EPT
The European Debt Crisis and the Euro - Page 22
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ondik
Czech Republic2908 Posts
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Boblion
France8043 Posts
On December 04 2010 07:53 xDaunt wrote: I'm not sure that he's blaming the EU for the present mess that Ireland is in so much as he is chastizing the EU for disrupting Ireland's democracy by conditioning Ireland's ability to hold elections upon its enactment of an "acceptable" budget. That's not the real story. | ||
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xDaunt
United States17988 Posts
I posted the video because I want to know what the real story is.  | ||
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bellweather
United States404 Posts
On November 17 2010 00:22 Taguchi wrote: the major point of this crisis that no one talks about is that a whole bunch of countries are cutting spending, reducing wages, hiking up taxes and generally taking money from the population to pay off their lenders, ie basically the very very rich people, and people are mostly ok with it! in greece this happened as a mandate from the imf and eu and attributed to the general fail of the corrupt government and the citizens, since the popular opinion is that u get what government u deserve as a population in spain, portugal, great britain and whoever else im not aware of there is no such mandate, there is only the fear the greece situation instilled in those populations and... acceptance the end result is that money is steadily flowing to the very very rich, the gap in living standards between rich and poor widens and this is amazingly also seen as fair and lawful and how it should be, like in the old days nobles were nobles because it was fair and lawful and how it should be but with a bit of macroeconomic spicing to muddle things a bit since populations have grown a bit more insightful over the years this is admittedly better than having to go to war every couple of decades so the rich have something to do but still as an aside, the euro / dollar back in march when this topic was started was 1.3525, today it is ... 1.3626, with various rumor fueled fluctuations over the year, just what you'd expect to see at a poker table but with a much smoother, relaxing curve! Cutting spending, reducing wages, hiking taxes are all GOOD ways to reign in the budget. Greece cannot service its debt without reigning in its spending and raising revenue (read taxes). Greeks reaped the benefits of a corrupt, but more importantly inefficient government. Tax revenues should've been much higher in the past, but between corrupt tax collectors, self-serving individuals (to be fair I wouldn't pay taxes either if I could get away with it), disproportionate spending and debt raising, Greece put itself in a rut. Greece MUST service its debt, thereby gaining access to liquidity, regardless of who it is going to to function properly. | ||
TanGeng
Sanya12364 Posts
There are a few parties to the bailout. The Irish general public, the Irish national government, the Irish banks, the EU, the people of other member nations. The Irish banks were the ones in trouble. About two years ago, the banks were heavily in debt and in risk of going bankrupt and the Irish national government assumed the liability as sovereign debt. Fast forward to present day, now the Irish national government finds it hard to pay the interest and in risk of going bankrupt. (This is why their interest rates are going higher and making them even less able to afford the interest. Lenders are afraid that the government will never be able to pay them back, and that fear is reality. The Irish government probably won't pay back its sovereign debt - not by itself anyways.) The EU and the ECB can bailout the Irish in three ways: ECB can monetize the debt, the EU can assume the debt, or the EU can give Ireland a loan. Monetizing the debt will cause inflation and inflation has terrible consequences. Assuming the debt means that other nations will pay for Irish mistake. Giving a loan will mean the other nations will assume Ireland's risk, but Ireland will pay in the long run. In total absence of a bailout, the Irish government is forced into austerity measures - not spending any money and collecting a lot of stuff in taxes. And if austerity measures are still insufficient, then the government defaults - all the debt becomes non-performing and whoever holds those Irish sovereign debt won't get their money back. Many of the banks in other EU nations are afraid of an Irish default. They hold a good amount of Irish sovereign debt. That will end up hurting the banks and then hurting the depositors in those banks. The EU's choice is to give Ireland a loan and it is basically forcing upon the Irish government a loan. The Irish government must then accede to the EU's austerity requirements and repayment plan. The austerity measures and repayment plan are quite harsh compared to what the Irish people are used to, and thus the loan is very unpopular. (In the old days, countries would invade one another to secure the repayment of sovereign debt.) The Irish people, of course, can direct their own government to be deadbeats and default on the sovereign debt. It'll hurt their credit prevent its government from getting loans again, but it will also free its people from having to slave away to comply with the repayment plan. All-in-all there are no good solutions for anyone involved. Monetization hurts everyone and it's hard to see its ultimate consequences. Assumption of debt hurts people of EU since they now pay off the debt. A loan hurts the Irish people who have to adhere to the repayment plan. A default hurts banks and holders of sovereign debt. They all have ripple effect consequences. | ||
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TanGeng
Sanya12364 Posts
The real danger comes from Spain and Portugal. If those two countries go bad, then the EU will crumble. | ||
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Robstickle
Great Britain406 Posts
On December 04 2010 06:56 xDaunt wrote:If nothing else, it's a helluva speech. He's a brilliant speaker but apart from that I'm embarrassed (as a Brit) to have him representing me in the EU. Being out of the Euro doesn't seem to be protecting us but goddammit if the Germans aren't doing very well in the Euro. | ||
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Klive5ive
United Kingdom6056 Posts
On December 04 2010 07:59 ondik wrote: Nigel Farage is HERO. Must be hard working with people that hate you because you're expressing unpopular yet very true opinions. You guys in USA have no idea how rotten the EU is He's not a hero. His comments about Belgium are inflammatory and totally unnecessary. He's overly rude and often not really a credit to the UK. Having said that the EU really is a disaster. It's a momumental waste of money. The fews things that are worth Governing on a Europe-wide basis could easily be undertaken on a case by case basis by national leaders without the need for this huge bureaucratic nightmare. We already have NATO for defence anyway. The EURO isn't "going down" as such but it will inevitably split apart in the near future so that the weaker countries can inflate themselves out of debt without harming the overall eurozone. Maybe a "Euro North" and "Euro South". The fact that sovereign countries have completely different interest rates for borrowing the same amount of the same currency shows that investors at least have some concerns about that happening (since a flat-out default by one of the nations is unlikely). | ||
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Hatsu
United Kingdom474 Posts
The EUR is in dire straits and has been for a while now. While I personally did hedge against it collapse, I can tell you that I do not expect it really. The EU is still the largest economy in the world and has the backing of Germany - which is quite something. Splitting the EUR would be a logistical and political nightmare and I cannot imagine it in practical terms. Plus, lets not forget that the US, the UK and Japan are not exactly in a better shape than the EU in terms of finances. Japan, in particular, is well beyond redemption. | ||
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Ganondorf
Italy600 Posts
http://www.marketwatch.com/story/china-official-says-will-help-eu-with-debt-report-2010-12-21 The news is recent so it's hard to find a more detailed article. They already helped portugal by buying their bonds, and this statement (which is a correction of previous bolder ones) indicates that they will buy other EU bonds in order to preserve stability and as a leverage for talks on economic cooperation with the EU. | ||
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Manit0u
Poland17257 Posts
On December 04 2010 09:19 Klive5ive wrote: The EURO isn't "going down" as such but it will inevitably split apart in the near future so that the weaker countries can inflate themselves out of debt without harming the overall eurozone. Maybe a "Euro North" and "Euro South". I've read that Germans are already preparing to propose Euro-1 and Euro-2 zones. E1 would include countries who haven't got that much of a problem (Germany, Benelux and don't know who else) and E2 would be countries dragging others down or having a lot of problems with their economy (Spain, Portugal, France, Ireland, Greece etc.). Don't know the details on how this would function though. | ||
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Roe
Canada6002 Posts
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clementdudu
France819 Posts
On December 22 2010 07:46 Manit0u wrote: I've read that Germans are already preparing to propose Euro-1 and Euro-2 zones. E1 would include countries who haven't got that much of a problem (Germany, Benelux and don't know who else) and E2 would be countries dragging others down or having a lot of problems with their economy (Spain, Portugal, France, Ireland, Greece etc.). Don't know the details on how this would function though. Either you're pulling that out of your ass,or the guy youre quoting is pulling it even deeper from his. There is NO WAY,EVER,NEVER,EVERNERVER,Germany would separate itself from France. On the english guy,England by its nature is against Eu,and english nationalist dickheads are even worse.thats pure populism. Oh and his last phrase,the Euro project destroyed by the markets says it all. | ||
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bellweather
United States404 Posts
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adamb111
27 Posts
anyways.. the EU is a good idea, but the problem is that you have politicians and extreme academics running the show as opposed to people who actually know wtf is going on. as such, instead of gradually bringing it in, the governments rushed everything. they should have had germany france england, austria switzerland and the like join, and then get all the shit breakers in. the portuguese, italians, eastern europeans shouldve been allowed in when they got their shit together. this is all creating structural imbalances within the system, especially the financial markets. in my opinion its not a question of if the euro will go down, but when. in 2012-14(?) alot of eastern european countries are joining the eurozone. their transition will be similar to the germans as in what cost 1 mark will cost 1 euro, but wages and salaries will decline in the adjustment process. that is, youll be paid at the exchange rate, but the euro is valued greater than the mark. the germans survived, very successfully, for one reason. they are savers. the other countries, however, are not. and when they do make this transition, all hell will break loose. then the euro's problems will really come to light. not only will the piigs weigh on euro, but so will eastern europe. bottom line is, one cannot rush simple things, let alone things as complex as the integration of cultures, societies, economies into one gigantic Smorgasbord. and lets not forget that it isnt even a fact that its entirely beneficial to have one currency for this entire region. unless they slow it down, say bye bye. | ||
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Ganondorf
Italy600 Posts
If/When a bigger state defaults, is when the euro will really begin to shrink, because those cannot be easily saved, they'll have to exit the euro and restructure the debt in a new currency. This would be a disaster for the world economy as a whole, with a potentially huge domino effect, so we see how international collaboration will postpone or even solve the problem in the future. | ||
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Letall
Sweden384 Posts
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Tufas
Austria2259 Posts
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Buruguduy
Philippines238 Posts
On December 22 2010 13:19 Letall wrote: Got some questions for you guys here, can Germany abandon the Euro and go back to a currency of their own? If so what where to happen to the Euro? I'm pretty sure the maastricht treaty makes it ILLEGAL for any euro zone nation to exit... but if the current debt situation gets worse, then some may be forcibly kicked out! I read this a couple of days back, pretty interesting... it's from a forex trading website (yes, i dabble in online forex trading) here's the link: http://www.babypips.com/blogs/piponomics/3-possible-endings-to-the-euro-zone-crisis.html | ||
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bUbUsHeD
China54 Posts
On December 04 2010 07:59 ondik wrote: Nigel Farage is HERO. Must be hard working with people that hate you because you're expressing unpopular yet very true opinions. You guys in USA have no idea how rotten the EU is He is the best. Not only a great speaker but also the only one to fight the rotten socialist scum that 99% of EU parliament is. If there were people like him in the CZ, there could be a real chance to leave this megalomaniac EU style Soviet Union project and actually have a prosperous country to live in. | ||
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