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On May 26 2012 16:07 Xamo wrote:
So what do we do in Europe to escape from our current trap?
This is what I think should be done:
- Greece should be maintained in the Eurozone
- ECB should lower interest rates and "print money" to buy sourthern Europe bank/treasure bunds exactly as the Federal Reserve did to get out of the crysis in USA.
- That may lead to inflation, at least in Germany and the northern countries. I'm not sure, in the USA it did not, but look at the UK... Anyway, if it happens, they should increase taxes and devote the extra money to create a program to heavily invest in Greece in long-term infrastructures.
- That perhaps will also lower Euro exchange rates, leading to better exports.
And sadly this is what I think will happen:
- Public funds that warrant bank deposits and currently are per-nation will be centralized in an european fund, to try to protect assets in Italy and Spain
- Greece will go out of the Euro, default again, banks will go bankrupcy and/or hyperinflation will happen... really bad times
- Later on, ECB will have to provide unlimited liquidity to avoid total kaos in southern coutries, and "print money" anyway to absorb Greece's defaults
- ...
I'm negative today...
Basically what you want is for germany and the northern countries to pay for southern countries in order to maintain a standard of living they cant support on their own.
Your rigth it wont happen.
What I have been saying since day one is that greek standard of living will drop to a level which they can support and this will happen regardless of which road they choose to take because they all lead to the same place.
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On May 26 2012 11:49 Epocalypse wrote:
definitions come from the facts of reality and you observing them.
If there is anything I have learned from my brief study of Special Relativity it is that your observations, and thus your facts, depend entirely upon where and how you stand.
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On May 26 2012 18:14 3Form wrote:Show nested quote +On May 26 2012 11:49 Epocalypse wrote:
definitions come from the facts of reality and you observing them. If there is anything I have learned from my brief study of Special Relativity it is that your observations, and thus your facts, depend entirely upon where and how you stand.
I don't think that E=MC^2 depends on whether I am standing on one leg in my apartment. I think you have misunderstood Special Relativity.
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On May 26 2012 18:41 Squeegy wrote:Show nested quote +On May 26 2012 18:14 3Form wrote:On May 26 2012 11:49 Epocalypse wrote:
definitions come from the facts of reality and you observing them. If there is anything I have learned from my brief study of Special Relativity it is that your observations, and thus your facts, depend entirely upon where and how you stand. I don't think that E=MC^2 depends on whether I am standing on one leg in my apartment. I think you have misunderstood Special Relativity.
http://en.wikipedia.org/wiki/Special_relativity#Lack_of_an_absolute_reference_frame
See also the Consequences of Special Relativity.
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On May 26 2012 17:51 CuddlyCuteKitten wrote:Show nested quote +On May 26 2012 16:07 Xamo wrote:
So what do we do in Europe to escape from our current trap?
This is what I think should be done:
- Greece should be maintained in the Eurozone
- ECB should lower interest rates and "print money" to buy sourthern Europe bank/treasure bunds exactly as the Federal Reserve did to get out of the crysis in USA.
- That may lead to inflation, at least in Germany and the northern countries. I'm not sure, in the USA it did not, but look at the UK... Anyway, if it happens, they should increase taxes and devote the extra money to create a program to heavily invest in Greece in long-term infrastructures.
- That perhaps will also lower Euro exchange rates, leading to better exports.
And sadly this is what I think will happen:
- Public funds that warrant bank deposits and currently are per-nation will be centralized in an european fund, to try to protect assets in Italy and Spain
- Greece will go out of the Euro, default again, banks will go bankrupcy and/or hyperinflation will happen... really bad times
- Later on, ECB will have to provide unlimited liquidity to avoid total kaos in southern coutries, and "print money" anyway to absorb Greece's defaults
- ...
I'm negative today...
Basically what you want is for germany and the northern countries to pay for southern countries in order to maintain a standard of living they cant support on their own. Your rigth it wont happen. What I have been saying since day one is that greek standard of living will drop to a level which they can support and this will happen regardless of which road they choose to take because they all lead to the same place.
Yours is a common misunderstanding that has no relation to reality, besides probably in case of Greece, where they were lying to get more money to support their lifestyle. Our problem in Spain, as it was in Ireland, is the real estate bubble that has exploded in the middle of a credit crunch.
Bubbles just explode everywhere regardles of lifestyle, look at USA in 2008. Where they also having a standard of living that they cannot support? I don't think so.
The asymetry here in Europe is that the bubble has not happened in all countries. So the ECB is not allowed to put in monetary politics to address the problem as the Federal Reserve did, because most of the non-affected countries do not want to pay for it. That is, your point, but a bit different.
Where did the money for the bubble came from? In case of the USA, mainly from China, but also from the rest of the world. In case of Spain, we never had much money, so it came mainly from Germany, but also from the rest of the world. Exactly as the money that went to Greece. So the good solution for Spain/Ireland would have been: let banks go bankruptcy, protect the deposits from the citizens with public money but let germans and the rest loose the money they invested in a bubble (in the form of bank bunds). This scares the rest of Europe as a result of the Lehman Brothers "experiment", because it will probably provoke bankruptcies all over the EU. We were not allowed to do it.
So we are now nationallizing banks with problems, taking money from spanish taxes to avoid germans and the rest loose the money they invested in a bubble. If we run out of money, which could happen if we continue to pay such high interest rates, either we need a rescue from the EU and the IMF or we let banks go bankruptcy. The former is just not possible, Spain is too big, the latter ... see above.
No matter what, our destinies are tyied as a result of the investments made. Just realize it.
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On May 26 2012 19:12 3Form wrote:Show nested quote +On May 26 2012 18:41 Squeegy wrote:On May 26 2012 18:14 3Form wrote:On May 26 2012 11:49 Epocalypse wrote:
definitions come from the facts of reality and you observing them. If there is anything I have learned from my brief study of Special Relativity it is that your observations, and thus your facts, depend entirely upon where and how you stand. I don't think that E=MC^2 depends on whether I am standing on one leg in my apartment. I think you have misunderstood Special Relativity. http://en.wikipedia.org/wiki/Special_relativity#Lack_of_an_absolute_reference_frameSee also the Consequences of Special Relativity.
Does one of them imply that E=MC^2 depends on my standing on one leg in my apartment?
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On May 26 2012 19:24 Squeegy wrote:Show nested quote +On May 26 2012 19:12 3Form wrote:On May 26 2012 18:41 Squeegy wrote:On May 26 2012 18:14 3Form wrote:On May 26 2012 11:49 Epocalypse wrote:
definitions come from the facts of reality and you observing them. If there is anything I have learned from my brief study of Special Relativity it is that your observations, and thus your facts, depend entirely upon where and how you stand. I don't think that E=MC^2 depends on whether I am standing on one leg in my apartment. I think you have misunderstood Special Relativity. http://en.wikipedia.org/wiki/Special_relativity#Lack_of_an_absolute_reference_frameSee also the Consequences of Special Relativity. Does one of them imply that E=MC^2 depends on my standing on one leg in my apartment?
Careful, I'll stop being nice... You are acting like E=mc^2 is the only thing that Einstein did in his life... Mass energy equivalence is but ONE of the consequences of special relativity.
The underlying principle behind SR is that light travels at the same speed in all reference frames. Ergo, if I am on a train moving past your apartment, the world looks very different to me than it does to you.
Length contraction, time dilation, relativity of simultaneity all illustrate this. I advise you to do some more reading lest we clutter this thread further.
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On May 26 2012 19:23 Xamo wrote:Show nested quote +On May 26 2012 17:51 CuddlyCuteKitten wrote:On May 26 2012 16:07 Xamo wrote:
So what do we do in Europe to escape from our current trap?
This is what I think should be done:
- Greece should be maintained in the Eurozone
- ECB should lower interest rates and "print money" to buy sourthern Europe bank/treasure bunds exactly as the Federal Reserve did to get out of the crysis in USA.
- That may lead to inflation, at least in Germany and the northern countries. I'm not sure, in the USA it did not, but look at the UK... Anyway, if it happens, they should increase taxes and devote the extra money to create a program to heavily invest in Greece in long-term infrastructures.
- That perhaps will also lower Euro exchange rates, leading to better exports.
And sadly this is what I think will happen:
- Public funds that warrant bank deposits and currently are per-nation will be centralized in an european fund, to try to protect assets in Italy and Spain
- Greece will go out of the Euro, default again, banks will go bankrupcy and/or hyperinflation will happen... really bad times
- Later on, ECB will have to provide unlimited liquidity to avoid total kaos in southern coutries, and "print money" anyway to absorb Greece's defaults
- ...
I'm negative today...
Basically what you want is for germany and the northern countries to pay for southern countries in order to maintain a standard of living they cant support on their own. Your rigth it wont happen. What I have been saying since day one is that greek standard of living will drop to a level which they can support and this will happen regardless of which road they choose to take because they all lead to the same place. Yours is a common misunderstanding that has no relation to reality, besides probably in case of Greece, where they were lying to get more money to support their lifestyle. Our problem in Spain, as it was in Ireland, is the real estate bubble that has exploded in the middle of a credit crunch. Bubbles just explode everywhere regardles of lifestyle, look at USA in 2008. Where they also having a standard of living that they cannot support? I don't think so. The asymetry here in Europe is that the bubble has not happened in all countries. So the ECB is not allowed to put in monetary politics to address the problem as the Federal Reserve did, because most of the non-affected countries do not want to pay for it. That is, your point, but a bit different. Where did the money for the bubble came from? In case of the USA, mainly from China, but also from the rest of the world. In case of Spain, we never had much money, so it came mainly from Germany, but also from the rest of the world. Exactly as the money that went to Greece. So the good solution for Spain/Ireland would have been: let banks go bankruptcy, protect the deposits from the citizens with public money but let germans and the rest loose the money they invested in a bubble (in the form of bank bunds). This scares the rest of Europe as a result of the Lehman Brothers "experiment", because it will probably provoke bankruptcies all over the EU. We were not allowed to do it. So we are now nationallizing banks with problems, taking money from spanish taxes to avoid germans and the rest loose the money they invested in a bubble. If we run out of money, which could happen if we continue to pay such high interest rates, either we need a rescue from the EU and the IMF or we let banks go bankruptcy. The former is just not possible, Spain is too big, the latter ... see above. No matter what, our destinies are tyied as a result of the investments made. Just realize it.
Hm, I hope this question doesn't come off as ignorant, because I mean it seriously and would appreciate a good answer:
Isn't the whole real estate bubble exploding thing caused by masses of people taking credits for houses which they cannot afford to pay back?
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On May 26 2012 19:48 JustPassingBy wrote:
Hm, I hope this question doesn't come off as ignorant, because I mean it seriously and would appreciate a good answer:
Isn't the whole real estate bubble exploding thing caused by masses of people taking credits for houses which they cannot afford to pay back?
I'd rather look at it this way:
Those were banks giving loans to people who obviously didn't have enough creditworthiness while getting a mortgage on the houses they (the people) had or built with the banks' expectation of rising housing prices.
Some people couldn't pay back their loans, the housing prices were a bubble which exploded, and the mortgages ended up being worth a fraction of their previous value.
The people who were able to pay back the loans turned out to have taken a too high loan for their housing and sat on a worthless immobile themselves while still paying the interest to the banks.
With this huge hole arising in the banks balances, they had to start selling their stocks to fill it and that affected the stock market.
The rest is chain reaction.
The government could actually have stopped that chain reaction by bailing out the first concerned banks before the fire spread.
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The real question is if Germany and France wants to keep euro and it appears they dont.
The solution - roughly put - was well known since euros formation.
Eurobond , no seperate banking system , recycling of earnings , a solely monetary policy through ecb and so on more or less whats happened with the formation of the U.s.
Now nothing happened or happening instead , it seems Germany and France looking for a scapegoat for their own reasons.
Germany cause they ve drained all the money from south , thus south is pretty much useless for them now ( they eyeing china and developing countries for their exports now ) and for France is the only way to escape through Euro that severly weakens their economy ( and to avoid the formations needed soon ).
Monetary unions dont last forever , it s not the first time a monetary union to collapse.
As an outsider its pretty evident that this is the end game.
suprisingly the only ones who thing this is madness is the U.s, Why ... well for starters they know economics plus they knew that , if a single bank collapse can create a chaos imagine an exit of a founding European country.
Sadly Germans keep been arrogant and chauvinistics ( just like the French are) and ignore the real danger that lures after a Grexit.
( to be fair Greeks have done nothing for the past 2 years to avoid the danger , total unorganisation and spend their time with ridiculous theoretalking. Meanwhile the Greeks dont seem to wnat to change anything , the public sector having the worst productivity leves from all european countries plus having 137 closed occupations a world record - they ve got of course a -32% cuts in wages another world record for a country not in a war but this could have been avoided with serious reforms))
Well its not the first this happens in the last 80 years or so anyway ( 2 world wars hello ;p ) Thing is many innocents will pay for the corrupt banking system and a flawed Euro.
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On May 26 2012 20:17 topoulo wrote:
The real question is if Germany and France wants to keep euro and it appears they dont.
The solution - roughly put - was well known since euros formation.
Eurobond , no seperate banking system , recycling of earnings , a solely monetary policy through ecb and so on more or less whats happened with the formation of the U.s.
Now nothing happened or happening instead , it seems Germany and France looking for a scapegoat for their own reasons.
Germany cause they ve drained all the money from south , thus south is pretty much useless for them now ( they eyeing china and developing countries for their exports now ) and for France is the only way to escape through Euro that severly weakens their economy ( and to avoid the formations needed soon ).
Monetary unions dont last forever , it s not the first time a monetary union to collapse.
As an outsider its pretty evident that this is the end game.
suprisingly the only ones who thing this is madness is the U.s, Why ... well for starters they know economics plus they knew that , if a single bank collapse can create a chaos imagine an exit of a founding European country.
Sadly Germans keep been arrogant and chauvinistics ( just like the French are) and ignore the real danger that lures after a Grexit.
( to be fair Greeks have done nothing for the past 2 years to avoid the danger , total unorganisation and spend their time with ridiculous theoretalking. Meanwhile the Greeks dont seem to wnat to change anything , the public sector having the worst productivity leves from all european countries plus having 137 closed occupations a world record)
Well its not the first this happens in the last 80 years or so anyway ( 2 world wars hello ;p ) Thing is many innocents will pay for the corrupt banking system .
The Germans still want to keep euro, it's easier for them to export this way. Only they don't want the bad kids, who are not worth to them that much (Greece, Portugal). They still do most of their trade benefits from fellow euro countries by blocking the wages on a low level.
But the average German or French has a 1600 euros Greek debt on his head, which will be probably never paid back.
The all thing is shitty, the European Union was built the wrong way. It was bruteforced politically and economically instead of making it mature culturally like Schuman wanted.
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On May 26 2012 18:41 Squeegy wrote:Show nested quote +On May 26 2012 18:14 3Form wrote:On May 26 2012 11:49 Epocalypse wrote:
definitions come from the facts of reality and you observing them. If there is anything I have learned from my brief study of Special Relativity it is that your observations, and thus your facts, depend entirely upon where and how you stand. I don't think that E=MC^2 depends on whether I am standing on one leg in my apartment. I think you have misunderstood Special Relativity.
Well said.
It's the same as saying "facts don't exist... except for this one." "Nothing can be known... except that nothing can be known"- The Fallacy of Self-Exclusion.
- To stray off topic, Immanuel Kant's philosophy rests on this kind of fallacy.
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The Germans still want to keep euro, it's easier for them to export this way. Only they don't want the bad kids, who are not worth to them that much (Greece, Portugal). They still do most of their trade benefits from fellow euro countries by blocking the wages on a low level.
But the average German or French has a 1600 euros Greek debt on his head, which will be probably never paid back.
The all thing is shitty, the European Union was built the wrong way. It was bruteforced politically and economically instead of making it mature culturally like Schuman wanted.
Actually thats not how it can work. Imagine is the u.s simply said , when california was in a problem , lets throw out california instead of saving them.
How it works is that you print money , you save the weaker economy then you make sure that wont be happening again not the other way around.
Furthemore your severly mistaken to believe that germany has any kind of debt towards the european pigs , on the contrary , Germany is making billions upon billions through tge balance of payments , through increase (speculative loans through ecb that germany takes advantage of ) and zero interest rates for their bonds compare to 700% increase the pigs get.
But ofcourse Merkel (and so does Lagarde, actually) basically tells everyone that there is a conspiracy by the Greek low-income classes to steal the “hard working” Germans’ money , its this kind of propaganda ( btw remmebr when the Fiat Group was bidding to buy Opel from GM, the German media (and the German politicians – ALL of them) were pushing anti-Italian racist slurs, especially to the members of IG Metal) same thing here.
Would it surprise you to know that Europe’s taxpayers have provided as much financial support to Germany as they have to Greece? An examination of European money flows and central-bank balance sheets suggests this is so.
"By December 2009, according to the Bank for International Settlements, German banks had amassed claims of $704 billion on Greece, Ireland, Italy, Portugal and Spain, much more than the German banks’ aggregate capital. In other words, they lent more than they could afford"
When the European Union and the European Central Bank stepped in to bail out the struggling countries, they made it possible for German banks to bring their money home. As a result, they bailed out Germany’s banks as well as the taxpayers who might otherwise have had to support those banks if the loans weren’t repaid. Unlike much of the aid provided to Greece, the support to Germany’s banks happened automatically, as a function of the currency union’s structure" go
on and read
http://www.bloomberg.com/news/2012-05-23/merkel-should-know-her-country-has-been-bailed-out-too.html
And the The Financial Times Deutschland :
"The Germans still appear to be profiting from the crisis through absurdly low interest rates (4.6 Bil. euro, two year notes at zero percent issued last Wednesday)that only exist because other euro-zone countries are in crisis and everyone is fleeing to German bonds"
Btw asking for Greeks and the south to pay when Germany never did in the world war 2 isnt that irony ?
Btw lets forget a second for Greeks . Lets asume they are the irresponsible ones.
Explain me Spain and Italy to me. Why spain before 2008 which was the example of economic health comes as the one to leave after a greek exit. Explain me the 125% of debt Italy has ( 1.8 trillion and rising) no serious economist believes that European crisis isnt systemic , fyi even the founders said so http://www.bbc.co.uk/news/world-europe-16016131
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On May 26 2012 20:00 Cattivik wrote:Show nested quote +On May 26 2012 19:48 JustPassingBy wrote:
Hm, I hope this question doesn't come off as ignorant, because I mean it seriously and would appreciate a good answer:
Isn't the whole real estate bubble exploding thing caused by masses of people taking credits for houses which they cannot afford to pay back? I'd rather look at it this way: Those were banks giving loans to people who obviously didn't have enough creditworthiness while getting a mortgage on the houses they (the people) had or built with the banks' expectation of rising housing prices. Some people couldn't pay back their loans, the housing prices were a bubble which exploded, and the mortgages ended up being worth a fraction of their previous value. The people who were able to pay back the loans turned out to have taken a too high loan for their housing and sat on a worthless immobile themselves while still paying the interest to the banks. - Pretty accurate
With this huge hole arising in the banks balances, they had to start selling their stocks to fill it and that affected the stock market.
The rest is chain reaction.
The government could actually have stopped that chain reaction by bailing out the first concerned banks before the fire spread.
The government actually encouraged the bad lending through Fannie/Mac. The bubble would not have happened if the government didn't promote bad loans. Giving Fannie/Mac an incentive to give bad loans by guaranteeing a bailout if necessary.
So they took huge risks, made terrible decision, gave loans to people who they knew would never pay them back and that's the story of the housing bubble. A government operation.
For the record... look at BB&T, a top ten bank, who refused to engage in such lending practices because they knew it would result in a bubble. That's why through the who crisis they continued to be profitable because they act on principle. They also refused TARP money, however the government made it illegal for them to refuse and had to take it. But they paid it back as soon as the government allowed them to. The former CEO, John Allison, says he learned his lesson from Atlas Shrugged and that it's a required read for all upper management. If they fail the Atlas Shrugged test they get fired.
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topoulo May 26 2012 07:06. Posts 187
"There cant be more than 1 euro , one for the north one of the south this is pure bs , Gresham's law states that : When a government compulsorily overvalues one type of money and undervalues another, the undervalued money will leave the country or disappear from circulation into hoards, while the overvalued money will flood into circulation"
You probably mean that bad monney wins from good monney.
Like you say, people will hoard the "good" monney and spend the "bad" monney, wich leads to the "bad" monney becoming the dominant currency in trade.
This law only aplies when different currencys are used inside one and the same country.
This would not happen with a north and south euro, the northern euro would only be legal tender in the north, and the southern euro would only be legal tender in the south.
There can definatly be more then 1 euro, just like there is more then 1 different currency worldwide.
"Germany before euro had the lowest per capita gdp under the Dm , and consider the sick man of europe , whereas Greeks had the highest."
This is just false.
Germany had a long recession and alot of trouble with the unification but overall the german gdp/captiva has been among the highest and its economy the strongest of the whole zone since like 1955.
"At this very moment , the delta (aka difference) between almost zero percent financing for Germany and anywhere between 400% to 700% higher cost of financing for every other European state , this creates huge impalances , thus the need for a eurobond."
Yes germany pays alot less interest then the southern countrys but we cant set this interest at will.
The interest is determined by the market and if the market thinks that germany is more likely to pay back its debt then greece they will lend monney at a lower rate to germany.
There is realy no way to avoid this and it is also a good thing, it rewards good economic policy with a low interest rate, and it punishes bad economic policy with a high interest rate.
Eurobonds would be a big equaliser and work against the forces of capitalism.
It encourages "bad" behaviour while discourages "good" behaviour. it is a solution for the symptoms but not a solution for the problem.
Euro bonds could be an option if there also was a fiscal union,and when a european government can decide on isues in every single state,
States would have to give up their independancy to make their own budget to make eurobonds work.
Then again, if europe could decide on greek internal tax and budget policy,the situation probably would not have gone so bad.
Agree with other parts of your post though.
Cutting in bad economic times seldom has a good effect, definatly in the short term.
We cant simply spend monney either though.
We can add alot of monney but if we dont use this monney efficiently to produce more, we will just end up with more monney+same amount of goods->higher prices.
Adding alot of euros would bring the euro down, After the ecb lend 1 trillion freshly created euros to the banks to avoid immediate collapse the euro went from 1.35 to 1.25.
Now this is good for exports, but is it realy good for us?
No, a weak currency is a double edged sword.
On one hand your exports are alot better,on the other hand your imports (oil, electronics from asia etc) become alot more expensive wich will lead to inflation.
If you look at it in a verry abstract way, you will see that more and more goods are leaving the country and less and less goods are coming in.
In other words:the country is getting more poor.
It has to trade in a less favourable way.
Instead of 1 mercedes 600 sel for 2000 barrels of oil, they now have to give 2 mercedes 600 sel for 2000 barrels of oil .
Simply devaluating a currency is a last resort measure,a sign of failure to compete.
So what to do then?
I have no clue lol. Personally i would like to see a split in the zone but i am 99% sure that wont happen.
What will happen i think is that the zone stays one (though greece might leave) and that we will start some sort of quantitative easing, print more euros to spend our way out of the trouble.
Germany, the netherlands and finland are against this atm but there will be elections in thoose countrys soon, and leftwing is looking to win.
Accept the inflation and the less favourable trade due to a lower euro that comes with it.
We will get richer on paper, though more poor in absolute terms.
It wont provide a structural solution for the southern economys but it will (again) buy time to wait for better times wich inevitably will come.
-Thx for the link to the cds rates btw on prev page
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On May 26 2012 21:04 topoulo wrote:
Actually thats not how it can work. Imagine is the u.s simply said , when california was in a problem , lets throw out california instead of saving them.
How it works is that you print money , you save the weaker economy then you make sure that wont be happening again not the other way around.
California "was" in a problem? They still have a huge problem.
Printing money just means making it less valuable and all it is is a hidden form of taxation. It devalues the dollar, so now when mom & pop sell a candy bar for a dollar, their books will show down the line that it should have been sold at 1dollar+inflation(the amount of inflation being determined by how much money was printed). So they actually make less profit thanks to inflation and make it harder to survive. But the phenomenon is not immediately seen and works to the advantage of the government, because it's under the radar for a short while. If the government straight up just raised taxes, people would stop spending and it would undermine the government's effort to collect more money so they need a hidden method.. that method is printing money.
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On May 26 2012 21:04 topoulo wrote:Show nested quote +The Germans still want to keep euro, it's easier for them to export this way. Only they don't want the bad kids, who are not worth to them that much (Greece, Portugal). They still do most of their trade benefits from fellow euro countries by blocking the wages on a low level.
But the average German or French has a 1600 euros Greek debt on his head, which will be probably never paid back.
The all thing is shitty, the European Union was built the wrong way. It was bruteforced politically and economically instead of making it mature culturally like Schuman wanted. Actually thats not how it can work. Imagine is the u.s simply said , when california was in a problem , lets throw out california instead of saving them. How it works is that you print money , you save the weaker economy then you make sure that wont be happening again not the other way around. Furthemore your severly mistaken to believe that germany has any kind of debt towards the european pigs , on the contrary , Germany is making billions upon billions through tge balance of payments , through increase (speculative loans through ecb that germany takes advantage of ) and zero interest rates for their bonds compare to 700% increase the pigs get. But ofcourse Merkel (and so does Lagarde, actually) basically tells everyone that there is a conspiracy by the Greek low-income classes to steal the “hard working” Germans’ money , its this kind of propaganda ( btw remmebr when the Fiat Group was bidding to buy Opel from GM, the German media (and the German politicians – ALL of them) were pushing anti-Italian racist slurs, especially to the members of IG Metal) same thing here. Would it surprise you to know that Europe’s taxpayers have provided as much financial support to Germany as they have to Greece? An examination of European money flows and central-bank balance sheets suggests this is so. "By December 2009, according to the Bank for International Settlements, German banks had amassed claims of $704 billion on Greece, Ireland, Italy, Portugal and Spain, much more than the German banks’ aggregate capital. In other words, they lent more than they could afford"
When the European Union and the European Central Bank stepped in to bail out the struggling countries, they made it possible for German banks to bring their money home. As a result, they bailed out Germany’s banks as well as the taxpayers who might otherwise have had to support those banks if the loans weren’t repaid. Unlike much of the aid provided to Greece, the support to Germany’s banks happened automatically, as a function of the currency union’s structure" go on and read http://www.bloomberg.com/news/2012-05-23/merkel-should-know-her-country-has-been-bailed-out-too.htmlAnd the The Financial Times Deutschland : "The Germans still appear to be profiting from the crisis through absurdly low interest rates (4.6 Bil. euro, two year notes at zero percent issued last Wednesday)that only exist because other euro-zone countries are in crisis and everyone is fleeing to German bonds" Btw asking for Greeks and the south to pay when Germany never did in the world war 2 isnt that irony ? Btw lets forget a second for Greeks . Lets asume they are the irresponsible ones. Explain me Spain and Italy to me. Why spain before 2008 which was the example of economic health comes as the one to leave after a greek exit. Explain me the 125% of debt Italy has ( 1.8 trillion and rising) no serious economist believes that European crisis isnt systemic , fyi even the founders said so http://www.bbc.co.uk/news/world-europe-16016131
Europe is not a country, so your comparison is irrelevant.
Germany's benefits from the exports it does with Greece is small, not worth all the loans given.
I said that Germany makes huge benefits from trade with the rest of the Eurozone, so don't see why you contradict me on this. But for the loan interest, if Greece was able to borrow at a low interest rate for so long it was because of the euro. People were like, yeah Greece has a shitty economy, but they will be backed up by the eurozone anyways. Check the interest rate before the euro and after. Pretty astounding. And if PIGS get an increase of their interest rates it's for a reason.
Governements chose to borrow, now they owe.
Never said that Greeks were stealing money from Germans. I actually find some of German measures taken during Schroder really anti-competitive, and on a certain aspect deloyal. But Greece has been abusing the subsidies given, and has had poor budget management. You add huge corruption, and huge tax fraud...If the EU hasn't been flooding money to Greece it would have collapsed even before the crisis, or not collapse but in serious trouble.
The other issue your pointing out is the absurd help the bank received, taking absurd risk and being backed up by the states. Nothing special about Germany.
Spain, estate bubble.
Italy, south and corruption.
It's not all about that but those issues where the before the crisis, the crisis just made them more visible.
I love this "no serious economist believes that European crisis isnt systemic". So you, Topoulo, have a list of all the serious economists and they all support your point of view. What a coincidence
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On May 26 2012 21:38 Epocalypse wrote:Show nested quote +On May 26 2012 21:04 topoulo wrote:
Actually thats not how it can work. Imagine is the u.s simply said , when california was in a problem , lets throw out california instead of saving them.
How it works is that you print money , you save the weaker economy then you make sure that wont be happening again not the other way around. California "was" in a problem? They still have a huge problem. Printing money just means making it less valuable and all it is is a hidden form of taxation. It devalues the dollar, so now when mom & pop sell a candy bar for a dollar, their books will show down the line that it should have been sold at 1dollar+inflation(the amount of inflation being determined by how much money was printed). So they actually make less profit thanks to inflation and make it harder to survive. But the phenomenon is not immediately seen and works to the advantage of the government, because it's under the radar for a short while. If the government straight up just raised taxes, people would stop spending and it would undermine the government's effort to collect more money so they need a hidden method.. that method is printing money.
+ Show Spoiler +It bothers me that whenever someone speaks of inflation from printing money, he never takes into consideration where it flows.
It's true in a theoretical system where you only have money and goods, that an increase of money supply increases the price of goods.
But here you have a more differentiated system.
If all of the printed money goes to consumers, the consumers product prices will increase after a 'realization buffer' where vendors need to acknowledge the inflation and correct their prices.
If all of the printed money goes to banks who use the money to buffer the losses from defaulted debt and mortgage value decrease, then they will reinvest that money into something else than consumer goods.
They will invest that money into assets.And the money banks invest creates bubbles, 2000 the dotcom bubble, 2008 the housing price bubble, my next guess is the debt/bond bubble (government debts bought with bank debt), specifically speaking, the German BoT bubble.The markets behavior is entirely irrational, they buy bonds not granting them any profit whatsoever cause of the insanely low interest.
But don't consider the last point relevant to the discussion, don't quote it. It's just a bold prediction. I just would like if people stopped assuming that any increase in money supply leads to consumer price inflation.
And this passage also illustrates how bank debt is paid with more national debt, and how the banks use that debt to buy or get (through mortgages) assets (houses,resources) others might have worked for their entire life.
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On May 26 2012 19:33 3Form wrote:Show nested quote +On May 26 2012 19:24 Squeegy wrote:On May 26 2012 19:12 3Form wrote:On May 26 2012 18:41 Squeegy wrote:On May 26 2012 18:14 3Form wrote:On May 26 2012 11:49 Epocalypse wrote:
definitions come from the facts of reality and you observing them. If there is anything I have learned from my brief study of Special Relativity it is that your observations, and thus your facts, depend entirely upon where and how you stand. I don't think that E=MC^2 depends on whether I am standing on one leg in my apartment. I think you have misunderstood Special Relativity. http://en.wikipedia.org/wiki/Special_relativity#Lack_of_an_absolute_reference_frameSee also the Consequences of Special Relativity. Does one of them imply that E=MC^2 depends on my standing on one leg in my apartment? Careful, I'll stop being nice... You are acting like E=mc^2 is the only thing that Einstein did in his life... Mass energy equivalence is but ONE of the consequences of special relativity. The underlying principle behind SR is that light travels at the same speed in all reference frames. Ergo, if I am on a train moving past your apartment, the world looks very different to me than it does to you. Length contraction, time dilation, relativity of simultaneity all illustrate this. I advise you to do some more reading lest we clutter this thread further.
That's nice and all but in fact all I am saying saying is that what you said earlier is wrong. I am fine with stopping here if you agree that E=MC^2 (for example) does not depend on my standing on one leg in my apartment.
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Does it realy matter what inflates?
This difference between asset and "normal" inflation is only made to downplay the effects of inflation i sometimes think.
The effects always reach consumers in the end.
Consumers spend a huge part of all the monney they make on assets such as houses.Inflation of thoose is equally if not more important to them as the inflation in consumer electronics,luxery goods, healthcare , energy, transportation, communication and food.
Increasing the euro suply will weaken the euro wich will lead to higher energy cost for example .
The banks who use the euros to refinance will spend some of them on dollars and yens to refinance loans in thoose currencys.
Even though the extra euros only circulate between banks, the effect from it (a weaker euro) does reach the consumers.
Its possible to make a difference between every type of inflation but i dont realy see annything wrong with using it as a broad term to describe all the effects of increasing the monney suply combined.
It would probably be more accurate to make a difference though so i will try to do so from now on when using the term.
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EPT
