mmmh, well frankly I'd say esp. the last couple of minutes (I presume you are talking about the interview section with the "random group of friends") of this video are pretty bad. As I said above I can easily understand why the greek people are disgusted and depressed with the current situation, but the people interviewed display the classic case of "someone else is to blame". No one forced Greece to run up such a debt (for that matter no one forced them to commit fraud to join the EURO in the first place), so why exactly is "europe" (whatever that may specifically be) now to blame for the situation?
Frankly the discussion on this topic is diffcult to say the least, but a short polemic documentary isn't really displaying any new insights. (Note i just spent 3 weeks in Greece, I know perfectly well how the people feel, and foremost they feel anger at their own politicians, and quite a lot of missplaced anger at Angela Merkel. On the other hand I also know perfectly well how my own countrymen and our German neighbors feel and frankly the most common attitude is why should we bail them out if they can't even be bothered to pay their taxes.)
If you give me an hour I could interview 20 random Austrians and find at least 5 opinions that say we should stop sending money immediatly, but that doesn't change the fact that that would probably be the worst thing the EU could do.
Also Trowa your hilarious, but i shall ignore you henceforth otherwise I'll probably start saying insulting things which have no place in this thread. Suffice to say that your lack of understanding on the background of Greece and Spain (as well as the major differences in their economic situation) is obvious. Maybe you should educate yourselve a bit about that before you get on that high horse.
Your definition on what is and isn't fraud also might need to be updated.
The problem right now with Europe and especially the southern nations is that they aren't competitively economically. If you look at Greece or Italy what up and coming tech companies have you heard about? The EU budget expenditures are laughable from a postindustrial standpoint as a large part goes to agricultural subsidies. The proposals that richer nations should guarantee or transfer money to poorer nations is really stupid as it will keep the poorer nations as competitive as they are for now.
On June 19 2012 06:22 archonOOid wrote: The problem right now with Europe and especially the southern nations is that they aren't competitively economically. If you look at Greece or Italy what up and coming tech companies have you heard about? The EU budget expenditures are laughable from a postindustrial standpoint as a large part goes to agricultural subsidies. The proposals that richer nations should guarantee or transfer money to poorer nations is really stupid as it will keep the poorer nations as competitive as they are for now.
Exactly! But this has always been the case. Why were these Countries offered giant loans from Europe for infrastructure development in the first place? Germany couldn't have expected Greece to become a competitive economy in such a short period of time. But you say richer nations shouldn't guarantee their debt - wait a second, these are the nations and the banks who didn't do their due diligence, didn't asses their risk and got burned for it. Everyone wanted to make a quick buck, but Greece was never going to be able to develop as much as the ECB's bullshit projections showed. So that leads us on to the final point - if investors don't do their research, and refuse to asses their real risk, then why didn't they take a loss in the first place before they started pumping billions into Greece and skimming as much off the top via private banks as possible in a frantic effort to get their money back? The fact is that if Greece was allowed to default when their debt numbers were about 100 Billion Euro's then we would have had a market shock similar to Lehman (who lost about $130 Billion dollars when they filed for bankruptcy) but we would have probably recovered. As it stands, Germany wants to put the tax payer on the hook for Trillions of Euro's and it all started with a rather small amount of Greek public debt. The more you put into this crazy ponzi, the worse it is going to get.
Madness. Simply madness.
Edit - I understand Greece lied (with the help of Goldman Sachs, of course!) about the state of their financial affairs, but any economist with half a brain cell could have told you the public finances were 'cooked.' Ignorance in this case is most certainly no excuse.
And Tula - not a problem. Maybe you should take some time to read for yourself on what some of your Countrymen are saying, considering that Austrian economists are at the forefront of this movement. I'd recommend 'Meltdown: A Free-Market Look at Why the Stock Market Collapsed, the Economy Tanked, and Government Bailouts Will Make Things Worse' by Thomas E Woods. Its very good. And this man isn't alone, believe me. What I don't understand is why you are disagreeing with me - we both agree bail outs are bad, the only difference is that I point out that private institutions and European governments are putting their liabilities onto the taxpayer so they can make a profit. How is that good? You talk about them frantically trying to deal with the crises. They aren't. They are covering their backs.
If you answer even one thing I write about, answer this. European governments and private banks want their money back. Now the problem - Greece has no money, so how can we do this? Simple. We lend them money which they immediately pay back to us, paying of a portion of their debt but gaining a new loan. Now, who underwrites this loan? The taxpayer. If the loan goes bad and Greece don't repay, who loses out? The taxpayer. They are simply putting the credit risk - that Greece can't pay the money back - onto you and me. Considering this, why are you saying I'm crazy to think this isn't a great situation? In the end, the people making these decisions won't lose anything whether they repay or they don't repay. Its called 'moral hazard.' Notice how whenever Greece has tried to either re-negotiate or hold a referendum on the bail out plan, International politicians are VERY clear that they are never going to let Greece re-negotiate. Just look at Merkel.
Anyway, I don't want to argue with you and I apologise for coming off as condescending. It was out of order. This thread is for discussion, and I was just trying to put something out there that I hadn't seen before. This is our futures at stake here, and I do get a bit annoyed when discussing it. I'm happy to talk to anyone about this, because I believe its truly important that everyone is talking about it. After all, they are (in my opinion) auctioning off our future and we have no say in how they do it.
Mmm wall of text. I apologise. These things are hard to compress down!
Frankly, I feel obliged would like to thank Tula for his posts as they are completely spot on, including the criticism of Trowa's posts.
Please Trowa do not take this as a personal attack. Many, many people share the same views (andunderstandably so, considering the general lack of financial education that afflicts the vast majority of the population) but that does not make them right. There is no conspiracy, no master plan to make crazy amounts of money out of this crisis: banks, private companies and smart individuals are simply covering their asses by moving assets out of Greece, Spain and to a certain extente Italy, while at the same time governments really are trying to sort this mess out and calm things down as that's the only way for them to survive.
On June 19 2012 23:24 Hatsu wrote: Frankly, I feel obliged would like to thank Tula for his posts as they are completely spot on, including the criticism of Trowa's posts.
Please Trowa do not take this as a personal attack. Many, many people share the same views (andunderstandably so, considering the general lack of financial education that afflicts the vast majority of the population) but that does not make them right. There is no conspiracy, no master plan to make crazy amounts of money out of this crisis: banks, private companies and smart individuals are simply covering their asses by moving assets out of Greece, Spain and to a certain extente Italy, while at the same time governments really are trying to sort this mess out and calm things down as that's the only way for them to survive.
You are saying that highly trained economists are wrong without even reading their arguments? I'm confused. What is your financial education, out of interest? But of course, you are correct. James Rickards, author of 'Currency Wars,' economist, investment banker. He has no financial education as you claim, right? Same with Mitch Feierstein, author of 'Planet Ponzi' an economist who runs a $500 Million hedge fund. And of course the whole range of Austrian economists putting across exactly the same argument. And lets not forget John Paulson who made billions of dollars betting against the MBS market when people like you were believing it to be perfectly safe. They must be stupid compared to you, I'm sure. People are telling me 'Trowa you are wrong' without presenting any kind of counter argument. You just say 'well done Tula that is spot on' without even substantiating that claim. Mind blowing. Surely you can understand why this is frustrating.
That's the problem with this thread, its just full of mutual back rubbing with no argument at all. The moment anyone presents a counter argument supported by facts, everyone just says 'hes crazy.' You act as if the governments of the World have ALWAYS acted in the peoples interests. That's obviously why they transferred the balance sheets of RBS, AIG, Lloyds TSB, Northern Rock, General Motors (the list goes on) onto the tax payer. Because they always act in the peoples interest, right? They are just frantically trying to save the Euro. That's why they are auctioning the taxpayers future off.
It just amazes me that people have the gall to say 'ok hes crazy, everyone move along' without presenting any argument.
That's it for me. In two pages no one has argued a point, they just say 'you're wrong.' That's how debate works right, you don't present any evidence you just laugh it off and say 'don't listen to that guy.' GG. I'll be back in six months and we'll see if all of this World saving financial intervention has got us anywhere.
Edit - lol I just looked at your posting history. you're very good at making statements like 'no one here but me knows what they are talking about, move along,' but not so great at putting forward an actual argument. wp.
On June 19 2012 23:24 Hatsu wrote: Frankly, I feel obliged would like to thank Tula for his posts as they are completely spot on, including the criticism of Trowa's posts.
Please Trowa do not take this as a personal attack. Many, many people share the same views (andunderstandably so, considering the general lack of financial education that afflicts the vast majority of the population) but that does not make them right. There is no conspiracy, no master plan to make crazy amounts of money out of this crisis: banks, private companies and smart individuals are simply covering their asses by moving assets out of Greece, Spain and to a certain extente Italy, while at the same time governments really are trying to sort this mess out and calm things down as that's the only way for them to survive.
You are saying that highly trained economists are wrong without even reading their arguments? I'm confused. What is your financial education, out of interest? But of course, you are correct. James Rickards, author of 'Currency Wars,' economist, investment banker. He has no financial education as you claim, right? Same with Mitch Feierstein, author of 'Planet Ponzi' an economist who runs a $500 Million hedge fund. And of course the whole range of Austrian economists putting across exactly the same argument. And lets not forget John Paulson who made billions of dollars betting against the MBS market when people like you were believing it to be perfectly safe. They must be stupid compared to you, I'm sure. I notice you don't address what I say about putting bad loans onto the tax payer either. People are telling me 'Trowa you are wrong' without presenting any kind of counter argument. You just say 'well done Tula that is spot on' without even substantiating that claim. Mind blowing. Surely you can understand why this is frustrating.
That's the problem with this thread, its just full of mutual back rubbing with no argument at all. The moment anyone presents a counter argument supported by facts, everyone just says 'hes crazy.' You act as if the governments of the World have ALWAYS acted in the peoples interests. That's obviously why they transferred the balance sheets of RBS, AIG, Lloyds TSB, Northern Rock, General Motors (the list goes on) onto the tax payer. Because they always act in the peoples interest, right? They are just frantically trying to save the Euro. That's why they are auctioning the taxpayers future off.
It just amazes me that people have the gall to say 'ok hes crazy, everyone move along' without presenting any argument.
That's it for me. In two pages no one has argued a point, they just say 'you're wrong.' That's how debate works right, you don't present any evidence you just laugh it off and say 'don't listen to that guy.' GG. I'll be back in six months and we'll see if all of this World saving financial intervention has got us anywhere.
Edit - lol I just looked at your posting history. you're very good at making statements like 'no one here but me knows what they are talking about, move along,' but not so great at putting forward an actual argument. wp.
The answer is simple. From the very outset of your entrance into this thread and constituent debate, it was made abundantly clear that you are an Austrian school sycophant, unwilling and possibly unable to realize what sort of errors are inherent in advocating an economic policy circa 1962. You see, when a poster on an internet forum trumpets an economic idea, say Rothbard's critique of Keynesian public goods, and seems more sure of his position than Rothbard himself, most posters are going to simply hit the ignore button. To make matters even worse, argumentation on the part of Mises fans seems predicated almost exclusively on a refusal to compromise. It's as though everyone who read "The Anti-Capitalistic Mentality" decided to then on mirror Mises in his inflexibility every time an opposing view is brought up, when in reality both Rothbard and Hayek famously exclaimed that the Austrian school would do well to loosen up and become more holistic in approach. I've linked this on TL before, but here is a wonderful, fairly extensive critique of Austrian purism in which the author makes it clear that while Mises, Rothbard, and Hayek have provided economics with some essential tools/viewpoints, their work is not the stopping point, not even close. http://econfaculty.gmu.edu/bcaplan/whyaust.htm
As an aside, citing a work of Thomas Woods as though it would solidify your position is rather hilarious, his last amounted to little more than one large state's rights blowjob.
In summary, most people who would normally be inclined to get into a debate with you already know where the path leads, and are simply unwilling to play out a tired scenario. I'll leave you with this quote. "There is no Austrian economics - only good economics, and bad economics"-Milton Friedman.
I'll compose a proper reply later in the evening when I have the time for it, but just one short note before I have to go do some more work, discounting an argument simply because the person saying it belongs to an opposing school of thought (in Trowa's case him being Austrian) is not a proper way to discuss this either.
I have many problems with his arguments, which I'll try to detail in a bit, but please stick to the level of arguments and facts instead of personal attacks in the meanwhile.
Lol this went to hell. Anyways one thing that bothers me is why people think the "blame" is only on "x" or "y" nation. The blame is on the entire European union from german/french banks, to Greek people, to French/german politicians. Everyone is at fault here.
Trowa127 United Kingdom. June 19 2012 21:42. Posts 994
You pretty much right, though seeing you are from england this wont effect you that much. The burden is put on the taxpayer indeed as you said and thats a bad thing. There is not realy an alternative though, not even for the taxpayer. Letting some banks go bankrupt will cost the taxpayer equally as much. They will loose their safings, and possibly jobs. It suprises me how little support the occupy movement got, would have thought that most people had enough of the banking system by now.
Credit monney is a great system btw,its just the corruption that spoils it. Gold standard completely sucks when it comes to maximising economic output.
"You are saying that highly trained economists are wrong without even reading their arguments"
More then 50% of the economists are wrong more then 50% of the time, thats why they have to argue so much about who is right and who is wrong. Most of them realy dont got a clue besides the theorys and facts they learned at their business school.
On June 19 2012 23:24 Hatsu wrote: Frankly, I feel obliged would like to thank Tula for his posts as they are completely spot on, including the criticism of Trowa's posts.
Please Trowa do not take this as a personal attack. Many, many people share the same views (andunderstandably so, considering the general lack of financial education that afflicts the vast majority of the population) but that does not make them right. There is no conspiracy, no master plan to make crazy amounts of money out of this crisis: banks, private companies and smart individuals are simply covering their asses by moving assets out of Greece, Spain and to a certain extente Italy, while at the same time governments really are trying to sort this mess out and calm things down as that's the only way for them to survive.
You are saying that highly trained economists are wrong without even reading their arguments? I'm confused. What is your financial education, out of interest? But of course, you are correct. James Rickards, author of 'Currency Wars,' economist, investment banker. He has no financial education as you claim, right? Same with Mitch Feierstein, author of 'Planet Ponzi' an economist who runs a $500 Million hedge fund. And of course the whole range of Austrian economists putting across exactly the same argument. And lets not forget John Paulson who made billions of dollars betting against the MBS market when people like you were believing it to be perfectly safe. They must be stupid compared to you, I'm sure. I notice you don't address what I say about putting bad loans onto the tax payer either. People are telling me 'Trowa you are wrong' without presenting any kind of counter argument. You just say 'well done Tula that is spot on' without even substantiating that claim. Mind blowing. Surely you can understand why this is frustrating.
That's the problem with this thread, its just full of mutual back rubbing with no argument at all. The moment anyone presents a counter argument supported by facts, everyone just says 'hes crazy.' You act as if the governments of the World have ALWAYS acted in the peoples interests. That's obviously why they transferred the balance sheets of RBS, AIG, Lloyds TSB, Northern Rock, General Motors (the list goes on) onto the tax payer. Because they always act in the peoples interest, right? They are just frantically trying to save the Euro. That's why they are auctioning the taxpayers future off.
It just amazes me that people have the gall to say 'ok hes crazy, everyone move along' without presenting any argument.
That's it for me. In two pages no one has argued a point, they just say 'you're wrong.' That's how debate works right, you don't present any evidence you just laugh it off and say 'don't listen to that guy.' GG. I'll be back in six months and we'll see if all of this World saving financial intervention has got us anywhere.
Edit - lol I just looked at your posting history. you're very good at making statements like 'no one here but me knows what they are talking about, move along,' but not so great at putting forward an actual argument. wp.
The answer is simple. From the very outset of your entrance into this thread and constituent debate, it was made abundantly clear that you are an Austrian school sycophant, unwilling and possibly unable to realize what sort of errors are inherent in advocating an economic policy circa 1962. You see, when a poster on an internet forum trumpets an economic idea, say Rothbard's critique of Keynesian public goods, and seems more sure of his position than Rothbard himself, most posters are going to simply hit the ignore button. To make matters even worse, argumentation on the part of Mises fans seems predicated almost exclusively on a refusal to compromise. It's as though everyone who read "The Anti-Capitalistic Mentality" decided to then on mirror Mises in his inflexibility every time an opposing view is brought up, when in reality both Rothbard and Hayek famously exclaimed that the Austrian school would do well to loosen up and become more holistic in approach. I've linked this on TL before, but here is a wonderful, fairly extensive critique of Austrian purism in which the author makes it clear that while Mises, Rothbard, and Hayek have provided economics with some essential tools/viewpoints, their work is not the stopping point, not even close. http://econfaculty.gmu.edu/bcaplan/whyaust.htm
As an aside, citing a work of Thomas Woods as though it would solidify your position is rather hilarious, his last amounted to little more than one large state's rights blowjob.
In summary, most people who would normally be inclined to get into a debate with you already know where the path leads, and are simply unwilling to play out a tired scenario. I'll leave you with this quote. "There is no Austrian economics - only good economics, and bad economics"-Milton Friedman.
Thank you. I'll look into everything you posted - especially that article. I'd love to see a counter side - the problem I had is that the people I was replying too posted no counter-argument, they just said 'you are wrong.' Thanks a lot for posting this. I'll reply once I've read through it and read the source material you linked. I'd tend to agree with you - I'm certainly very enthusiastic about Austrian economics but I'm happy to read any other opinions. But I think you give some posters too much credit - a lot of people in this thread clearly have no real opinion of their own, and simply parrot the general consensus. That is frustrating.
What I would ask you, and I know I sound like a broken record, but if this massive transference of debt to the tax payer hadn't occured in the first place, and these banks were allowed to fail, what do you think would have happened? Bearing in mind the liabilities at the time were very small compared to those that exist today.
Rassy - I agree with you. Banks are extremely important to economic development. They push down the price of funding, provide fast, easy to access to liquidity and can should be the primary contributer to small and medium sized business funding and development. The problem of course, as you said, is corruption and the relationship between the state and the financial services industry (in my opinion). You set a dangerous presecedent when you intefere in the market with government bail outs, currency price manipulation etc. Let me just clarify - I believe in the free market, and support it 100%. I just don't believe that, with the level of government and central bank intervention into our economy, we live in something even resembling a free market.
On June 19 2012 06:22 archonOOid wrote: The problem right now with Europe and especially the southern nations is that they aren't competitively economically. If you look at Greece or Italy what up and coming tech companies have you heard about? The EU budget expenditures are laughable from a postindustrial standpoint as a large part goes to agricultural subsidies. The proposals that richer nations should guarantee or transfer money to poorer nations is really stupid as it will keep the poorer nations as competitive as they are for now.
Exactly! But this has always been the case. Why were these Countries offered giant loans from Europe for infrastructure development in the first place? Germany couldn't have expected Greece to become a competitive economy in such a short period of time. But you say richer nations shouldn't guarantee their debt - wait a second, these are the nations and the banks who didn't do their due diligence, didn't asses their risk and got burned for it. Everyone wanted to make a quick buck, but Greece was never going to be able to develop as much as the ECB's bullshit projections showed. So that leads us on to the final point - if investors don't do their research, and refuse to asses their real risk, then why didn't they take a loss in the first place before they started pumping billions into Greece and skimming as much off the top via private banks as possible in a frantic effort to get their money back? The fact is that if Greece was allowed to default when their debt numbers were about 100 Billion Euro's then we would have had a market shock similar to Lehman (who lost about $130 Billion dollars when they filed for bankruptcy) but we would have probably recovered. As it stands, Germany wants to put the tax payer on the hook for Trillions of Euro's and it all started with a rather small amount of Greek public debt. The more you put into this crazy ponzi, the worse it is going to get.
Madness. Simply madness.
Responding to the bolded points:
Greece can become competitive by lowering wages. The problem isn't that they didn't build infrastructure fast enough it is that wages rose too fast post euro inegration which made them uncompetitive. Unit labor costs must come down for Greece to regain competitivness!
Investors took a hit when Greece restructured its debt, no? My understanding is that the debt reduction was quite large.
It's not a ponzi. The issue isn't just Greece and never was. It is the risk that Greek problems will lead to problems in other countries as well so bailout funds are sized to prevent contagion throughout the Eurozone.
On June 19 2012 05:56 Gaga wrote: whats new about what they said ? and it gets worse every day.
economic collaps for dummies :
for dummies, by dummies. That's not how global economics work, yes everything is interconnected and one crisis can spiral out of control and have global effect, but it's not a domino-effect (the crisis in Iceland or Ireland is not the main factor of the crisis in other states, such as Greece). Also Japan's economy appears to be twice the size of the EU's, unless of course it's not meant to symbolize (which i guess it wanted to), in that case i dont get the Japan- USA-Global final order
On June 19 2012 23:24 Hatsu wrote: Frankly, I feel obliged would like to thank Tula for his posts as they are completely spot on, including the criticism of Trowa's posts.
Please Trowa do not take this as a personal attack. Many, many people share the same views (andunderstandably so, considering the general lack of financial education that afflicts the vast majority of the population) but that does not make them right. There is no conspiracy, no master plan to make crazy amounts of money out of this crisis: banks, private companies and smart individuals are simply covering their asses by moving assets out of Greece, Spain and to a certain extente Italy, while at the same time governments really are trying to sort this mess out and calm things down as that's the only way for them to survive.
You are saying that highly trained economists are wrong without even reading their arguments? I'm confused. What is your financial education, out of interest? But of course, you are correct. James Rickards, author of 'Currency Wars,' economist, investment banker. He has no financial education as you claim, right? Same with Mitch Feierstein, author of 'Planet Ponzi' an economist who runs a $500 Million hedge fund. And of course the whole range of Austrian economists putting across exactly the same argument. And lets not forget John Paulson who made billions of dollars betting against the MBS market when people like you were believing it to be perfectly safe. They must be stupid compared to you, I'm sure. I notice you don't address what I say about putting bad loans onto the tax payer either. People are telling me 'Trowa you are wrong' without presenting any kind of counter argument. You just say 'well done Tula that is spot on' without even substantiating that claim. Mind blowing. Surely you can understand why this is frustrating.
That's the problem with this thread, its just full of mutual back rubbing with no argument at all. The moment anyone presents a counter argument supported by facts, everyone just says 'hes crazy.' You act as if the governments of the World have ALWAYS acted in the peoples interests. That's obviously why they transferred the balance sheets of RBS, AIG, Lloyds TSB, Northern Rock, General Motors (the list goes on) onto the tax payer. Because they always act in the peoples interest, right? They are just frantically trying to save the Euro. That's why they are auctioning the taxpayers future off.
It just amazes me that people have the gall to say 'ok hes crazy, everyone move along' without presenting any argument.
That's it for me. In two pages no one has argued a point, they just say 'you're wrong.' That's how debate works right, you don't present any evidence you just laugh it off and say 'don't listen to that guy.' GG. I'll be back in six months and we'll see if all of this World saving financial intervention has got us anywhere.
Edit - lol I just looked at your posting history. you're very good at making statements like 'no one here but me knows what they are talking about, move along,' but not so great at putting forward an actual argument. wp.
The answer is simple. From the very outset of your entrance into this thread and constituent debate, it was made abundantly clear that you are an Austrian school sycophant, unwilling and possibly unable to realize what sort of errors are inherent in advocating an economic policy circa 1962. You see, when a poster on an internet forum trumpets an economic idea, say Rothbard's critique of Keynesian public goods, and seems more sure of his position than Rothbard himself, most posters are going to simply hit the ignore button. To make matters even worse, argumentation on the part of Mises fans seems predicated almost exclusively on a refusal to compromise. It's as though everyone who read "The Anti-Capitalistic Mentality" decided to then on mirror Mises in his inflexibility every time an opposing view is brought up, when in reality both Rothbard and Hayek famously exclaimed that the Austrian school would do well to loosen up and become more holistic in approach. I've linked this on TL before, but here is a wonderful, fairly extensive critique of Austrian purism in which the author makes it clear that while Mises, Rothbard, and Hayek have provided economics with some essential tools/viewpoints, their work is not the stopping point, not even close. http://econfaculty.gmu.edu/bcaplan/whyaust.htm
As an aside, citing a work of Thomas Woods as though it would solidify your position is rather hilarious, his last amounted to little more than one large state's rights blowjob.
In summary, most people who would normally be inclined to get into a debate with you already know where the path leads, and are simply unwilling to play out a tired scenario. I'll leave you with this quote. "There is no Austrian economics - only good economics, and bad economics"-Milton Friedman.
Thank you. I'll look into everything you posted - especially that article. I'd love to see a counter side - the problem I had is that the people I was replying too posted no counter-argument, they just said 'you are wrong.' Thanks a lot for posting this. I'll reply once I've read through it and read the source material you linked. I'd tend to agree with you - I'm certainly very enthusiastic about Austrian economics but I'm happy to read any other opinions. But I think you give some posters too much credit - a lot of people in this thread clearly have no real opinion of their own, and simply parrot the general consensus. That is frustrating.
What I would ask you, and I know I sound like a broken record, but if this massive transference of debt to the tax payer hadn't occured in the first place, and these banks were allowed to fail, what do you think would have happened? Bearing in mind the liabilities at the time were very small compared to those that exist today.
Rassy - I agree with you. Banks are extremely important to economic development. They push down the price of funding, provide fast, easy to access to liquidity and can should be the primary contributer to small and medium sized business funding and development. The problem of course, as you said, is corruption and the relationship between the state and the financial services industry (in my opinion). You set a dangerous presecedent when you intefere in the market with government bail outs, currency price manipulation etc. Let me just clarify - I believe in the free market, and support it 100%. I just don't believe that, with the level of government and central bank intervention into our economy, we live in something even resembling a free market.
You have elucidated what lies at the crux of the European debt crisis, and that is the terribly difficult to pin down effects of doing something like let banks fail. The Austerity camp claims letting these banks fail will simply and positively reconfigure the markets in a manner more befitting the dynamic of a totally free market, while more Keynesian minded folk are generally in agreement that such an act would lead to worldwide drops in investor confidence, in currency value, in bank holding solvency, etc. The fact of the matter is that anyone who claims knowledge of the externalities of total market-deregulation is either lying or playing on a private interest, and the reasonable folk are left with a very dangerous and risky decision, a decision that, when charged politically, is usually avoided as best as possible.
On June 19 2012 06:22 archonOOid wrote: The problem right now with Europe and especially the southern nations is that they aren't competitively economically. If you look at Greece or Italy what up and coming tech companies have you heard about? The EU budget expenditures are laughable from a postindustrial standpoint as a large part goes to agricultural subsidies. The proposals that richer nations should guarantee or transfer money to poorer nations is really stupid as it will keep the poorer nations as competitive as they are for now.
Exactly! But this has always been the case. Why were these Countries offered giant loans from Europe for infrastructure development in the first place? Germany couldn't have expected Greece to become a competitive economy in such a short period of time. But you say richer nations shouldn't guarantee their debt - wait a second, these are the nations and the banks who didn't do their due diligence, didn't asses their risk and got burned for it. Everyone wanted to make a quick buck, but Greece was never going to be able to develop as much as the ECB's bullshit projections showed. So that leads us on to the final point - if investors don't do their research, and refuse to asses their real risk, then why didn't they take a loss in the first place before they started pumping billions into Greece and skimming as much off the top via private banks as possible in a frantic effort to get their money back? The fact is that if Greece was allowed to default when their debt numbers were about 100 Billion Euro's then we would have had a market shock similar to Lehman (who lost about $130 Billion dollars when they filed for bankruptcy) but we would have probably recovered. As it stands, Germany wants to put the tax payer on the hook for Trillions of Euro's and it all started with a rather small amount of Greek public debt. The more you put into this crazy ponzi, the worse it is going to get.
Madness. Simply madness.
Responding to the bolded points:
Greece can become competitive by lowering wages. The problem isn't that they didn't build infrastructure fast enough it is that wages rose too fast post euro inegration which made them uncompetitive. Unit labor costs must come down for Greece to regain competitivness!
Investors took a hit when Greece restructured its debt, no? My understanding is that the debt reduction was quite large.
It's not a ponzi. The issue isn't just Greece and never was. It is the risk that Greek problems will lead to problems in other countries as well so bailout funds are sized to prevent contagion throughout the Eurozone.
Private investors took a 'haircut' but as far as I'm aware it was nowhere near the overall amount of money at stake here. In fact, a cursory check online doesn't reveal a figure for the write down, do you have any up to date figures? I would be really interested to see how much private investors have lost. Although it appears quite a few investors (hedge funds especially) accepted the write down, lots of other people seem to be contesting it.
Interesting point on wage appreciation as well - I certainly agree that low wages would make the economy more competetive, but why wasn't this attached to the loans as part of the terms of the loan, or at least suggested pre-crisis when all this money was being lent. That seems a bit confusing to me. Benefit of hindsight I guess. Do you have a graph that includes the United Kingdom? I'd like to see our cost of labour.
Farvacola - interesting. So I guess what you are saying is that we don't really know what would happen, until it happened, right? So in the end this could be a good model for future crisis, as we are learning something (well I'd like to think we are). What do you think the next step is if the government intervention model doesn't work?
On June 19 2012 06:22 archonOOid wrote: The problem right now with Europe and especially the southern nations is that they aren't competitively economically. If you look at Greece or Italy what up and coming tech companies have you heard about? The EU budget expenditures are laughable from a postindustrial standpoint as a large part goes to agricultural subsidies. The proposals that richer nations should guarantee or transfer money to poorer nations is really stupid as it will keep the poorer nations as competitive as they are for now.
Exactly! But this has always been the case. Why were these Countries offered giant loans from Europe for infrastructure development in the first place? Germany couldn't have expected Greece to become a competitive economy in such a short period of time. But you say richer nations shouldn't guarantee their debt - wait a second, these are the nations and the banks who didn't do their due diligence, didn't asses their risk and got burned for it. Everyone wanted to make a quick buck, but Greece was never going to be able to develop as much as the ECB's bullshit projections showed. So that leads us on to the final point - if investors don't do their research, and refuse to asses their real risk, then why didn't they take a loss in the first place before they started pumping billions into Greece and skimming as much off the top via private banks as possible in a frantic effort to get their money back? The fact is that if Greece was allowed to default when their debt numbers were about 100 Billion Euro's then we would have had a market shock similar to Lehman (who lost about $130 Billion dollars when they filed for bankruptcy) but we would have probably recovered. As it stands, Germany wants to put the tax payer on the hook for Trillions of Euro's and it all started with a rather small amount of Greek public debt. The more you put into this crazy ponzi, the worse it is going to get.
Madness. Simply madness.
Responding to the bolded points:
Greece can become competitive by lowering wages. The problem isn't that they didn't build infrastructure fast enough it is that wages rose too fast post euro inegration which made them uncompetitive. Unit labor costs must come down for Greece to regain competitivness!
Investors took a hit when Greece restructured its debt, no? My understanding is that the debt reduction was quite large.
It's not a ponzi. The issue isn't just Greece and never was. It is the risk that Greek problems will lead to problems in other countries as well so bailout funds are sized to prevent contagion throughout the Eurozone.
Private investors took a 'haircut' but as far as I'm aware it was nowhere near the overall amount of money at stake here. In fact, a cursory check online doesn't reveal a figure for the write down, do you have any up to date figures? I would be really interested to see how much private investors have lost. Although it appears quite a few investors (hedge funds especially) accepted the write down, lots of other people seem to be contesting it.
Interesting point on wage appreciation as well - I certainly agree that low wages would make the economy more competetive, but why wasn't this attached to the loans as part of the terms of the loan, or at least suggested pre-crisis when all this money was being lent. That seems a bit confusing to me. Benefit of hindsight I guess.
"Under the terms of the restructuring, bondholders stand to lose up to 75% of their investment by writing down the value of Greek bonds by 53.3% and exchanging the debt for securities with a lower interest rate. The deal is expected to eliminate over €100 billion from Greece's debt load and reduce its funding costs over the next few years, according to the Institute of International Finance, which represents the private sector."
I'm not sure what you mean by 'overall amount of money at stake' since the crisis is not just Greece alone.
You can't tie lower wages to a bailout since the government does not have the authority to lower wages for everyone in the private sector.
On June 19 2012 06:22 archonOOid wrote: The problem right now with Europe and especially the southern nations is that they aren't competitively economically. If you look at Greece or Italy what up and coming tech companies have you heard about? The EU budget expenditures are laughable from a postindustrial standpoint as a large part goes to agricultural subsidies. The proposals that richer nations should guarantee or transfer money to poorer nations is really stupid as it will keep the poorer nations as competitive as they are for now.
Exactly! But this has always been the case. Why were these Countries offered giant loans from Europe for infrastructure development in the first place? Germany couldn't have expected Greece to become a competitive economy in such a short period of time. But you say richer nations shouldn't guarantee their debt - wait a second, these are the nations and the banks who didn't do their due diligence, didn't asses their risk and got burned for it. Everyone wanted to make a quick buck, but Greece was never going to be able to develop as much as the ECB's bullshit projections showed. So that leads us on to the final point - if investors don't do their research, and refuse to asses their real risk, then why didn't they take a loss in the first place before they started pumping billions into Greece and skimming as much off the top via private banks as possible in a frantic effort to get their money back? The fact is that if Greece was allowed to default when their debt numbers were about 100 Billion Euro's then we would have had a market shock similar to Lehman (who lost about $130 Billion dollars when they filed for bankruptcy) but we would have probably recovered. As it stands, Germany wants to put the tax payer on the hook for Trillions of Euro's and it all started with a rather small amount of Greek public debt. The more you put into this crazy ponzi, the worse it is going to get.
Madness. Simply madness.
Responding to the bolded points:
Greece can become competitive by lowering wages. The problem isn't that they didn't build infrastructure fast enough it is that wages rose too fast post euro inegration which made them uncompetitive. Unit labor costs must come down for Greece to regain competitivness!
Investors took a hit when Greece restructured its debt, no? My understanding is that the debt reduction was quite large.
It's not a ponzi. The issue isn't just Greece and never was. It is the risk that Greek problems will lead to problems in other countries as well so bailout funds are sized to prevent contagion throughout the Eurozone.
Private investors took a 'haircut' but as far as I'm aware it was nowhere near the overall amount of money at stake here. In fact, a cursory check online doesn't reveal a figure for the write down, do you have any up to date figures? I would be really interested to see how much private investors have lost. Although it appears quite a few investors (hedge funds especially) accepted the write down, lots of other people seem to be contesting it.
Interesting point on wage appreciation as well - I certainly agree that low wages would make the economy more competetive, but why wasn't this attached to the loans as part of the terms of the loan, or at least suggested pre-crisis when all this money was being lent. That seems a bit confusing to me. Benefit of hindsight I guess.
"Under the terms of the restructuring, bondholders stand to lose up to 75% of their investment by writing down the value of Greek bonds by 53.3% and exchanging the debt for securities with a lower interest rate. The deal is expected to eliminate over €100 billion from Greece's debt load and reduce its funding costs over the next few years, according to the Institute of International Finance, which represents the private sector."
I'm not sure what you mean by 'overall amount of money at stake' since the crisis is not just Greece alone.
You can't tie lower wages to a bailout since the government does not have the authority to lower wages for everyone in the private sector.
Lower wages would only weaken demand, which will put us more into the crisis. You only see wages as a cost, while it should also be seen as a demand. Also, wages too high would mean inflation (the price of goods should grow to match the higher cost of wages for companies), not a crisis. The problem is way above wage, it's the whole institution of the EU that is in question - the current wage and unemployment is only a symptom of that. People who don't get that the problem at hand is about how the EU has been made and think they will find the solution within Greek economy weakness are wrong. Just read that http://en.wikipedia.org/wiki/Optimum_currency_area , even if you can discuss this a lot, the idea that the EU zone does not match a certain number of caracteristic that are needed in order to withstand an asymmetric shock is spot on in my opinion.
On June 19 2012 06:22 archonOOid wrote: The problem right now with Europe and especially the southern nations is that they aren't competitively economically. If you look at Greece or Italy what up and coming tech companies have you heard about? The EU budget expenditures are laughable from a postindustrial standpoint as a large part goes to agricultural subsidies. The proposals that richer nations should guarantee or transfer money to poorer nations is really stupid as it will keep the poorer nations as competitive as they are for now.
Exactly! But this has always been the case. Why were these Countries offered giant loans from Europe for infrastructure development in the first place? Germany couldn't have expected Greece to become a competitive economy in such a short period of time. But you say richer nations shouldn't guarantee their debt - wait a second, these are the nations and the banks who didn't do their due diligence, didn't asses their risk and got burned for it. Everyone wanted to make a quick buck, but Greece was never going to be able to develop as much as the ECB's bullshit projections showed. So that leads us on to the final point - if investors don't do their research, and refuse to asses their real risk, then why didn't they take a loss in the first place before they started pumping billions into Greece and skimming as much off the top via private banks as possible in a frantic effort to get their money back? The fact is that if Greece was allowed to default when their debt numbers were about 100 Billion Euro's then we would have had a market shock similar to Lehman (who lost about $130 Billion dollars when they filed for bankruptcy) but we would have probably recovered. As it stands, Germany wants to put the tax payer on the hook for Trillions of Euro's and it all started with a rather small amount of Greek public debt. The more you put into this crazy ponzi, the worse it is going to get.
Madness. Simply madness.
Responding to the bolded points:
Greece can become competitive by lowering wages. The problem isn't that they didn't build infrastructure fast enough it is that wages rose too fast post euro inegration which made them uncompetitive. Unit labor costs must come down for Greece to regain competitivness!
Investors took a hit when Greece restructured its debt, no? My understanding is that the debt reduction was quite large.
It's not a ponzi. The issue isn't just Greece and never was. It is the risk that Greek problems will lead to problems in other countries as well so bailout funds are sized to prevent contagion throughout the Eurozone.
Private investors took a 'haircut' but as far as I'm aware it was nowhere near the overall amount of money at stake here. In fact, a cursory check online doesn't reveal a figure for the write down, do you have any up to date figures? I would be really interested to see how much private investors have lost. Although it appears quite a few investors (hedge funds especially) accepted the write down, lots of other people seem to be contesting it.
Interesting point on wage appreciation as well - I certainly agree that low wages would make the economy more competetive, but why wasn't this attached to the loans as part of the terms of the loan, or at least suggested pre-crisis when all this money was being lent. That seems a bit confusing to me. Benefit of hindsight I guess.
"Under the terms of the restructuring, bondholders stand to lose up to 75% of their investment by writing down the value of Greek bonds by 53.3% and exchanging the debt for securities with a lower interest rate. The deal is expected to eliminate over €100 billion from Greece's debt load and reduce its funding costs over the next few years, according to the Institute of International Finance, which represents the private sector."
I'm not sure what you mean by 'overall amount of money at stake' since the crisis is not just Greece alone.
You can't tie lower wages to a bailout since the government does not have the authority to lower wages for everyone in the private sector.
Lower wages would only mean a weaken demand, which will put us more into the crisis. You only see wages as a cost, while it should be seen as a demand. Also, wages too high would mean inflation (the price of goods should grow to match the higher cost of wages for companies), not a crisis. The problem is way above wage, it's the whole institution of the EU that is in question - the current wage and unemployment is only a symptom of that.
When wages fall prices will as well. Internal demand will be stable while exports will rise.
Typically this is done (more effectively) by devaluing the currency but Greece can't do that because it is part of the Euro. So the options are deflation or leaving the Euro. Government spending is out of the question (beyond bailout funds) since they have too much debt already.
you can discuss as much as you want, europe is pretty fucked either way.
from my understanding its pretty easy.
the worth of the currency reflects the economic output of a nation.
the problem is, you have greece and for example germany with the same currency but a 100% difference in output.
can only work if germany transfers money every year to greece to close this difference - that will not happen. all are going back to old currencys. the end
On June 19 2012 06:22 archonOOid wrote: The problem right now with Europe and especially the southern nations is that they aren't competitively economically. If you look at Greece or Italy what up and coming tech companies have you heard about? The EU budget expenditures are laughable from a postindustrial standpoint as a large part goes to agricultural subsidies. The proposals that richer nations should guarantee or transfer money to poorer nations is really stupid as it will keep the poorer nations as competitive as they are for now.
Exactly! But this has always been the case. Why were these Countries offered giant loans from Europe for infrastructure development in the first place? Germany couldn't have expected Greece to become a competitive economy in such a short period of time. But you say richer nations shouldn't guarantee their debt - wait a second, these are the nations and the banks who didn't do their due diligence, didn't asses their risk and got burned for it. Everyone wanted to make a quick buck, but Greece was never going to be able to develop as much as the ECB's bullshit projections showed. So that leads us on to the final point - if investors don't do their research, and refuse to asses their real risk, then why didn't they take a loss in the first place before they started pumping billions into Greece and skimming as much off the top via private banks as possible in a frantic effort to get their money back? The fact is that if Greece was allowed to default when their debt numbers were about 100 Billion Euro's then we would have had a market shock similar to Lehman (who lost about $130 Billion dollars when they filed for bankruptcy) but we would have probably recovered. As it stands, Germany wants to put the tax payer on the hook for Trillions of Euro's and it all started with a rather small amount of Greek public debt. The more you put into this crazy ponzi, the worse it is going to get.
Madness. Simply madness.
Responding to the bolded points:
Greece can become competitive by lowering wages. The problem isn't that they didn't build infrastructure fast enough it is that wages rose too fast post euro inegration which made them uncompetitive. Unit labor costs must come down for Greece to regain competitivness!
Investors took a hit when Greece restructured its debt, no? My understanding is that the debt reduction was quite large.
It's not a ponzi. The issue isn't just Greece and never was. It is the risk that Greek problems will lead to problems in other countries as well so bailout funds are sized to prevent contagion throughout the Eurozone.
Private investors took a 'haircut' but as far as I'm aware it was nowhere near the overall amount of money at stake here. In fact, a cursory check online doesn't reveal a figure for the write down, do you have any up to date figures? I would be really interested to see how much private investors have lost. Although it appears quite a few investors (hedge funds especially) accepted the write down, lots of other people seem to be contesting it.
Interesting point on wage appreciation as well - I certainly agree that low wages would make the economy more competetive, but why wasn't this attached to the loans as part of the terms of the loan, or at least suggested pre-crisis when all this money was being lent. That seems a bit confusing to me. Benefit of hindsight I guess.
"Under the terms of the restructuring, bondholders stand to lose up to 75% of their investment by writing down the value of Greek bonds by 53.3% and exchanging the debt for securities with a lower interest rate. The deal is expected to eliminate over €100 billion from Greece's debt load and reduce its funding costs over the next few years, according to the Institute of International Finance, which represents the private sector."
I'm not sure what you mean by 'overall amount of money at stake' since the crisis is not just Greece alone.
You can't tie lower wages to a bailout since the government does not have the authority to lower wages for everyone in the private sector.
Lower wages would only mean a weaken demand, which will put us more into the crisis. You only see wages as a cost, while it should be seen as a demand. Also, wages too high would mean inflation (the price of goods should grow to match the higher cost of wages for companies), not a crisis. The problem is way above wage, it's the whole institution of the EU that is in question - the current wage and unemployment is only a symptom of that.
When wages fall prices will as well. Internal demand will be stable while exports will rise.
Typically this is done (more effectively) by devaluing the currency but Greece can't do that because it is part of the Euro. So the options are deflation or leaving the Euro. Government spending is out of the question (beyond bailout funds) since they have too much debt already.
You are turning around reality. When wage goes up for no particular reason (no productivity gain) it will create inflation. But the other side is not right, when wage fall, price will not fall because price are not only made out of the equilibrium of supply and demand, but also out of production costs. Nobody ever used devaluation to lower wages ? Don't understand, but it's true that Greece not being able to devaluate is a big reason for the crisis.
On June 20 2012 04:28 phil.ipp wrote: you can discuss as much as you want, europe is pretty fucked either way.
from my understanding its pretty easy.
the worth of the currency reflects the economic output of a nation.
the problem is, you have greece and for example germany with the same currency but a 100% difference in output.
can only work if germany transfers money every year to greece to close this difference - that will not happen. all are going back to old currencys. the end
I agree. But the europe is not necessarily over, there are solutions. There are difference in output between the Nevada and Washington or New York, it doesn't destroy the united state.
EPT![[image loading]](http://media.economist.com/sites/default/files/imagecache/full-width/images/2012/05/blogs/graphic-detail/20120526_woc265.png)
