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Okay, let me first say one thing: i'm a pro-european and actually proud of the euro. Just to getting that out of the way in the beginning. But i really get angered by that constant repeating of WRONG media news that germany profited from the euro more then others did or profited at all atleast in an economic sense.
Before the introduction of the Euro and the associated equalisation of interested rates on government stocks across all EZ countries Germany was in 3rd place of the gross domestic product (GDP) per capita in europe. Till the Lehman default in 2008 we decended in the ranks and were at around 10th-11th place by that time. For many years after the Euro was introduced Germany had the lowest economic growth in europe. We had a very high and barely controlable amout of unemployment. We had the lowest net rate of investments of ALL OECD countries. Germany was called the "sick man of europe" during that time. Only after former Chancellor Schröder introduced significant and painful social reforms which later on costed him his reelection Germany was able with a so-called "real devaluation" (the other way would be a currency devaluation - which most of the southern countries did before the Euro existed to increase their competitiveness) to slowly and steadily increase its competitiveness again. To say that during this phase Germany would have profited from the Euro is a plain lie or uninformend stupidity since it is turning the truth upside down and ignores all existing facts. I don't care who or which so-called expert who has never been to Germany claimed it - it is WRONG.
Where we (Germany) profited was with our exports and ONLY there and mostly after the so-called Agenda 2010 by Schröder because as i said what we did was a real devaluation of our wages and generall costs. This means that while the domestic demands in Germany itself wasn't growing (higher prices, lower wages) we got alot cheaper and got a higher competitiveness then most of the southern countries. This almost automatically leads to high exports into countries where the opposite is happening and in that case we are talking about the southern countries of europe and ireland. Those countries had a "boom" during those years, increasing their prices, wages and thereby also lowering their competitiveness. Furthermore because they were able to lend money much easier and cheaper than before they accumulated insane amouts of debt. The standard of living in those countries increased too much and too quickly for their own economy to support it. Now their prices are too high and because they cannot devaluate their currency the only option they have is either leave the Euro Zone and devaluate or do a real devaluation like Germany did but that is going to be much harder for countries like Greece and Portugal since their economic state is MUCH MUCH MUCH MUCH worse compared to Germany back then. The price tag of the products they offer are just too high and there is no demand for them anymore because of that.
Still i'm only talking about our exports. They have raised about 42% since the beginning of the Euro BUT as i said in the beginning the overall per capita GDP deceased relative to the other countries in Europe and that is basically because our domestic demand was going down like crazy. The GDP is the sum of the exports and the domestic demands of a country for those who have no idea about economics. Again ... 3rd before the Euro 10th during 2008. Thats a fact. (i would provide links but they are in german so it doesnt make much sense)
With the beginning of the crisis this changed though. Germany profited alot from the crisis which imo is not a good thing. The reason for this is that after the Lehman default and the European debt crisis investors were very hesitant to lend money and were very afraid of taking hugh risks. What should they do with all their money? With government stocks and shady american financial constructs with an even more shady triple A rating out of the question they've invested the money in Germany. It was never cheaper to get a credit in Germany as it is today - we basically have a huge building boom. The interest rates on short-timed german government stocks are below the level of inflation (so they are basically donating Germany money just to keep it safe). This ofcourse creates alot of investment, jobs and therefore increases the overall economic growth. The investors are just afraid of risk and believe in and trust Germanys economy. They wont get as much profit from it but atleast the risk is low. It is basically a mirror image of the situation as it was before the crisis just with a little difference: Germany in contradiction to Greece and Portugal has a much more solid economy.
But why is this Germanys fault? Till the Lehman default Germany was basically the biggest loser of the Euro and now as things have change da bit we are blamed for EVERYTHING? Get your facts straight pls. The Euro as it was introduced was basically a golden Credit Card with "do not use me" written on it without any form of harm if you intend to ignore that warning. That basically is the reason for our problems today. Each individual country now has only one of the following solutions: Currency devaluation (means: leave the Euro Zone), real devaluation (will probably shock the voters or lead to civil unrest or even civil war if the amout needed is too high f.e. in case of Greece) or a high inflation in Germany and the other more competitive countries like the Netherlands, Finnland, Austria meaning we would accept to decrease the competitivness of our economy. In case of Germany basically revert the changes that were made with the Agenda 2010. I guess the only solution that would not lead to civil war would be that Portugal and Greece would leave the Euro to devaluate with a perspective of re-entering it as soon as their economy is in a better state. For the remaining countries it should be possible to bring the economies more in line if germany highers their wages a bit and Spain/France/Italy make some unpopular changes and reforms.
PS: Don't believe everything those wall-street and city of london pseudo analytics say. Why? Because they have a shitload of money invested in spanish, italian and french banks and government stocks that needs to be rescued . Thats why they want Eurobonds. Because they don't want to lose their money and still profit from the insanely high interest rates. They fool you by saying that it's all Germanys fault and that the END IS NEAR if there wont be Eurobonds etc. It is just a big war behind the scenes. The alternativ would be that they as the investors have to abstain from many of their high risk investments and thereby losing money.
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On June 28 2012 03:25 JoelB wrote:
Okay, let me first say one thing: i'm a pro-european and actually proud of the euro. Just to getting that out of the way in the beginning. But i really get angered by that constant repeating of WRONG media news that germany profited from the euro more then others did or profited at all atleast in an economic sense.
Before the introduction of the Euro and the associated equalisation of interested rates on government stocks across all EZ countries Germany was in 3rd place of the gross domestic product (GDP) per capita in europe. Till the Lehman default in 2008 we decended in the ranks and were at around 10th-11th place by that time. For many years after the Euro was introduced Germany had the lowest economic growth in europe. We had a very high and barely controlable amout of unemployment. We had the lowest net rate of investments of ALL OECD countries.
That has nothing to do with the EU. You had one of the lower economical growth because you were already a big economy. It's like during the 30 glorious, the europe had an economical growth of 5-7% (for france and germany) but the US had "only" 1 to 4% economical growth. It doesn't mean the US didn't profit from the free market more than say France, it just mean it is easier to have a high economical growth when you start smaller.
In economy, in the most basics models on economical growth (like Solow's model) there is a huge part of the economical growth of smaller economies that is explained by the idea that they catch up : "A key prediction of neoclassical growth models is that the income levels of poor countries will tend to catch up with or converge towards the income levels of rich countries as long as they have similar characteristics – for instance saving rates" from here.
Also, about unemployment, it's the same in the entire europe more or less (in comparaison to the US or most other OCDE countries). There is a famous OCDE rapport on employment that proves that.
Germany was called the "sick man of europe" during that time. Only after former Chancellor Schröder introduced significant and painful social reforms which later on costed him his reelection Germany was able with a so-called "real devaluation" (the other way would be a currency devaluation - which most of the southern countries did before the Euro existed to increase their competitiveness) to slowly and steadily increase its competitiveness again. To say that during this phase Germany would have profited from the Euro is a plain lie or uninformend stupidity since it is turning the truth upside down and ignores all existing facts. I don't care who or which so-called expert who has never been to Germany claimed it - it is WRONG.
You are mistaking the Europe and the euro. It's two different things. Also germany was the "sick man of europe" because it was split in two, and the two part of germany had completly different economical structure, so that's another topic entirely. Also, saying that germany is today gaining way more than others thanks to the euro is not saying that germany is not a great economy. I think everybody agrees that germany is a great economy and way more competitiv than France, Italy, Spain or Greece.
Where we (Germany) profited was with our exports and ONLY there and mostly after the so-called Agenda 2010 by Schröder because as i said what we did was a real devaluation of our wages and generall costs. This means that while the domestic demands in Germany itself wasn't growing (higher prices, lower wages) we got alot cheaper and got a higher competitiveness then most of the southern countries. This almost automatically leads to high exports into countries where the opposite is happening and in that case we are talking about the southern countries of europe and ireland. Those countries had a "boom" during those years, increasing their prices, wages and thereby also lowering their competitiveness. Furthermore because they were able to lend money much easier and cheaper than before they accumulated insane amouts of debt. The standard of living in those countries increased too much and too quickly for their own economy to support it. Now their prices are too high and because they cannot devaluate their currency the only option they have is either leave the Euro Zone and devaluate or do a real devaluation like Germany did but that is going to be much harder for countries like Greece and Portugal since their economic state is MUCH MUCH MUCH MUCH worse compared to Germany back then. The price tag of the products they offer are just too high and there is no demand for them anymore because of that.
You don't understand basic economy. Germany profit from exports, which means, from a pure mercantilist point of view, they have a positif commercial balance : money going in and no money going out. Basically it explain why the debt of most country just exploded after the subprime crisis while the german debt (that was higher than France prior to 2007) is now one of the lowest of all the europe.
So all in all, the idea that the current eu monetary system is more helping germany than other countries is just true, I don't really know what you can add to that.
![[image loading]](http://upload.wikimedia.org/wikipedia/commons/thumb/9/9c/Current_account_imbalances_EN_%283D%29.svg/440px-Current_account_imbalances_EN_%283D%29.svg.png)
The problem is not that germany is competitiv, nor that people buy german goods, the problem is that the money germany gain from exports is never reinvested in something european (partly due to the fact that german wages didn't increase at all despite the growth and the gain from exports). It's why economist says they have a neo-mercantilist policy.
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Zurich15328 Posts
You can add to that that Germany has made important reforms 10 years ago and had virtually no increase in wages for a decade. And is now reaping the benefits of that. It's not just the Euro that makes Germany run so well recently, and people seem to be quick to forget that.
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On June 28 2012 05:05 zatic wrote:
You can add to that that Germany has made important reforms 10 years ago and had virtually no increase in wages for a decade. And is now reaping the benefits of that. It's not just the Euro that makes Germany run so well recently, and people seem to be quick to forget that.
The thing is, the fact that your wage didn't increase in 10 year is a problem for other european countries because it means germany's demand is not growing. Where is the money going ? If germany is gaining more through exportation, they should earn more and spend more, so that the money continue on flowing and eventually goes back into greek pockets, but it's not.
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http://cib.natixis.com/flushdoc.aspx?id=52172
I already posted this once in the thread and it adresses the question about Germany's profits.
I'll break it down really short for you (WhiteDog), since you promised earlier you would read it. You obviously didn't.
Look at chart 1. I'd estimate that to be an average of -15 % trade balance over 12 years, of which Eurozone takes roughly 7 %.
Look at chart 2, and you have Germany: -2 % trade balance from German imports. Know what?
2/15 of these percentages have to be accounted to Germany. 100 % of these percentages are stuff the Greek bought without being able to afford it.
This whole campaign against Germany sucks totally, they are hindering further centralization of the EU by Eurobonds, and are being bombarded with medial campaigns. Stop eating the stuff you get thrown at, read the article and you have tons of evidence on the spot.
Blame GREECE, not Germany. Greece is having a trade deficit fueled with debt, they are buying stuff when they can't, and get even paid for it from the EU, that on the other hand gets the greatest contribution in these payments from Germany.
This debt fueled trade deficit is very similar to the American economic policy, just that the Americans had Chinese to buy their bonds in the past and somewaht keep the currency alive, still, over the decades, dollar lost more than 90 % of its original value.
But what Germany has to get accused for simply cause they are competitive is ridiculous. You want them to have a bad economy in expectation of other economies to be able to catch up? Well, if that happens, it will be the Chinese economy which surpasses us all, and EU members with shitty economy will still have a shitty economy, and less contributions from EU's stronger economies which had to shoot themselves into their own leg according to the newspapers.
gg (now even Germans believe they should feel guilty for having a better economy,)
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On June 28 2012 05:22 Vivax wrote:http://cib.natixis.com/flushdoc.aspx?id=52172I already posted this once in the thread and it adresses the question about Germany's profits. I'll break it down really short for you (WhiteDog), since you promised earlier you would read it. You obviously didn't. Look at chart 1. I'd estimate that to be an average of -15 % trade balance over 12 years, of which Eurozone takes roughly 7 %. Look at chart 2, and you have Germany: -2 % trade balance from German imports. Know what? 2/15 of these percentages have to be accounted to Germany. 100 % of these percentages are stuff the Greek bought without being able to afford it. This whole campaign against Germany sucks totally, they are hindering further centralization of the EU by Eurobonds, and are being bombarded with medial campaigns. Stop eating the stuff you get thrown at, read the article and you have tons of evidence on the spot. Blame GREECE, not Germany. Greece is having a trade deficit fueled with debt, they are buying stuff when they can't, and get even paid for it from the EU, that on the other hand gets the greatest contribution in these payments from Germany. This debt fueled trade deficit is very similar to the American economic policy, just that the Americans had Chinese to buy their bonds in the past and somewaht keep the currency alive, still, over the decades, dollar lost more than 90 % of its original value. But what Germany has to get accused of simply cause they are competitive is ridiculous. You want them to have a bad economy in expectation of other economies to be able to catch up? Well, if that happens, it will be the Chinese economy which surpasses us all, and EU members with shitty economy will still have a shitty economy, and less contributions from EU's stronger economies which had to shoot themselves into their own leg according to the newspapers. gg
I already answered to you, with numbers backed up. I will not respond another time to the same post and same argument.
The text you linked is only playing with words. Yes, greece is not suffering from German's policy, but Greece actual debt crisis is due to how the EU and the ECB is made, and germany is gaining money from it.
Blaming greece is just the easiest way to do it. In my opinion greece should just go out of the EU because it is destroying them, and putting up some kind of tariff / taking back their own currency. Heck all the european countries with high debt should do that. And the country that will suffer from that policy would be germany, because they have a neo mercantilist policy.
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You said something of Germany selling 10 M to Greece and Germany buying 2M from Germany. Without posting a source.
http://www.teamliquid.net/forum/postmessage.php?quote=1557&topic_id=114227
Without offense, I believe you are very ideology-driven in your 'reasoning'. Whenever there's something to complain about Germany, you're first to post. But you completely skip the fact that Germany makes 2 % of 15 % Greek trade deficit, and that they pay more than they profit from Greece with all the payments to EU and their wealth in TARGET positions, which are their part of positive saldo consisting of money they still have to get paid for. If that money has to pe baid back from European crisis countries like Greece, then a huge part of Germany's wealth is illusionary in light of PIGS bankruptcy.
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On June 28 2012 05:33 Vivax wrote:You said something of Germany selling 10 M to Greece and Germany buying 2M from Germany. Without posting a source. http://www.teamliquid.net/forum/postmessage.php?quote=1557&topic_id=114227Without offense, I believe you are very ideology-driven in your 'reasoning'. Whenever there's something to complain about Germany, you're first to post. But you completely skip the fact that Germany makes 2 % of 15 % Greek trade deficit, and that they pay more than they profit from Greece with all the payments to EU and their wealth in TARGET positions, which are their part of positive saldo consisting of money they still have to get paid for. If that money has to pe baid back from European crisis countries like Greece, then a huge part of Germany's wealth is illusionary in light of PIGS bankruptcy.
No I gave a source, no offense but if you can't read my posts and just pick one post out of the 10th or so I wrote back then, it feel kinda wrong.
http://www.smartexport.com/fr/Grece.html
Grèce : Principaux pays clients
Montant exports
Allemagne 2809 M USD
Italie 2615 M USD
Bulgarie 1958 M USD
Grèce : Principaux pays fournisseurs
Montant imports
Allemagne 10652 M USD
Italie 10182 M USD
Russie 6555 M USD
What I dislike about the current situation is that the EU is a fucked up. I have nothing against germany : they are only gaining money from the europe current status, but the problem is certainly not germany but the EU as it is. As paralleluniverse linked before, everything that is happening now can be understood through the theory of the optimal currency area.
The EU now is acting like the International Monetary Fund back during the consensus of washington : pushing for both budget austerity and structural reform to boost "competitiveness" that is all pushing us in the wall.
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On June 28 2012 05:08 WhiteDog wrote:Show nested quote +On June 28 2012 05:05 zatic wrote:
You can add to that that Germany has made important reforms 10 years ago and had virtually no increase in wages for a decade. And is now reaping the benefits of that. It's not just the Euro that makes Germany run so well recently, and people seem to be quick to forget that. The thing is, the fact that your wage didn't increase in 10 year is a problem for other european countries because it means germany's demand is not growing. Where is the money going ? If germany is gaining more through exportation, they should earn more and spend more, so that the money continue on flowing and eventually goes back into greek pockets, but it's not.
Germany was never paid (in liquidity) by the increased export, as the periphery borrowed money through the target system to finance their export (and haven't yet paid back the debt).
Hence German GDP rose due to the euro, but "real wealth" didn't.
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Thanks for the source, but the numbers are so gross that they barely allow conclusions, they are plain import/export absolute numbers.
They allow me however to make a great counterpoint to your argumentation (That Germany is disproportionately profitting from Greece and that is a major contributor to the Euro crisis, also the newspaper version I would guess).
On to this counterargument:
I wonder why you don't adress Italy. They are obviously on par with Greece with what you're accusing Germany for.
Quotient Germany = 3,79 (imports from Germanys/Greek exports=10652/2809)
Quotient Italy = 3,89 (imports from Italy/Greek exports to Italy=10182/2615)
So, the trade discrepance is even greater by 0,10 between Greece and Italy, yet Italy is in economic trouble! And it's Germany's fault! Makes perfect sense
If you go by relative numbers, Italy is the main villain here, just that Italy approves of Eurobonds and doesn't get into medial attention based on the claim that the exporteurs are making profit out of Greece's situation.
Also, on mercantilism: Ironically it would be THE way for Greece to get into a better spot since they would be able to protect their own economy with customs. That's the whole purpose of it, mercantilism allows for more control over a nations' economy by that nation, right now we're heading into the opposite for years, free market and globalization everywhere.
The big ones eat the small ones in that system (Something like China>Germany>Greece), and when that happens people(read:media) actually complain about the big ones (Germany) and not about globalization (EU free trade etc.).
You won't find many newspapers complaining about China's strength these days though...
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On June 28 2012 05:47 Vivax wrote:Thanks for the source, but the numbers are so gross that they barely allow conclusions, they are plain import/export absolute numbers. They allow me however to make a great counterpoint to your argumentation (That Germany is disproportionately profitting from Greece and that is a major contributor to the Euro crisis, also the newspaper version I would guess). On to this counterargument: I wonder however why you don't adress Italy. They are obviously on par with Greece with what you're accusing Germany for. Quotient Germany = 3,79 (imports from Germanys/Greek exports=10652/2809) Quotient Italy = 3,89 (imports from Italy/Greek exports to Italy=10182/2615) So, the trade discrepance is even greater by 0,10 between Greece and Italy, yet Italy is in economic trouble! And it's Germany's fault! Makes perfect sense If you go by relative numbers, Italy is the main villain here, just that Italy approves of Eurobonds and doesn't get into medial attention based on the claim that the exporteurs are making profit out of Greece's situation.
I never said it was specifically germany in problem, it's the whole free market system in the EU that is. But the fact that germany is currently gaining from it and not other country is true. I'm not saying germany is destroying greece, I'm saying Greece is in a bad spot because of the current EU monetary system, and germany is gaining from it, but the situation could be the exact opposite it would be the same.
Italy is way bigger than greece, you got to look at all the commercial balance, okay the trade between italy and greece is favoring italy, mainly because italy and greece are close and Italy is a big country, but that doesn't change my point.
I give you an exemple, Greece is buying 10 billion $ a year of german goods, and selling 2 M $ a year, it means they lose 8 M $ a years, but Greece's GDP is 215.088 billion € so 8 billion $ is a actually a big deal.
On the other side, Italy is gaining 8 billion $ from Greece as well, but Italy's GDP is $2.055 trillion so 8 billion $ is not much.
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On June 28 2012 05:54 WhiteDog wrote:Show nested quote +On June 28 2012 05:47 Vivax wrote:Thanks for the source, but the numbers are so gross that they barely allow conclusions, they are plain import/export absolute numbers. They allow me however to make a great counterpoint to your argumentation (That Germany is disproportionately profitting from Greece and that is a major contributor to the Euro crisis, also the newspaper version I would guess). On to this counterargument: I wonder however why you don't adress Italy. They are obviously on par with Greece with what you're accusing Germany for. Quotient Germany = 3,79 (imports from Germanys/Greek exports=10652/2809) Quotient Italy = 3,89 (imports from Italy/Greek exports to Italy=10182/2615) So, the trade discrepance is even greater by 0,10 between Greece and Italy, yet Italy is in economic trouble! And it's Germany's fault! Makes perfect sense If you go by relative numbers, Italy is the main villain here, just that Italy approves of Eurobonds and doesn't get into medial attention based on the claim that the exporteurs are making profit out of Greece's situation. I never said it was specifically germany in problem, it's the whole free market system in the EU that is. But the fact that germany is currently gaining from it and not other country is true. I'm not saying germany is destroying greece, I'm saying Greece is in a bad spot because of the current EU monetary system, and germany is gaining from it, but the situation could be the exact opposite it would be the same. Italy is way bigger than greece, you got to look at all the commercial balance, okay the trade between italy and greece is favoring italy, mainly because italy and greece are close and Italy is a big country, but that doesn't change my point. I give you an exemple, Greece is buying 10 billion $ a year of german goods, and selling 2 M $ a year, it means they lose 8 M $ a years, but Greece's GDP is 215.088 billion € so 8 billion $ is a actually a big deal. On the other side, Italy is gaining 8 billion $ from Greece as well, but Italy's GDP is $2.055 trillion so 8 billion $ is not much.
What? You think the target system (root of all the problem) and the euro fiat currency is an invention of the free market?
And what about the inelasticity of wages?
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On June 28 2012 05:36 WhiteDog wrote:
The EU now is acting like the International Monetary Fund back during the consensus of washington : pushing for both budget austerity and structural reform to boost "competitiveness" that is all pushing us in the wall.
Yeah, and that's why I don't understand that people want more centralization, more free market, more supranational interests being satisfied.
I think it's time for people to find back to a healthy 'nationalism', I can't find a better word (and we learned it's a badly sounding word, right?), but simply put, I don't like how there's this pressure to lose more national souveranity and identity to fit into the worlds free market & free borders concept.
It's simply not the right situation to loosen national souveranity now. And if anyone thinks that being outside of an union gives you a huge disadvantage on an international level, take a look at Switzerland. They're still among the wealthiest countries in the world with no big industry to speak of.
Right now we're part of an union where the economic policy is directed by a former Goldman Sachs vice president. And you know what the union wants: more melting pot policy.
I was actually hoping for Greece's referendum to cause an exit.
Nevermind the ESM, seems like countries have the right to Veto. And I don't even want to start talking about that <_<.
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On June 28 2012 06:36 Vivax wrote:Show nested quote +On June 28 2012 05:36 WhiteDog wrote:
The EU now is acting like the International Monetary Fund back during the consensus of washington : pushing for both budget austerity and structural reform to boost "competitiveness" that is all pushing us in the wall. Yeah, and that's why I don't understand that people want more centralization, more free market, more supranational interests being satisfied. I think it's time for people to find back to a healthy 'nationalism', I can't find a better word (and we learned it's a badly sounding word, right?), but simply put, I don't like how there's this pressure to lose more national souveranity and identity to fit into the worlds free market & free borders concept. It's simply not the right situation to loosen national souveranity now. And if anyone thinks that being outside of an union gives you a huge disadvantage on an international level, take a look at Switzerland. They're still among the wealthiest countries in the world with no big industry to speak of. Right now we're part of an union where the economic policy is directed by a former Goldman Sachs vice president. And you know what the union wants: more melting pot policy. I was actually hoping for Greece's referendum to cause an exit. Nevermind the ESM, seems like countries have the right to Veto. And I don't even want to start talking about that <_<.
I understand your point concerning nationalism but where we are now there is just no going back. It means that we would surrender the Euro and Europe because of cowardice. History should have teached you why we need Europe and that nationalism has never ended in a good way - be it a nice one or not. What we need now are visions and perspectives and not a fearful "lets go back to the past". The past is the past and though i would agree that the Euro was a bad construction in the beginning (Maastricht was just a joke) the breakdown would not only create a new world wide economic and financial crisis unheard of as of now but also cost Germany and all the other countries alot of money and even more wealth. It is just not an option. There is no way other then surrendering national souveranity in terms of financial politics. But this really needs to go hand in hand with a new idea of Europe - with elections for the president and/or the parliament and direct democratic influence. No politics of commissions and backrooms anymore that so many people in europe rightfully find highly disturbing and undemocratic (not saying dictatorship here). If those changes are made and the politicians are able to get the people supporting them (europe was communicated terribly this far ... was it bad? Europe's fault. Was it good? Our work) i see a bright future ahead. If not - then this whole continent will collapse in a way most people cannot even imagine.
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On June 28 2012 06:07 Hider wrote:Show nested quote +On June 28 2012 05:54 WhiteDog wrote:On June 28 2012 05:47 Vivax wrote:Thanks for the source, but the numbers are so gross that they barely allow conclusions, they are plain import/export absolute numbers. They allow me however to make a great counterpoint to your argumentation (That Germany is disproportionately profitting from Greece and that is a major contributor to the Euro crisis, also the newspaper version I would guess). On to this counterargument: I wonder however why you don't adress Italy. They are obviously on par with Greece with what you're accusing Germany for. Quotient Germany = 3,79 (imports from Germanys/Greek exports=10652/2809) Quotient Italy = 3,89 (imports from Italy/Greek exports to Italy=10182/2615) So, the trade discrepance is even greater by 0,10 between Greece and Italy, yet Italy is in economic trouble! And it's Germany's fault! Makes perfect sense If you go by relative numbers, Italy is the main villain here, just that Italy approves of Eurobonds and doesn't get into medial attention based on the claim that the exporteurs are making profit out of Greece's situation. I never said it was specifically germany in problem, it's the whole free market system in the EU that is. But the fact that germany is currently gaining from it and not other country is true. I'm not saying germany is destroying greece, I'm saying Greece is in a bad spot because of the current EU monetary system, and germany is gaining from it, but the situation could be the exact opposite it would be the same. Italy is way bigger than greece, you got to look at all the commercial balance, okay the trade between italy and greece is favoring italy, mainly because italy and greece are close and Italy is a big country, but that doesn't change my point. I give you an exemple, Greece is buying 10 billion $ a year of german goods, and selling 2 M $ a year, it means they lose 8 M $ a years, but Greece's GDP is 215.088 billion € so 8 billion $ is a actually a big deal. On the other side, Italy is gaining 8 billion $ from Greece as well, but Italy's GDP is $2.055 trillion so 8 billion $ is not much. What? You think the target system (root of all the problem) and the euro fiat currency is an invention of the free market? And what about the inelasticity of wages?
"Free market" is the invention (with the eu monetary system), nothing is "an" invention of the free market, because the free market has no will and never existed in the first place - the birth of the market only happened because of state, in the boundary made by the state, and it's not some kind of entity that represent the normal evolution of mankind. Don't read Hayek.
The free market is an idea that cannot sustain itself in the real world.
On June 28 2012 07:06 JoelB wrote:Show nested quote +On June 28 2012 06:36 Vivax wrote:On June 28 2012 05:36 WhiteDog wrote:
The EU now is acting like the International Monetary Fund back during the consensus of washington : pushing for both budget austerity and structural reform to boost "competitiveness" that is all pushing us in the wall. Yeah, and that's why I don't understand that people want more centralization, more free market, more supranational interests being satisfied. I think it's time for people to find back to a healthy 'nationalism', I can't find a better word (and we learned it's a badly sounding word, right?), but simply put, I don't like how there's this pressure to lose more national souveranity and identity to fit into the worlds free market & free borders concept. It's simply not the right situation to loosen national souveranity now. And if anyone thinks that being outside of an union gives you a huge disadvantage on an international level, take a look at Switzerland. They're still among the wealthiest countries in the world with no big industry to speak of. Right now we're part of an union where the economic policy is directed by a former Goldman Sachs vice president. And you know what the union wants: more melting pot policy. I was actually hoping for Greece's referendum to cause an exit. Nevermind the ESM, seems like countries have the right to Veto. And I don't even want to start talking about that <_<. I understand your point concerning nationalism but where we are now there is just no going back. It means that we would surrender the Euro and Europe because of cowardice. History should have teached you why we need Europe and that nationalism has never ended in a good way - be it a nice one or not. What we need now are visions and perspectives and not a fearful "lets go back to the past". The past is the past and though i would agree that the Euro was a bad construction in the beginning (Maastricht was just a joke) the breakdown would not only create a new world wide economic and financial crisis unheard of as of now but also cost Germany and all the other countries alot of money and even more wealth. It is just not an option. There is no way other then surrendering national souveranity in terms of financial politics. But this really needs to go hand in hand with a new idea of Europe - with elections for the president and/or the parliament and direct democratic influence. No politics of commissions and backrooms anymore that so many people in europe rightfully find highly disturbing and undemocratic (not saying dictatorship here). If those changes are made and the politicians are able to get the people supporting them (europe was communicated terribly this far ... was it bad? Europe's fault. Was it good? Our work) i see a bright future ahead. If not - then this whole continent will collapse in a way most people cannot even imagine.
I agree, but it will never happen because some have more to lose (Germany, northern countries) than others. People will never surrender their national sovereignty because people feel more french, italian, german, greek than european.
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On June 28 2012 17:15 WhiteDog wrote:Show nested quote +On June 28 2012 06:07 Hider wrote:On June 28 2012 05:54 WhiteDog wrote:On June 28 2012 05:47 Vivax wrote:Thanks for the source, but the numbers are so gross that they barely allow conclusions, they are plain import/export absolute numbers. They allow me however to make a great counterpoint to your argumentation (That Germany is disproportionately profitting from Greece and that is a major contributor to the Euro crisis, also the newspaper version I would guess). On to this counterargument: I wonder however why you don't adress Italy. They are obviously on par with Greece with what you're accusing Germany for. Quotient Germany = 3,79 (imports from Germanys/Greek exports=10652/2809) Quotient Italy = 3,89 (imports from Italy/Greek exports to Italy=10182/2615) So, the trade discrepance is even greater by 0,10 between Greece and Italy, yet Italy is in economic trouble! And it's Germany's fault! Makes perfect sense If you go by relative numbers, Italy is the main villain here, just that Italy approves of Eurobonds and doesn't get into medial attention based on the claim that the exporteurs are making profit out of Greece's situation. I never said it was specifically germany in problem, it's the whole free market system in the EU that is. But the fact that germany is currently gaining from it and not other country is true. I'm not saying germany is destroying greece, I'm saying Greece is in a bad spot because of the current EU monetary system, and germany is gaining from it, but the situation could be the exact opposite it would be the same. Italy is way bigger than greece, you got to look at all the commercial balance, okay the trade between italy and greece is favoring italy, mainly because italy and greece are close and Italy is a big country, but that doesn't change my point. I give you an exemple, Greece is buying 10 billion $ a year of german goods, and selling 2 M $ a year, it means they lose 8 M $ a years, but Greece's GDP is 215.088 billion € so 8 billion $ is a actually a big deal. On the other side, Italy is gaining 8 billion $ from Greece as well, but Italy's GDP is $2.055 trillion so 8 billion $ is not much. What? You think the target system (root of all the problem) and the euro fiat currency is an invention of the free market? And what about the inelasticity of wages? "Free market" is the invention (with the eu monetary system), nothing is "an" invention of the free market, because the free market has no will and never existed in the first place - the birth of the market only happened because of state, in the boundary made by the state, and it's not some kind of entity that represent the normal evolution of mankind. Don't read Hayek. The free market is an idea that cannot sustain itself in the real world.
I haven't read Hayek. But what about Wikipedia?
A free market arises when market transactions are unregulated, theoretically allowing price to be set by supply and demand
I think you need we need to go by official definitions in a discussion. Even if we assume that government comes before "free market", they have 2 choices: 1) Let the market be free, 2) Regulate it. Whenever 2) happens the "free market" becomes unfree. The unfree market will often tend to make suboptimal choices as demand/suply possibly could be manipulated. Not saying it always happens whenever the market gets regulated, but with the Target system it definitely has been.
Free market cannot sustain it self in the real world? One of the best examples of "free market" in the real world was US in the 19th century, which probably experienced the highest growth rates ever.
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On June 28 2012 17:15 WhiteDog wrote:
I agree, but it will never happen because some have more to lose (Germany, northern countries) than others. People will never surrender their national sovereignty because people feel more french, italian, german, greek than european.
Actually Germany is the country that is leading the charge in terms of giving up some (not all of course, nobody wants that) national sovereignty especially in terms of financial politics to a higher instance or a newly formed European Ministry of Finance. Because we know that this is the only way the Euro will work no matter what the right wing idiots say. On that point we will be able to accept euro bonds etc. if there is a real way of controlling a countries debt outside of the country itself. But especially the southern countries are not willing to accept that because they want to continue with their mindless politics of debt. But Euro Bonds etc. without any form of international controll wont happen AND is in direct conflict with our constitution in more ways then just that the germans would have to pay for something they have NO control over. Thats the point that some politicians in Europe and the World are constantly not understanding. It is just not possible, you would need to go through a referendum to change the constitution and i wont have to tell you how this will end.
I consider myself a european born in germany. I have many friends in countries all over europe and i love this continent for its culture, its people. For me our differences in culture and language is not a hindrance it is what makes us so special. I could imagine moving out of germany to france, italy, the netherlands or norway maybe but never outside of europe. It is basically the same for every person i know here in germany and i think its the same for many especially younger people elsewhere too. And i still believe that my children will one day have "Nationality: European (Germany)" written in their passport.
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On June 28 2012 17:28 Hider wrote:Show nested quote +On June 28 2012 17:15 WhiteDog wrote:On June 28 2012 06:07 Hider wrote:On June 28 2012 05:54 WhiteDog wrote:On June 28 2012 05:47 Vivax wrote:Thanks for the source, but the numbers are so gross that they barely allow conclusions, they are plain import/export absolute numbers. They allow me however to make a great counterpoint to your argumentation (That Germany is disproportionately profitting from Greece and that is a major contributor to the Euro crisis, also the newspaper version I would guess). On to this counterargument: I wonder however why you don't adress Italy. They are obviously on par with Greece with what you're accusing Germany for. Quotient Germany = 3,79 (imports from Germanys/Greek exports=10652/2809) Quotient Italy = 3,89 (imports from Italy/Greek exports to Italy=10182/2615) So, the trade discrepance is even greater by 0,10 between Greece and Italy, yet Italy is in economic trouble! And it's Germany's fault! Makes perfect sense If you go by relative numbers, Italy is the main villain here, just that Italy approves of Eurobonds and doesn't get into medial attention based on the claim that the exporteurs are making profit out of Greece's situation. I never said it was specifically germany in problem, it's the whole free market system in the EU that is. But the fact that germany is currently gaining from it and not other country is true. I'm not saying germany is destroying greece, I'm saying Greece is in a bad spot because of the current EU monetary system, and germany is gaining from it, but the situation could be the exact opposite it would be the same. Italy is way bigger than greece, you got to look at all the commercial balance, okay the trade between italy and greece is favoring italy, mainly because italy and greece are close and Italy is a big country, but that doesn't change my point. I give you an exemple, Greece is buying 10 billion $ a year of german goods, and selling 2 M $ a year, it means they lose 8 M $ a years, but Greece's GDP is 215.088 billion € so 8 billion $ is a actually a big deal. On the other side, Italy is gaining 8 billion $ from Greece as well, but Italy's GDP is $2.055 trillion so 8 billion $ is not much. What? You think the target system (root of all the problem) and the euro fiat currency is an invention of the free market? And what about the inelasticity of wages? "Free market" is the invention (with the eu monetary system), nothing is "an" invention of the free market, because the free market has no will and never existed in the first place - the birth of the market only happened because of state, in the boundary made by the state, and it's not some kind of entity that represent the normal evolution of mankind. Don't read Hayek. The free market is an idea that cannot sustain itself in the real world. I haven't read Hayek. But what about Wikipedia? Show nested quote +A free market arises when market transactions are unregulated, theoretically allowing price to be set by supply and demand I think you need we need to go by official definitions in a discussion. Even if we assume that government comes before "free market", they have 2 choices: 1) Let the market be free, 2) Regulate it. Whenever 2) happens the "free market" becomes unfree. The unfree market will often tend to make suboptimal choices as demand/suply possibly could be manipulated. Not saying it always happens whenever the market gets regulated, but with the Target system it definitely has been. Free market cannot sustain it self in the real world? One of the best examples of "free market" in the real world was US in the 19th century, which probably experienced the highest growth rates ever.
http://en.wikipedia.org/wiki/The_Great_Transformation_(book)
In reality, the market is born with and through the state regulation and other type of political institution. And what we consider today as "free market" is just the will to strictly restrict the role of the state within the market to only defining the property right and defending them.
It doesn't mean that there are no other institution outside of the state that take part within the market - the free-market is not "free", hence why wage are "inelastique". For exemple, the theory of implicite contract imply that there is a "voluntary and self-enforcing long term agreements made between two parties regarding the future exchange of goods or services", which means people agree on not using the market - people agreed to rigidify the wages.
Well I'm not very clear, but what I intended to say was that the "free market" of today is based on the rather ioditic idea that the market is the best way to coordinate actions, and that if the state does not play a role, it will disturb the market "equilibrium", while in reality everything shows that it's not true (transaction cost, externality, inequality, etc.). So yes, the "free market" is an utopia and is leading us to the wall.
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How do Germans profit from the euro when the result of their export surplusses lead to the destruction of the countries they depend on the most ? (their neighbours)
It's as much our problem as theirs ... there is no profit there for anyone.
To think germany can just give the money back they earned ... wake the fuck up the money they "earned" where IOU's that are now going bust. How the fuck is germany in a good position here ?
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http://www.bloomberg.com/news/2012-06-29/eu-leaders-ease-debt-crisis-rules-for-spain-as-merkel-retreats.html
Talks in Brussels have yielded significantly different results when compared to previous summits in which the tag-team of Sarkozy and Merkel managed to push through austerity measures, with Francois Hollande leading the charge against Merkel through a championing of providing immediate relief to countries in continuously dire financial straits. Preferred creditor status on loans to Spains banks are no more for members of the Eurozone.
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EPT
