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On July 14 2015 05:49 InVerno wrote:Show nested quote +On July 14 2015 03:29 cLutZ wrote:On July 13 2015 20:32 unsaeglich wrote:
EU is always a loss for each country, a loss of Freedom, an economic loss.
Like a comment in a german newspaper said: An affectionate partnership turned into a violent marriage.
There is a reason the Euro is generally popular, and its because its not a loss of freedom for an individual person in a country, just like the dollar doesn't piss off a Californian or Alabamian. It actually protects then, to an extent, from their local government. What it does do is reduce the freedom of governments because they cannot inflate away their debts, or debts in general. This is important, because it demonstrates how the Greek government can be profligate and irresponsible, without attacking individual Greeks. As far as we know from history, the only federations that have worked at a comparable level with EU are USA, Canada, Australia and India. India is a bit of a different\more complex story, but for others, they all had a thing in common, the native population has been exterminated and replaced with a new one with same language, politically and culturally united, with a leadership developed as a whole. I'm sorry to say but EU countries are a bit different from Alabama, they made the world history as you know it today, and if you think part of the rivalry between France and Germany was originated in a battle happened in the 1870 you start to understand why comparing Alabama or California to any EU nation is just laughable, and same goes for the federation that can bond them compared with USA.
I wasn't comparing the ability to bond them, I was comparing the protections provided to citizens because inflation is not an option for the local governments. We all know its less of a culture shock going from Houston to San Fransisco than Lisbon to Berlin.
If I was going to make a hamfisted America analogy I would compare Greece to Illinois and Germany to New York.
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On July 14 2015 06:23 lord_nibbler wrote:Show nested quote +On July 14 2015 05:55 c0ldfusion wrote:
I feel like I have to apologize for my fellow Americans when they make these inappropriate analogies. It embarrasses us all. Why? He is kind of right. This experiment called EU is very bold, it's 'achievability' uncertain. You can take some learnings from Belgium for example, but in the grand scheme of things there is no president for a union between people living in so many different societies. The same Language, culture, politics, history all hugely important fields that countries normally rely on for communion, but that are absent in the EU. There is no 'European public', no real companionship and I doubt I will ever see one in my lifetime. So how do you form a union with just 'friendly associates'?
the question should rather be what will happen if we don't. European nations have the notorious trend to start awful stuff when they drift apart, and I'm not too eager to see nationalist zealots running Europe again in the future.
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On July 14 2015 06:26 Nyxisto wrote:Show nested quote +On July 14 2015 06:23 lord_nibbler wrote:On July 14 2015 05:55 c0ldfusion wrote:
I feel like I have to apologize for my fellow Americans when they make these inappropriate analogies. It embarrasses us all. Why? He is kind of right. This experiment called EU is very bold, it's 'achievability' uncertain. You can take some learnings from Belgium for example, but in the grand scheme of things there is no president for a union between people living in so many different societies. The same Language, culture, politics, history all hugely important fields that countries normally rely on for communion, but that are absent in the EU. There is no 'European public', no real companionship and I doubt I will ever see one in my lifetime. So how do you form a union with just 'friendly associates'? the question should rather be what will happen if we don't. European nations have the notorious trend to start awful stuff when they drift apart, and I'm not too eager to see nationalist zealots running Europe again in the future.
Which countries do you think may fall for that first? They are tendencies for sure, both in the south and the north but something major must change to see nationalists in charge of a powerfull country again imo.
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I don't know, convinced Europeans seem to be a pretty rare species right now in most countries. I have to say that although I've been generally sceptical about the Greek government what that the German government has done over the last few days really crossed the line. Privatizing assets worth a third of Greece's GDP is just insane.
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The main problem is that in general people are not aware that a bank is basically a casino and that every last cent in a bank from saving accounts to other financial products is basically like money laying around on a roulette table.
Banks governments and everyone in the financial sector does not want the populous to know that.
They give the appearance that the money is safe on a bank that there is no risk that you get interests on a saving accounts.
But basically the truth is that every cent on a bank can be at a total loss.
The only save kind of bank would be a bank where they take your money, and you pay for the account and get no interest and they would not be allowed to lend the money away or do anything with it.
At the moment a bank lends money away or money is spend on stocks, bonds, fonds that money is basically lying on a roulette table and people have to be aware of that.
I mean I don't wanna argue if gambling in general is bad but one should not gamble more than he is willing to loose...
If you buy a pack of cigarettes you have these nice stickers with smoking can cause cancer and what not.
Why not have these stickers on every financial product and saving account?
Like: "All the money you put on your saving account can be lost"
or something.
But there is also peoples money in accounts where the individual has no real control over it like pension fonds or something where some guy decides what happens with the money. I'm interested to see how many financial experts are willing to do risky stuff or even unrisky stuff if they face the death penalty for loosing money that is payed in a pension account.
But people are kept in the dark because the casinos and croupiers are not interested in telling their customers that they are basically putting their money on a casino table instead of a place where it is safe and lies around.
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On July 14 2015 06:47 gsgfdf wrote:Show nested quote +On July 14 2015 06:26 Nyxisto wrote:On July 14 2015 06:23 lord_nibbler wrote:On July 14 2015 05:55 c0ldfusion wrote:
I feel like I have to apologize for my fellow Americans when they make these inappropriate analogies. It embarrasses us all. Why? He is kind of right. This experiment called EU is very bold, it's 'achievability' uncertain. You can take some learnings from Belgium for example, but in the grand scheme of things there is no president for a union between people living in so many different societies. The same Language, culture, politics, history all hugely important fields that countries normally rely on for communion, but that are absent in the EU. There is no 'European public', no real companionship and I doubt I will ever see one in my lifetime. So how do you form a union with just 'friendly associates'? the question should rather be what will happen if we don't. European nations have the notorious trend to start awful stuff when they drift apart, and I'm not too eager to see nationalist zealots running Europe again in the future. Which countries do you think may fall for that first? They are tendencies for sure, both in the south and the north but something major must change to see nationalists in charge of a powerfull country again imo.
Something like an economic crisis and rampant immigration perhaps? Oh wait. Imho FN isn't that far from being given significant power in France, and the same for some of the smaller countries (PVV in The Netherlands, NVA in Belgium or even the Golden Dawn in Greece).
Xenophobia is once again rearing its ugly head in Europe, and the problems in the EU are adding fuel to the fire. Pegida is not just some crazy people in Dresden, it is a symptom of something that is playing all over Europe.
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On July 14 2015 06:11 warding wrote:InVerno, you didn't really argue cLutZ point about the Euro being a protection for individuals in Eurozone countries against their local governments. [EDITED: I wrote three redundant sentences and felt stupid afterwards, feeling the need to edit them out] EDIT: To illustrate cLutZ's point, here's a chart for the rate of inflation in Portugal from 1977 to 2009: + Show Spoiler +Guess what happened in 1992?
cLutZ didn't argue, he gave a baseless statement that the euro gave "protection" to its population. What proof did he got about this ? That inflation is low ? How is that a protection ?
The euro is good for business, bad for the weakest economy and the people. Inflation is not always a bad thing, it force investment (that is really low in Europe, in every countries), usually goes with less unemployment and give fuel to the economy, meanwhile deflation usually goes with a crisis, and "lowflation" is now considered as a bad thing. The problem is the degree : 20 % inflation is unstable and undesirable (hyperinflation is set 50 % a month), 5 % is still okay. We struggle to get 2%, this is not good.
Plus the US dollars is actually protection because the federal state is more than 20 % of the US GDP : it permit global transfert and thus to fight against the inequalities in competitivity that the fixed exchange rate cannot reequilibrate.
On July 14 2015 06:26 Nyxisto wrote:Show nested quote +On July 14 2015 06:23 lord_nibbler wrote:On July 14 2015 05:55 c0ldfusion wrote:
I feel like I have to apologize for my fellow Americans when they make these inappropriate analogies. It embarrasses us all. Why? He is kind of right. This experiment called EU is very bold, it's 'achievability' uncertain. You can take some learnings from Belgium for example, but in the grand scheme of things there is no president for a union between people living in so many different societies. The same Language, culture, politics, history all hugely important fields that countries normally rely on for communion, but that are absent in the EU. There is no 'European public', no real companionship and I doubt I will ever see one in my lifetime. So how do you form a union with just 'friendly associates'? the question should rather be what will happen if we don't. European nations have the notorious trend to start awful stuff when they drift apart, and I'm not too eager to see nationalist zealots running Europe again in the future.
Schauble is a nationalist zealots and is running Europe already.
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Inflation being at a controlled AND predictable level is a protection to:
- Anyone with money in the bank;
- Anyone intending to make any sort of long-term investment;
- Anyone lending money thus giving anyone taking a loan more favorable terms;
- Anyone with fixed nominal incomes;
- Anyone having to manage a company handling importation or exports.
- Everyone, Because politicians in charge of the monetary system have a tool to increase taxes on everyone without the general population knowing or understanding what's happening.
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On July 14 2015 07:01 WhiteDog wrote:Show nested quote +On July 14 2015 06:11 warding wrote:InVerno, you didn't really argue cLutZ point about the Euro being a protection for individuals in Eurozone countries against their local governments. [EDITED: I wrote three redundant sentences and felt stupid afterwards, feeling the need to edit them out] EDIT: To illustrate cLutZ's point, here's a chart for the rate of inflation in Portugal from 1977 to 2009: + Show Spoiler +Guess what happened in 1992? cLutZ didn't argue, he gave a baseless statement that the euro gave "protection" to its population. What proof did he got about this ? That inflation is low ? How is that a protection ? The euro is good for business, bad for the weakest economy and the people. Inflation is not always a bad thing, it force investment (that is really low in Europe, in every countries), usually goes with less unemployment and give fuel to the economy, meanwhile deflation usually goes with a crisis, and "lowflation" is now considered as a bad thing. The problem is the degree : 20 % inflation is unstable and undesirable ( hyperinflation is set 50 % a month), 5 % is still okay. We struggle to get 2%, this is not good. Plus the US dollars is actually protection because the federal state is more than 20 % of the US GDP : it permit global transfert and thus to fight against the inequalities in competitivity that the fixed exchange rate cannot reequilibrate. Show nested quote +On July 14 2015 06:26 Nyxisto wrote:On July 14 2015 06:23 lord_nibbler wrote:On July 14 2015 05:55 c0ldfusion wrote:
I feel like I have to apologize for my fellow Americans when they make these inappropriate analogies. It embarrasses us all. Why? He is kind of right. This experiment called EU is very bold, it's 'achievability' uncertain. You can take some learnings from Belgium for example, but in the grand scheme of things there is no president for a union between people living in so many different societies. The same Language, culture, politics, history all hugely important fields that countries normally rely on for communion, but that are absent in the EU. There is no 'European public', no real companionship and I doubt I will ever see one in my lifetime. So how do you form a union with just 'friendly associates'? the question should rather be what will happen if we don't. European nations have the notorious trend to start awful stuff when they drift apart, and I'm not too eager to see nationalist zealots running Europe again in the future. Schauble is a nationalist zealots and is running Europe already.
Wait, your answer is therefore to give MORE power to the EU? I think petty nationalism is a thing of the past, and states can maintain their culture and their identity just fine while ceding quite a lot of autonomy to a Federal European Government, but I recognize that my view is the minority, so imagine the uproar if EU started administering taxes directly.
I just thought that your stance was that the EU was a failed experiment, just as globalism in general, and France should just retreat back and become a socialist utopia all by itself.
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Economic analysis of the new agreement by Barry Eichengreen (a highly influential economist and former IMF senior policy adviser):
"Economically, the new program is perverse, because it will plunge Greece deeper into depression.
"It provides no basis for recovery or growth.
"Structural reforms alone will not reverse the downward spiral.
"As the depression deepens, the deficit targets will be missed [...] accelerating the economy’s contraction. Eventually, the agreement will trigger Grexit.
"Greece deserves better. It deserves a program that respects its sovereignty and allows the government to establish its credibility over time. It deserves a program capable of stabilizing its economy rather than bleeding it to death. And it deserves support from the ECB to enable it to remain a eurozone member.
"Europe deserves better, too. Other European countries should not in good conscience accede to this politically destructive, economically perverse program.
"Last but not least, the German public deserve better. Germans deserve a leader who stands firm in the face of extremism, rather than encouraging it, whether at home or abroad."
Adair Turner (former chairman of the UK's Financial Services Authority):
"Greece and its European partners may have agreed on a new bailout provision, but how the Greek economic tragedy will actually end remains a mystery. One thing, however, is certain: eurozone governments will end up writing off a large proportion of their loans to Greece. Their refusal to recognize that reality has increased the losses they will suffer."
All around the world, the response to this new deal is clear. Left or right, economically conservative or liberal, pro-European or Euroskeptic: even Germany's closest allies have been shocked and alienated by its actions during this crisis. This deal is a disaster: it is extremely punitive, economically illiterate, and politically destructive. This is not an agreement at all: it is a diktat and complete confiscation of the national sovereignty of a fellow EU member state. Germany, and its northern allies, by putting their narrow national and political interests ahead of the greater good of the Europe, have seriously jeopardized the European Union and may have dealt it irreparable damage. Angela Merkel has won this battle decisively but in so doing, she may have lost the war. Or to use the Greek word for it, a pyrrhic victory.
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On July 14 2015 07:23 Acrofales wrote:Show nested quote +On July 14 2015 07:01 WhiteDog wrote:On July 14 2015 06:11 warding wrote:InVerno, you didn't really argue cLutZ point about the Euro being a protection for individuals in Eurozone countries against their local governments. [EDITED: I wrote three redundant sentences and felt stupid afterwards, feeling the need to edit them out] EDIT: To illustrate cLutZ's point, here's a chart for the rate of inflation in Portugal from 1977 to 2009: + Show Spoiler +Guess what happened in 1992? cLutZ didn't argue, he gave a baseless statement that the euro gave "protection" to its population. What proof did he got about this ? That inflation is low ? How is that a protection ? The euro is good for business, bad for the weakest economy and the people. Inflation is not always a bad thing, it force investment (that is really low in Europe, in every countries), usually goes with less unemployment and give fuel to the economy, meanwhile deflation usually goes with a crisis, and "lowflation" is now considered as a bad thing. The problem is the degree : 20 % inflation is unstable and undesirable ( hyperinflation is set 50 % a month), 5 % is still okay. We struggle to get 2%, this is not good. Plus the US dollars is actually protection because the federal state is more than 20 % of the US GDP : it permit global transfert and thus to fight against the inequalities in competitivity that the fixed exchange rate cannot reequilibrate. On July 14 2015 06:26 Nyxisto wrote:On July 14 2015 06:23 lord_nibbler wrote:On July 14 2015 05:55 c0ldfusion wrote:
I feel like I have to apologize for my fellow Americans when they make these inappropriate analogies. It embarrasses us all. Why? He is kind of right. This experiment called EU is very bold, it's 'achievability' uncertain. You can take some learnings from Belgium for example, but in the grand scheme of things there is no president for a union between people living in so many different societies. The same Language, culture, politics, history all hugely important fields that countries normally rely on for communion, but that are absent in the EU. There is no 'European public', no real companionship and I doubt I will ever see one in my lifetime. So how do you form a union with just 'friendly associates'? the question should rather be what will happen if we don't. European nations have the notorious trend to start awful stuff when they drift apart, and I'm not too eager to see nationalist zealots running Europe again in the future. Schauble is a nationalist zealots and is running Europe already. Wait, your answer is therefore to give MORE power to the EU? I think petty nationalism is a thing of the past, and states can maintain their culture and their identity just fine while ceding quite a lot of autonomy to a Federal European Government, but I recognize that my view is the minority, so imagine the uproar if EU started administering taxes directly. I just thought that your stance was that the EU was a failed experiment, just as globalism in general, and France should just retreat back and become a socialist utopia all by itself.
There's two solutions : more power to the EU to make it a real optimal currency area, or get the fuck out of it. I'm for the second solution because I don't see any future in making an optimal currency area with so vastly different culture. If the currency area needs us to become German - or to act like German - it's a no thanks. I'm not to fond of german political culture.
On July 14 2015 07:21 warding wrote:
Inflation being at a controlled AND predictable level is a protection to:
- Anyone with money in the bank;
- Anyone intending to make any sort of long-term investment;
- Anyone lending money thus giving anyone taking a loan more favorable terms;
- Anyone with fixed nominal incomes;
- Anyone having to manage a company handling importation or exports.
- Everyone, Because politicians in charge of the monetary system have a tool to increase taxes on everyone without the general population knowing or understanding what's happening.
You don't answer my point tho, and you basically agree that inflation at 0 is not a good thing for the economy. Inflation can be controlled and predictable at 5%, is that really a bad thing ? No.
There is something that monetarists and orthodox of the lowflation don't like it's the phillips curve : an empirical work that shows that low inflation usually comes with high unemployment. Based on this work, the current agreement amongst economist is that the best inflation is targetted between 2 and 4 : we in the euro have been below 2 for the last decade so it's not optimal at all, and it's not protecting us but actually creating unemployment.
Here are two classic econ paper about the problem of lowflation and the most optimal inflation target :
- Akerlof GA, Dickens WT, Perry GL (1996) The Macroeconomics of Low Inflation, Brookings Papers on Economic Activity, 1996(1) ; http://www.brookings.edu/~/media/projects/bpea/1996 1/1996a_bpea_akerlof_dickens_perry_gordon_mankiw.pdf ;
- Akerlof GA, Dickens WT, Perry GL (2000), Near-Rational Wage and Price Setting and the Optimal Rates of Inflation and Unemployment. Brookings Papers on Economic Activity 2000(1):1-60. http://www.researchgate.net/publication/246924305_Near-Rational_Wage_and_Price_Setting_and_the_Optimal_Rates_of_Inflation_and_Unemployment
And here is a graph and a quick conclusion from the Macroeconomics of Low Inflation :
![[image loading]](http://s7.postimg.org/clrn0k4wb/inflation_target_3.png)
Finally, our analysis of the macroeconomics of low inflation has a direct bearing on the public finance literature that evaluates the distortions in the tax system that arise from nonzero inflation rates.
In that literature, moving to zero inflation reduces distortions that exist in a nominally defined tax system. A widely used simplification compares the present value of permanently removing these distortions with the one-time unemployment cost
of getting inflation to zero. In such a comparison, even small permanent benefits outweigh large one-time costs. But our analysis shows that such a comparison is invalid. The unemployment costs are not one-time but, rather, permanent and substantial. Comparing low inflation rates with a zero inflation rate, we are convinced that the unemployment costs outweigh the costs of tax distortions. We fully appreciate the benefits of stabilizing inflation at a low rate, and advocate that as an appropriate target for monetary policy. But the optimal inflation target is not zero.
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WhiteDog if you check the historical inflation levels for most EU countries other than Germany and the UK you'll see that they were nowhere near your 5% optimal level. I posted a chart of Portugal's. I never argued that deflation was positive.
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On July 14 2015 08:06 warding wrote:
WhiteDog if you check the historical inflation levels for most EU countries other than Germany and the UK you'll see that they were nowhere near your 5% optimal level. I posted a chart of Portugal's. I never argued that deflation was positive.
I don't understand your point ? I never said 5 % is optimal, I said it's not bad. Optimal is between 2 and 4. Sure, Portugal didn't had the perfect inflation - but had no unemployment. Don't forget that the inflation saw between 1970 and 1980 is largely linked to the oil crisis - an exogene shock (imported inflation). Now Portugal doesn't have enough inflation and thus it have unemployment : it is good for business, bad for the common people that suffer unemployment.
I repeat that hyperinflation is 50 % inflation per month.
Here is the inflation in Europe on average.
![[image loading]](http://www.alhambrapartners.com/wp-content/uploads/2013/11/ABOOK-Nov-2013-Inflation-Europe.jpg)
Here is France it goes from 1956 to 2012 :
http://www.aboutinflation.com/inflation-rate-historical/france-inflation-rate-historical-chart
Note that 1993 is Maastricht (that force everyone to have fixed exchange rate with Germany, which mean it's basically the euro). Globaly it barely touch the lower bound of the optimal area since 1993, and is always below a 3% inflation target - in this context, our long term unemployment around 7 % is perfectly understandable. The euro is definitly not protecting France - well it's not protecting French jobs.
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On July 14 2015 07:30 Evil_Sheep wrote:
All around the world, the response to this new deal is clear. Left or right, economically conservative or liberal, pro-European or Euroskeptic. It is just not true, what you say, please stop pretending like there is universal consensus on your personal opinion!
I can quickly google a dozen articles not following your perceived consensus:
Milo Yiannopoulos: Is anyone honestly surprised that Greeks dont pay their debts?
Germany and Britain must now reshape Europe
Two examples I red just in the last hour..
Here is a food for thought: What is stopping France from giving additional loans to Greece free of any conditions? They could just relief the French part of the ECB loans tomorrow, nobody is forcing them to go along with the others. Or maybe do it in a round about way, insure any new German loans with French guaranties...
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WhiteDog, Germany has very low inflation AND unemployment. It was also apparently immune to the imported oil inflation, whereas other European countries were not. Neither is inflation the total explanation for employment, nor is the oil shock the total explanation for the inflation of the 70s. Either way, I agree with you on most of what you say. You should agree too that the Euro brought an end to inflation over 10% in many EU countries, and that that is a good thing. I agree with you that the low levels of inflation we find ourselves facing today are not optimal, but it's something we've been having a very hard time getting out of even with extremely loose monetary policy.
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maybe a week ago... but now? That deal is going way too far
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Errr... the former was written as an angry rant long before any agreement was made. Moreover, neither says anything about this deal. What I have read about the deal is that absolutely nobody is happy about it, and the general consensus is that it'll just prolong the whole ordeal without solving anything, and is more punitive than anything else. Sounds pretty terrible to me.
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On July 14 2015 08:54 Acrofales wrote:Errr... the former was written as an angry rant long before any agreement was made. Moreover, neither says anything about this deal. What I have read about the deal is that absolutely nobody is happy about it, and the general consensus is that it'll just prolong the whole ordeal without solving anything, and is more punitive than anything else. Sounds pretty terrible to me.
on top of that, the entire point of Merkel apparently was that she can't have Greece do what they want so she forces the deal through to keep unity in the EU up. That always has been her reasoning behind being so harsh on greeks: we can't just let them do whatever or everyone will do whatever and the EU will break apart from everyone going different ways
And it's gotten way more toxic than ever. Not only does the deal itself fail (that had to be expected really...) but it also fails on anything else she wanted to do with how hard of a stance she took
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No it's not "debunked" (it's just a set of empirical data you know... so it's true, what is discussed is the idea that there is a tradeoff between inflation or not), but the trade off between unemployment and inflation has been "proved" wrong in the long term (by Phelps & Friedman first of all, then by a few guys like the one you linked).
The article I linked already took those critics into account - it is written after all the critics in 1992 (while the article you linked is based on work made in 1970 - which is why my article take as a given that the impact of a lower inflation on unemployment is only short run as seen in the part I linked) - but show that the trade off still exist in the long term below a certain inflation rate - which is why they propose a target and not zero. Again, this is well accepted within the economy : those work are at the core of the inflation target respected by the central banks of the world (which are around 2% - some people argue it is not enough). Akerlof (the writter of the article I linked) got a nobel prize too btw.
On July 14 2015 08:49 warding wrote:
WhiteDog, Germany has very low inflation AND unemployment. It was also apparently immune to the imported oil inflation, whereas other European countries were not. Neither is inflation the total explanation for employment, nor is the oil shock the total explanation for the inflation of the 70s. Either way, I agree with you on most of what you say. You should agree too that the Euro brought an end to inflation over 10% in many EU countries, and that that is a good thing. I agree with you that the low levels of inflation we find ourselves facing today are not optimal, but it's something we've been having a very hard time getting out of even with extremely loose monetary policy.
Germany is germany really. It has a different economy, it doesn't strive on credit. But the work I linked is based on 28 countries.
I personally don't care about 10 % inflation. The greatest growth France had happened during a time where we had, on average, 5% inflation : as I said, it's a trade off. It does not benefit business, banking and credit, but the fear that inflation put in economists mind nowadays is overstate to me. But I am really concern about unemployment, and think unemployment, unlike our politicians.
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EPT![[image loading]](http://i0.wp.com/estatisticasenumeros.economiafinancas.com/wp-content/uploads/2010/01/Infla%C3%A7%C3%A3o-em-Portugal-1977-a-2009.jpg)
