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Well illegal immigrants are illegal. Do you let anybody come in the US? Plus that's sensationalist news, there is not going to be any massive exile u_u
But I'm not sure they can do that without breaking Schengen.
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On May 27 2012 03:06 Maenander wrote:Show nested quote +On May 27 2012 02:37 WhiteDog wrote:On May 27 2012 02:32 Maenander wrote:On May 27 2012 02:13 WhiteDog wrote:On May 27 2012 01:50 Maenander wrote:On May 27 2012 01:13 Robinsa wrote:On May 27 2012 01:06 Maenander wrote:It's a myth that Germany increased its exports only due to the massive lending in southern europe or due to the Euro. The facts: Share of German exports going to the countries of the current Eurozone: 1990: 46.5%; 2008: 42.6% Example Italy: 1990: 9.1%, 2008: 5.8% Greece was ranked 19th among the importers of german goods in 1990 and only 27th in 2008. source: www.destatis.de People are not saying that Germany is exporting more to the Eurozone (at least now). Its exports have increased partly because of a weak euro. Its weak because of the countries in "southern europe" as you describe them. The weak euro makes it easier for Germany to export outside of the Eurozone. Aaah the "weak" Euro. According to this argument the US should export like crazy. You are from Sweden, aren't you? Let's take a look at Swedish Kronor vs Euros: ![[image loading]](http://i.imgur.com/a7JMs.png) A weak Krona, I guess? I don't really understand the 2 numbers you put there buddy... The only thing that is important is the commercial balance between grece and germany, and not the relativ part of greece within german exports (because greece is a small country, with difficulties ?). Even if we indeed see that germany is less exporting to greece, it still is the first partner of Greece with around 10652 M USD of importation to greece from germany and only 2809M USD of exportation from greece to germany. So basically around 8 000 M USD in favor of germany (all those numbers are for 2008, here http://www.smartexport.com/fr/Grece.html). Also consider that Greece GPD is 308449 M $ (so 2.5 % of Greece GPD in 2008 had gone from Greece to Germany through importation). Nice way of using numbers to makes them say what you want by the way  Your numbers only showed how germany has opened itself to the global economy and how it is not as dependant from European economies as it was before. I didn't want to talk about Greece, but about the claim that Germany is "exploiting" the weaker members of the Eurozone and that that is the main reason it is doing well now, which is simply not true. And yeah that is claimed again and again, in this thread and all over the internet. By the number I showed, it is true ... As I said, the commercial balance between Greece and Germany is heavily in favor of Germany (2.5% of Greece GPD in 2008...), which mean any public investment made in Greece will heavily go in German hands. It's a fact. It's true that if you take those numbers in relation with German GPD or German exportation overall, it's thin. But that's not because German's doesn't profit from Greece investment, it just mean that German is a big country with a big GPD and high exportation all around the world, and not only in Greece, a small european country (economically). It has been like that for decades, why should it suddenly start to be a problem? If one looks at the GDP growth rate, Greece experienced an economic boost when the Euro arrived, much more so than Germany: ![[image loading]](http://i.imgur.com/IZkrf.gif) We now know how this boost was financed, based on loans with lower interest rates thanks to the Euro. Cheap loans made Greece borrow too much. Now they are no longer cheap. That is the crux of the Greek problem, not some trade imbalances that existed since like forever. The problem Europe has is its decreasing competitiveness on a global scale, Europe as a whole has to find a new - less dominating - place in the ever shifting global economy, it cannot be that Germany is now blamed for making the necessary adjustments.
Now you change the subject. No it doesn't have always been like that, the proof is that the credit that the german central bank had from the european central bank was around 0 prior to 2007 and is now around 465 billions or something like that in october 2011.
When a Greek company buy something from a German company, the money is transfered from the greek bank to the german bank, and the german central bank receive a credit in "base money" that matche the sum of the transfert. Until 2007, the credit was around 0, which means that the money that greece invested into german company eventually was going right back to them in some ways (like for exemple, german buying french good and french buying greek goods, but mainly because german banks bought asset from greek banks, with that base money). It basically mean that the situation really started early 2007. In my opinion, one must also take into consideration that even if the economic situation in Germany is good, the overall capacity of consumption of german people didn't really change since some time now, which mean the money German receive didn't really go into german hand but stays in banks and is reinvested in different sector.
The economic growth of Greece in 2004-2005 (one of the best of the euro zone at the time LOL) is not due to the euro, but to the dynamic of services and constructions (keep in mind, the olympic games were in Greece at the time and we all know the impact they have on the economy). It's too easy to put it all on the euro, it actually didn't do much imo. Not to mention they had a great economic growth prior to the euro.
I think you are luring yourself into thinking the europe gave Greece economic growth and didn't do shit in pushing them in this crisis. In my opinion, the reason of the current economic situation is that, at a global level (and germany is a big factor to that) there is really a problem of redistribution. The money does not come back to the consumers (and because of that, it also doesn't come back into the state through taxes).
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Conservative government gerrymandering to the reactionary cretins in this country I'm afraid.
Last year, foreign students graduating from a british university were allowed 18 months to find suitable employment (i.e. able to sponsor them for a work permit). This year they are only allowed 6 months before being booted out. Good job encouraging the talent to seek work abroad.
All stinks of "bloody immigrants stealing all the jobs" type irrational phobias.
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On May 27 2012 03:44 Heweree wrote:Well illegal immigrants are illegal. Do you let anybody come in the US? Plus that's sensationalist news, there is not going to be any massive exile u_u But I'm not sure they can do that without breaking Schengen.
UK isnt in Schengen agreement afaik. Schengen agreement is just not having to show passports at borders. Has nothing to do with the free movement i.e. does not require a visa.
People from anywhere in the EU can go to any other country without a visa. This is what the article is getting at.
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On May 27 2012 03:56 WhiteDog wrote:Show nested quote +On May 27 2012 03:06 Maenander wrote:On May 27 2012 02:37 WhiteDog wrote:On May 27 2012 02:32 Maenander wrote:On May 27 2012 02:13 WhiteDog wrote:On May 27 2012 01:50 Maenander wrote:On May 27 2012 01:13 Robinsa wrote:On May 27 2012 01:06 Maenander wrote:It's a myth that Germany increased its exports only due to the massive lending in southern europe or due to the Euro. The facts: Share of German exports going to the countries of the current Eurozone: 1990: 46.5%; 2008: 42.6% Example Italy: 1990: 9.1%, 2008: 5.8% Greece was ranked 19th among the importers of german goods in 1990 and only 27th in 2008. source: www.destatis.de People are not saying that Germany is exporting more to the Eurozone (at least now). Its exports have increased partly because of a weak euro. Its weak because of the countries in "southern europe" as you describe them. The weak euro makes it easier for Germany to export outside of the Eurozone. Aaah the "weak" Euro. According to this argument the US should export like crazy. You are from Sweden, aren't you? Let's take a look at Swedish Kronor vs Euros: A weak Krona, I guess? I don't really understand the 2 numbers you put there buddy... The only thing that is important is the commercial balance between grece and germany, and not the relativ part of greece within german exports (because greece is a small country, with difficulties ?). Even if we indeed see that germany is less exporting to greece, it still is the first partner of Greece with around 10652 M USD of importation to greece from germany and only 2809M USD of exportation from greece to germany. So basically around 8 000 M USD in favor of germany (all those numbers are for 2008, here http://www.smartexport.com/fr/Grece.html). Also consider that Greece GPD is 308449 M $ (so 2.5 % of Greece GPD in 2008 had gone from Greece to Germany through importation). Nice way of using numbers to makes them say what you want by the way Your numbers only showed how germany has opened itself to the global economy and how it is not as dependant from European economies as it was before. I didn't want to talk about Greece, but about the claim that Germany is "exploiting" the weaker members of the Eurozone and that that is the main reason it is doing well now, which is simply not true. And yeah that is claimed again and again, in this thread and all over the internet. By the number I showed, it is true ... As I said, the commercial balance between Greece and Germany is heavily in favor of Germany (2.5% of Greece GPD in 2008...), which mean any public investment made in Greece will heavily go in German hands. It's a fact. It's true that if you take those numbers in relation with German GPD or German exportation overall, it's thin. But that's not because German's doesn't profit from Greece investment, it just mean that German is a big country with a big GPD and high exportation all around the world, and not only in Greece, a small european country (economically). It has been like that for decades, why should it suddenly start to be a problem? If one looks at the GDP growth rate, Greece experienced an economic boost when the Euro arrived, much more so than Germany: We now know how this boost was financed, based on loans with lower interest rates thanks to the Euro. Cheap loans made Greece borrow too much. Now they are no longer cheap. That is the crux of the Greek problem, not some trade imbalances that existed since like forever. The problem Europe has is its decreasing competitiveness on a global scale, Europe as a whole has to find a new - less dominating - place in the ever shifting global economy, it cannot be that Germany is now blamed for making the necessary adjustments. Now you change the subject. No it doesn't have always been like that, the proof is that the credit that the german central bank had from the european central bank was around 0 prior to 2007 and is now around 465 billions or something like that in october 2011. When a Greek company buy something from a German company, the money is transfered from the greek bank to the german bank, and the german central bank receive a credit in "base money" that matche the sum of the transfert. Until 2007, the credit was around 0, which means that the money that greece invested into german company eventually was going right back to them in some ways (like for exemple, german buying french good and french buying greek goods, but mainly because german banks bought asset from greek banks, with that base money). It basically mean that the situation really started early 2007. In my opinion, one must also take into consideration that even if the economic situation in Germany is good, the overall capacity of consumption of german people didn't really change since some time now, which mean the money German receive didn't really go into german hand but stays in banks and is reinvested in different sector. The economic growth of Greece in 2004-2005 (one of the best of the euro zone at the time LOL) is not due to the euro, but to the dynamic of services and constructions (keep in mind, the olympic games were in Greece at the time and we all know the impact they have on the economy). It's too easy to put it all on the euro, it actually didn't do much imo. Not to mention they had a great economic growth prior to the euro. I think you are luring yourself into thinking the europe gave Greece economic growth and didn't do shit in pushing them in this crisis. In my opinion, the reason of the current economic situation is that, at a global level (and germany is a big factor to that) there is really a problem of redistribution. The money does not come back to the consumers (and because of that, it also doesn't come back into the state through taxes).
In your first post you talked about trade imbalances, now about Target 2 saldi. They are connected, but not the same. Trade imbalances do not necessarily increase the Target 2 saldi, as can be seen until 2008.
The increasing Target 2 saldi show that the Eurozone members are not unable to "print" money. Germany is flooded by money from other Eurozone members, all lent from the ECB. All would be fine if investments in, e.g., Greece, would still be considered viable. At this point, however, the German banks are giving the money to the Bundesbank instead of investing it. Cause and effect are not as clear as you would suggest.
The Target 2 saldi are a massive danger to Germany btw, if the Euro breaks up all the money could vanish in an instant.
And I disagree. The economic growth was mainly financed by loans, the Olympic Games were a major example of Greek overspending.
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On May 27 2012 04:59 Maenander wrote:Show nested quote +On May 27 2012 03:56 WhiteDog wrote:On May 27 2012 03:06 Maenander wrote:On May 27 2012 02:37 WhiteDog wrote:On May 27 2012 02:32 Maenander wrote:On May 27 2012 02:13 WhiteDog wrote:On May 27 2012 01:50 Maenander wrote:On May 27 2012 01:13 Robinsa wrote:On May 27 2012 01:06 Maenander wrote:It's a myth that Germany increased its exports only due to the massive lending in southern europe or due to the Euro. The facts: Share of German exports going to the countries of the current Eurozone: 1990: 46.5%; 2008: 42.6% Example Italy: 1990: 9.1%, 2008: 5.8% Greece was ranked 19th among the importers of german goods in 1990 and only 27th in 2008. source: www.destatis.de People are not saying that Germany is exporting more to the Eurozone (at least now). Its exports have increased partly because of a weak euro. Its weak because of the countries in "southern europe" as you describe them. The weak euro makes it easier for Germany to export outside of the Eurozone. Aaah the "weak" Euro. According to this argument the US should export like crazy. You are from Sweden, aren't you? Let's take a look at Swedish Kronor vs Euros: A weak Krona, I guess? I don't really understand the 2 numbers you put there buddy... The only thing that is important is the commercial balance between grece and germany, and not the relativ part of greece within german exports (because greece is a small country, with difficulties ?). Even if we indeed see that germany is less exporting to greece, it still is the first partner of Greece with around 10652 M USD of importation to greece from germany and only 2809M USD of exportation from greece to germany. So basically around 8 000 M USD in favor of germany (all those numbers are for 2008, here http://www.smartexport.com/fr/Grece.html). Also consider that Greece GPD is 308449 M $ (so 2.5 % of Greece GPD in 2008 had gone from Greece to Germany through importation). Nice way of using numbers to makes them say what you want by the way Your numbers only showed how germany has opened itself to the global economy and how it is not as dependant from European economies as it was before. I didn't want to talk about Greece, but about the claim that Germany is "exploiting" the weaker members of the Eurozone and that that is the main reason it is doing well now, which is simply not true. And yeah that is claimed again and again, in this thread and all over the internet. By the number I showed, it is true ... As I said, the commercial balance between Greece and Germany is heavily in favor of Germany (2.5% of Greece GPD in 2008...), which mean any public investment made in Greece will heavily go in German hands. It's a fact. It's true that if you take those numbers in relation with German GPD or German exportation overall, it's thin. But that's not because German's doesn't profit from Greece investment, it just mean that German is a big country with a big GPD and high exportation all around the world, and not only in Greece, a small european country (economically). It has been like that for decades, why should it suddenly start to be a problem? If one looks at the GDP growth rate, Greece experienced an economic boost when the Euro arrived, much more so than Germany: We now know how this boost was financed, based on loans with lower interest rates thanks to the Euro. Cheap loans made Greece borrow too much. Now they are no longer cheap. That is the crux of the Greek problem, not some trade imbalances that existed since like forever. The problem Europe has is its decreasing competitiveness on a global scale, Europe as a whole has to find a new - less dominating - place in the ever shifting global economy, it cannot be that Germany is now blamed for making the necessary adjustments. Now you change the subject. No it doesn't have always been like that, the proof is that the credit that the german central bank had from the european central bank was around 0 prior to 2007 and is now around 465 billions or something like that in october 2011. When a Greek company buy something from a German company, the money is transfered from the greek bank to the german bank, and the german central bank receive a credit in "base money" that matche the sum of the transfert. Until 2007, the credit was around 0, which means that the money that greece invested into german company eventually was going right back to them in some ways (like for exemple, german buying french good and french buying greek goods, but mainly because german banks bought asset from greek banks, with that base money). It basically mean that the situation really started early 2007. In my opinion, one must also take into consideration that even if the economic situation in Germany is good, the overall capacity of consumption of german people didn't really change since some time now, which mean the money German receive didn't really go into german hand but stays in banks and is reinvested in different sector. The economic growth of Greece in 2004-2005 (one of the best of the euro zone at the time LOL) is not due to the euro, but to the dynamic of services and constructions (keep in mind, the olympic games were in Greece at the time and we all know the impact they have on the economy). It's too easy to put it all on the euro, it actually didn't do much imo. Not to mention they had a great economic growth prior to the euro. I think you are luring yourself into thinking the europe gave Greece economic growth and didn't do shit in pushing them in this crisis. In my opinion, the reason of the current economic situation is that, at a global level (and germany is a big factor to that) there is really a problem of redistribution. The money does not come back to the consumers (and because of that, it also doesn't come back into the state through taxes). In your first post you talked about trade imbalances, now about Target 2 saldi. They are connected, but not the same. Trade imbalances do not necessarily increase the Target 2 saldi, as can be seen until 2008. The increasing Target 2 saldi show that the Eurozone members are not unable to "print" money. Germany is flooded by money from other Eurozone members, all lent from the ECB. All would be fine if investments in, e.g., Greece, would still be considered viable. At this point, however, the German banks are giving the money to the Bundesbank instead of investing it. Cause and effect are not as clear as you would suggest. The Target 2 saldi are a massive danger to Germany btw, if the Euro breaks up all the money could vanish in an instant. And I disagree. The economic growth was mainly financed by loans, the Olympic Games were a major example of Greek overspending.
Basically, there have always been trade imbalance (mainly because germany is one of the only remaining country with an industry in europe ?) but they were negated by the european bank system that's it. You are more or less just saying what I said, the german decided by 2007 that buying asset in country such as greece or italy was no longer an option and we started to see an increase in the credit the german central bank have in the european central bank.
The growth of the credit also shows how Germany is growing thanks to those country and their consumption.
The idea that it was financed by loan doesn't mean much imo, most growth is financed by loan, it doesn't mean anything since with 4.5% growth of the GPD, you are in a situation where you can pay back the loan you contracted. There was no overspending, as you see here the moment where Greece had a good economic were in fact the only moment where greece had the lowest deficit.
![[image loading]](http://graphics.thomsonreuters.com/0210/GR_DFTPLN0210.gif)
As I said, the economic growth was due to the olympic games and the economy of Greece who was still, at the time, competitive in the construction sector and service.
You also see that the deficit started in 1979-1980, which is also pretty interesting in itself.
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On May 27 2012 05:06 WhiteDog wrote:Show nested quote +On May 27 2012 04:59 Maenander wrote:On May 27 2012 03:56 WhiteDog wrote:On May 27 2012 03:06 Maenander wrote:On May 27 2012 02:37 WhiteDog wrote:On May 27 2012 02:32 Maenander wrote:On May 27 2012 02:13 WhiteDog wrote:On May 27 2012 01:50 Maenander wrote:On May 27 2012 01:13 Robinsa wrote:On May 27 2012 01:06 Maenander wrote:It's a myth that Germany increased its exports only due to the massive lending in southern europe or due to the Euro. The facts: Share of German exports going to the countries of the current Eurozone: 1990: 46.5%; 2008: 42.6% Example Italy: 1990: 9.1%, 2008: 5.8% Greece was ranked 19th among the importers of german goods in 1990 and only 27th in 2008. source: www.destatis.de People are not saying that Germany is exporting more to the Eurozone (at least now). Its exports have increased partly because of a weak euro. Its weak because of the countries in "southern europe" as you describe them. The weak euro makes it easier for Germany to export outside of the Eurozone. Aaah the "weak" Euro. According to this argument the US should export like crazy. You are from Sweden, aren't you? Let's take a look at Swedish Kronor vs Euros: A weak Krona, I guess? I don't really understand the 2 numbers you put there buddy... The only thing that is important is the commercial balance between grece and germany, and not the relativ part of greece within german exports (because greece is a small country, with difficulties ?). Even if we indeed see that germany is less exporting to greece, it still is the first partner of Greece with around 10652 M USD of importation to greece from germany and only 2809M USD of exportation from greece to germany. So basically around 8 000 M USD in favor of germany (all those numbers are for 2008, here http://www.smartexport.com/fr/Grece.html). Also consider that Greece GPD is 308449 M $ (so 2.5 % of Greece GPD in 2008 had gone from Greece to Germany through importation). Nice way of using numbers to makes them say what you want by the way Your numbers only showed how germany has opened itself to the global economy and how it is not as dependant from European economies as it was before. I didn't want to talk about Greece, but about the claim that Germany is "exploiting" the weaker members of the Eurozone and that that is the main reason it is doing well now, which is simply not true. And yeah that is claimed again and again, in this thread and all over the internet. By the number I showed, it is true ... As I said, the commercial balance between Greece and Germany is heavily in favor of Germany (2.5% of Greece GPD in 2008...), which mean any public investment made in Greece will heavily go in German hands. It's a fact. It's true that if you take those numbers in relation with German GPD or German exportation overall, it's thin. But that's not because German's doesn't profit from Greece investment, it just mean that German is a big country with a big GPD and high exportation all around the world, and not only in Greece, a small european country (economically). It has been like that for decades, why should it suddenly start to be a problem? If one looks at the GDP growth rate, Greece experienced an economic boost when the Euro arrived, much more so than Germany: We now know how this boost was financed, based on loans with lower interest rates thanks to the Euro. Cheap loans made Greece borrow too much. Now they are no longer cheap. That is the crux of the Greek problem, not some trade imbalances that existed since like forever. The problem Europe has is its decreasing competitiveness on a global scale, Europe as a whole has to find a new - less dominating - place in the ever shifting global economy, it cannot be that Germany is now blamed for making the necessary adjustments. Now you change the subject. No it doesn't have always been like that, the proof is that the credit that the german central bank had from the european central bank was around 0 prior to 2007 and is now around 465 billions or something like that in october 2011. When a Greek company buy something from a German company, the money is transfered from the greek bank to the german bank, and the german central bank receive a credit in "base money" that matche the sum of the transfert. Until 2007, the credit was around 0, which means that the money that greece invested into german company eventually was going right back to them in some ways (like for exemple, german buying french good and french buying greek goods, but mainly because german banks bought asset from greek banks, with that base money). It basically mean that the situation really started early 2007. In my opinion, one must also take into consideration that even if the economic situation in Germany is good, the overall capacity of consumption of german people didn't really change since some time now, which mean the money German receive didn't really go into german hand but stays in banks and is reinvested in different sector. The economic growth of Greece in 2004-2005 (one of the best of the euro zone at the time LOL) is not due to the euro, but to the dynamic of services and constructions (keep in mind, the olympic games were in Greece at the time and we all know the impact they have on the economy). It's too easy to put it all on the euro, it actually didn't do much imo. Not to mention they had a great economic growth prior to the euro. I think you are luring yourself into thinking the europe gave Greece economic growth and didn't do shit in pushing them in this crisis. In my opinion, the reason of the current economic situation is that, at a global level (and germany is a big factor to that) there is really a problem of redistribution. The money does not come back to the consumers (and because of that, it also doesn't come back into the state through taxes). In your first post you talked about trade imbalances, now about Target 2 saldi. They are connected, but not the same. Trade imbalances do not necessarily increase the Target 2 saldi, as can be seen until 2008. The increasing Target 2 saldi show that the Eurozone members are not unable to "print" money. Germany is flooded by money from other Eurozone members, all lent from the ECB. All would be fine if investments in, e.g., Greece, would still be considered viable. At this point, however, the German banks are giving the money to the Bundesbank instead of investing it. Cause and effect are not as clear as you would suggest. The Target 2 saldi are a massive danger to Germany btw, if the Euro breaks up all the money could vanish in an instant. And I disagree. The economic growth was mainly financed by loans, the Olympic Games were a major example of Greek overspending. Basically, there have always been trade imbalance (mainly because germany is one of the only remaining country with an industry in europe ?) but they were negated by the european bank system that's it. You are more or less just saying what I said, the german decided by 2007 that buying asset in country such as greece or italy was no longer an option and we started to see an increase in the credit the german central bank have in the european central bank. The growth of the credit also shows how Germany is growing thanks to those country and their consumption. The idea that it was financed by loan doesn't mean much imo, most growth is financed by loan, it doesn't mean anything since with 4.5% growth of the GPD, you are in a situation where you can pay back the loan you contracted. There was no overspending, as you see here the moment where Greece had a good economic were in fact the only moment where greece had the lowest deficit. As I said, the economic growth was due to the olympic games and the economy of Greece who was still, at the time, competitive in the construction sector and service. You also see that the deficit started in 1979-1980, which is also pretty interesting in itself.
Greece had the lowest deficit during the "good" times because of low interest rates and EU budget-reports. In my opinion the Greeks had a historic chance to get rid of their longstanding public debt problems, I adressed that in a previous post:
http://www.teamliquid.net/forum/viewmessage.php?topic_id=114227¤tpage=67#1335
The "low" deficit level was still too high, it is only that the previous level was even more unsustainable and borderline insane, if not for massive inflation.
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On May 27 2012 05:52 Maenander wrote:Show nested quote +On May 27 2012 05:06 WhiteDog wrote:On May 27 2012 04:59 Maenander wrote:On May 27 2012 03:56 WhiteDog wrote:On May 27 2012 03:06 Maenander wrote:On May 27 2012 02:37 WhiteDog wrote:On May 27 2012 02:32 Maenander wrote:On May 27 2012 02:13 WhiteDog wrote:On May 27 2012 01:50 Maenander wrote:On May 27 2012 01:13 Robinsa wrote:
[quote]
People are not saying that Germany is exporting more to the Eurozone (at least now). Its exports have increased partly because of a weak euro. Its weak because of the countries in "southern europe" as you describe them. The weak euro makes it easier for Germany to export outside of the Eurozone. Aaah the "weak" Euro. According to this argument the US should export like crazy. You are from Sweden, aren't you? Let's take a look at Swedish Kronor vs Euros: A weak Krona, I guess? I don't really understand the 2 numbers you put there buddy... The only thing that is important is the commercial balance between grece and germany, and not the relativ part of greece within german exports (because greece is a small country, with difficulties ?). Even if we indeed see that germany is less exporting to greece, it still is the first partner of Greece with around 10652 M USD of importation to greece from germany and only 2809M USD of exportation from greece to germany. So basically around 8 000 M USD in favor of germany (all those numbers are for 2008, here http://www.smartexport.com/fr/Grece.html). Also consider that Greece GPD is 308449 M $ (so 2.5 % of Greece GPD in 2008 had gone from Greece to Germany through importation). Nice way of using numbers to makes them say what you want by the way Your numbers only showed how germany has opened itself to the global economy and how it is not as dependant from European economies as it was before. I didn't want to talk about Greece, but about the claim that Germany is "exploiting" the weaker members of the Eurozone and that that is the main reason it is doing well now, which is simply not true. And yeah that is claimed again and again, in this thread and all over the internet. By the number I showed, it is true ... As I said, the commercial balance between Greece and Germany is heavily in favor of Germany (2.5% of Greece GPD in 2008...), which mean any public investment made in Greece will heavily go in German hands. It's a fact. It's true that if you take those numbers in relation with German GPD or German exportation overall, it's thin. But that's not because German's doesn't profit from Greece investment, it just mean that German is a big country with a big GPD and high exportation all around the world, and not only in Greece, a small european country (economically). It has been like that for decades, why should it suddenly start to be a problem? If one looks at the GDP growth rate, Greece experienced an economic boost when the Euro arrived, much more so than Germany: We now know how this boost was financed, based on loans with lower interest rates thanks to the Euro. Cheap loans made Greece borrow too much. Now they are no longer cheap. That is the crux of the Greek problem, not some trade imbalances that existed since like forever. The problem Europe has is its decreasing competitiveness on a global scale, Europe as a whole has to find a new - less dominating - place in the ever shifting global economy, it cannot be that Germany is now blamed for making the necessary adjustments. Now you change the subject. No it doesn't have always been like that, the proof is that the credit that the german central bank had from the european central bank was around 0 prior to 2007 and is now around 465 billions or something like that in october 2011. When a Greek company buy something from a German company, the money is transfered from the greek bank to the german bank, and the german central bank receive a credit in "base money" that matche the sum of the transfert. Until 2007, the credit was around 0, which means that the money that greece invested into german company eventually was going right back to them in some ways (like for exemple, german buying french good and french buying greek goods, but mainly because german banks bought asset from greek banks, with that base money). It basically mean that the situation really started early 2007. In my opinion, one must also take into consideration that even if the economic situation in Germany is good, the overall capacity of consumption of german people didn't really change since some time now, which mean the money German receive didn't really go into german hand but stays in banks and is reinvested in different sector. The economic growth of Greece in 2004-2005 (one of the best of the euro zone at the time LOL) is not due to the euro, but to the dynamic of services and constructions (keep in mind, the olympic games were in Greece at the time and we all know the impact they have on the economy). It's too easy to put it all on the euro, it actually didn't do much imo. Not to mention they had a great economic growth prior to the euro. I think you are luring yourself into thinking the europe gave Greece economic growth and didn't do shit in pushing them in this crisis. In my opinion, the reason of the current economic situation is that, at a global level (and germany is a big factor to that) there is really a problem of redistribution. The money does not come back to the consumers (and because of that, it also doesn't come back into the state through taxes). In your first post you talked about trade imbalances, now about Target 2 saldi. They are connected, but not the same. Trade imbalances do not necessarily increase the Target 2 saldi, as can be seen until 2008. The increasing Target 2 saldi show that the Eurozone members are not unable to "print" money. Germany is flooded by money from other Eurozone members, all lent from the ECB. All would be fine if investments in, e.g., Greece, would still be considered viable. At this point, however, the German banks are giving the money to the Bundesbank instead of investing it. Cause and effect are not as clear as you would suggest. The Target 2 saldi are a massive danger to Germany btw, if the Euro breaks up all the money could vanish in an instant. And I disagree. The economic growth was mainly financed by loans, the Olympic Games were a major example of Greek overspending. Basically, there have always been trade imbalance (mainly because germany is one of the only remaining country with an industry in europe ?) but they were negated by the european bank system that's it. You are more or less just saying what I said, the german decided by 2007 that buying asset in country such as greece or italy was no longer an option and we started to see an increase in the credit the german central bank have in the european central bank. The growth of the credit also shows how Germany is growing thanks to those country and their consumption. The idea that it was financed by loan doesn't mean much imo, most growth is financed by loan, it doesn't mean anything since with 4.5% growth of the GPD, you are in a situation where you can pay back the loan you contracted. There was no overspending, as you see here the moment where Greece had a good economic were in fact the only moment where greece had the lowest deficit. As I said, the economic growth was due to the olympic games and the economy of Greece who was still, at the time, competitive in the construction sector and service. You also see that the deficit started in 1979-1980, which is also pretty interesting in itself. Greece had the lowest deficit during the "good" times because of low interest rates and EU budget-reports. In my opinion the Greeks had a historic chance to get rid of their longstanding public debt problems, I adressed that in a previous post: http://www.teamliquid.net/forum/viewmessage.php?topic_id=114227¤tpage=67#1335 The "low" deficit level was still too high, it is only that the previous level was even more unsustainable and borderline insane, if not for massive inflation.
You understand that 3% deficit is okay if you just stay with the same tax rate with a 4.5 % economical growth ? It means you will most likely have 4.5% more money through tax...
They have a low level deficit because they had economical growth mainly.
I think you don't understand why country take debt in the first place.
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Ok, WhiteDog, let's assume you are right:
Germany is a parasite to the EU countries cause they contribute to the European economy by weakening the Euro (lolz), so Germany can export into them.
If there wasn't a Germany in the union, Greece would actually have kept its growth alive.
By your logic, the solution would be
a) Germany paying the revenues of their own economy to other EU countries in a way that these countries don't get into trouble with their deficit. -> Completely utopic, Germany would need to have a GDP increase equivalent to the sum of deficit increase of all EU countries with a deficit superior to the growth at a given period.
Then they would have to give away all that growth their citizens worked for to other countries, cause apparently that's where they earned that money...
b) Germany voluntarily reducing their ability to compete on the European market in the expectation that other EU countries would fill that gap, cause Germany has a too strong economy.
I have marked this. If Greece is actually buying German exports as you say while being economically so weak that they have negative trade balance cause of the very same Germany, the money for buying the German exports is actually coming from EU subventions and deficit spending.
Now Greece gets in trouble for their deficit, and Germany is supposed to pay for something they sold to the Greek?
Do you even know who's been on the giving and who on the receiving end all this damn time?
EU money transfer 2010
That was 2010 when Greece wasn't even this much in medial focus.
Do you know what happens if Germany loses its competitivity on the export market? Do you know about the "neighbours" in the east, what their economic power is at cost of what civil rights?
You would actually struck down the whole EU on international markets by crippling Germany.
Note, I am not stating that it's true that Germans mainly export into economically weak countries and profit from it.
This still is under the assumption that your statements are correct.
It's a pretty shaky statement on itself, and i have yet to see a source confirming that. Why don't you look for a statistic of German exports by country?
Then I actually went through the work of handpicking your fruits in this thread, cause I think that you argue from the viewpoint of dogmatic keynesianism while not posting the slightiest bit of evidence, your whole arguments base on a theory, not on empiry:
+ Show Spoiler +On February 10 2012 00:28 WhiteDog wrote:
What is happening in Greece right now is all because the government cut down all the pay and stopped all their investment. Less money in the economy in a crisis = more recession. Explanation #1 On February 10 2012 00:40 WhiteDog wrote:
This is where you are wrong, and all the discussion after that is just the reflexion of it. Basically, you are thinking the current "debt crisis" is due to "too much spending" and austerity is the solution to that. But the problem is that due to the lack of investment, the state spend too much, which created a huge debt.
Austerity maybe the solution to the debt, but not to the crisis : austerity will just aggravate the economical crisis.
explanation #2 contradicts your previous statement, you managed to do that in the arc of less than 30 minutes. On February 10 2012 00:58 WhiteDog wrote:
Private investment. Investment and consumption is the same in the short term (you are spending money, in the short term you don't care about the efficiency of the spendings). No, consumption and investments aren't the same in the calculation of GDP, GDP is calculated for short term. You don't care about efficiency of spending?Then what's the point of doing it? On May 23 2012 01:18 WhiteDog wrote:
There are thousands of ways for Greece to get out of this situation without necessarily becoming the next weimar.
Mention one for a start maybe. On May 23 2012 01:18 WhiteDog wrote:
It's interesting that most people who think they know economy in this forum are believers or ignorants. Like saying saving is just demand of goods for later, that's a neoclassical point of view, not an economic truth.
It's interesting that...Like saying more deficit spending is the way out of the crisis, that's the keynesian point of view, not an economic truth. On May 25 2012 19:05 WhiteDog wrote:
The real problem is that the economic policy most people have when they invest throught public debt is not keynesian.
Right, that's just what Greece, Spain and whatever else have been doing all these years while being fed by EU money transferred by countries with a competitive economy. Guess which countries have the most people employed by the government as opposed to people employed by private companies.Hint: They're southwards.
You should do a favor to yourself and not embrace an economic theory with elements in closed systems (Did keynes take into consideration influences from other countries?Did he know the type of globalization in economy we have today?) trying to explain something like this crisis with it when it's clear that you didn't post a single thing to back up the theory, instead constantly attacking other posts and reciting keynes and more keynes.
Also, your last post:
On May 27 2012 06:43 WhiteDog wrote:
You understand that 3% deficit is okay if you just stay with the same tax rate with a 4.5 % economical growth ? It means you will most likely have 4.5% more money through tax...
They have a low level deficit because they had economical growth mainly.
I think you don't understand why country take debt in the first place.
When you have a deficit of 100 €, it increases by 3 %/€ to 103 €.The deficit is subject to an interest rate. For Greece it's something around 25 % for 10 year bonds, that's 25,75 you have to pay back periodically .
The deficit increased due to government spending and debt not being paid back.
Then you have a GDP of 50 €: government consumption 30 €, private consumption 25 €, investments 10 €, trade balance -15 €.
It increases by 4.5 % = 2.25 € .
Wow, not just that it's less than the increase of the deficit, you can also easily see that at a certain point it becomes impossible for such a country to pay back its debts.
Saying 3 % deficit is okay is another dogma in your argumentation, the GDP increase might even derive from government spending only, making a comparison of raw GDP increase and deficit increase pretty useless.
And no, you won't have 4.5 % through tax, how the hell do you even assume that a GDP increase equivals to a tax revenue increase.
You clearly understand everything as opposed to all these pesky non-keynesianists.
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The greeks have been buying international loans from the IMF. Their debt is due to governement spending tons of money that due to regulations in the EU they thought they could. Throw in a bunch of companies including some from the US more than willing to take their money and you find out Greece was a teenager given a credit card they should not have been given.
The problem with the EU is that everyone was given economic protections with the assumption that everyone would in general attempt to add to the continents economy So you got two options: 1) Support them until they reform their government. 2) Stop doing bussiness with them.
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On May 27 2012 09:37 Cattivik wrote:Ok, WhiteDog, let's assume you are right: Germany is a parasite to the EU countries cause they contribute to the European economy by weakening the Euro (lolz), so Germany can export into them. If there wasn't a Germany in the union, Greece would actually have kept its growth alive. By your logic, the solution would be a) Germany paying the revenues of their own economy to other EU countries in a way that these countries don't get into trouble with their deficit. -> Completely utopic, Germany would need to have a GDP increase equivalent to the sum of deficit increase of all EU countries with a deficit superior to the growth at a given period. Then they would have to give away all that growth their citizens worked for to other countries, cause apparently that's where they earned that money...b) Germany voluntarily reducing their ability to compete on the European market in the expectation that other EU countries would fill that gap, cause Germany has a too strong economy. I have marked this. If Greece is actually buying German exports as you say while being economically so weak that they have negative trade balance cause of the very same Germany, the money for buying the German exports is actually coming from EU subventions and deficit spending. Now Greece gets in trouble for their deficit, and Germany is supposed to pay for something they sold to the Greek? Do you even know who's been on the giving and who on the receiving end all this damn time? EU money transfer 2010That was 2010 when Greece wasn't even this much in medial focus. Do you know what happens if Germany loses its competitivity on the export market? Do you know about the "neighbours" in the east, what their economic power is at cost of what civil rights? You would actually struck down the whole EU on international markets by crippling Germany. Note, I am not stating that it's true that Germans mainly export into economically weak countries and profit from it. This still is under the assumption that your statements are correct. It's a pretty shaky statement on itself, and i have yet to see a source confirming that. Why don't you look for a statistic of German exports by country? Then I actually went through the work of handpicking your fruits in this thread, cause I think that you argue from the viewpoint of dogmatic keynesianism while not posting the slightiest bit of evidence, your whole arguments base on a theory, not on empiry: + Show Spoiler +On February 10 2012 00:28 WhiteDog wrote:
What is happening in Greece right now is all because the government cut down all the pay and stopped all their investment. Less money in the economy in a crisis = more recession. Explanation #1 On February 10 2012 00:40 WhiteDog wrote:
This is where you are wrong, and all the discussion after that is just the reflexion of it. Basically, you are thinking the current "debt crisis" is due to "too much spending" and austerity is the solution to that. But the problem is that due to the lack of investment, the state spend too much, which created a huge debt.
Austerity maybe the solution to the debt, but not to the crisis : austerity will just aggravate the economical crisis.
explanation #2 contradicts your previous statement, you managed to do that in the arc of less than 30 minutes. On February 10 2012 00:58 WhiteDog wrote:
Private investment. Investment and consumption is the same in the short term (you are spending money, in the short term you don't care about the efficiency of the spendings). No, consumption and investments aren't the same in the calculation of GDP, GDP is calculated for short term. You don't care about efficiency of spending?Then what's the point of doing it? On May 23 2012 01:18 WhiteDog wrote:
There are thousands of ways for Greece to get out of this situation without necessarily becoming the next weimar.
Mention one for a start maybe. On May 23 2012 01:18 WhiteDog wrote:
It's interesting that most people who think they know economy in this forum are believers or ignorants. Like saying saving is just demand of goods for later, that's a neoclassical point of view, not an economic truth.
It's interesting that...Like saying more deficit spending is the way out of the crisis, that's the keynesian point of view, not an economic truth. On May 25 2012 19:05 WhiteDog wrote:
The real problem is that the economic policy most people have when they invest throught public debt is not keynesian.
Right, that's just what Greece, Spain and whatever else have been doing all these years while being fed by EU money transferred by countries with a competitive economy. Guess which countries have the most people employed by the government as opposed to people employed by private companies.Hint: They're southwards. You should do a favor to yourself and not embrace an economic theory with elements in closed systems (Did keynes take into consideration influences from other countries?Did he know the type of globalization in economy we have today?) trying to explain something like this crisis with it when it's clear that you didn't post a single thing to back up the theory, instead constantly attacking other posts and reciting keynes and more keynes. Also, your last post: Show nested quote +On May 27 2012 06:43 WhiteDog wrote:
You understand that 3% deficit is okay if you just stay with the same tax rate with a 4.5 % economical growth ? It means you will most likely have 4.5% more money through tax...
They have a low level deficit because they had economical growth mainly.
I think you don't understand why country take debt in the first place. When you have a deficit of 100 €, it increases by 3 %/€ to 103 €.The deficit is subject to an interest rate. For Greece it's something around 25 % for 10 year bonds, that's 25,75 you have to pay back periodically . The deficit increased due to government spending and debt not being paid back. Then you have a GDP of 50 €: government consumption 30 €, private consumption 25 €, investments 10 €, trade balance -15 €. It increases by 4.5 % = 2.25 € . Wow, not just that it's less than the increase of the deficit, you can also easily see that at a certain point it becomes impossible for such a country to pay back its debts. Saying 3 % deficit is okay is another dogma in your argumentation, the GDP increase might even derive from government spending only, making a comparison of raw GDP increase and deficit increase pretty useless. And no, you won't have 4.5 % through tax, how the hell do you even assume that a GDP increase equivals to a tax revenue increase. You clearly understand everything as opposed to all these pesky non-keynesianists.
You are wrong from the beginning to the end lol...
I never said Germany was parasiting the eu. The problem is how the EU has been made and how it is not permitting people with weakened industry to build one (because free market without any redistribution system). Germany is not parasiting, just profiting from other's public investment, which is just right, there is nothing to say about it (i already showed the import / export balance between greece and germany in 2008 and it clearly shows that). Also Germany is not mainly making trade with weakened economy....
The rest of the argument is meaningless, because it is all based on a certain idea of competitivity.
You don't understand that Europe is a free trade zone, protected by a common tariff. Within Europe, you must not only think countries as economic rival, but also through the idea that some are demand and some are offer (and offer, here Germany, cannot live without demand, here Greece for whom Germany is the first economic partner).
Everything Keynes said was in closed economy, he is completly outdated, I never or almost never cited Keynes except once when I said that Keynes' theory was counter cyclical : for him, you should not lower tax and continue spending in period of economical growth, something most countries did (which is why the policy they made are not keynesian).
Also I am not contradicting myself, just talking about different timelines : talking about before the crisis and after. Before, we were in a situation with a demand crisis, where countries used the state investment capacity to sustain the demand and push the economy (if you study GDP a little, you know consumption is 70% of it, the high rate of state worker should also be understood as a way for the state to secure a demand). After the crisis, in Greece at least, they cut down their investment, workers pay, and everything else, hence destroying the demand, and pushing their economy further into the crisis. Don't quote things out of context it's childlish.
Also, I don't really understand the second part, you're so wrong : are you mistaking debt and deficit ? GDP of 50€ with a debt of 100€ with an interest rate of 3%. Yeah sure... but the deficit is the amount by which a government, private company, or individual's spending exceeds income over a particular period of time. If your own income is 100, and you use 103, you have 3% deficit. If you have 4.5% economical growth, the GDP will increase by 4.5% and the tax revenu by 4.5, making you receiving 104.5 income. Don't mix deficit AND debt, two different things.
And yes that's an economical truth... non keynesian would just argue investment from the state is not the best way to gain economical growth and that it create inflation hence destroying the growth that would result anyway... But everybody agree that economical growth is the best way to pay your debt in the long run lol... There is a reason why so many economist like Wicksell make a relation between profit and investment.
It's not a question of keynesian, non keynesian... You should read Keynes, you will certainly learn a thing or two.
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On May 27 2012 06:43 WhiteDog wrote:Show nested quote +On May 27 2012 05:52 Maenander wrote:On May 27 2012 05:06 WhiteDog wrote:On May 27 2012 04:59 Maenander wrote:On May 27 2012 03:56 WhiteDog wrote:On May 27 2012 03:06 Maenander wrote:On May 27 2012 02:37 WhiteDog wrote:On May 27 2012 02:32 Maenander wrote:On May 27 2012 02:13 WhiteDog wrote:On May 27 2012 01:50 Maenander wrote:[quote] Aaah the "weak" Euro. According to this argument the US should export like crazy. You are from Sweden, aren't you? Let's take a look at Swedish Kronor vs Euros: A weak Krona, I guess? I don't really understand the 2 numbers you put there buddy... The only thing that is important is the commercial balance between grece and germany, and not the relativ part of greece within german exports (because greece is a small country, with difficulties ?). Even if we indeed see that germany is less exporting to greece, it still is the first partner of Greece with around 10652 M USD of importation to greece from germany and only 2809M USD of exportation from greece to germany. So basically around 8 000 M USD in favor of germany (all those numbers are for 2008, here http://www.smartexport.com/fr/Grece.html). Also consider that Greece GPD is 308449 M $ (so 2.5 % of Greece GPD in 2008 had gone from Greece to Germany through importation). Nice way of using numbers to makes them say what you want by the way Your numbers only showed how germany has opened itself to the global economy and how it is not as dependant from European economies as it was before. I didn't want to talk about Greece, but about the claim that Germany is "exploiting" the weaker members of the Eurozone and that that is the main reason it is doing well now, which is simply not true. And yeah that is claimed again and again, in this thread and all over the internet. By the number I showed, it is true ... As I said, the commercial balance between Greece and Germany is heavily in favor of Germany (2.5% of Greece GPD in 2008...), which mean any public investment made in Greece will heavily go in German hands. It's a fact. It's true that if you take those numbers in relation with German GPD or German exportation overall, it's thin. But that's not because German's doesn't profit from Greece investment, it just mean that German is a big country with a big GPD and high exportation all around the world, and not only in Greece, a small european country (economically). It has been like that for decades, why should it suddenly start to be a problem? If one looks at the GDP growth rate, Greece experienced an economic boost when the Euro arrived, much more so than Germany: We now know how this boost was financed, based on loans with lower interest rates thanks to the Euro. Cheap loans made Greece borrow too much. Now they are no longer cheap. That is the crux of the Greek problem, not some trade imbalances that existed since like forever. The problem Europe has is its decreasing competitiveness on a global scale, Europe as a whole has to find a new - less dominating - place in the ever shifting global economy, it cannot be that Germany is now blamed for making the necessary adjustments. Now you change the subject. No it doesn't have always been like that, the proof is that the credit that the german central bank had from the european central bank was around 0 prior to 2007 and is now around 465 billions or something like that in october 2011. When a Greek company buy something from a German company, the money is transfered from the greek bank to the german bank, and the german central bank receive a credit in "base money" that matche the sum of the transfert. Until 2007, the credit was around 0, which means that the money that greece invested into german company eventually was going right back to them in some ways (like for exemple, german buying french good and french buying greek goods, but mainly because german banks bought asset from greek banks, with that base money). It basically mean that the situation really started early 2007. In my opinion, one must also take into consideration that even if the economic situation in Germany is good, the overall capacity of consumption of german people didn't really change since some time now, which mean the money German receive didn't really go into german hand but stays in banks and is reinvested in different sector. The economic growth of Greece in 2004-2005 (one of the best of the euro zone at the time LOL) is not due to the euro, but to the dynamic of services and constructions (keep in mind, the olympic games were in Greece at the time and we all know the impact they have on the economy). It's too easy to put it all on the euro, it actually didn't do much imo. Not to mention they had a great economic growth prior to the euro. I think you are luring yourself into thinking the europe gave Greece economic growth and didn't do shit in pushing them in this crisis. In my opinion, the reason of the current economic situation is that, at a global level (and germany is a big factor to that) there is really a problem of redistribution. The money does not come back to the consumers (and because of that, it also doesn't come back into the state through taxes). In your first post you talked about trade imbalances, now about Target 2 saldi. They are connected, but not the same. Trade imbalances do not necessarily increase the Target 2 saldi, as can be seen until 2008. The increasing Target 2 saldi show that the Eurozone members are not unable to "print" money. Germany is flooded by money from other Eurozone members, all lent from the ECB. All would be fine if investments in, e.g., Greece, would still be considered viable. At this point, however, the German banks are giving the money to the Bundesbank instead of investing it. Cause and effect are not as clear as you would suggest. The Target 2 saldi are a massive danger to Germany btw, if the Euro breaks up all the money could vanish in an instant. And I disagree. The economic growth was mainly financed by loans, the Olympic Games were a major example of Greek overspending. Basically, there have always been trade imbalance (mainly because germany is one of the only remaining country with an industry in europe ?) but they were negated by the european bank system that's it. You are more or less just saying what I said, the german decided by 2007 that buying asset in country such as greece or italy was no longer an option and we started to see an increase in the credit the german central bank have in the european central bank. The growth of the credit also shows how Germany is growing thanks to those country and their consumption. The idea that it was financed by loan doesn't mean much imo, most growth is financed by loan, it doesn't mean anything since with 4.5% growth of the GPD, you are in a situation where you can pay back the loan you contracted. There was no overspending, as you see here the moment where Greece had a good economic were in fact the only moment where greece had the lowest deficit. As I said, the economic growth was due to the olympic games and the economy of Greece who was still, at the time, competitive in the construction sector and service. You also see that the deficit started in 1979-1980, which is also pretty interesting in itself. Greece had the lowest deficit during the "good" times because of low interest rates and EU budget-reports. In my opinion the Greeks had a historic chance to get rid of their longstanding public debt problems, I adressed that in a previous post: http://www.teamliquid.net/forum/viewmessage.php?topic_id=114227¤tpage=67#1335 The "low" deficit level was still too high, it is only that the previous level was even more unsustainable and borderline insane, if not for massive inflation. You understand that 3% deficit is okay if you just stay with the same tax rate with a 4.5 % economical growth ? It means you will most likely have 4.5% more money through tax... They have a low level deficit because they had economical growth mainly. I think you don't understand why country take debt in the first place.
3% deficit and 4.5% growth? You cherry pick numbers from the charts ...
I understand that Greece was in huge debt from the beginning. That Greece rarely hit the deficit limit even in economically prosperous times, the only time one has a chance to actually reduce the debt. That inflation was much lower after the introduction of the Euro than before, which means the deficit hit much harder, something the Greek government certainly knew.
You apparently don't understand when a country shouldn't take any more debt. I tell you why the Greek government took debt in those times: to bribe the people in order to get reelected.
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On May 27 2012 06:43 WhiteDog wrote:Show nested quote +On May 27 2012 05:52 Maenander wrote:On May 27 2012 05:06 WhiteDog wrote:On May 27 2012 04:59 Maenander wrote:On May 27 2012 03:56 WhiteDog wrote:On May 27 2012 03:06 Maenander wrote:On May 27 2012 02:37 WhiteDog wrote:On May 27 2012 02:32 Maenander wrote:On May 27 2012 02:13 WhiteDog wrote:On May 27 2012 01:50 Maenander wrote:[quote] Aaah the "weak" Euro. According to this argument the US should export like crazy. You are from Sweden, aren't you? Let's take a look at Swedish Kronor vs Euros: A weak Krona, I guess? I don't really understand the 2 numbers you put there buddy... The only thing that is important is the commercial balance between grece and germany, and not the relativ part of greece within german exports (because greece is a small country, with difficulties ?). Even if we indeed see that germany is less exporting to greece, it still is the first partner of Greece with around 10652 M USD of importation to greece from germany and only 2809M USD of exportation from greece to germany. So basically around 8 000 M USD in favor of germany (all those numbers are for 2008, here http://www.smartexport.com/fr/Grece.html). Also consider that Greece GPD is 308449 M $ (so 2.5 % of Greece GPD in 2008 had gone from Greece to Germany through importation). Nice way of using numbers to makes them say what you want by the way Your numbers only showed how germany has opened itself to the global economy and how it is not as dependant from European economies as it was before. I didn't want to talk about Greece, but about the claim that Germany is "exploiting" the weaker members of the Eurozone and that that is the main reason it is doing well now, which is simply not true. And yeah that is claimed again and again, in this thread and all over the internet. By the number I showed, it is true ... As I said, the commercial balance between Greece and Germany is heavily in favor of Germany (2.5% of Greece GPD in 2008...), which mean any public investment made in Greece will heavily go in German hands. It's a fact. It's true that if you take those numbers in relation with German GPD or German exportation overall, it's thin. But that's not because German's doesn't profit from Greece investment, it just mean that German is a big country with a big GPD and high exportation all around the world, and not only in Greece, a small european country (economically). It has been like that for decades, why should it suddenly start to be a problem? If one looks at the GDP growth rate, Greece experienced an economic boost when the Euro arrived, much more so than Germany: We now know how this boost was financed, based on loans with lower interest rates thanks to the Euro. Cheap loans made Greece borrow too much. Now they are no longer cheap. That is the crux of the Greek problem, not some trade imbalances that existed since like forever. The problem Europe has is its decreasing competitiveness on a global scale, Europe as a whole has to find a new - less dominating - place in the ever shifting global economy, it cannot be that Germany is now blamed for making the necessary adjustments. Now you change the subject. No it doesn't have always been like that, the proof is that the credit that the german central bank had from the european central bank was around 0 prior to 2007 and is now around 465 billions or something like that in october 2011. When a Greek company buy something from a German company, the money is transfered from the greek bank to the german bank, and the german central bank receive a credit in "base money" that matche the sum of the transfert. Until 2007, the credit was around 0, which means that the money that greece invested into german company eventually was going right back to them in some ways (like for exemple, german buying french good and french buying greek goods, but mainly because german banks bought asset from greek banks, with that base money). It basically mean that the situation really started early 2007. In my opinion, one must also take into consideration that even if the economic situation in Germany is good, the overall capacity of consumption of german people didn't really change since some time now, which mean the money German receive didn't really go into german hand but stays in banks and is reinvested in different sector. The economic growth of Greece in 2004-2005 (one of the best of the euro zone at the time LOL) is not due to the euro, but to the dynamic of services and constructions (keep in mind, the olympic games were in Greece at the time and we all know the impact they have on the economy). It's too easy to put it all on the euro, it actually didn't do much imo. Not to mention they had a great economic growth prior to the euro. I think you are luring yourself into thinking the europe gave Greece economic growth and didn't do shit in pushing them in this crisis. In my opinion, the reason of the current economic situation is that, at a global level (and germany is a big factor to that) there is really a problem of redistribution. The money does not come back to the consumers (and because of that, it also doesn't come back into the state through taxes). In your first post you talked about trade imbalances, now about Target 2 saldi. They are connected, but not the same. Trade imbalances do not necessarily increase the Target 2 saldi, as can be seen until 2008. The increasing Target 2 saldi show that the Eurozone members are not unable to "print" money. Germany is flooded by money from other Eurozone members, all lent from the ECB. All would be fine if investments in, e.g., Greece, would still be considered viable. At this point, however, the German banks are giving the money to the Bundesbank instead of investing it. Cause and effect are not as clear as you would suggest. The Target 2 saldi are a massive danger to Germany btw, if the Euro breaks up all the money could vanish in an instant. And I disagree. The economic growth was mainly financed by loans, the Olympic Games were a major example of Greek overspending. Basically, there have always been trade imbalance (mainly because germany is one of the only remaining country with an industry in europe ?) but they were negated by the european bank system that's it. You are more or less just saying what I said, the german decided by 2007 that buying asset in country such as greece or italy was no longer an option and we started to see an increase in the credit the german central bank have in the european central bank. The growth of the credit also shows how Germany is growing thanks to those country and their consumption. The idea that it was financed by loan doesn't mean much imo, most growth is financed by loan, it doesn't mean anything since with 4.5% growth of the GPD, you are in a situation where you can pay back the loan you contracted. There was no overspending, as you see here the moment where Greece had a good economic were in fact the only moment where greece had the lowest deficit. As I said, the economic growth was due to the olympic games and the economy of Greece who was still, at the time, competitive in the construction sector and service. You also see that the deficit started in 1979-1980, which is also pretty interesting in itself. Greece had the lowest deficit during the "good" times because of low interest rates and EU budget-reports. In my opinion the Greeks had a historic chance to get rid of their longstanding public debt problems, I adressed that in a previous post: http://www.teamliquid.net/forum/viewmessage.php?topic_id=114227¤tpage=67#1335 The "low" deficit level was still too high, it is only that the previous level was even more unsustainable and borderline insane, if not for massive inflation. You understand that 3% deficit is okay if you just stay with the same tax rate with a 4.5 % economical growth ? It means you will most likely have 4.5% more money through tax... They have a low level deficit because they had economical growth mainly. I think you don't understand why country take debt in the first place.
Wrong. Both budget deficit and economic growth are expressed in %of GDP in order to confuse you. The government budget is not all of GDP, but merely a fraction. If the government spends 30% of GDP, 3% deficit is actually 10% of government spending, so there you have it, you would need 10% growth in tax revenue to break even next year.
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On May 26 2012 23:51 JustPassingBy wrote:Show nested quote +On May 26 2012 20:00 Cattivik wrote: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. But then it does mean that people were living at a standard they could not support on their own. Whether it is the fault of the people to accept credits they could not pay back, or the fault of the bank to give out unsafe credits to people who are not credit-worthy, the fault of the government to give the wrong impulses, is a whole different matter (probably a mixture of all three). Well, one thing people do get wrong, though: Obviously the financial aid is not to help those countries to maintain that standard of living they had before the crash, but to prevent the economy to go totally downhill and to prevent the worst case scenario of a nation declaring bancrupcy. Anyways, as long as the legal situation on the social and economic level are similar, modulo adjustments to the current situation, I don't see a reason why one country shouldn't help the other once in a while. Especially since it is also partially in their own interest.
You are slightly missing the point, at least in the case of Spain that is the one I know well: People in Spain are paying mortgages. The non-paying percentage is below 3%, ridicolously low. Why? Because the law in Spain is different, much favorable to lenders than in the USA. If you cannot pay, you loose your home, BUT you do not get rid of the mortgage. your home is valuated at current - low - market value, and the amount is substracted from your debt. So you end up without home but with a substancial amont of debt. Nobody wants that, we pay even if we have to eat potatoes all day.
So, why are banks in trouble when people are paying their mortgages? Because spanish homes are brick-and-mortar ones, as almost in every place in Europe. It takes years to buy the land, build roads, build up houses, sell them. Now nobody is buying more houses, so construction companies have ended up with a huge amount of investment trapped in empty land, unfinished houses or finished houses that are unsellable. Those companies go bankruptcy, and banks who gave them huge credits are in trouble. And if those banks go bankruptcy (they should, in my opinion), other banks that lend them the money to invest in the bubble will have problems. Where are those banks? In Germany and the rest of the northern EU, mostly...
I do not think that we were living at a standard that is too high for us. Personally, I am paying twice the mortagage I should have if the bubble was not there, so I am living at a standard that is below the one I should.
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On May 27 2012 15:52 Maenander wrote:Show nested quote +On May 27 2012 06:43 WhiteDog wrote:On May 27 2012 05:52 Maenander wrote:On May 27 2012 05:06 WhiteDog wrote:On May 27 2012 04:59 Maenander wrote:On May 27 2012 03:56 WhiteDog wrote:On May 27 2012 03:06 Maenander wrote:On May 27 2012 02:37 WhiteDog wrote:On May 27 2012 02:32 Maenander wrote:On May 27 2012 02:13 WhiteDog wrote:[quote] I don't really understand the 2 numbers you put there buddy... The only thing that is important is the commercial balance between grece and germany, and not the relativ part of greece within german exports (because greece is a small country, with difficulties ?). Even if we indeed see that germany is less exporting to greece, it still is the first partner of Greece with around 10652 M USD of importation to greece from germany and only 2809M USD of exportation from greece to germany. So basically around 8 000 M USD in favor of germany (all those numbers are for 2008, here http://www.smartexport.com/fr/Grece.html). Also consider that Greece GPD is 308449 M $ (so 2.5 % of Greece GPD in 2008 had gone from Greece to Germany through importation). Nice way of using numbers to makes them say what you want by the way Your numbers only showed how germany has opened itself to the global economy and how it is not as dependant from European economies as it was before. I didn't want to talk about Greece, but about the claim that Germany is "exploiting" the weaker members of the Eurozone and that that is the main reason it is doing well now, which is simply not true. And yeah that is claimed again and again, in this thread and all over the internet. By the number I showed, it is true ... As I said, the commercial balance between Greece and Germany is heavily in favor of Germany (2.5% of Greece GPD in 2008...), which mean any public investment made in Greece will heavily go in German hands. It's a fact. It's true that if you take those numbers in relation with German GPD or German exportation overall, it's thin. But that's not because German's doesn't profit from Greece investment, it just mean that German is a big country with a big GPD and high exportation all around the world, and not only in Greece, a small european country (economically). It has been like that for decades, why should it suddenly start to be a problem? If one looks at the GDP growth rate, Greece experienced an economic boost when the Euro arrived, much more so than Germany: We now know how this boost was financed, based on loans with lower interest rates thanks to the Euro. Cheap loans made Greece borrow too much. Now they are no longer cheap. That is the crux of the Greek problem, not some trade imbalances that existed since like forever. The problem Europe has is its decreasing competitiveness on a global scale, Europe as a whole has to find a new - less dominating - place in the ever shifting global economy, it cannot be that Germany is now blamed for making the necessary adjustments. Now you change the subject. No it doesn't have always been like that, the proof is that the credit that the german central bank had from the european central bank was around 0 prior to 2007 and is now around 465 billions or something like that in october 2011. When a Greek company buy something from a German company, the money is transfered from the greek bank to the german bank, and the german central bank receive a credit in "base money" that matche the sum of the transfert. Until 2007, the credit was around 0, which means that the money that greece invested into german company eventually was going right back to them in some ways (like for exemple, german buying french good and french buying greek goods, but mainly because german banks bought asset from greek banks, with that base money). It basically mean that the situation really started early 2007. In my opinion, one must also take into consideration that even if the economic situation in Germany is good, the overall capacity of consumption of german people didn't really change since some time now, which mean the money German receive didn't really go into german hand but stays in banks and is reinvested in different sector. The economic growth of Greece in 2004-2005 (one of the best of the euro zone at the time LOL) is not due to the euro, but to the dynamic of services and constructions (keep in mind, the olympic games were in Greece at the time and we all know the impact they have on the economy). It's too easy to put it all on the euro, it actually didn't do much imo. Not to mention they had a great economic growth prior to the euro. I think you are luring yourself into thinking the europe gave Greece economic growth and didn't do shit in pushing them in this crisis. In my opinion, the reason of the current economic situation is that, at a global level (and germany is a big factor to that) there is really a problem of redistribution. The money does not come back to the consumers (and because of that, it also doesn't come back into the state through taxes). In your first post you talked about trade imbalances, now about Target 2 saldi. They are connected, but not the same. Trade imbalances do not necessarily increase the Target 2 saldi, as can be seen until 2008. The increasing Target 2 saldi show that the Eurozone members are not unable to "print" money. Germany is flooded by money from other Eurozone members, all lent from the ECB. All would be fine if investments in, e.g., Greece, would still be considered viable. At this point, however, the German banks are giving the money to the Bundesbank instead of investing it. Cause and effect are not as clear as you would suggest. The Target 2 saldi are a massive danger to Germany btw, if the Euro breaks up all the money could vanish in an instant. And I disagree. The economic growth was mainly financed by loans, the Olympic Games were a major example of Greek overspending. Basically, there have always been trade imbalance (mainly because germany is one of the only remaining country with an industry in europe ?) but they were negated by the european bank system that's it. You are more or less just saying what I said, the german decided by 2007 that buying asset in country such as greece or italy was no longer an option and we started to see an increase in the credit the german central bank have in the european central bank. The growth of the credit also shows how Germany is growing thanks to those country and their consumption. The idea that it was financed by loan doesn't mean much imo, most growth is financed by loan, it doesn't mean anything since with 4.5% growth of the GPD, you are in a situation where you can pay back the loan you contracted. There was no overspending, as you see here the moment where Greece had a good economic were in fact the only moment where greece had the lowest deficit. As I said, the economic growth was due to the olympic games and the economy of Greece who was still, at the time, competitive in the construction sector and service. You also see that the deficit started in 1979-1980, which is also pretty interesting in itself. Greece had the lowest deficit during the "good" times because of low interest rates and EU budget-reports. In my opinion the Greeks had a historic chance to get rid of their longstanding public debt problems, I adressed that in a previous post: http://www.teamliquid.net/forum/viewmessage.php?topic_id=114227¤tpage=67#1335 The "low" deficit level was still too high, it is only that the previous level was even more unsustainable and borderline insane, if not for massive inflation. You understand that 3% deficit is okay if you just stay with the same tax rate with a 4.5 % economical growth ? It means you will most likely have 4.5% more money through tax... They have a low level deficit because they had economical growth mainly. I think you don't understand why country take debt in the first place. 3% deficit and 4.5% growth? You cherry pick numbers from the charts ... I understand that Greece was in huge debt from the beginning. That Greece rarely hit the deficit limit even in economically prosperous times, the only time one has a chance to actually reduce the debt. That inflation was much lower after the introduction of the Euro than before, which means the deficit hit much harder, something the Greek government certainly knew. You apparently don't understand when a country shouldn't take any more debt. I tell you why the Greek government took debt in those times: to bribe the people in order to get reelected.
Ho my god, 3% deficit and 4.5% economical growth are the numbers for Greece in 2005, I didn't "cherry pick".
I agree with you about taking debt, but not on the why, that's the point. In a closed economy, taking debt to create economical growth is a good idea, this you don't agree. The real problem is that, since the EU is a free trade zone, any public investment is useless and will eventually end in the pocket of the few country who have a positive commercial balance, here Germany.
Look, Greece started a policy of economic rigor since the crisis, and it failed hard. On the other side, Iceland refused too harsh policy and they have the best economical growth of the EU zone this year or almost. Stopping all the public investment is not the best way to stop the debt from growing.
http://sacsis.org.za/site/article/728.1
http://www.washingtontimes.com/news/2010/mar/07/iceland-voters-likely-reject-debt-deal/?page=all
And here is Island's growth
http://www.tradingeconomics.com/iceland/gdp-growth
On May 27 2012 16:47 50bani wrote:Show nested quote +On May 27 2012 06:43 WhiteDog wrote:On May 27 2012 05:52 Maenander wrote:On May 27 2012 05:06 WhiteDog wrote:On May 27 2012 04:59 Maenander wrote:On May 27 2012 03:56 WhiteDog wrote:On May 27 2012 03:06 Maenander wrote:On May 27 2012 02:37 WhiteDog wrote:On May 27 2012 02:32 Maenander wrote:On May 27 2012 02:13 WhiteDog wrote:[quote] I don't really understand the 2 numbers you put there buddy... The only thing that is important is the commercial balance between grece and germany, and not the relativ part of greece within german exports (because greece is a small country, with difficulties ?). Even if we indeed see that germany is less exporting to greece, it still is the first partner of Greece with around 10652 M USD of importation to greece from germany and only 2809M USD of exportation from greece to germany. So basically around 8 000 M USD in favor of germany (all those numbers are for 2008, here http://www.smartexport.com/fr/Grece.html). Also consider that Greece GPD is 308449 M $ (so 2.5 % of Greece GPD in 2008 had gone from Greece to Germany through importation). Nice way of using numbers to makes them say what you want by the way Your numbers only showed how germany has opened itself to the global economy and how it is not as dependant from European economies as it was before. I didn't want to talk about Greece, but about the claim that Germany is "exploiting" the weaker members of the Eurozone and that that is the main reason it is doing well now, which is simply not true. And yeah that is claimed again and again, in this thread and all over the internet. By the number I showed, it is true ... As I said, the commercial balance between Greece and Germany is heavily in favor of Germany (2.5% of Greece GPD in 2008...), which mean any public investment made in Greece will heavily go in German hands. It's a fact. It's true that if you take those numbers in relation with German GPD or German exportation overall, it's thin. But that's not because German's doesn't profit from Greece investment, it just mean that German is a big country with a big GPD and high exportation all around the world, and not only in Greece, a small european country (economically). It has been like that for decades, why should it suddenly start to be a problem? If one looks at the GDP growth rate, Greece experienced an economic boost when the Euro arrived, much more so than Germany: We now know how this boost was financed, based on loans with lower interest rates thanks to the Euro. Cheap loans made Greece borrow too much. Now they are no longer cheap. That is the crux of the Greek problem, not some trade imbalances that existed since like forever. The problem Europe has is its decreasing competitiveness on a global scale, Europe as a whole has to find a new - less dominating - place in the ever shifting global economy, it cannot be that Germany is now blamed for making the necessary adjustments. Now you change the subject. No it doesn't have always been like that, the proof is that the credit that the german central bank had from the european central bank was around 0 prior to 2007 and is now around 465 billions or something like that in october 2011. When a Greek company buy something from a German company, the money is transfered from the greek bank to the german bank, and the german central bank receive a credit in "base money" that matche the sum of the transfert. Until 2007, the credit was around 0, which means that the money that greece invested into german company eventually was going right back to them in some ways (like for exemple, german buying french good and french buying greek goods, but mainly because german banks bought asset from greek banks, with that base money). It basically mean that the situation really started early 2007. In my opinion, one must also take into consideration that even if the economic situation in Germany is good, the overall capacity of consumption of german people didn't really change since some time now, which mean the money German receive didn't really go into german hand but stays in banks and is reinvested in different sector. The economic growth of Greece in 2004-2005 (one of the best of the euro zone at the time LOL) is not due to the euro, but to the dynamic of services and constructions (keep in mind, the olympic games were in Greece at the time and we all know the impact they have on the economy). It's too easy to put it all on the euro, it actually didn't do much imo. Not to mention they had a great economic growth prior to the euro. I think you are luring yourself into thinking the europe gave Greece economic growth and didn't do shit in pushing them in this crisis. In my opinion, the reason of the current economic situation is that, at a global level (and germany is a big factor to that) there is really a problem of redistribution. The money does not come back to the consumers (and because of that, it also doesn't come back into the state through taxes). In your first post you talked about trade imbalances, now about Target 2 saldi. They are connected, but not the same. Trade imbalances do not necessarily increase the Target 2 saldi, as can be seen until 2008. The increasing Target 2 saldi show that the Eurozone members are not unable to "print" money. Germany is flooded by money from other Eurozone members, all lent from the ECB. All would be fine if investments in, e.g., Greece, would still be considered viable. At this point, however, the German banks are giving the money to the Bundesbank instead of investing it. Cause and effect are not as clear as you would suggest. The Target 2 saldi are a massive danger to Germany btw, if the Euro breaks up all the money could vanish in an instant. And I disagree. The economic growth was mainly financed by loans, the Olympic Games were a major example of Greek overspending. Basically, there have always been trade imbalance (mainly because germany is one of the only remaining country with an industry in europe ?) but they were negated by the european bank system that's it. You are more or less just saying what I said, the german decided by 2007 that buying asset in country such as greece or italy was no longer an option and we started to see an increase in the credit the german central bank have in the european central bank. The growth of the credit also shows how Germany is growing thanks to those country and their consumption. The idea that it was financed by loan doesn't mean much imo, most growth is financed by loan, it doesn't mean anything since with 4.5% growth of the GPD, you are in a situation where you can pay back the loan you contracted. There was no overspending, as you see here the moment where Greece had a good economic were in fact the only moment where greece had the lowest deficit. As I said, the economic growth was due to the olympic games and the economy of Greece who was still, at the time, competitive in the construction sector and service. You also see that the deficit started in 1979-1980, which is also pretty interesting in itself. Greece had the lowest deficit during the "good" times because of low interest rates and EU budget-reports. In my opinion the Greeks had a historic chance to get rid of their longstanding public debt problems, I adressed that in a previous post: http://www.teamliquid.net/forum/viewmessage.php?topic_id=114227¤tpage=67#1335 The "low" deficit level was still too high, it is only that the previous level was even more unsustainable and borderline insane, if not for massive inflation. You understand that 3% deficit is okay if you just stay with the same tax rate with a 4.5 % economical growth ? It means you will most likely have 4.5% more money through tax... They have a low level deficit because they had economical growth mainly. I think you don't understand why country take debt in the first place. Wrong. Both budget deficit and economic growth are expressed in %of GDP in order to confuse you. The government budget is not all of GDP, but merely a fraction. If the government spends 30% of GDP, 3% deficit is actually 10% of government spending, so there you have it, you would need 10% growth in tax revenue to break even next year.
Ho you are right, my bad. I thought it was expression in % of state income in the chart, damn that's actually sick, 12% of GDP deficit...
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On May 27 2012 10:27 WhiteDog wrote:
You are wrong from the beginning to the end lol...
I never said Germany was parasiting the eu. The problem is how the EU has been made and how it is not permitting people with weakened industry to build one (because free market without any redistribution system). Germany is not parasiting, just profiting from other's public investment, which is just right, there is nothing to say about it (i already showed the import / export balance between greece and germany in 2008 and it clearly shows that). Also Germany is not mainly making trade with weakened economy....
The rest of the argument is meaningless, because it is all based on a certain idea of competitivity.
You don't understand that Europe is a free trade zone, protected by a common tariff. Within Europe, you must not only think countries as economic rival, but also through the idea that some are demand and some are offer (and offer, here Germany, cannot live without demand, here Greece for whom Germany is the first economic partner).
Everything Keynes said was in closed economy, he is completly outdated, I never or almost never cited Keynes except once when I said that Keynes' theory was counter cyclical : for him, you should not lower tax and continue spending in period of economical growth, something most countries did (which is why the policy they made are not keynesian).
Also I am not contradicting myself, just talking about different timelines : talking about before the crisis and after. Before, we were in a situation with a demand crisis, where countries used the state investment capacity to sustain the demand and push the economy (if you study GDP a little, you know consumption is 70% of it, the high rate of state worker should also be understood as a way for the state to secure a demand). After the crisis, in Greece at least, they cut down their investment, workers pay, and everything else, hence destroying the demand, and pushing their economy further into the crisis. Don't quote things out of context it's childlish.
Also, I don't really understand the second part, you're so wrong : are you mistaking debt and deficit ? GDP of 50€ with a debt of 100€ with an interest rate of 3%. Yeah sure... but the deficit is the amount by which a government, private company, or individual's spending exceeds income over a particular period of time. If your own income is 100, and you use 103, you have 3% deficit. If you have 4.5% economical growth, the GDP will increase by 4.5% and the tax revenu by 4.5, making you receiving 104.5 income. Don't mix deficit AND debt, two different things.
And yes that's an economical truth... non keynesian would just argue investment from the state is not the best way to gain economical growth and that it create inflation hence destroying the growth that would result anyway... But everybody agree that economical growth is the best way to pay your debt in the long run lol... There is a reason why so many economist like Wicksell make a relation between profit and investment.
It's not a question of keynesian, non keynesian... You should read Keynes, you will certainly learn a thing or two.
It would be nice if you made a statement to the EU payments i posted through that link.
I am actually not very fond of the deficit mechanics, but what I've learned so far is that GDP isn't a very trustworthy way of measuring economically sustainable growth cause it can be increased by deficit spending.
My example of calculation might be dead wrong there, but i have yet to see a valid example of the calculation in that process, it also proves that the poster understands the matter and doesn't read it off some book.
Anyway, I looked myself for evidence regarding the trade Greek vs. German trade balance, and the article specifically adresses your question.
Also, the name of the author company fits well into a sc forum.
http://cib.natixis.com/flushdoc.aspx?id=52172
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On May 27 2012 20:23 Cattivik wrote:Show nested quote +On May 27 2012 10:27 WhiteDog wrote:
You are wrong from the beginning to the end lol...
I never said Germany was parasiting the eu. The problem is how the EU has been made and how it is not permitting people with weakened industry to build one (because free market without any redistribution system). Germany is not parasiting, just profiting from other's public investment, which is just right, there is nothing to say about it (i already showed the import / export balance between greece and germany in 2008 and it clearly shows that). Also Germany is not mainly making trade with weakened economy....
The rest of the argument is meaningless, because it is all based on a certain idea of competitivity.
You don't understand that Europe is a free trade zone, protected by a common tariff. Within Europe, you must not only think countries as economic rival, but also through the idea that some are demand and some are offer (and offer, here Germany, cannot live without demand, here Greece for whom Germany is the first economic partner).
Everything Keynes said was in closed economy, he is completly outdated, I never or almost never cited Keynes except once when I said that Keynes' theory was counter cyclical : for him, you should not lower tax and continue spending in period of economical growth, something most countries did (which is why the policy they made are not keynesian).
Also I am not contradicting myself, just talking about different timelines : talking about before the crisis and after. Before, we were in a situation with a demand crisis, where countries used the state investment capacity to sustain the demand and push the economy (if you study GDP a little, you know consumption is 70% of it, the high rate of state worker should also be understood as a way for the state to secure a demand). After the crisis, in Greece at least, they cut down their investment, workers pay, and everything else, hence destroying the demand, and pushing their economy further into the crisis. Don't quote things out of context it's childlish.
Also, I don't really understand the second part, you're so wrong : are you mistaking debt and deficit ? GDP of 50€ with a debt of 100€ with an interest rate of 3%. Yeah sure... but the deficit is the amount by which a government, private company, or individual's spending exceeds income over a particular period of time. If your own income is 100, and you use 103, you have 3% deficit. If you have 4.5% economical growth, the GDP will increase by 4.5% and the tax revenu by 4.5, making you receiving 104.5 income. Don't mix deficit AND debt, two different things.
And yes that's an economical truth... non keynesian would just argue investment from the state is not the best way to gain economical growth and that it create inflation hence destroying the growth that would result anyway... But everybody agree that economical growth is the best way to pay your debt in the long run lol... There is a reason why so many economist like Wicksell make a relation between profit and investment.
It's not a question of keynesian, non keynesian... You should read Keynes, you will certainly learn a thing or two. It would be nice if you made a statement to the EU payments i posted through that link. I am actually not very fond of the deficit mechanics, but what I've learned so far is that GDP isn't a very trustworthy way of measuring economically sustainable growth cause it can be increased by deficit spending. My example of calculation might be dead wrong there, but i have yet to see a valid example of the calculation in that process, it also proves that the poster understands the matter and doesn't read it off some book. Anyway, I looked myself for evidence regarding the trade Greek vs. German trade balance, and the article specifically adresses your question. Also, the name of the author company fits well into a sc forum. http://cib.natixis.com/flushdoc.aspx?id=52172
You can discuss a lot of thing and I will read the article you linked but understand : every years greek people buy for 10M euros of German goods while German buy for 2M greek goods. So obviously, if the greek government spend a certain sum of money, a part of it will go to germany and never come back. It's something very important international economy, while everybody agree that free trade is good in the long run, if you have no comparative advantage what will you sell to other countries? Greece had the shipping industry but had to compete against asiatic countries and now they need help to build new industries.
The text you linked is somehow right, but playing with words. It's true that Greece is not suffering from German's foreign policy... Greece debt crisis is partly due to how the EU and the ECB is made, nothing to do with Germany.
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Very sad. I hate reading news like this, and also seeing people in one country blaming people from other country for whatever reason. No folk is responsible of out current situation. If you look at a cause, search for where the money has gone, and blame also the politics for not doing their work of controlling the economy.
We are all small persons, that's it. Shattered by the storms of capitalism and the power of the money. Accept it. Oh, and play Starcraft :-)
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Its difficult.
One could argue that the greece problem has little to do with economics at all and that it is more a political problem.
If greece government would simply spend a bit less and collect a bit more taxes there maybe would not be a problem.
For the part that is related to economy, i realy dont think i even remotely understand it, but this is how i see it.
Greece did profit from the euro initially, and so did spain and italy.
Interest and exchange rate:
Before the euro all countrys had their own different interest rates.
Greeks rate was high and the german rate was low.
With the euro coming and strict rules regarding deficit and spending (thoose rules turned out to be not so strict in the end though) the interest rates of all euro countrys started to converge and the interest the germans and greeks had to pay became almost the same.
This basicly made lending for greeks alot cheaper then it used to be.
This cheaper form of credit made possible the huge economic growth in greece.spain and italy at the start of the euro zone,
It also inflated their real estate market wich fueled even more consumer credit and consumption.
On the other hand the currencys:germany had a strong currency and greek had a weak currency and now the got mixed together.
Result: germany got a slightly weaker currency then it would normally have, and greece got a stronger currency then they would normally have.
This made the german industry even more competitive then it already was and this was a boost for the german economy.
For the greek economy the opposite could be said. Their exports became to expensive relativly to what they used to be before the euro and this stronger currency made it more difficult for greek to compete.
On one hand you have the huge growth in investments and consumption at the start of the euro, on the other hand thoose investments dont pay off because greece economy has trouble to compete due to a strong euro.
What politicians did hope was that this would force greece to become a little bit more like germany
As it is now the euro is alot closer to the dmark then it is to the drachme,the euro is still verry strong despite this crisis.
The greek had to make the bigger change, for germany it was relativly small.
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So the battle for the Euro is set to begin...
Also any German TL'ers tell how popular Merkel and her plans are in Germany?
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EPT
