On June 28 2011 21:18 Necrophantasia wrote: If Greece defaults, which it most likely will rather than risk a further loss of sovereignty, the most obvious consequence is that several major French and German banks stand poised to fail. Greece will be forcibly ejected from the EU, and there will likely be a short term massive hike in costs of borrowing in the region, though in the long term it return to normal. Greece will wallow in its misery for a long time to come, but the currency union is unlikely to collapse. Though whether this event will trigger the rest of the PIIGS to take measures that could harm the union is yet to be seen.
Unfortunately it's way worse than that, especially for Germany, who are stuck deep in the Greece problem.
When the Greece crisis emerged last year, it was underestimated severely. This has led to several fatal decision that make the crisis more dangerous to Europe as a whole now.
A year ago Sarkozy/France got their will in changing the ECB's role from a "normal" central bank, to a player in the commercial financial market. Instead of just taking Greek state bonds as securities from Greek merchant banks for loans, they started buying Greek bonds off of German and French banks, all risks included. It was believed that would stabilize the markets enough for Greek to overcome a temporary crisis and enable it to borrow again.
The ECB holds about 40-50 billion of Greek state bonds. In addition, it has about 90 billion of Greek bonds in securities from Greek banks. The ECB's equity are about 11 billion.
So any of the currently discussed debts cuts above say 20% (they are talking 50% right now) would virtually bankrupt the ECB. Higher cuts, in addition to the likely failure of the banks the 90 billion in securities come from would kill the ECB instantly.
The ECB is owned by its 17 member states, with Germany holding about 20%. So of those ~140 billion in direct bonds and risky securities Germany would have to come up ~30 billion alone for the ECB bankruptcy. On top of that come the German banks and insurances that are still heavily involved in Greek state bonds.
This whole mess gives you a better idea why Merkel/Germany is fighting against debt cuts, and is rather willing to ship another 12 billion South to prevent a Greek default.
On June 28 2011 20:31 paulinepain wrote: It's not just Greece or Euro that is going down, it's the entire capitalism empire. Soon after Greece, you'll have Portugal, Ireland, Spain, and all the others. We simply can't live forever making loans.
And what does this have to do with capitalism?
All I see is a bunch of countries with high taxes, astronomic debts and overpowered cost ineffective public sectors. Looks more like socialism to me.
Are you sure`? The biggest reason Greece economy is and have been going down the drain is taxes. Greece is the worst country in Europe when it comes to collecting taxes. Their countrymen also score among the highest in a study where they measure willingness to pay taxes and the trust in the system within they act.
Yesterday on swedish television they interviewed a specialist in greece social economy. He said that if greece would have been able to collect taxes on the same scale as other countries in europe. If so they would have twice the amount of the loan allready stored and the situation would not look as dire as it does today.
On June 28 2011 20:31 paulinepain wrote: It's not just Greece or Euro that is going down, it's the entire capitalism empire. Soon after Greece, you'll have Portugal, Ireland, Spain, and all the others. We simply can't live forever making loans.
I just hope it takes a couple more years, I don't want to experience any major war.
Most Germans still seem to think the EU and the Euro especially guaranty us peace. Not only that, but it goes to the point where many people here seem to think the EU is the ONLY keeper of peace, and open war breaks out as soon as it is abolished. I just don't understand where most of my fellow men get this ridiculous concept from.
The whole Euro situation looks pretty dire, but war should be the last thing we should worry about.
The Euro and EU were conceived by Germany and France to extend socialism to the whole of Europe and allow them to try to run Europe (at least this time neither country tried to invade anyone), there are of course many benefits to extending trade agreements and having common standards and laws but the EU is joke to many British who dont really care about it at all. The only real benefit to our daily lives this has brought is easier travelling through other EU nations borders.
The truth of the matter is what decisions are right for the UK are not necessarily right for people in Belgium and vice versa (just using Belgium as an example) as this is highlighted now that countries are not allowed to set their own economic policies on currency etc in this time of need of drastic action. Why will the UK be better off than many in this current financial climate? because we joined the EU and not the Euro and therefore have retained our right to set our own fiscal policies and control our currency.
Extend socialism to the whole of Europe? Hardly. Germany did invest into the paneuropean idea to secure its place in Europe by peaceful means, yes. Britain on the other hand joined the EU to not lose their control over Europe!
Noone wants a centralized europe btw, a federal europe however would have its advantages. Some decisions are best made on a regional level, some on a national level, and some on a continental level, that is pretty much common place.
Will the UK really be better off than many others? That remains to be seen. But hey, you could always become the 51. state, others don't have that option.
Sorry for the polemic answer, but the irrational levels of the british europhobia gets on my nerves. You just cannot wait to say I told you so.
On June 28 2011 20:31 paulinepain wrote: It's not just Greece or Euro that is going down, it's the entire capitalism empire. Soon after Greece, you'll have Portugal, Ireland, Spain, and all the others. We simply can't live forever making loans.
Let me guess, you are one of those nutters who thinks that a debt fuelled fiat currency cannot work and that returning to the gold standard is a sensible option? At least it sounds like that is what you are saying, in which case you are a complete moron. The system isn't fundamentally broken, its just going through a regularly scheduled adjustment period (recession) which will hurt some people in short run before returning to normal. It really isn't the apocalypse.
"you are one of those nutters who thinks that a debt fuelled fiat currency cannot work"
Actually yes, I believe fiat currency cannot work in the long run.
"returning to the gold standard is a sensible option?"
An option for what? An economic system with gold standard is actually safer yes, since the money supply is backed up by something that is real (world gold reserve), but for me, anything that is monetary based isn't an option, please don't call me utopian...
"The system isn't fundamentally broken, its just going through a regularly scheduled adjustment period"
I believe the system is fundamentally broken, and that these "regularly scheduled adjustment period" are the proof of it, and that ultimately it will fail. And sooner or later, we will have to replace this system with a new one.
"It really isn't the apocalypse"
No it isn't.
The problem is that most non-monetary systems (such as that Zeitgeist (sp?) stuff) assume that humans are idealistic. Unfortunately, humans are bastards, for lack of a better word, so systems like that will be worse than what we currently have.
Capitalism is the worst system, except for every other one thats been tried...
That's primarily because culture and economic stress make people that way. People are entirely capable of being the opposite when they're not pushed into a corner, and that's not my opinion, that's backed by social sciences and neurology.
This crisis seems so similar to the US's problem with GM, AIG, large banks. The US government decided that these companies were 'too big to fail,' and I wouldn't be surprised to see the same thing here if the EU treats Greece as 'too big to fail.' It seems to me that without letting these companies / countries suffer consequences of what is often times poor decision making over many many years, there is no incentive for anyone to start making better decisions.
For the American companies, they take a lot of risks, gambles. If it works out, they make a lot of money. If not, the government gives them back their money, with minimal losses. There needs to be accountability. If these governments were more concerned about the worst case scenario like is happening with Greece, like seeing another country really suffer, they'll probably be less likely to do dumb things in their own country that could get them into this mess. Helping them to mostly maintain what they already have won't fix the problem in the long run, just as a more short run fix. There really needs to be some more powerful financial reform imo.
The EU is a nice idea and all but unless a country has a robust economy driven by exports and competitive prices it should never join the EU.
The whole idea is one one side you have a boatload of investment money you initially get from the EU and no more customs taxes for your exports to the EU and the ability to brand with made in EU. For a country with good productivity, competitive prices this is awesome.
On the other side you lose the option to protect your own companies since you are not allowed to tax EU imports anymore so if your quality/pricing/competitiveness/productivity is lower than the rest of the EU the entire country will most likely just be used as a consumption market by the real economies. Your own companies can't sell anymore because the others produce better/cheaper goods. So your entire economy goes to the crapper. All for a couple of billion euros.
New, not very bad EU members are great for the industrial power houses in the EU but shitty for the new guy if he doesn't think it through.
So while economies are booming this is win for the big guys and reasonable win for the shitty economy ones, demand is very high. When it goes to shit all the poor economy goes bankrupt, they can never compete so they end up like Greece, they joined the ring with the big boys but never made efforts into actually becoming as good as them, lived off the boom.
It's the same for Romania as I see it, the only saving grace is we don't have the euro and the government sort of only steals enough to not bankrupt the country :D
Only thing is that the big boys want these new countries in when there's a boom, it's the only way to increase the market size when the size of your own population is stagnating.
Maybe one day they'll stop going for the betterment of their own economies and just expand the EU with only countries that fit in. Or a new Greece is always around the corner.
I don't want to sound fascist or speak in a derogatory fashion towards greek people <3 but the EU has been attempting to grow far too quickly, you cannot expect a poorly developed country like greece to do well when put in such close competition with "northern" europe...
I believe it was the french philosopher Rousseau who first discriminated between countries that are best suited for different forms of government; the mediterranean countries do not have active enough citizens to be suited for the responsibilities of a democracy (yet).
Can that change with grass-roots movements and an educational effort? probably, but that has to start out with small government (less demand of the citizen to act responsibly towards society) and certainly not the ridiculous welfare system they currently have.
to preempt any smart-ass, who wants to point out how notoriously vast our own swedish/scandinavian welfare state is, I want to say that this took many centuries and strategic use of periods of inflated economic growth to build (benefits of not participating in WWII etc. etc. etc.) and cannot be compared to a country like greece which has a socialist government and a welfare state that (from what I can tell) blows ours out of the water. And this is without the necessary political involvment of the populace in the first place!!
If the collapse of the Greek economy leads to the collapse of the Euro and collapse of the EU as a whole that is a good thing.Whenever i watch Dan Hannans speeches on youtube in the EU parliamanet over 95% of the seats are empty...
You Europeans are the ones paying the 150,000+ Euro salary for these EU politicians that never even bother to show up for parliament.The EU is a gravy train that has created far too much red tape and troughers.It must end.
Jameser, you're right, it did grow too quickly but one of the reasons is to increase demand on their own industries, some of them at least.
As an example, Ikea. It's cheap as dirt for the most part and when Romania joined the EU, with the crappy salaries for most people it was a lot cheaper to just buy from the guy that adapted (Ikea) than buy from some Romanian furniture shop (I know people that still have furniture from 30-40 years ago). Even if quality wise the Romanian goods were a lot better they were also a lot more expensive (real wood, handcrafted, high production costs). Our industry didn't adapt so they went bye bye. Some did manage to pull through and either produce crappy stuff just as Ikea or export to places that can afford to pay for the expensive merchandise.
On another note, the difference in customer service between your Ikea and our Ikea is probably huge. I only bought a desk from there, they're quite simple looking and I like simple. It had a flaw in the welding of the feet, it took me forever to get them to exchange it. I know people that have mailed the producer to get the local branch to abide by the warranty. People are afraid to provide the most basic service because the small extra cost of replacing a defective item might cost them their job. This and an idiot government makes the branches of EU companies here to have some of the highest profit margins, compared to real states.
Just as another argument as to why the EU shouldn't expand with countries that don't fit in. Things run differently here and until we learn to live as a democracy we have no business in the EU. And at the very least not the Euro.
On June 28 2011 23:02 dakalro wrote: Jameser, you're right, it did grow too quickly but one of the reasons is to increase demand on their own industries, some of them at least.
As an example, Ikea. It's cheap as dirt for the most part and when Romania joined the EU, with the crappy salaries for most people it was a lot cheaper to just buy from the guy that adapted (Ikea) than buy from some Romanian furniture shop (I know people that still have furniture from 30-40 years ago). Even if quality wise the Romanian goods were a lot better they were also a lot more expensive (real wood, handcrafted, high production costs). Our industry didn't adapt so they went bye bye. Some did manage to pull through and either produce crappy stuff just as Ikea or export to places that can afford to pay for the expensive merchandise.
This is true pretty much everywhere , apart from China of course.Even countries like Vietnam , Indonesia and Thailand struggle to compete with Chinese goods.Of course part of the problem is the large tarriffs China puts on imported goods whilst alot of places fell for the free trade baloney (although Europe did increase tarriffs on imported shoes to help defend the shoe industry from cheap imports so perhaps not all is lost).
It ends up in a landfill within 5 years but it's cheap , and thats all that matters to most people these days right?
On June 28 2011 23:02 dakalro wrote: Jameser, you're right, it did grow too quickly but one of the reasons is to increase demand on their own industries, some of them at least.
As an example, Ikea. It's cheap as dirt for the most part and when Romania joined the EU, with the crappy salaries for most people it was a lot cheaper to just buy from the guy that adapted (Ikea) than buy from some Romanian furniture shop (I know people that still have furniture from 30-40 years ago). Even if quality wise the Romanian goods were a lot better they were also a lot more expensive (real wood, handcrafted, high production costs). Our industry didn't adapt so they went bye bye. Some did manage to pull through and either produce crappy stuff just as Ikea or export to places that can afford to pay for the expensive merchandise.
This is true pretty much everywhere , apart from China of course.Even countries like Vietnam , Indonesia and Thailand struggle to compete with Chinese goods.Of course part of the problem is the large tarriffs China puts on imported goods whilst alot of places fell for the free trade baloney (although Europe did increase tarriffs on imported shoes to help defend the shoe industry from cheap imports so perhaps not all is lost).
It ends up in a landfill within 5 years but it's cheap , and thats all that matters to most people these days right?
Products with a low life time are the trade mark of consumerism. It's not necesarily a bad thing, that's the kind of stuff that keeps the economy spinning by allowing for growth in production. System has plenty of vices but it's the only one that works so far.
On June 28 2011 22:48 iPlaY.NettleS wrote: If the collapse of the Greek economy leads to the collapse of the Euro and collapse of the EU as a whole that is a good thing.Whenever i watch Dan Hannans speeches on youtube in the EU parliamanet over 95% of the seats are empty... http://www.youtube.com/watch?v=e9IYcq6hzJE
You Europeans are the ones paying the 150,000+ Euro salary for these EU politicians that never even bother to show up for parliament.The EU is a gravy train that has created far too much red tape and troughers.It must end.
Someone linked a video of my favorite politician <3<3<3
Watch some videos of this man if you want to have the pure, unadulterated truth thrown into your face.
On June 28 2011 22:41 Jameser wrote: I don't want to sound fascist or speak in a derogatory fashion towards greek people <3 but the EU has been attempting to grow far too quickly, you cannot expect a poorly developed country like greece to do well when put in such close competition with "northern" europe...
You do realize Greece was in the EU 14 years before Sweden, right?
On June 29 2011 17:08 Cyba wrote: Products with a low life time are the trade mark of consumerism. It's not necesarily a bad thing, that's the kind of stuff that keeps the economy spinning by allowing for growth in production. System has plenty of vices but it's the only one that works so far.
It's not something i agree with , due to the environmental problems it causes.
yes, EURO will go down if we keep trying to help countries who simply cant get enough economic power to pay us back or at least pay for themselves some day
thank you, CDU. i know why i never voted for u -.-
EPT
