The European Debt Crisis and the Euro - Page 83

On June 20 2012 04:44 phil.ipp wrote:
Europe is not over, but the currency as it is now is over.

there are many solutions to the problem but everyone of them is not without a big rezession.

to use a tv metaphor: there will be blood

On June 20 2012 03:23 Geo.Rion wrote:

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 20 2012 03:01 Trowa127 wrote:


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 20 2012 00:42 Trowa127 wrote:
]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.

On June 20 2012 08:06 Tula wrote:


Right getting back into the argument now that I have some free time to compose my thoughts into a readable format (English is not my first language so I need to pay attention, otherwise I will not be able to get my points across).

One of the first problems in this debate is that quite a few people simply do not understand anything in regards to economics and simply parrot what their favorite newssource or politician says. I think that is something we can all agree on, and is one of the underlying problems of the EURO. These matters are highly complex to say the very least, but our politicians are trying to walk the tightrope between doing the right thing and not completly loosing all voters in the process. In many EU countries (including Greece) we currently have Opposition parties who are completly comfortable flat out lying to the population, and far too many people believe them (what they are saying specifically varies, the Austrian FPÖ for example is currently campaigning that we should "throw Greece out of the EU" even if that is simply impossible under current EU law, while Greece's Syriza said they should stop paying back their debts but remain in the EURO (no idea how that is supposed to work)). So yes, I can understand what you mean, and I would love to cite you some sources on which I base my opinion, but they are almost exclusively in German...

Let's get to the meat of your post after this slight excursion, you want an answer to the question what would have happened if we had not "moved" the debt on the shoulders of the taxpayers? Obviously the true costs are not something we can calculate with any certainity, but one thing almost all European economists agree on, is that IF we had simply let Greece smash 3 years ago we would have paid more (within the past 3 years) than we currently did. The amount of outstanding debts we would have had to write off would have been huge lump sum(Greece owed most of their debt to a combination of their own banks and German/French/Austrian banks) but most likely surviveable (to those countries), but we still would have had to pay almost the same amount of "help" after the crash (and after allowing some of our own banks to crash as a followup, because it makes little sense to talk about a what IF scenario, if we presume the bailout simply had happened 6 months later for the struggling German banks...) to make sure the Greek people can get back on their feet in one way or another. (Unless someone wants to propose we should simply ignore whatever happens there, no matter that we swore we would be brothers from now on)

Still, even with that completly uncertain number (and I must admit to some doubt about the number, since I've seen widly varying guesses in the last 3 years) there is one more fundamental factor, that being that some amount of bailout was completly unavoidable due to the links between Banks and State in (at least) some countries. When this crisis broke out both Germany and Austria guaranteed their banks (to prevent a run on them after Lehman brothers failed). From that point onwards, we were commited to bailing out at least our own banks (who were fairly safe at that point, the true Greek Crisis had not become appareant). So the true question has never been should we try to bail out someone at all? The question has always been can we save Greece without having to bail out our banks after they go bankrupt.

Personally I blame the EU for one thing the most, and that is their flip flopping attitude during the early days of this crisis. Considering how much money we had to send towards Greece in the last 2 years, I am honestly wondering if we could not have solved this much faster, if we had sent enough money with the FIRST packet, instead of this strange approach.

The crux of the matter is that the EU did not move fast enough to prevent the markets from panicking and injecting a fear dynamic into the entire situation. If Germany, Denmark, Austria, Holland and Liechtenstein had simply said: "very well Greece were complete idiots and are struggling now, but no matter we can manage this" at the very beginning and paid, would this entire situation have gotten as bad?

Closing point, personally I am not a great fan of austerity, but I also do not believe that a debt crisis can be solved by taking on new debts to cover the old. Frankly I wish we would accept that Greece simply cannot pay off this mountain of debt of their own power. Either we need to truly help them (and that means simply paying off at least a major part of their debt, even if that will hurt our own economies and in the process become a true European Union to prevent similar things from happening again) or they need to leave the Euro in some orderly fashion (and honestly I don't have the slightest clue if that is even possible legally, without their debts reamining a millstone around their neck).

On June 20 2012 08:15 Psychobabas wrote:


A. Syriza did not say that Greece shouldnt repay the debts, they are asking for renegotiation due to poverty hitting social instability levels. They are not saying that they wont pay, they just dont want even more hard-hitting austerity measures, ie. keeping the ones already imposed and negotiating the ones to come.

B. Greece isnt the problem really apart from the ripple effect. 2 weeks ago Spain, the euro's 4th biggest economy, filed for their first massive bailout sum. The Baltic states are struggling, Italy is struggling, Portugal is struggling, Ireland is struggling. Get ready for more.

Cyprus has become the fifth eurozone country to request financial aid from its partners in the European currency union as it struggles to shore up its banks, which took heavy losses on Greek debt.

The island nation's government said in a terse statement on Monday that it required assistance following "negative spillover effects through its financial sector, due to its large exposure in the Greek economy".

Stefanos Stefanou, government spokesman, would not say how much Cyprus would ask from the European bailout fund, saying that the amount would be subject to negotiations in the coming days.

The 27 leaders of the European Union will meet in Brussels on Thursday.

Stefanou said that despite its demand for European aid, the Cypriot government would continue negotiations for a possible loan from a country outside the EU, such as Russia or China. Cyprus has been surviving off a Russian loan so far this year.

"One doesn't preclude the other," Stefanou told the Associated Press news agency. "Our efforts to secure a bilateral loan will continue."

On June 27 2012 07:35 Rassy wrote:
Netherlands and germany raising retirement age to 67, yet france manages to lower it from 62 to 60.

On June 27 2012 06:42 WhiteDog wrote:
I feel like Europe is a dead end. Germany as it is now is destroying the EU with their neo mercantilist policy, not to mention most countries within the EU does not feel like they are european, but just use the EU like some kind of business organisation.

On June 27 2012 21:05 radiatoren wrote:

I think that Merkel is getting the short stick in this and will end up having to accept a far more centralised financial policy in the Euro-zone. It is actually already moving in that direction with Rompuys proposals.

Die Linke:
Rompuys planhttp://www.ft.com/cms/s/0/101fb194-bf88-11e1-bb88-00144feabdc0.html
Merkel wiggling