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On June 25 2013 22:33 Restrider wrote:Show nested quote +On June 25 2013 22:20 WhiteDog wrote: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." 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.
I knew this was coming.
Population in Germany - 2012 estimate 80,399,300. Population in Switzerland - 2012 estimate 8,014,000.
that base his success on its bank and the capital that flow in it because of those banks.
Switzerland is an economic paradise, it's industry is great, but it's not their key to success. Germany is, after China, the biggest acotr in international trade. I don't even know how you can compare one of the biggest international contributor with Switzerland and still think you are actually right in doing so.
On June 25 2013 22:33 Restrider wrote:Show nested quote +On June 25 2013 22:20 WhiteDog wrote: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. 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.
I'm not contradicting myself. And no, we wouldn't suffer higher costs than Germany, since our economy is less based on its exportation - as the crisis showed.
I'm not defending protectionism or the end of the EU zone, because it would be a bad thing for everyone. But in the current situation, some countries, such as Greece, should consider it. And in the long run, if the policies doesn't change, then I see no reasons for other european countries to end their free trade with a country that is having such surplus each years and refuse to do anything aside from lecturing other european countries.
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On June 25 2013 22:40 WhiteDog wrote:Show nested quote +On June 25 2013 22:33 Restrider wrote:On June 25 2013 22:20 WhiteDog wrote: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." 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. I knew this was coming. Population in Germany - 2012 estimate 80,399,300. Population in Switzerland Show nested quote + that base his success on its bank and the capital that flow in it because of those banks. Switzerland is an economic paradise, it's industry is great, but it's not their key to success. Germany is, after China, the biggest acotr in international trade. I don't even know how you can compare one of the biggest international contributor with Switzerland and still think you are actually right in doing so. Show nested quote +On June 25 2013 22:33 Restrider wrote:On June 25 2013 22:20 WhiteDog wrote: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. 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. I'm not contradicting myself. And no, we wouldn't suffer higher costs than Germany, since our economy is less based on its exportation - as the crisis showed. More than half of our GDP is intern consumption.
Just look at the numbers I posted earlier. Of course there a scaling effects, but do you really think that most of Switzerland's industrial production is being consumed in Switzerland? No, they trade with it.
And to your other point:
Let me get this straight...
You tell me that protectionism would lead to an increase in industrial production in France/Italy. Let's assume that is the case. The increase in industrial production would obviously lead to a higher demand of pre-fabricated industrial goods or at least raw materials, which would likely have high taxes on them, because you just started a trade war.
NOW you tell me, that would not be a problem, since your economy relies on internal consumption and not so much on industrial production and exportation, which is the reason for the recession in the first place.
This is becoming circular, I will stop arguing this.
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On June 25 2013 22:40 WhiteDog wrote:
And in the long run, if the policies doesn't change, then I see no reasons for other european countries to end their free trade with a country that is having such surplus each years and refuse to do anything aside from lecturing other european countries.
Oh how sweat, like all the addicts are going to stop running to their drug dealers any minute now because it is hurting their health in the long run, yea right.
Again, as stated earlier, reducing exports is not in the German game plan (and never will).
Keeping the analogy, Germany is telling France not to lay off the drugs now, but start pushing the good stuff to China, because there is a fortune to be made and the only way out is selling more than you sniff.
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On June 25 2013 22:48 Restrider wrote:Show nested quote +On June 25 2013 22:40 WhiteDog wrote:On June 25 2013 22:33 Restrider wrote:On June 25 2013 22:20 WhiteDog wrote: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:
[quote]
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." 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. I knew this was coming. Population in Germany - 2012 estimate 80,399,300. Population in Switzerland that base his success on its bank and the capital that flow in it because of those banks. Switzerland is an economic paradise, it's industry is great, but it's not their key to success. Germany is, after China, the biggest acotr in international trade. I don't even know how you can compare one of the biggest international contributor with Switzerland and still think you are actually right in doing so. On June 25 2013 22:33 Restrider wrote:On June 25 2013 22:20 WhiteDog wrote: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:
[quote]
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. 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. I'm not contradicting myself. And no, we wouldn't suffer higher costs than Germany, since our economy is less based on its exportation - as the crisis showed. More than half of our GDP is intern consumption. Just look at the numbers I posted earlier. Of course there a scaling effects, but do you really think that most of Switzerland's industrial production is being consumed in Switzerland? No, they trade with it.
Do you know what's the % of the industry in the Italian economy ? 28,9 %... Do you consider that Italy would be like Germany and Switzerland if the EU would not exist ? lol <i'm pretty sure you don't think so.
You can't compare two vastly different economies as Switzerland and Germany. As I said take into consideration the banking sector in Switzerland and the impact it has on investment for exemple. Germany base its well being on an old and efficient industrial sector and a network of well developped small firm. It's just different.
And to your other point:
Let me get this straight...
You tell me that protectionism would lead to an increase in industrial production in France/Italy. Let's assume that is the case. The increase in industrial production would obviously lead to a higher demand of pre-fabricated industrial goods or at least raw materials, which would likely have high taxes on them, because you just started a trade war.
NOW you tell me, that would not be a problem, since your economy relies on internal consumption and not so much on industrial production and exportation, which is the reason for the recession in the first place.
Getting out of free trade would induce cost, yes - but it will not lead to a higher taxation rate on raw materials. Those cost would most likely be less than what the current EU is leading us to, that is my point.
I'm talking about localised taxation on specific industry that needs production - what economists call educational protectionism - like the car industry in France and Italy. In a situation of crisis it will also reduce the output gap, and thus put people to work out of unemployment - Keynes argued for small term protectionism to face the 1930's crisis.
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Okay, I'll just cut the quoting pyramid here.
Do you know what's the % of the industry in the Italian economy ? 28,9 %... Do you consider that Italy would be like Germany and Switzerland if the EU would not exist ? lol <i'm pretty sure you don't think so.
You can't compare two vastly different economies as Switzerland and Germany. As I said take into consideration the banking sector in Switzerland and the impact it has on investment for exemple. Germany base its well being on an old and efficient industrial sector and a network of well developped small firm. It's just different.
Yes, Italy has kind of a healthy industry, especially the northern part. It mostly suffers under bureaucracy, corruption and inefficient administration.
France has more than a few strong companies (for instance in nuclear technology or pharamceutical industry), however is starting to crumble as well due to inflexible contracts etc.
Spain boomed mostly due to the construction in the last decade. This is a sector where you cannot really rely on, since it is not feasible for exportation.
So, in any case, you have to differentiate, but in all of these countries there have to be done reforms.
And again, Switzerland may have a strong finance sector, but as I've shown you, the statistics are similar.
Getting out of free trade would induce cost, yes - but it will not lead to a higher taxation rate on raw materials. Those cost would most likely be less than what the current EU is leading us to, that is my point.
I'm talking about localised taxation on specific industry that needs production - what economists call educational protectionism - like the car industry in France and Italy. In a situation of crisis it will also reduce the output gap, and thus put people to work out of unemployment - Keynes argued for small term protectionism to face the 1930's crisis.
The question is, how much taxes would be needed to give the french/italian car industry a kickstart? If it is not enough, nothing substantial will change. If it is too much, you will end up in an escalating trade war.
+ Show Spoiler +Again, the EU recently put taxes on chinese solar panels, which is a small term portectionism using your terms. However, China has retaliated with taxes on european steel tubes. The main concern is that this might spiral into a trade war. And this is nothing I just inveted, it just happened a few weeks ago and is still in the process.
And to reiterate, if you go the route of protectionism you need a market that is self-sustainable and I cannot see how France and Italy are big enough for that. The entire EU (~500 Mio citizens) may be big enough, but I am not even certain of that.
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On June 26 2013 00:54 Restrider wrote:Okay, I'll just cut the quoting pyramid here. Show nested quote +
Do you know what's the % of the industry in the Italian economy ? 28,9 %... Do you consider that Italy would be like Germany and Switzerland if the EU would not exist ? lol <i'm pretty sure you don't think so.
You can't compare two vastly different economies as Switzerland and Germany. As I said take into consideration the banking sector in Switzerland and the impact it has on investment for exemple. Germany base its well being on an old and efficient industrial sector and a network of well developped small firm. It's just different.
Yes, Italy has kind of a healthy industry, especially the northern part. It mostly suffers under bureaucracy, corruption and inefficient administration. France has more than a few strong companies (for instance in nuclear technology or pharamceutical industry), however is starting to crumble as well due to inflexible contracts etc. Spain boomed mostly due to the construction in the last decade. This is a sector where you cannot really rely on, since it is not feasible for exportation. So, in any case, you have to differentiate, but in all of these countries there have to be done reforms. And again, Switzerland may have a strong finance sector, but as I've shown you, the statistics are similar. Show nested quote +
Getting out of free trade would induce cost, yes - but it will not lead to a higher taxation rate on raw materials. Those cost would most likely be less than what the current EU is leading us to, that is my point.
I'm talking about localised taxation on specific industry that needs production - what economists call educational protectionism - like the car industry in France and Italy. In a situation of crisis it will also reduce the output gap, and thus put people to work out of unemployment - Keynes argued for small term protectionism to face the 1930's crisis.
The question is, how much taxes would be needed to give the french/italian car industry a kickstart? If it is not enough, nothing substantial will change. If it is too much, you will end up in an escalating trade war. + Show Spoiler +Again, the EU recently put taxes on chinese solar panels, which is a small term portectionism using your terms. However, China has retaliated with taxes on european steel tubes. The main concern is that this might spiral into a trade war. And this is nothing I just inveted, it just happened a few weeks ago and is still in the process. And to reiterate, if you go the route of protectionism you need a market that is self-sustainable and I cannot see how France and Italy are big enough for that. The entire EU (~500 Mio citizens) may be big enough, but I am not even certain of that.
Modern protectionnism rarely come through taxation (it's against the World Trade Organization). For exemple, the US use volontary export restriction that set a certain quotas of japanese car that can be imported. Those kind of agreement between countries are often regarded as a way to both protect an industry and evade any "trade war" (since it is accepted by both countries).
The EU taxes on solar panels is due to chinese's government high investment on that sector - something viewed as false competition by some european countries.
Economy is war anyway. Germany's behavior right now showed that to all others europeans.
Also, in the current state of the EU, I'm still pretty sure any cost coming from taxation will still be lower than what the EU is doing right now : consider the Greek's unemployment over the last 4 years.
As for the Italian / switzerland / germany thing I just can't understand why you continue. Most European countries have 25% of their GDP that comes from industry. Most European countries are very different from each others.
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On June 26 2013 01:04 WhiteDog wrote:
Economy is war anyway. Germany's behavior right now showed that to all others europeans.
What is that supposed to mean?
Seriously, I do not understand. Either you thought 'economy is war' before, then Germany showed you nothing, or you actually did not believe so not long ago?
Then again, you want to 'localize' the auto industry for France and Italy in order to protect it, when in fact you should strive for global sales. There is half a billion cars to be sold to Chinese and Indian customers in the coming decades, it has to be your cars that are sold, and that is how you protect your auto industry in France.
Also the Euro was essentially a deal, the southern countries would get cheap interest rates for building lots of new infrastructure, while the northern countries would sell and loan to them like crazy.
All sides knew what they agreed to. The south also knew that 'economy is war'. They just thought they had made a bargain.
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On June 26 2013 01:04 WhiteDog wrote:Show nested quote +On June 26 2013 00:54 Restrider wrote:Okay, I'll just cut the quoting pyramid here.
Do you know what's the % of the industry in the Italian economy ? 28,9 %... Do you consider that Italy would be like Germany and Switzerland if the EU would not exist ? lol <i'm pretty sure you don't think so.
You can't compare two vastly different economies as Switzerland and Germany. As I said take into consideration the banking sector in Switzerland and the impact it has on investment for exemple. Germany base its well being on an old and efficient industrial sector and a network of well developped small firm. It's just different.
Yes, Italy has kind of a healthy industry, especially the northern part. It mostly suffers under bureaucracy, corruption and inefficient administration. France has more than a few strong companies (for instance in nuclear technology or pharamceutical industry), however is starting to crumble as well due to inflexible contracts etc. Spain boomed mostly due to the construction in the last decade. This is a sector where you cannot really rely on, since it is not feasible for exportation. So, in any case, you have to differentiate, but in all of these countries there have to be done reforms. And again, Switzerland may have a strong finance sector, but as I've shown you, the statistics are similar.
Getting out of free trade would induce cost, yes - but it will not lead to a higher taxation rate on raw materials. Those cost would most likely be less than what the current EU is leading us to, that is my point.
I'm talking about localised taxation on specific industry that needs production - what economists call educational protectionism - like the car industry in France and Italy. In a situation of crisis it will also reduce the output gap, and thus put people to work out of unemployment - Keynes argued for small term protectionism to face the 1930's crisis.
The question is, how much taxes would be needed to give the french/italian car industry a kickstart? If it is not enough, nothing substantial will change. If it is too much, you will end up in an escalating trade war. + Show Spoiler +Again, the EU recently put taxes on chinese solar panels, which is a small term portectionism using your terms. However, China has retaliated with taxes on european steel tubes. The main concern is that this might spiral into a trade war. And this is nothing I just inveted, it just happened a few weeks ago and is still in the process. And to reiterate, if you go the route of protectionism you need a market that is self-sustainable and I cannot see how France and Italy are big enough for that. The entire EU (~500 Mio citizens) may be big enough, but I am not even certain of that. Modern protectionnism rarely come through taxation (it's against the World Trade Organization). For exemple, the US use volontary export restriction that set a certain quotas of japanese car that can be imported. Those kind of agreement between countries are often regarded as a way to both protect an industry and evade any "trade war" (since it is accepted by both countries). The EU taxes on solar panels is due to chinese's government high investment on that sector - something viewed as false competition by some european countries. Economy is war anyway. Germany's behavior right now showed that to all others europeans. Also, in the current state of the EU, I'm still pretty sure any cost coming from taxation will still be lower than what the EU is doing right now : consider the Greek's unemployment over the last 4 years. As for the Italian / switzerland / germany thing I just can't understand why you continue. Most European countries have 25% of their GDP that comes from industry. Most European countries are very different from each others.
Modern protectionism also come from especially health and environmental demands when we are talking EU. Trade agreements have become a huge mess since GATT and a renegotiation of several parameters in the agreements should be contemplated to avoid an even further bureaucracy in the field.
When that is said, sure, a french (almost always synonymous with protectionistic) approach to the economy might be an advantage the next couple of years when european economy is contracting, but in a longer perspective it would seem like a bad deal for innovation and secondary/tertiary industry based on foreign products (rare metals, gold, diamonds, a lot of the genetically interesting living organisms and their proteins etc.).
The protectionistic approach is practically dead anyway besides the legal lack of parity and quotas. GATT has killed it and WTO is completely gummed up in a long fight between mainly EU and USA on one side and India on the other.
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Protectionism doesn't work over the long run. Coddled industries become inefficient, and trading partners fight back. Protectionism has already been on the rise and the EU is hardly better for it.
Gotta ink that free trade deal.
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On June 26 2013 01:04 WhiteDog wrote:Show nested quote +On June 26 2013 00:54 Restrider wrote:Okay, I'll just cut the quoting pyramid here.
Do you know what's the % of the industry in the Italian economy ? 28,9 %... Do you consider that Italy would be like Germany and Switzerland if the EU would not exist ? lol <i'm pretty sure you don't think so.
You can't compare two vastly different economies as Switzerland and Germany. As I said take into consideration the banking sector in Switzerland and the impact it has on investment for exemple. Germany base its well being on an old and efficient industrial sector and a network of well developped small firm. It's just different.
Yes, Italy has kind of a healthy industry, especially the northern part. It mostly suffers under bureaucracy, corruption and inefficient administration. France has more than a few strong companies (for instance in nuclear technology or pharamceutical industry), however is starting to crumble as well due to inflexible contracts etc. Spain boomed mostly due to the construction in the last decade. This is a sector where you cannot really rely on, since it is not feasible for exportation. So, in any case, you have to differentiate, but in all of these countries there have to be done reforms. And again, Switzerland may have a strong finance sector, but as I've shown you, the statistics are similar.
Getting out of free trade would induce cost, yes - but it will not lead to a higher taxation rate on raw materials. Those cost would most likely be less than what the current EU is leading us to, that is my point.
I'm talking about localised taxation on specific industry that needs production - what economists call educational protectionism - like the car industry in France and Italy. In a situation of crisis it will also reduce the output gap, and thus put people to work out of unemployment - Keynes argued for small term protectionism to face the 1930's crisis.
The question is, how much taxes would be needed to give the french/italian car industry a kickstart? If it is not enough, nothing substantial will change. If it is too much, you will end up in an escalating trade war. + Show Spoiler +Again, the EU recently put taxes on chinese solar panels, which is a small term portectionism using your terms. However, China has retaliated with taxes on european steel tubes. The main concern is that this might spiral into a trade war. And this is nothing I just inveted, it just happened a few weeks ago and is still in the process. And to reiterate, if you go the route of protectionism you need a market that is self-sustainable and I cannot see how France and Italy are big enough for that. The entire EU (~500 Mio citizens) may be big enough, but I am not even certain of that. Modern protectionnism rarely come through taxation (it's against the World Trade Organization). For exemple, the US use volontary export restriction that set a certain quotas of japanese car that can be imported. Those kind of agreement between countries are often regarded as a way to both protect an industry and evade any "trade war" (since it is accepted by both countries). The EU taxes on solar panels is due to chinese's government high investment on that sector - something viewed as false competition by some european countries. Economy is war anyway. Germany's behavior right now showed that to all others europeans. Also, in the current state of the EU, I'm still pretty sure any cost coming from taxation will still be lower than what the EU is doing right now : consider the Greek's unemployment over the last 4 years. As for the Italian / switzerland / germany thing I just can't understand why you continue. Most European countries have 25% of their GDP that comes from industry. Most European countries are very different from each others.
High subsidy you mean, to push out any other firms in the market. Either the EU would've had to subsidize an ungodly amount themselves or put a minimum price on Chinese solar panels. Which by the way the Chinese now seem to accept.
Nor do I understand your last sentence, in what way does it matter that European countries are different from each other? Isn't that the most interesting thing about the EU, that countries so wildly different from each other and a history filled with slaughter managed to come together for a common purpose? It even underlines the differences between it's members in it's very own motto.
This bitching between countries won't solve anything, if we want to stay combined we have to do things combined.
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On June 26 2013 01:48 lord_nibbler wrote:Show nested quote +On June 26 2013 01:04 WhiteDog wrote:
Economy is war anyway. Germany's behavior right now showed that to all others europeans. What is that supposed to mean? Seriously, I do not understand. Either you thought 'economy is war' before, then Germany showed you nothing, or you actually did not believe so not long ago? Then again, you want to 'localize' the auto industry for France and Italy in order to protect it, when in fact you should strive for global sales. There is half a billion cars to be sold to Chinese and Indian customers in the coming decades, it has to be your cars that are sold, and that is how you protect your auto industry in France. Also the Euro was essentially a deal, the southern countries would get cheap interest rates for building lots of new infrastructure, while the northern countries would sell and loan to them like crazy. All sides knew what they agreed to. The south also knew that 'economy is war'. They just thought they had made a bargain.
Well, after WW2 a lot of people thought economy was a mean to avoid war. That's part of the reason why all countries worked so hard to push international trade through bretton woods.
The EU has been made with the same idea in mind : connect countries that made war against each others for century. Now the EU is flawed and everybody knows it.
Germany's economic policy nowadays is, in my opinion, a real problem, because they are blaming southern europe for their current situation, while everybody knows the current situation is directly linked to how the EU has been made (the lisbon treaty famously forbid to help another EU country in an economical difficulty, and that was added after Germany's demand). The EU as it is is good for germany (and even that is up to argument), and bad for most southern countries.
For exemple, look at the theory of optimum currency area from Mundell. The idea behind this theory is to economically consider in which condition a region should get a unified currency. The four conditions usually cited as "needed" for a currency union are : Labor mobility across the region ; Openness with capital mobility and price and wage flexibility across the region ; A risk sharing system such as an automatic fiscal transfer mechanism to redistribute money to areas/sectors which have been adversely affected by the first two characteristics ; Participant countries have similar business cycles.
It's pretty obvious the current EU have no risk sharing system - thus why it is in crisis today. You cannot blame a small country for having a smaller industry than you. You cannot blame Greece for being a weaker economy than Germany, because that's how it is since a hundred years.
Historically, when a country is having a difficult moment, it use devaluation to get over it. With the EU, we can't, so we need other means to fight such problems. Competitive deflation is a way to get other economical problems too, but it is a suicide : Greece accepted such policy and are in recession since five years, gone from 10% unemployment to 25%.
As for German's trade policy towards other EU members, it is basically a form of neo mercantilism : they are accumulating surplus and never use that same surplus aside from lending it through financial market (did you know the house bubble in spane was heavily financed by German's capitals ?).
As for your argument on china... Is it too hard to understand that at the moment, the french and italian industry can't compete with german's ? It is not a question of work cost, it's a question of brand and non-price competitivity. Different country build different good, french car are middle class cars, german's are high classes car well respected through out the world.
The EURO was not a "deal". We basically have the german mark for the entire EU, something that could never work in the long run for most southern countries. As for the interest rate, I don't really see the point of the EU. The interest rate are low nowadays because of the US's monetary policy.
On June 26 2013 02:02 JonnyBNoHo wrote:Protectionism doesn't work over the long run. Coddled industries become inefficient, and trading partners fight back. Protectionism has already been on the rise and the EU is hardly better for it. Gotta ink that free trade deal.
That's why I said educational protectionism or the "infant industry". Don't give me that bullshit about freetrade please.
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I don't see how people can have any faith in a system that brought us the CAP, the Strasbourg Circus and an economic system that is both fundamentally broken and punishingly anti-democratic to poorer countries.
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On June 26 2013 02:12 WhiteDog wrote:Show nested quote +On June 26 2013 02:02 JonnyBNoHo wrote:Protectionism doesn't work over the long run. Coddled industries become inefficient, and trading partners fight back. Protectionism has already been on the rise and the EU is hardly better for it. Gotta ink that free trade deal. That's why I said educational protectionism or the "infant industry". Don't give me that bullshit about freetrade please.
Yeah you can make rational arguments for protectionism in certain circumstances. The problem is restricting countries to only the good kind and then removing them when circumstances change. To my knowledge, EU countries don't have a good reputation for pulling that kind of policy off. In the current situation pulling that off seems even more remote.
I do agree with you that Germany needs to restructure its economy, fwiw.
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On June 26 2013 02:12 WhiteDog wrote:Show nested quote +On June 26 2013 01:48 lord_nibbler wrote:On June 26 2013 01:04 WhiteDog wrote:
Economy is war anyway. Germany's behavior right now showed that to all others europeans. What is that supposed to mean? Seriously, I do not understand. Either you thought 'economy is war' before, then Germany showed you nothing, or you actually did not believe so not long ago? Then again, you want to 'localize' the auto industry for France and Italy in order to protect it, when in fact you should strive for global sales. There is half a billion cars to be sold to Chinese and Indian customers in the coming decades, it has to be your cars that are sold, and that is how you protect your auto industry in France. Also the Euro was essentially a deal, the southern countries would get cheap interest rates for building lots of new infrastructure, while the northern countries would sell and loan to them like crazy. All sides knew what they agreed to. The south also knew that 'economy is war'. They just thought they had made a bargain. Well, after WW2 a lot of people thought economy was a mean to avoid war. That's part of the reason why all countries worked so hard to push international trade through bretton woods. The EU has been made with the same idea in mind : connect countries that made war against each others for century.
I do not see it this way at all (and I am kind of convinced most others as well).
Economy does not avoid war, on the contrary it often causes it. 'Free trade' was pushed after the war by USA in order to loan / control much more capital in the rebuilding countries than previously possible.
Countries had been trading goods for centuries and still fought wars against each other. What changed was massive foreign investment. If for example German banks own shares in French corporation they will never want to invade France again, because that would ruin their investment. And also why invade anyway when you can just buy / invest?
You cannot blame small country for having a smaller industry that you. You cannot blame Greece for being a weaker economy than Germany, because that's how it is since a hundred years.
Greece is not blamed for it size. It is blamed for it's relative high debts.
It is about the fact that they did invest way to much money with too little return after the introduction of the Euro. The fact that they delayed reforms or never tackled economic and social problems is what bites them now.
Also, I know I sad it already, but please realize, the Euro was not forced onto Greece, they agreed to it. In fact they wanted it so much they cooked the books for it. Why? Because it was a unique chance for them to get massive foreign investment.
They took the deal.
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On June 26 2013 03:12 lord_nibbler wrote:Show nested quote +On June 26 2013 02:12 WhiteDog wrote:On June 26 2013 01:48 lord_nibbler wrote:On June 26 2013 01:04 WhiteDog wrote:
Economy is war anyway. Germany's behavior right now showed that to all others europeans. What is that supposed to mean? Seriously, I do not understand. Either you thought 'economy is war' before, then Germany showed you nothing, or you actually did not believe so not long ago? Then again, you want to 'localize' the auto industry for France and Italy in order to protect it, when in fact you should strive for global sales. There is half a billion cars to be sold to Chinese and Indian customers in the coming decades, it has to be your cars that are sold, and that is how you protect your auto industry in France. Also the Euro was essentially a deal, the southern countries would get cheap interest rates for building lots of new infrastructure, while the northern countries would sell and loan to them like crazy. All sides knew what they agreed to. The south also knew that 'economy is war'. They just thought they had made a bargain. Well, after WW2 a lot of people thought economy was a mean to avoid war. That's part of the reason why all countries worked so hard to push international trade through bretton woods. The EU has been made with the same idea in mind : connect countries that made war against each others for century. I do not see it this way at all (and I am kind of convinced most others as well). Economy does not avoid war, on the contrary it often causes it. 'Free trade' was pushed after the war by USA in order to loan (control) much more capital in the rebuilding countries than previously possible. Countries had been trading goods for centuries and still fought wars against each other. What changed was massive foreign investment. If for example German banks own shares in French cooperations they will never want to invade France again, because that would ruin their investment. And also why invade anyway when you can just buy / invest? Show nested quote +
You cannot blame small country for having a smaller industry that you. You cannot blame Greece for being a weaker economy than Germany, because that's how it is since a hundred years.
Greece is not blamed for it size. It is blamed for it's relative high debts. It is about the fact that they did invest way to much money with too little return after the introduction of the Euro. The fact that they delayed reforms or never tackled economic and social problems is what bites them now. Also, I know I sad it already, but please realize, the Euro was not forced onto Greece, they agreed to it. In fact they wanted it so much they cooked the books for it. Why? Because it was a unique chance for them to get massive foreign investment. They took the deal.
That's true, but the borrower and lender both share responsibility in that.
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On June 26 2013 03:17 JonnyBNoHo wrote:Show nested quote +On June 26 2013 03:12 lord_nibbler wrote:On June 26 2013 02:12 WhiteDog wrote:On June 26 2013 01:48 lord_nibbler wrote:On June 26 2013 01:04 WhiteDog wrote:
Economy is war anyway. Germany's behavior right now showed that to all others europeans. What is that supposed to mean? Seriously, I do not understand. Either you thought 'economy is war' before, then Germany showed you nothing, or you actually did not believe so not long ago? Then again, you want to 'localize' the auto industry for France and Italy in order to protect it, when in fact you should strive for global sales. There is half a billion cars to be sold to Chinese and Indian customers in the coming decades, it has to be your cars that are sold, and that is how you protect your auto industry in France. Also the Euro was essentially a deal, the southern countries would get cheap interest rates for building lots of new infrastructure, while the northern countries would sell and loan to them like crazy. All sides knew what they agreed to. The south also knew that 'economy is war'. They just thought they had made a bargain. Well, after WW2 a lot of people thought economy was a mean to avoid war. That's part of the reason why all countries worked so hard to push international trade through bretton woods. The EU has been made with the same idea in mind : connect countries that made war against each others for century. I do not see it this way at all (and I am kind of convinced most others as well). Economy does not avoid war, on the contrary it often causes it. 'Free trade' was pushed after the war by USA in order to loan (control) much more capital in the rebuilding countries than previously possible. Countries had been trading goods for centuries and still fought wars against each other. What changed was massive foreign investment. If for example German banks own shares in French cooperations they will never want to invade France again, because that would ruin their investment. And also why invade anyway when you can just buy / invest?
You cannot blame small country for having a smaller industry that you. You cannot blame Greece for being a weaker economy than Germany, because that's how it is since a hundred years.
Greece is not blamed for it size. It is blamed for it's relative high debts. It is about the fact that they did invest way to much money with too little return after the introduction of the Euro. The fact that they delayed reforms or never tackled economic and social problems is what bites them now. Also, I know I sad it already, but please realize, the Euro was not forced onto Greece, they agreed to it. In fact they wanted it so much they cooked the books for it. Why? Because it was a unique chance for them to get massive foreign investment. They took the deal. That's true, but the borrower and lender both share responsibility in that.
This is a fact that people are too quick to dismiss. High savings rate in Germany and low wages, but a refusal to take on debt means the money flowed out of Germany. At the same time, Germans weren't buying their own products (that were strangely prohibitively expensive to them), but were taking advantage of their savings by funding other countries to buy their goods, mainly these other EU countries more comfortable with debt. The strange thing is, there was no reason to lend to Greece or Italy at these rates because of their history of devaluing currency to relieve debt. People forgot why these countries had unstable currencies before the Euro, and figured the Euro would fix everything.
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On June 26 2013 04:21 aksfjh wrote:Show nested quote +On June 26 2013 03:17 JonnyBNoHo wrote:On June 26 2013 03:12 lord_nibbler wrote:On June 26 2013 02:12 WhiteDog wrote:On June 26 2013 01:48 lord_nibbler wrote:On June 26 2013 01:04 WhiteDog wrote:
Economy is war anyway. Germany's behavior right now showed that to all others europeans. What is that supposed to mean? Seriously, I do not understand. Either you thought 'economy is war' before, then Germany showed you nothing, or you actually did not believe so not long ago? Then again, you want to 'localize' the auto industry for France and Italy in order to protect it, when in fact you should strive for global sales. There is half a billion cars to be sold to Chinese and Indian customers in the coming decades, it has to be your cars that are sold, and that is how you protect your auto industry in France. Also the Euro was essentially a deal, the southern countries would get cheap interest rates for building lots of new infrastructure, while the northern countries would sell and loan to them like crazy. All sides knew what they agreed to. The south also knew that 'economy is war'. They just thought they had made a bargain. Well, after WW2 a lot of people thought economy was a mean to avoid war. That's part of the reason why all countries worked so hard to push international trade through bretton woods. The EU has been made with the same idea in mind : connect countries that made war against each others for century. I do not see it this way at all (and I am kind of convinced most others as well). Economy does not avoid war, on the contrary it often causes it. 'Free trade' was pushed after the war by USA in order to loan (control) much more capital in the rebuilding countries than previously possible. Countries had been trading goods for centuries and still fought wars against each other. What changed was massive foreign investment. If for example German banks own shares in French cooperations they will never want to invade France again, because that would ruin their investment. And also why invade anyway when you can just buy / invest?
You cannot blame small country for having a smaller industry that you. You cannot blame Greece for being a weaker economy than Germany, because that's how it is since a hundred years.
Greece is not blamed for it size. It is blamed for it's relative high debts. It is about the fact that they did invest way to much money with too little return after the introduction of the Euro. The fact that they delayed reforms or never tackled economic and social problems is what bites them now. Also, I know I sad it already, but please realize, the Euro was not forced onto Greece, they agreed to it. In fact they wanted it so much they cooked the books for it. Why? Because it was a unique chance for them to get massive foreign investment. They took the deal. That's true, but the borrower and lender both share responsibility in that. This is a fact that people are too quick to dismiss. High savings rate in Germany and low wages, but a refusal to take on debt means the money flowed out of Germany. At the same time, Germans weren't buying their own products (that were strangely prohibitively expensive to them), but were taking advantage of their savings by funding other countries to buy their goods, mainly these other EU countries more comfortable with debt. The strange thing is, there was no reason to lend to Greece or Italy at these rates because of their history of devaluing currency to relieve debt. People forgot why these countries had unstable currencies before the Euro, and figured the Euro would fix everything.
This happened mainly due to a false sense of security caused by the Treaty of Maastricht. Alas, no one really tried to keep that treaty.
Furthermore, Germany was going through a time of hard social and economical reforms. People feared to lose their jobs and thus did not spend their money and rather saved it, because having no savings or even debts while not knowing whether you have a job next year or not, is something you do not want to be in.
Thus, they kept their money tight on their bank accounts and other financial saving plans. The banks invested in the southern countries, because they tried to get higher interests with low risks. And at that time, the interests for investments in southern Europe were higher than in Germany, but appeared to be as save as in Germany (i.e. Treaty of Maastricht, no risks of currency fluctuations etc.).
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On June 26 2013 04:52 Restrider wrote:Show nested quote +On June 26 2013 04:21 aksfjh wrote:On June 26 2013 03:17 JonnyBNoHo wrote:On June 26 2013 03:12 lord_nibbler wrote:On June 26 2013 02:12 WhiteDog wrote:On June 26 2013 01:48 lord_nibbler wrote:On June 26 2013 01:04 WhiteDog wrote:
Economy is war anyway. Germany's behavior right now showed that to all others europeans. What is that supposed to mean? Seriously, I do not understand. Either you thought 'economy is war' before, then Germany showed you nothing, or you actually did not believe so not long ago? Then again, you want to 'localize' the auto industry for France and Italy in order to protect it, when in fact you should strive for global sales. There is half a billion cars to be sold to Chinese and Indian customers in the coming decades, it has to be your cars that are sold, and that is how you protect your auto industry in France. Also the Euro was essentially a deal, the southern countries would get cheap interest rates for building lots of new infrastructure, while the northern countries would sell and loan to them like crazy. All sides knew what they agreed to. The south also knew that 'economy is war'. They just thought they had made a bargain. Well, after WW2 a lot of people thought economy was a mean to avoid war. That's part of the reason why all countries worked so hard to push international trade through bretton woods. The EU has been made with the same idea in mind : connect countries that made war against each others for century. I do not see it this way at all (and I am kind of convinced most others as well). Economy does not avoid war, on the contrary it often causes it. 'Free trade' was pushed after the war by USA in order to loan (control) much more capital in the rebuilding countries than previously possible. Countries had been trading goods for centuries and still fought wars against each other. What changed was massive foreign investment. If for example German banks own shares in French cooperations they will never want to invade France again, because that would ruin their investment. And also why invade anyway when you can just buy / invest?
You cannot blame small country for having a smaller industry that you. You cannot blame Greece for being a weaker economy than Germany, because that's how it is since a hundred years.
Greece is not blamed for it size. It is blamed for it's relative high debts. It is about the fact that they did invest way to much money with too little return after the introduction of the Euro. The fact that they delayed reforms or never tackled economic and social problems is what bites them now. Also, I know I sad it already, but please realize, the Euro was not forced onto Greece, they agreed to it. In fact they wanted it so much they cooked the books for it. Why? Because it was a unique chance for them to get massive foreign investment. They took the deal. That's true, but the borrower and lender both share responsibility in that. This is a fact that people are too quick to dismiss. High savings rate in Germany and low wages, but a refusal to take on debt means the money flowed out of Germany. At the same time, Germans weren't buying their own products (that were strangely prohibitively expensive to them), but were taking advantage of their savings by funding other countries to buy their goods, mainly these other EU countries more comfortable with debt. The strange thing is, there was no reason to lend to Greece or Italy at these rates because of their history of devaluing currency to relieve debt. People forgot why these countries had unstable currencies before the Euro, and figured the Euro would fix everything. This happened mainly due to a false sense of security caused by the Treaty of Maastricht. Alas, no one really tried to keep that treaty. Furthermore, Germany was going through a time of hard social and economical reforms. People feared to lose their jobs and thus did not spend their money and rather saved it, because having no savings or even debts while not knowing whether you have a job next year or not, is something you do not want to be in. Thus, they kept their money tight on their bank accounts and other financial saving plans. The banks invested in the southern countries, because they tried to get higher interests with low risks. And at that time, the interests for investments in southern Europe were higher than in Germany, but appeared to be as save as in Germany (i.e. Treaty of Maastricht, no risks of currency fluctuations etc.).
And thus you have the failings of the lender. It's not like Greece ever satisfied the debt obligations of the treaty and yet they were given massive loans. Their inflation ability was stripped, they didn't follow the treaty (even in the slightest), and banks still exposed themselves to that risk in droves. The falsified nature of Greek deficits wasn't even that bad (going from high 2% to low 3%, a technicality at best), but the trend was obvious.
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A small sovereign debt restructuring is happening in Cyprus.
Statement by the European Commission and the IMF on Cyprus
We welcome today’s announcement by the Cypriot authorities to launch a voluntary debt exchange of Cypriot sovereign bonds with a total nominal value of €1,0 billion and maturing within the economic adjustment programme period (2013-Q1 2016), for new bonds with the same coupon rates and 5‒10 year maturities.
The objective of this liability management operation is to facilitate cash-flow management for the government and to ensure adequate funding at terms that support long-term public debt sustainability, an essential step towards Cyprus’s economic recovery. The transaction is fully in line with the country’s previously announced commitment to roll over €1 billion of government debt held by domestic investors at existing coupon rates and extended maturities. Once this transaction is completed, the refinancing commitment undertaken by the Cypriot authorities in support of the adjustment programme would be fulfilled.
We reiterate our commitment to stand by Cyprus in partnership and to support its return to growth and prosperity.
Link
Edit: Still sucks to be Cyprus...
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After more than a year of divisive and unproductive squabbling, the European Union has finally agreed to a budget deal, just hours ahead of a summit to end rampant youth unemployment in the bloc.
The last-minute agreement was reached on Thursday, as officials finally signed off on a $1.3 trillion budget for the EU, including the first spending cuts in its history.
The agreement still requires parliamentary approval.
Without a budget in place, the programmes to tackle unemployment and other issues to be discussed in the upcoming two-day summit in Brussels would not have been able to be launched.
European Commission President Jose Manuel Barroso announced the agreement, saying "this is a good deal for Europe, this is a good deal for European citizens, this is a good deal for the European economy".
The 2014-2020 trillion-euro budget was only agreed upon with compromises on all sides.
At a summit in February, Britain, backed by Germany and the Netherlands, shot down a Commission bid to increase the budget by 5 percent as being unacceptable in times of austerity.
Instead, EU leaders for the first time ever agreed to cut spending, by 3.0 percent, in a move that angered MEPs who said money was needed to implement growth measures in their struggling countries.
Source
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EPT
