hoover dam in the 30,s.
Something similar in europe could be done? (though make sure corruption wont kill it)
Build ports and hotels in greece for tourism, irrigation projects in spain for more farmland for whine and fruits and maybe huge solar plants? The problem is that a lot of these infrastructure projects have already been done in the last decades with help of EU funds. The best streets, highways, railways you can find in Europe are located in Spain, Greece, Portugal etc. A funny side effect of this is the following: Recently the prime ministers et al. decided to increase the fundings of the European Development Bank to fund infrastructure projects all over the EU. They did this as one project to counter the recession in the mediterranean states. But since this Bank has to fund projects based on the need for an improved infrastructure and not solely on the econimic situation of that region, in the end, most projects that were funded, were located in northern/mid Europe (i.e. NOT the recession states), because there the infrastructure really needed some improvement. This happened, because there already is an excellent infrastructure in the states with a recession! There is just a huge lack of competitive industry/firms/corps in these states.
Germany's competitivity is not on price. The word "competitivity" doesn't mean much. 40% of Germany's exportations are cars - BMW, Mercedes, Volkswagen, all respected brand that are not price-competitivity. It's not something you can "improve" with cut and such.
Greece labor costs are lower than germany's, it does not make them more "competitive" considering that they sold most of their competitive advantages (like the boat industry). Competitivity is labor / capital / brand. Lowering salary cost does very little to improve competitivity.
On the other hand, as a lot of economists showed, and something you don't seem to accept, is that labor "cost" are only cost at the microeconomic level : at the macroeconomic level, labor is the vector of demand. Lowering labor price lower agregate demand and shut down any possibility for growth.
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On June 25 2013 21:24 WhiteDog wrote:Show nested quote +On June 25 2013 20:42 Restrider wrote:On June 25 2013 20:12 RvB wrote:On June 25 2013 19:17 Rassy wrote:
"Money needs to flow at a low cost out of Germany and into the troubled countries."
Just no.
Why should the only country that follows the rules pay for thoose who didnt?
And what good is it if troubled countrys get out of a recession but then instead germany falls into one ? (wich it definatly will if large sums of monney will flow out of the country)
Germany struggled for 10 years+ to get things working again after the reunification, they already paid for pulling 16m people out of poverty (the former east germans) and they paid a hefty price for that.
Then rather just print monney and give it to the troubled countrys, but pulling monney from there where it is spend wisely and efficient, to put it into places where it is not spend wisely and effecient will only bring europe as a whole closer to poverty. Wouldn't for example a raise in wages in Germany also be a form of money transfer? Makes Ger less competitve and increases consumption from weak countries. This way everyone benefits. No, this would not really work. Germany would become less competitive on the world market, that is true. And maybe the Germans would consume more. But there is no guarantee that this also means that the states that are in a recession would gain anything, since the Germans probably would just buy their goods from countries that are actually competitive (such as China, themselves, etc.). The lack of an economy/industry that is competitive globally is what makes this recession so hideous. The fact that Germany - among many other like China, Taïwan, or some countries in the middle east - is having budget surplus (the only country in europe in 2012) and that, despite that, the wage are not moving a bit while the inequalities are rising does not seem to make a difference to you. It's not a question of competition, it's a question of stability. Our system have no stability in this situation. You can continue to defend your own interest in this matter, but it will only lead to the end of this flawed system, and Germany will lost a lot economically because of it - Germany already lost a lot of credibility in Europe, if you consider how Greek or Spanish view their policy (not to mention french).
This is the typical fallacy a lot of people tend to do.
The countries that are in a recession right now were not able to prepare themselves for the challanges that were caused by globalisation.
Let's take Portugal as an example:
Portugal was known for its textile industry in the 70s and 80s, but that has disappeared, because these textiles are now produced a lot cheaper in Turkey, Bangladesh and/or Pakistan.
To blame Germany now for the problems in Portugal (mainly: lack of a competitive industry) is just an easy way out and an excuse to not have to face the dire truth.
Germany had to go through a painful process in the first decade of this century to be able to compete with countries such as China. The others have not done this process, but desperately need to do it before it is too late (and I bet that for more than one country it already is too late).
Most people seem to forget that including a competing labour force of over a billion WILL have an effect on your national, even continental, economy, if you want to have a globalized market/industry/economy. And this happened with Deng Xiaopings reforms in China and in general the end of the Cold War.
So, this is what could have been done:
1. Keep one step ahead (i.e. innovation, R&E) without becoming too expensive.
2. Lower your production costs to be able to compete (i.e. a portugese worker in the textile industry would not earn more than the semi-slaves in Bangladesh or China).
3. Form a closed market and put exorbitant taxes on products from other regions.
Point 1. is what happened in Germany and other states, I would not recommend 2. and 3. is nearly impossible right now (the economy is too intertwined already to pull something like this off).
TL:DR
Stop comparing things that you should not compare and stop blaming your neighbour for the fate you face, when the only one responsible for it is you!
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On June 25 2013 21:24 WhiteDog wrote:
On the other hand, as a lot of economists showed, and something you don't seem to accept, is that labor "cost" are only cost at the microeconomic level : at the macroeconomic level, labor is the vector of demand. Lowering labor price lower agregate demand and shut down any possibility for growth.
I do accept that. And I pointed out that export and consumption needs to be balanced more in Germany. But that does not solve the problem in other countries. They simply have nothing (or not much) to offer right now, which could lead to a balanced trade balance. You need to cut costs (i.e. not necessarily wages, but inefficiencies in administration, overabundance of bureaucracy, inflexible contracts, corruption etc.) and stimulate entrepreneurship.
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On June 25 2013 21:47 Restrider wrote:Show nested quote +On June 25 2013 21:24 WhiteDog wrote:On June 25 2013 20:42 Restrider wrote:On June 25 2013 20:12 RvB wrote:On June 25 2013 19:17 Rassy wrote:
"Money needs to flow at a low cost out of Germany and into the troubled countries."
Just no.
Why should the only country that follows the rules pay for thoose who didnt?
And what good is it if troubled countrys get out of a recession but then instead germany falls into one ? (wich it definatly will if large sums of monney will flow out of the country)
Germany struggled for 10 years+ to get things working again after the reunification, they already paid for pulling 16m people out of poverty (the former east germans) and they paid a hefty price for that.
Then rather just print monney and give it to the troubled countrys, but pulling monney from there where it is spend wisely and efficient, to put it into places where it is not spend wisely and effecient will only bring europe as a whole closer to poverty. Wouldn't for example a raise in wages in Germany also be a form of money transfer? Makes Ger less competitve and increases consumption from weak countries. This way everyone benefits. No, this would not really work. Germany would become less competitive on the world market, that is true. And maybe the Germans would consume more. But there is no guarantee that this also means that the states that are in a recession would gain anything, since the Germans probably would just buy their goods from countries that are actually competitive (such as China, themselves, etc.). The lack of an economy/industry that is competitive globally is what makes this recession so hideous. The fact that Germany - among many other like China, Taïwan, or some countries in the middle east - is having budget surplus (the only country in europe in 2012) and that, despite that, the wage are not moving a bit while the inequalities are rising does not seem to make a difference to you. It's not a question of competition, it's a question of stability. Our system have no stability in this situation. You can continue to defend your own interest in this matter, but it will only lead to the end of this flawed system, and Germany will lost a lot economically because of it - Germany already lost a lot of credibility in Europe, if you consider how Greek or Spanish view their policy (not to mention french). This is the typical fallacy a lot of people tend to do. The countries that are in a recession right now were not able to prepare themselves for the challanges that were caused by globalisation. Let's take Portugal as an example: Portugal was known for its textile industry in the 70s and 80s, but that has disappeared, because these textiles are now produced a lot cheaper in Turkey, Bangladesh and/or Pakistan. To blame Germany now for the problems in Portugal (mainly: lack of a competitive industry) is just an easy way out and an excuse to not have to face the dire truth. Germany had to go through a painful process in the first decade of this century to be able to compete with countries such as China. The others have not done this process, but desperately need to do it before it is too late (and I bet that for more than one country it already is too late). Most people seem to forget that including a competing labour force of over a billion WILL have an effect on your national, even continental, economy, if you want to have a globalized market/industry/economy. And this happened with Deng Xiaopings reforms in China and in general the end of the Cold War. So, this is what could have been done: 1. Keep one step ahead (i.e. innovation, R&E) without becoming too expensive.
2. Lower your production costs to be able to compete (i.e. a portugese worker in the textile industry would not earn more than the semi-slaves in Bangladesh or China).
3. Form a closed market and put exorbitant taxes on products from other regions.Point 1. is what happened in Germany and other states, I would not recommend 2. and 3. is nearly impossible right now (the economy is too intertwined already to pull something like this off). TL:DR Stop comparing things that you should not compare and stop blaming your neighbour for the fate you face, when the only one responsible for it is you!
You don't even understand that if european countries really were trying to push for competitivity, the best way would have been to push for protectionnism - not only protectionnism toward China or India, but towards Germany.
It's the end of the EU. Stop trying to overvalue Germany's competitivity. You really think every european countries having deficits are too dumb to think about your "3 step to economic success" ?
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On June 25 2013 21:55 WhiteDog wrote:Show nested quote +On June 25 2013 21:47 Restrider wrote:On June 25 2013 21:24 WhiteDog wrote:On June 25 2013 20:42 Restrider wrote:On June 25 2013 20:12 RvB wrote:On June 25 2013 19:17 Rassy wrote:
"Money needs to flow at a low cost out of Germany and into the troubled countries."
Just no.
Why should the only country that follows the rules pay for thoose who didnt?
And what good is it if troubled countrys get out of a recession but then instead germany falls into one ? (wich it definatly will if large sums of monney will flow out of the country)
Germany struggled for 10 years+ to get things working again after the reunification, they already paid for pulling 16m people out of poverty (the former east germans) and they paid a hefty price for that.
Then rather just print monney and give it to the troubled countrys, but pulling monney from there where it is spend wisely and efficient, to put it into places where it is not spend wisely and effecient will only bring europe as a whole closer to poverty. Wouldn't for example a raise in wages in Germany also be a form of money transfer? Makes Ger less competitve and increases consumption from weak countries. This way everyone benefits. No, this would not really work. Germany would become less competitive on the world market, that is true. And maybe the Germans would consume more. But there is no guarantee that this also means that the states that are in a recession would gain anything, since the Germans probably would just buy their goods from countries that are actually competitive (such as China, themselves, etc.). The lack of an economy/industry that is competitive globally is what makes this recession so hideous. The fact that Germany - among many other like China, Taïwan, or some countries in the middle east - is having budget surplus (the only country in europe in 2012) and that, despite that, the wage are not moving a bit while the inequalities are rising does not seem to make a difference to you. It's not a question of competition, it's a question of stability. Our system have no stability in this situation. You can continue to defend your own interest in this matter, but it will only lead to the end of this flawed system, and Germany will lost a lot economically because of it - Germany already lost a lot of credibility in Europe, if you consider how Greek or Spanish view their policy (not to mention french). This is the typical fallacy a lot of people tend to do. The countries that are in a recession right now were not able to prepare themselves for the challanges that were caused by globalisation. Let's take Portugal as an example: Portugal was known for its textile industry in the 70s and 80s, but that has disappeared, because these textiles are now produced a lot cheaper in Turkey, Bangladesh and/or Pakistan. To blame Germany now for the problems in Portugal (mainly: lack of a competitive industry) is just an easy way out and an excuse to not have to face the dire truth. Germany had to go through a painful process in the first decade of this century to be able to compete with countries such as China. The others have not done this process, but desperately need to do it before it is too late (and I bet that for more than one country it already is too late). Most people seem to forget that including a competing labour force of over a billion WILL have an effect on your national, even continental, economy, if you want to have a globalized market/industry/economy. And this happened with Deng Xiaopings reforms in China and in general the end of the Cold War. So, this is what could have been done: 1. Keep one step ahead (i.e. innovation, R&E) without becoming too expensive.
2. Lower your production costs to be able to compete (i.e. a portugese worker in the textile industry would not earn more than the semi-slaves in Bangladesh or China).
3. Form a closed market and put exorbitant taxes on products from other regions.Point 1. is what happened in Germany and other states, I would not recommend 2. and 3. is nearly impossible right now (the economy is too intertwined already to pull something like this off). TL:DR Stop comparing things that you should not compare and stop blaming your neighbour for the fate you face, when the only one responsible for it is you! You don't even understand that if european countries really were trying to push for competitivity, the best way would have been to push for protectionnism - not only protectionnism toward China or India, but towards Germany. It's the end of the EU. Stop trying to overvalue Germany's competitivity, and just understand how economy works. You really think every european countries having deficits are dumb enough not to think about your "3 step to economic success" ?
Really?
You think protectionism is the solution in a highly internationalized economy? And who is going to produce the laptop/desktop PC you are writing these posts right now? Do you even have an idea how complex the production chains of today's products are? If you want to localize everything in one economic region (even excluding the country with most inhabitants in Europe), you'd have a market of about 100-200 million tops. Not enough to have scaling benefits that matter. To sum it up, it would just simply fail.
And I do not overvalue Germany. If Germany was on its own (and I mean without having to act as a guaranteer for half Europe), it would be in a pretty comfortable position. Comparable to Switzerland for instance.
But since Germany had to put a lot of money in danger to maybe extend the lifetime of a overly corrupt system, it now is in danger.
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On June 25 2013 22:11 Restrider wrote:Show nested quote +On June 25 2013 21:55 WhiteDog wrote:On June 25 2013 21:47 Restrider wrote:On June 25 2013 21:24 WhiteDog wrote:On June 25 2013 20:42 Restrider wrote:On June 25 2013 20:12 RvB wrote:On June 25 2013 19:17 Rassy wrote:
"Money needs to flow at a low cost out of Germany and into the troubled countries."
Just no.
Why should the only country that follows the rules pay for thoose who didnt?
And what good is it if troubled countrys get out of a recession but then instead germany falls into one ? (wich it definatly will if large sums of monney will flow out of the country)
Germany struggled for 10 years+ to get things working again after the reunification, they already paid for pulling 16m people out of poverty (the former east germans) and they paid a hefty price for that.
Then rather just print monney and give it to the troubled countrys, but pulling monney from there where it is spend wisely and efficient, to put it into places where it is not spend wisely and effecient will only bring europe as a whole closer to poverty. Wouldn't for example a raise in wages in Germany also be a form of money transfer? Makes Ger less competitve and increases consumption from weak countries. This way everyone benefits. No, this would not really work. Germany would become less competitive on the world market, that is true. And maybe the Germans would consume more. But there is no guarantee that this also means that the states that are in a recession would gain anything, since the Germans probably would just buy their goods from countries that are actually competitive (such as China, themselves, etc.). The lack of an economy/industry that is competitive globally is what makes this recession so hideous. The fact that Germany - among many other like China, Taïwan, or some countries in the middle east - is having budget surplus (the only country in europe in 2012) and that, despite that, the wage are not moving a bit while the inequalities are rising does not seem to make a difference to you. It's not a question of competition, it's a question of stability. Our system have no stability in this situation. You can continue to defend your own interest in this matter, but it will only lead to the end of this flawed system, and Germany will lost a lot economically because of it - Germany already lost a lot of credibility in Europe, if you consider how Greek or Spanish view their policy (not to mention french). This is the typical fallacy a lot of people tend to do. The countries that are in a recession right now were not able to prepare themselves for the challanges that were caused by globalisation. Let's take Portugal as an example: Portugal was known for its textile industry in the 70s and 80s, but that has disappeared, because these textiles are now produced a lot cheaper in Turkey, Bangladesh and/or Pakistan. To blame Germany now for the problems in Portugal (mainly: lack of a competitive industry) is just an easy way out and an excuse to not have to face the dire truth. Germany had to go through a painful process in the first decade of this century to be able to compete with countries such as China. The others have not done this process, but desperately need to do it before it is too late (and I bet that for more than one country it already is too late). Most people seem to forget that including a competing labour force of over a billion WILL have an effect on your national, even continental, economy, if you want to have a globalized market/industry/economy. And this happened with Deng Xiaopings reforms in China and in general the end of the Cold War. So, this is what could have been done: 1. Keep one step ahead (i.e. innovation, R&E) without becoming too expensive.
2. Lower your production costs to be able to compete (i.e. a portugese worker in the textile industry would not earn more than the semi-slaves in Bangladesh or China).
3. Form a closed market and put exorbitant taxes on products from other regions.Point 1. is what happened in Germany and other states, I would not recommend 2. and 3. is nearly impossible right now (the economy is too intertwined already to pull something like this off). TL:DR Stop comparing things that you should not compare and stop blaming your neighbour for the fate you face, when the only one responsible for it is you! You don't even understand that if european countries really were trying to push for competitivity, the best way would have been to push for protectionnism - not only protectionnism toward China or India, but towards Germany. It's the end of the EU. Stop trying to overvalue Germany's competitivity, and just understand how economy works. You really think every european countries having deficits are dumb enough not to think about your "3 step to economic success" ? Really? You think protectionism is the solution in a highly internationalized economy? And who is going to produce the laptop/desktop PC you are writing these posts right now? Do you even have an idea how complex the production chains of today's products are? If you want to localize everything in one economic region (even excluding the country with most inhabitants in Europe), you'd have a market of about 100-200 million tops. Not enough to have scaling benefits that matter. To sum it up, it would just simply fail. And I do not overvalue Germany. If Germany was on its own (and I mean without having to act as a guaranteer for half Europe), it would be in a pretty comfortable position. Comparable to Switzerland for instance. But since Germany had to put a lot of money in danger to maybe extend the lifetime of a overly corrupt system, it now is in danger.
You are spouting nonsense. Germany have nothing in common with Switzerland. Switzerland is a small country that base his success on its bank and the capital that flow in it because of those banks.
Germany is big country, with an economy designed toward exportation and its success is heavily linked to the international fluctuations. Why does Germany lost more than most EU country after the subprime crisis ? Because its economy is based on exportation and industrial production, two things that dropped after the crisis. Two completly different strategies. International trade benefit a lot to Germany - that's why it is doing so well in the EU, a free trade zone. Switzerland gain from capital mobility and financial markets.
Protectionism is the best solution to protect a specific industry during its creation - to build and destroy comparative advantages. That kind of protectionism was what permit the US to became what it is now - yes the US built its industry with a 40% tariff. "Who is going to proce the laptop/desktop PC"... who said anything about protectionism on something you don't build in the first place ?
France and Italy could gain a lot by protecting itself from Japan's and Germany's cars for exemple (like the US is doing with Japanese cars). And if Germany continue with the mindset you are having right now, I think it's the best thing to do in the long run.
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On June 25 2013 22:20 WhiteDog wrote:Show nested quote +On June 25 2013 22:11 Restrider wrote:On June 25 2013 21:55 WhiteDog wrote:On June 25 2013 21:47 Restrider wrote:On June 25 2013 21:24 WhiteDog wrote:On June 25 2013 20:42 Restrider wrote:On June 25 2013 20:12 RvB wrote:On June 25 2013 19:17 Rassy wrote:
"Money needs to flow at a low cost out of Germany and into the troubled countries."
Just no.
Why should the only country that follows the rules pay for thoose who didnt?
And what good is it if troubled countrys get out of a recession but then instead germany falls into one ? (wich it definatly will if large sums of monney will flow out of the country)
Germany struggled for 10 years+ to get things working again after the reunification, they already paid for pulling 16m people out of poverty (the former east germans) and they paid a hefty price for that.
Then rather just print monney and give it to the troubled countrys, but pulling monney from there where it is spend wisely and efficient, to put it into places where it is not spend wisely and effecient will only bring europe as a whole closer to poverty. Wouldn't for example a raise in wages in Germany also be a form of money transfer? Makes Ger less competitve and increases consumption from weak countries. This way everyone benefits. No, this would not really work. Germany would become less competitive on the world market, that is true. And maybe the Germans would consume more. But there is no guarantee that this also means that the states that are in a recession would gain anything, since the Germans probably would just buy their goods from countries that are actually competitive (such as China, themselves, etc.). The lack of an economy/industry that is competitive globally is what makes this recession so hideous. The fact that Germany - among many other like China, Taïwan, or some countries in the middle east - is having budget surplus (the only country in europe in 2012) and that, despite that, the wage are not moving a bit while the inequalities are rising does not seem to make a difference to you. It's not a question of competition, it's a question of stability. Our system have no stability in this situation. You can continue to defend your own interest in this matter, but it will only lead to the end of this flawed system, and Germany will lost a lot economically because of it - Germany already lost a lot of credibility in Europe, if you consider how Greek or Spanish view their policy (not to mention french). This is the typical fallacy a lot of people tend to do. The countries that are in a recession right now were not able to prepare themselves for the challanges that were caused by globalisation. Let's take Portugal as an example: Portugal was known for its textile industry in the 70s and 80s, but that has disappeared, because these textiles are now produced a lot cheaper in Turkey, Bangladesh and/or Pakistan. To blame Germany now for the problems in Portugal (mainly: lack of a competitive industry) is just an easy way out and an excuse to not have to face the dire truth. Germany had to go through a painful process in the first decade of this century to be able to compete with countries such as China. The others have not done this process, but desperately need to do it before it is too late (and I bet that for more than one country it already is too late). Most people seem to forget that including a competing labour force of over a billion WILL have an effect on your national, even continental, economy, if you want to have a globalized market/industry/economy. And this happened with Deng Xiaopings reforms in China and in general the end of the Cold War. So, this is what could have been done: 1. Keep one step ahead (i.e. innovation, R&E) without becoming too expensive.
2. Lower your production costs to be able to compete (i.e. a portugese worker in the textile industry would not earn more than the semi-slaves in Bangladesh or China).
3. Form a closed market and put exorbitant taxes on products from other regions.Point 1. is what happened in Germany and other states, I would not recommend 2. and 3. is nearly impossible right now (the economy is too intertwined already to pull something like this off). TL:DR Stop comparing things that you should not compare and stop blaming your neighbour for the fate you face, when the only one responsible for it is you! You don't even understand that if european countries really were trying to push for competitivity, the best way would have been to push for protectionnism - not only protectionnism toward China or India, but towards Germany. It's the end of the EU. Stop trying to overvalue Germany's competitivity, and just understand how economy works. You really think every european countries having deficits are dumb enough not to think about your "3 step to economic success" ? Really? You think protectionism is the solution in a highly internationalized economy? And who is going to produce the laptop/desktop PC you are writing these posts right now? Do you even have an idea how complex the production chains of today's products are? If you want to localize everything in one economic region (even excluding the country with most inhabitants in Europe), you'd have a market of about 100-200 million tops. Not enough to have scaling benefits that matter. To sum it up, it would just simply fail. And I do not overvalue Germany. If Germany was on its own (and I mean without having to act as a guaranteer for half Europe), it would be in a pretty comfortable position. Comparable to Switzerland for instance. But since Germany had to put a lot of money in danger to maybe extend the lifetime of a overly corrupt system, it now is in danger. You are spouting nonsense. Germany have nothing - NOTHING - in common with Switzerland. Switzerland is a small country that base his success on its bank and the capital that flow in it because of those banks. Germany is big country, with an economy designed toward exportation and its success is heavily linked to the international fluctuations. Why does Germany lost more than most EU country after the subprime crisis ? Because its economy is based on exportation and industrial production, two things that dropped after the crisis. Two completly different strategies. International trade benefit a lot to Germany - that's why it is doing so well in the EU, a free trade zone. Switzerland gain from capital mobility and financial markets. Protectionism is the best solution to protect a specific industry during its creation - to build and destroy comparative advantages. That kind of protectionism was what permit the US to became what it is now - yes the US built its industry with a 40% tariff. "Who is going to proce the laptop/desktop PC"... who said anything about protectionism on something you don't build in the first place ? France and Italy could gain a lot by protecting itself from Japan's and Germany's cars for exemple (like the US is doing with Japanese cars). And if Germany continue with the mindset you are having right now, I think it's the best thing to do in the long run.
I knew this was coming. Quote from the english Wikipedia:
"Switzerland has an extensive industrial sector, it is not very well known around the world but present with companies in different industrial sectors such as food processing like Nestlé, chemical for industrial and construction use like Sika AG, pharmaceutical like Novartis, roof coating Sarnafil, among many others."
EDIT: More sophisticated sources:
Switzerland
GDP per sector (2011)
agriculture: 1.2%
industry: 27.5%
services: 71.3%
Germany
GDP per sector (2012)
agriculture: 0.8%
industry: 28.1%
services: 71% (2011 estimate)
So, comparing Switzerland and Germany seems to be not such a weird idea, is it?
And again, protectionism only makes sense if your own market is big enough. 60-120 millions is way too small. And of course you would probably suffer repercussions, as you can see right now in the conflict between EU and China that started with taxes on solar panels.
And you even contradict yourself. Do you really think that 100% of french cars are made in France? No, that's not the case. And if you start your trade war, you would suffer under higher costs for the parts you CANNOT produce in your own country. In the end, such a behaviour would be a zero-sum game at best.
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EPT
