The european debt crisis

[molotovcocktail]

The european debt crisis is currently threatening EU, not that a fall of EU would be horrible, but i wonder what is the reason to this crisis. My opinion is that it is a result of the european countries trying both to give the population dignity and having a capitalist economy, something that is clearly impossible.
What do you think is the reason?

[RGacky3]

Greece had'nt been collecting taxes almost at all, and there was widespread corruption, Ireland began privatizing national banks, Spain wen't the same way.

They thought they could privatize, cut taxes, and let the welfare stay, they thought also that you could trust banks.

[RichardAWilson]

The Greeks were a crisis waiting to happen. Tax collection is inefficient. - Athens should be the image of trickle down economics. Ireland followed us in deregulating the financial sector and then rescuing those financial institutions after the crash.

Meanwhile, Spain has maintained solid public-sector budgeting.

The problem is that Spain remains in a depression.

For those "economic reasons," the Spaniards are being victimized by bond speculators, much like the Italians are being pounded.

Furthermore, European inaction (I.e. Germany, France and the European Central Bank) has complicated matters and made conditions worse - thus causing a perpetuating contagion. Greece was never really the concern.

The concern was that the Greek crisis would spread to Italy and Spain.

As Italian and Spanish interest rates have risen due to speculation, it has become that much harder for those countries to finance their financial obligations - thus increasing the chance of defaulting, which in turn led speculators to push rates even higher.

In a sense, such conditions can create a self-fulfilling prophecy.

Bond speculators will slash their own throats to obtain ultra-high rates because, if those bonds sour, they know they'll be rescued.

[RichardAWilson]

The Germans and Central Bankers wouldn't object for a second to rescuing Continental and London millionaires, billionaires and private financial institutions. (I.e. Deutsche Bank, HSBC and UBS)

They do, however, have an issue with intervening to push Greek, Irish, Italian and Spanish bond yields down to more sustainable levels.

[kapitalyst]

The european debt crisis is currently threatening EU, not that a fall of EU would be horrible, but i wonder what is the reason to this crisis. My opinion is that it is a result of the european countries trying both to give the population dignity and having a capitalist economy, something that is clearly impossible.
What do you think is the reason?

"Social democracy", as we view it, is not financially or economically sustainable. Governments spend more money than even exists. Even 100% wealth/income confiscation couldn't sustain the system. Even though the intentions are usually good, it's a massive waste. The govt. system we live in does very little good for the people, and comes at a huge cost to all of us.

Rest assured, the EU will eventually fall. I expect it to come within 5 years... no more than 10 tops, and that's if they're lucky. Only sweeping change can defuse the time bomb.

[RGacky3]

Really? Then Why is Norway and Germany fine? Why is Austria and Sweeden fine?

The countries that wen't down are the ones that privatized, de-regulated and cut taxes and let taxes go unpaid.

I'm betting the EU will drop too, but it has nothing to do with social-democracy.

[RichardAWilson]

Even 100% income confiscation couldn't sustain the system.

Are you on crack? The German Welfare State is far more generous than Spain's and tax rates in Germany are nowhere near total confiscation.

How do you consider universal health care, a free college education and free mass transportation as being "little in exchange."

We waste more here in America than the European Social-Democrats have ever wasted. (I.e. We're wasting tax dollars on a bloated Pentagon Industrial Complex, Imperial Wars and Corporate Welfare) It's us and (not Western Europeans) that receive little in return.

Scandinavia (I.e. Denmark, Finland, Norway and Sweden) avoided the global financial crisis and downturn. What does that tell you?

The worst affected countries were those that pursued the Anglo-Saxon Model (I.e. Britain, Ireland and America). Greece and Spain have never "been with the program." In yesteryear, those countries would turn to devaluation.

Even the French managed to avoid the financial crisis. The French even offer subsidized childcare and home aides for families. (Not to mention the 35-hour working week and five weeks of vacation).



http://www.cbsnews.com/stories/2006/03/31/60minutes/main1460246_page3.shtml

"Workers in four European countries, including France, are more productive per hour of work than Americans"


It's no surprise that the French are among the most productive in the world.


http://www.economist.com/node/13610197


The French are great savers and most have not taken out unaffordable mortgages or spent heavily on credit. Household debt as a share of GDP is less than half that in Britain or America.

The idea of nationalising banks may give Americans nightmares about turning French.

In truth, the French government has not yet had to rescue any big French bank from collapse, let alone nationalise one.

[ComradeMan]

The european debt crisis is currently threatening EU, not that a fall of EU would be horrible, but i wonder what is the reason to this crisis. My opinion is that it is a result of the european countries trying both to give the population dignity and having a capitalist economy, something that is clearly impossible.
What do you think is the reason?

I personally feel it's a bit of a sham. When there were different currencies the banks and financial speculators made a lot of money on currency exchange speculation, with the single currency that evaporated "over night". Secondly, a strong and united EU is an economic threat to US economic hegemony- hence the constant stream of negativity towards the idea from the US, or at least as I perceive it. The EU was/is fundamentally a good idea in my opinion but I feel that it has been "abused" for the sake of cynical economic interests. I am also suspicious of the negativity from the "Anglo" world because it seems they have never done anything other than berate, and moan about, the EU.

It's also not really true to paint France as a country that has "avoided" the financial crisis either- it has hit in France just like elsewhere. France "officially" moved into recession in 2008 and in the second quarter of 2011 reported zero growth.

[RichardAWilson]

The French economy grew in 2009 and 2010. This year's growth should average 1.8%. You're forgetting the surge in First Quarter GDP.

[ComradeMan]

The French economy grew in 2009 and 2010. This year's growth should average 1.8%. You're forgetting the surge in Second Quarter GDP.

Yeah but in 2011 it's back down to zero...

http://www.lemonde.fr/idees/article/2011/08/31/les-pauvres-sortiront-la-france-de-la-crise_1565271_3232.html

http://lafranceetlacrise.com/2011/02/07/leading-french-charity-sounds-alarm-over-unprecedented-housing-crisis/

[RichardAWilson]

In 2011, it's averaging an annualized 1.8%. As I said, you're forgetting First Quarter Growth.


http://www.ihs.com/products/global-insight/industry-economic-report.aspx?ID=1065930389



On a year-on-year (y/y) basis, GDP rose by 1.7% during the second quarter, following growth of 2.2% during the first quarter and 1.4% during the fourth quarter of 2010.

[RichardAWilson]

http://en.wikipedia.org/wiki/Economy_of_France

France has a number of the world's largest companies.

World's Largest Insurance Firm
World's Largest Airplane Maker
World's Largest Energy Company
World's Largest Nuclear Business
World's Largest Environmental Service Company
World's Largest Cement and Concrete Maker


The listing goes on and on =) Not bad for a "lazy country."


In 2008, France was the second-largest recipient of foreign direct investment among OECD countries at $117.9 billion

France attracted more foreign capital than Britain. (Meaning foreign businesses viewed French Social-Democracy as being more attractive than Britain's Trickle Down Anglo-Saxon Model)

By proportion, the French are wealthier than Americans.


In terms of aggregate wealth, the French are the wealthiest Europeans, accounting for more than a quarter of wealthiest European households. Globally, the French nation ranks 4th wealthiest, being proportionally the weathiest one.


The French are also among the least in debt populations in the developed world

[kapitalyst]

Really? Then Why is Norway and Germany fine? Why is Austria and Sweeden fine?

The countries that wen't down are the ones that privatized, de-regulated and cut taxes and let taxes go unpaid.

I'm betting the EU will drop too, but it has nothing to do with social-democracy.

GERMANY IS NOT "FINE"...

I only pay much attention the US, Canada, UK, Australia, Germany, France, Japan and China... so I can't speak for Norway, Austria and Sweden. But Germany, France and the UK are all in serious trouble now (and so are we) -- very hot water. Germany has been impacted more by this crisis than any other country... trillions upon trillions of market cap wiped out, and GDP estimates shrinking. And that is only the tip of the iceberg. My guess is that they're going to sweep this under the rug and hope the grime goes away by magic. But there is a cost for everything. We've all lived too long off the "sugar high" of debt and paper... the final day of reckoning draweth nigh.

It is true, however, that Germany has been one of the healthiest economies in the western world -- even more so than the US. They avoided over-borrowing, over-reliance on imports and printing cash that couldn't be offset by production and exports. But we're all guilty of those very things. Worst of all for der Vaterland is the fact that they're stuck in the EU, and obliged to bail out countries which have been totally reckless and irrational. If you want to believe anything, believe that at some point this crisis will have consequences and it will hurt.


When there were different currencies the banks and financial speculators made a lot of money on currency exchange speculation, with the single currency that evaporated "over night".

This is completely untrue. The FOREX market is alive and well, and the creation of the Euro dollar has actually created more speculative opportunity for it. Only a single, global currency would wipe out FOREX.


It's also not really true to paint France as a country that has "avoided" the financial crisis either- it has hit in France just like elsewhere.

And this is completely true. No one "avoided" it. It hurt everyone. Some people are just so motivated to praise their homeland or countries they admire than they'll either pretend things like this are true or they honestly just don't know the truth... they didn't witness anyone jumping out of windows, so it must not have been so bad, right? :lol:

Also, our means of "escaping" the crisis was simply more debt and paper. Meaning we never really "escaped", but have either postponed it or tried to "spread it out" over time.

[RichardAWilson]

Only a single, global currency would wipe out FOREX.

As would a resurrection of the Post-War Keynesian Woods System.

The first thing we should do is pass the Warren Buffet Trade Act. After we've passed Balanced Trade, we should use the resurrection of the Woods System as a bargaining tool for liberalized trade and internationalization.

A Currency Speculation Tax could be used to raise financing for an international democratic institution (I.e. the United Nations) to provide financial assistance and aid to industrializing economies and those seeking to transition to cleaner energy.

(Note: All of which are transitional solutions. In the long-run, a single global currency would be the ideal)

[ÑóẊîöʼn]

I personally feel it's a bit of a sham. When there were different currencies the banks and financial speculators made a lot of money on currency exchange speculation, with the single currency that evaporated "over night". Secondly, a strong and united EU is an economic threat to US economic hegemony- hence the constant stream of negativity towards the idea from the US, or at least as I perceive it. The EU was/is fundamentally a good idea in my opinion but I feel that it has been "abused" for the sake of cynical economic interests. I am also suspicious of the negativity from the "Anglo" world because it seems they have never done anything other than berate, and moan about, the EU.

Well speaking as an "Anglo", I must say that I'm not opposed to the EU in principle and I find most objections to it to be borne out of the most pathetic, petty and plastic forms of nationalism, usually from Little Englander types.

Having said that however I'm not impressed by attempts to get countries like Spain and Greece to slash their social spending.

[ComradeMan]

France has a number of the world's largest companies.....
That doesn't reflect much these days.

Italy is the 8th largest economy in the world by GDP according to IMF and World Bank 2010 stats and the 4th in Europe- 10th by PPP (France 9th). Add to this more billionaires at 5th than other countries such as France, Sweden and Switzerland.

France has higher unemployment at 9.6%, Italy at 8.4%. Italian inflation (CP) is 1.4% whereas France is at 1.5%. These figures get juggled around so much it's hard to say what's going on!

This is completely untrue. The FOREX market is alive and well, and the creation of the Euro dollar has actually created more speculative opportunity for it. Only a single, global currency would wipe out FOREX.
I was talking more about within Europe to be honest....

Well speaking as an "Anglo", I must say that I'm not opposed to the EU in principle and I find most objections to it to be borne out of the most pathetic, petty and plastic forms of nationalism, usually from Little Englander types.
Well, you know by "Anglo" what I mean in an economic sense- but then again the UK is always reminding us all of its "special relationship" with the US all the damn time and always seems to be against European integration etc... I suppose the "fog in the Channel" is what's "isolating us".... ;)

[ÑóẊîöʼn]

Well, you know by "Anglo" what I mean in an economic sense- but then again the UK is always reminding us all of its "special relationship" with the US all the damn time and always seems to be against European integration etc... I suppose the "fog in the Channel" is what's "isolating us".... ;)

I do think though that there is a cultural element to anti-EU sentiment, which is what makes it so ridiculous.

[kapitalyst]

As would a resurrection of the Post-War Keynesian Woods System.

A highly flawed system, but it wouldn't end FOREX at all...



The first thing we should do is pass the Warren Buffet Trade Act. After we've passed Balanced Trade, we should use the resurrection of the Woods System as a bargaining tool for liberalized trade and internationalization.


:laugh:



A Currency Speculation Tax could be used to raise financing for an international democratic institution (I.e. the United Nations) to provide financial assistance and aid to industrializing economies and those seeking to transition to cleaner energy.


Stop it, stop it! You're killing me!

:laugh::laugh::laugh:

The purpose of taxes is to pay for things that we need but come at a cost (e.g., military, infrastructure, etc). Taxes add no economic value by their very nature. They simply take away. Now you're going to argue that the production by those industrializing nations would have an economic benefit, since it's production. In theory, this would be true. In practice, you're just creating a fiasco.

Not to mention, you're going to chase a lot of people out of the FOREX market. You will lose vital systemic liquidity. It could cause serious global economic problems we cannot foresee. This is just a terrible idea, no offense...



(Note: All of which are transitional solutions. In the long-run, a single global currency would be the ideal)

:eek:

Wait a minute... we already have that.

[ComradeMan]

I do think though that there is a cultural element to anti-EU sentiment, which is what makes it so ridiculous.

Britain & Europe...
"Fog in the Channel"
UK Independence Party...

Perhaps De Gaulle was right.... :cursing:

"A recent (2010) YouGov (http://en.wikipedia.org/wiki/YouGov) poll found that 47% of voters in the United Kingdom would vote to leave the European Union, while 33% would vote to stay in (with 14% undecided and 5% unwilling to vote (http://en.wikipedia.org/wiki/Abstention)).[25] (http://en.wikipedia.org/wiki/Euroscepticism_in_the_United_Kingdom#cite_note-YouGov2010-24) Support and opposition for withdrawal from the Union are not evenly distributed among the different age groups (http://en.wikipedia.org/wiki/Age_group): opposition to EU membership is most prevalent among those 60 and older (57%) but dwindles steadily to only 31% among those aged 18–24.[25] (http://en.wikipedia.org/wiki/Euroscepticism_in_the_United_Kingdom#cite_note-YouGov2010-24) Finally, the results of the poll showed that London (http://en.wikipedia.org/wiki/London) is the most pro-EU region whereas the Rest of South region is the most eurosceptic.[25] (http://en.wikipedia.org/wiki/Euroscepticism_in_the_United_Kingdom#cite_note-YouGov2010-24)"
http://en.wikipedia.org/wiki/Euroscepticism_in_the_United_Kingdom

:crying:

[ÑóẊîöʼn]

Britain & Europe...
"Fog in the Channel"
UK Independence Party...

Perhaps De Gaulle was right.... :cursing:

"A recent (2010) YouGov (http://en.wikipedia.org/wiki/YouGov) poll found that 47% of voters in the United Kingdom would vote to leave the European Union, while 33% would vote to stay in (with 14% undecided and 5% unwilling to vote (http://en.wikipedia.org/wiki/Abstention)).[25] (http://en.wikipedia.org/wiki/Euroscepticism_in_the_United_Kingdom#cite_note-YouGov2010-24) Support and opposition for withdrawal from the Union are not evenly distributed among the different age groups (http://en.wikipedia.org/wiki/Age_group): opposition to EU membership is most prevalent among those 60 and older (57%) but dwindles steadily to only 31% among those aged 18–24.[25] (http://en.wikipedia.org/wiki/Euroscepticism_in_the_United_Kingdom#cite_note-YouGov2010-24) Finally, the results of the poll showed that London (http://en.wikipedia.org/wiki/London) is the most pro-EU region whereas the Rest of South region is the most eurosceptic.[25] (http://en.wikipedia.org/wiki/Euroscepticism_in_the_United_Kingdom#cite_note-YouGov2010-24)"
http://en.wikipedia.org/wiki/Euroscepticism_in_the_United_Kingdom

:crying:

That actually looks fairly optimistic. A lot of opposition to European integration seems to come from a bunch of miserable old farts who are eventually going to die anyway, and the young, urban population appears to be far less antagonistic towards the idea. Hope for the future, perhaps?

First Europe, then the world...

[RGacky3]

Germany has been impacted more by this crisis than any other country... trillions upon trillions of market cap wiped out, and GDP estimates shrinking. And that is only the tip of the iceberg.

I'm talking about the German working class, unlike the US, the German working class is'nt tied to the Capitalist's successs. The Germany working class is doing MUCH better than the rest.


And that is only the tip of the iceberg. My guess is that they're going to sweep this under the rug and hope the grime goes away by magic. But there is a cost for everything. We've all lived too long off the "sugar high" of debt and paper... the final day of reckoning draweth nigh.


Germany does'nt have that high of a debt or deficit, and they have a trade surplus.

Because of worker empowerment in Germany, when you have market failures it doe'nt devistate the working class, yeah, the stock market will suffer and the corporate profits will suffer (effecting GDP), but the workers are not forced to take the hit (because they have a say in what goes on).

BTW, Germany is the largest economy in Europe and the fourth largest in the world, of coarse they'll get affected by the Crash, but I judge economic success by how the mass of the people are effected.


They avoided over-borrowing, over-reliance on imports and printing cash that couldn't be offset by production and exports. But we're all guilty of those very things. Worst of all for der Vaterland is the fact that they're stuck in the EU, and obliged to bail out countries which have been totally reckless and irrational. If you want to believe anything, believe that at some point this crisis will have consequences and it will hurt.


Oh I don't doubt it, but Germany bailing out the other countries (which is basically bailing out the banks) is gonna make Germany take a hit, but if the EU was smart they would tell the banks to go screw and force them to take the hit, i.e. let Greece default.


This is completely untrue. The FOREX market is alive and well, and the creation of the Euro dollar has actually created more speculative opportunity for it. Only a single, global currency would wipe out FOREX.


You can't have a single currency with different fiscal policies, the Euro imo should drop OR you need serious regulation, and I'm not comfortable giving the European government any more poewr.


And this is completely true. No one "avoided" it. It hurt everyone. Some people are just so motivated to praise their homeland or countries they admire than they'll either pretend things like this are true or they honestly just don't know the truth... they didn't witness anyone jumping out of windows, so it must not have been so bad, right? :lol:


By avoided people mean hav'nt devistated the working class avoided.

[ComradeMan]

I'm talking about the German working class, unlike the US, the German working class is'nt tied to the Capitalist's successs. The Germany working class is doing MUCH better than the rest.

Well comparing the US that has very little safety net to European countries that have traditionally had a safety net post-WW2 is a false comparison. Now it's not to dispute that Germany has the most powerful economy in the EU- but the bigger they are they harder they can fall too.

http://www.economist.com/blogs/newsbook/2011/08/europes-economic-crisis


Germany does'nt have that high of a debt or deficit, and they have a trade surplus.

Public debt is 78.8% of GDP but remember that the EU countries are all to greater and lesser extents linked... so don't be so optimistics with the stats.


Oh I don't doubt it, but Germany bailing out the other countries (which is basically bailing out the banks) is gonna make Germany take a hit, but if the EU was smart they would tell the banks to go screw and force them to take the hit, i.e. let Greece default.

They can't and it's not just about Greece. Italy, for example, is one of Germany's main export partners- you don't want your main export partners going bankrupt! Apart from the fact that the reasons for prolonging the agony in the case of Greece have little to do with the rhetoric. French and German banks are sitting with vaults full of bonds from Greece, as well as Portugal, Ireland and Spain. There are all kinds of interests, not necessarily altruistic, at stake here. ;)

http://www.economist.com/node/16536898

[RGacky3]

Well comparing the US that has very little safety net to European countries that have traditionally had a safety net post-WW2 is a false comparison. Now it's not to dispute that Germany has the most powerful economy in the EU- but the bigger they are they harder they can fall too.


But the nature of the German economy is much different to the US and many other European countries, its a productive economy, an export economy and one with a strong working class (due to in no-small part, co determination) , which is not necessarily due to a safety net.


They can't and it's not just about Greece. Italy, for example, is one of Germany's main export partners- you don't want your main export partners going bankrupt! Apart from the fact that the reasons for prolonging the agony in the case of Greece have little to do with the rhetoric. French and German banks are sitting with vaults full of bonds from Greece, as well as Portugal, Ireland and Spain. There are all kinds of interests, not necessarily altruistic, at stake here. http://www.revleft.com/vb/european-debt-crisis-t162522/revleft/smilies/wink.gif


They can, they can definately default, it does'nt mean that they can't still import from Germany, infact it would be better, becuase the money would'nt go going to paying off banks and could instead by used to build the country.

Defualt, is definately an option, and they'll be some financial shake up sure, but look at Argentina, look at Iceland ... The alternative is destroying their economy slowly.

[ComradeMan]

...

Gacky, the German economy relies on a stable euro. If Greece defaults that will send shockwaves throughout the EU and the world in terms of the financial markets and also faith in the single currency. Leaving aside the fact that the defaulting PIIGS would leave French and German banks with vaults full of worthless bonds it would also have a destabilising effect on the euro which could in turn have a negative effect on the German economy. A chain is only as strong as its weakest link.

[RGacky3]

If Greece defualts its very possible to stabalize the Euro with Central Bank policies, the other option is a slow death of the Greek economy, Argentina did it, and they are fine, Iceland did it and they are fine.

The French and German banks can take the hit, they profited plenty from the boom, btw I'm not saying they shoud ALL default, Greece should definately.

I personally think the Euro is over anyway, it can't survive without a unified fiscal policy which is'nt gonna happen.

[ComradeMan]

If Greece defualts its very possible to stabalize the Euro with Central Bank policies, the other option is a slow death of the Greek economy, Argentina did it, and they are fine, Iceland did it and they are fine.

Except that neither Argentina or Iceland are part of an EU type "federation" (for lack of a better word) with a single currency tied to other nations economically. Argentina's pegging the currency to the US dollar is not the same as the situation in which Greece finds itself in. Not only that, if Greece defaults then what about Spain, Portugal, Ireland and ultimately the EU "nightmare"- if Italy defaults? This is not just about the Greek economy, ironically it matters in a sense less to Greece than it does to the rest of Europe in the short term at least.


The French and German banks can take the hit, they profited plenty from the boom, btw I'm not saying they shoud ALL default, Greece should definately.

There is no consensus on that- some argue they could ride out the storm whilst others argue that they would indeed suffer- in either case taking a hit hurts and the question is whether they are prepared to take the hit, and if not, why? Remember that the German and French banks are the biggest debt holders.


I personally think the Euro is over anyway, it can't survive without a unified fiscal policy which is'nt gonna happen.

I don't, I think it's a rough time and the eurosceptics are going to extremes to scare people about the inevitability of euro failure and so on, so to serve their own political ends.

What I do think is needed is more the French solution of a vast shake-up of the rules and not the German idea of tightening up the rules that are already in place. Europe and the euro need an overhaul.

What would scrapping the euro achieve? So Italy goes back to the lira and the debt is "translated" into lira? Greece the drachma, Spain the peso and so on... It doesn't cancel the debt does it?

[RGacky3]

Except that neither Argentina or Iceland are part of an EU type "federation" (for lack of a better word) with a single currency tied to other nations economically. Argentina's pegging the currency to the US dollar is not the same as the situation in which Greece finds itself in.

Your right, but seeing the banks responses to Argentina can teach us a lesson, your right about pegging the currency because they undid that.

The worst case secenario is that banks will dump the Euro, but seeing the lesson of other countries, it is obvious that those threats are empty.


Not only that, if Greece defaults then what about Spain, Portugal, Ireland and ultimately the EU "nightmare"- if Italy defaults? This is not just about the Greek economy, ironically it matters in a sense less to Greece than it does to the rest of Europe in the short term at least.


Your right in that a default will harm europe as a whole more than it will hurt the PIIGs, but so will bailouts, and the bailouts will come with austerity programs and ultimately destroy those economies, its good short term policies for banks balance sheets, but the working class and ultimately the economies of those countries will be destroyed.

There is NO WAY these banks should get 100 cents on the Dollar, they played these countries for suckers and now expect then to sacrifice their own economies to pay them back, financial institutions are not as powerful as they would be if you stand up to them.


There is no consensus on that- some argue they could ride out the storm whilst others argue that they would indeed suffer- in either case taking a hit hurts and the question is whether they are prepared to take the hit, and if not, why? Remember that the German and French banks are the biggest debt holders.


I say let them take the hit, and if they can't take the hit, nationalize the banks. People are SO scared of these financial institutions, what will these banks do? Withhold finances? And invest where, they are going to invest in strong economies no matter what.


What I do think is needed is more the French solution of a vast shake-up of the rules and not the German idea of tightening up the rules that are already in place. Europe and the euro need an overhaul.


See thats why I don't think the eurozone works, no matter what rules you have, your gonna have individual fiscal policies, you can't control that.


What would scrapping the euro achieve? So Italy goes back to the lira and the debt is "translated" into lira? Greece the drachma, Spain the peso and so on... It doesn't cancel the debt does it?

I'm not saying that it will cancel the debt but it will stop the moral hazard that comes with the Eurozone.

(PS: I appreciate the discussion being without these :rolleyes::laugh:, which just look douchy).

[ComradeMan]

I say let them take the hit, and if they can't take the hit, nationalize the banks. People are SO scared of these financial institutions, what will these banks do? Withhold finances? And invest where, they are going to invest in strong economies no matter what..

It's not so simple. What are you going to do, nationalise a bank and therefore it's debt too? Nationalisation doesn't magically wave away the debt. That's going to be popular with the electorate, who are already unhappy- be it in Northern Europe where they are angry about the perceived "footing the bill" for the irresponsible "Club Med" countries, be in it Southern Europe where, as you state, the ordinary people suffer with the austerity measures etc.

[Thirsty Crow]

It's not so simple. What are you going to do, nationalise a bank and therefore it's debt too? Nationalisation doesn't magically wave away the debt. That's going to be popular with the electorate, who are already unhappy- be it in Northern Europe where they are angry about the perceived "footing the bill" for the irresponsible "Club Med" countries, be in it Southern Europe where, as you state, the ordinary people suffer with the austerity measures etc.
That's absolutely true, what you saxy about the political practice of nationalization, and communists should keep that in mind (unlike some of the posters at this board who really think that the progressive solution would be to have the capitalist state nationalize the financial institutions, and threfore nationalize its debt).

[RGacky3]

It's not so simple. What are you going to do, nationalise a bank and therefore it's debt too? Nationalisation doesn't magically wave away the debt.

If you nationalize the banks, you get rid of the sovereign debt of the nation, i.e. the greek/italian/spanish bonds don't matter, and you use whatever assets you have left for the good of the economy. The debt that bank might have with other banks is a different issue, but simply not paying 100 cents on the dollar, like Iceland did, is definately an option.


That's going to be popular with the electorate, who are already unhappy- be it in Northern Europe where they are angry about the perceived "footing the bill" for the irresponsible "Club Med" countries, be in it Southern Europe where, as you state, the ordinary people suffer with the austerity measures etc.

Except they would'nt be footing the bill, there won't be a bill, right now the bill is owed to the bank, you nationalize the bank, forgive the bill, and restructure the banks balance sheets, they did it in Iceland, they can do it in Europe.

Now the banks might be able to take the hit nad be fine, and juts restructure themselves without nationalization.

it won't be the people "footing the bill" unless the banks require a bailout, in which case they get nationalized.

[kapitalyst]

I'm talking about the German working class, unlike the US, the German working class is'nt tied to the Capitalist's successs. The Germany working class is doing MUCH better than the rest.


And not for the reasons you've claimed. The German economy has done well for a few reasons. For one, German products have always been renowned world-wide for their quality. Germany has a natural export capacity. Germany also has good education, and the country has historically been considered an intellectual mecca... people get good educations and jobs. And there's also the reasons I've previously mentioned. It has nothing to do with "workers having a say". And if you think the working class can't be devastated by a financial collapse, you're dreaming.

Think about it this way. Let's say a couple has five kids. They spend money like crazy and lavish the kids with gifts and privilege. Then the parents run out of money. So they get some new credit cards with no spending limits, and just continue to spend money on the kids. An outside observer might think the kids seem to be doing great, so everything is fine with that family's finances. However, they'd be wrong. That will only last so long before the bills eventually come due. I'm sure you get my point.



Because of worker empowerment in Germany, when you have market failures it doe'nt devistate the working class, yeah, the stock market will suffer and the corporate profits will suffer (effecting GDP), but the workers are not forced to take the hit (because they have a say in what goes on).


"Having a say" doesn't protect anyone from systemic financial crises or recessions, Gacky...

When the bills are due and everyone is unable to borrow or print cash, everyone is fucked. I hope that doesn't happen, but it's a possibility. And if businesses are doing bad and profits and GDP begin to contract then, again... everyone is fucked.



Oh I don't doubt it, but Germany bailing out the other countries (which is basically bailing out the banks) is gonna make Germany take a hit, but if the EU was smart they would tell the banks to go screw and force them to take the hit, i.e. let Greece default.


I agree. Government should never bail out a corporation.



By avoided people mean hav'nt devistated the working class avoided.

We weren't "devastated" here in America like you think. Most working class people I talk to don't even know there was a serious crisis in 2008. They just knew the economy was doing poorly and things got more expensive. There will probably be a day when we are truly devastated though... world-wide...

[RGacky3]

For one, German products have always been renowned world-wide for their quality. Germany has a natural export capacity. Germany also has good education, and the country has historically been considered an intellectual mecca... people get good educations and jobs. And there's also the reasons I've previously mentioned.

And why has'nt German production been outsourced??? .... Ahhh yeah, Co-Determination.

Also good education, lots of countries have good education, why is German able to consume a large portion of its GDP as well? Oh yeah, a strong well paid working class.

Hav'nt good products and good education does'nt say shit when it comes to worker compensation, a company will pay a worker as low as possible DISPITE education and DISPITE productivity and the export market, infact having a good education could flood the labor market when it comes to high education jobs, but why is their production not been outsourced, while their compensation has stayed high? Co-Determination.


Think about it this way. Let's say a couple has five kids. They spend money like crazy and lavish the kids with gifts and privilege. Then the parents run out of money. So they get some new credit cards with no spending limits, and just continue to spend money on the kids. An outside observer might think the kids seem to be doing great, so everything is fine with that family's finances. However, they'd be wrong. That will only last so long before the bills eventually come due. I'm sure you get my point.


Yeah ... I get your point, and what does that have to do with what I said?


"Having a say" doesn't protect anyone from systemic financial crises or recessions, Gacky...

When the bills are due and everyone is unable to borrow or print cash, everyone is fucked. I hope that doesn't happen, but it's a possibility. And if businesses are doing bad and profits and GDP begin to contract then, again... everyone is fucked.


Yes it does, because it prevents companies from making cuts in order to maximise profits, and this keeps demand high even during the recession, which keeps local industry afloat, it also prevents capital flight.

The bills being due did not cause the crisis in the UK or the US, that was specifically greece.


We weren't "devastated" here in America like you think. Most working class people I talk to don't even know there was a serious crisis in 2008. They just knew the economy was doing poorly and things got more expensive. There will probably be a day when we are truly devastated though... world-wide...

I don't give a shit about people you talk to, I look at statistics. 1/5 in poverty, almost 1/5 unemployed (real unemployment), huge student debt. The crisis started in 2007 and stowballed.

[ComradeMan]

If you nationalize the banks, you get rid of the sovereign debt of the nation, i.e. the greek/italian/spanish bonds don't matter, and you use whatever assets you have left for the good of the economy. The debt that bank might have with other banks is a different issue, but simply not paying 100 cents on the dollar, like Iceland did, is definately an option.

No you don't, you internalise that sovereign debt- the debt just doesn't go away. You end up with legal actions against the government and all kinds of problems. If a bank is nationalised it means the government becomes the guarantor against the bank's liabilities. The bonds do matter- people or entities bought the bonds and they don't want to be ruined.


Except they would'nt be footing the bill, there won't be a bill, right now the bill is owed to the bank, you nationalize the bank, forgive the bill, and restructure the banks balance sheets, they did it in Iceland, they can do it in Europe.

They are footing the bill- a government only has, at the end of the day, taxpayers' money!!!

Just a little sidenote- I am not against Germany or the German people- but historically it could be argued that Germany is technically the biggest debt "defaulter" of the 20th century in terms of all the reparations that were waved post WWII, the 1930s default and so on... It's all very well singing the praises of the German model whilst conveniently forgetting who paid for and sustained it.

[RGacky3]

No you don't, you internalise that sovereign debt- the debt just doesn't go away. You end up with legal actions against the government and all kinds of problems. If a bank is nationalised it means the government becomes the guarantor against the bank's liabilities. The bonds do matter- people or entities bought the bonds and they don't want to be ruined.

The sovereign debt is owed to the banks ... WHen you nationalize the banks your talking over the institution to which debt is due ... The BANKS that bought the bonds don't want to be ruined, I'm saying let them be ruined, and if they cause trouble nationalize them, if you nationalize them your not taking on the sovereign debt, thats only if you take over the Greek treasury, which is not gonna happen.


They are footing the bill- a government only has, at the end of the day, taxpayers' money!!!


Ok look, Greece defaults, who suffers? Primarily the banks, then what do the banks do? They withhold credit, hurting the economy, you nationalize the banks, what to you get when you nationalize the banks? YOu get the banks assets and liabilities NOT greeces assets and liabilities.

The other option would be to bailout greece, who will then inturn pay ever higher interest rates to the banks, your basically paying off the banks with no control over what they do over it. I say Greece should default and the banks take the hit, and if they try and disrupt things over it they get nationalized, again, nationalizing a bank DOES NOT TAKE ON SOVEREIGN DEBT, you take the assets and liabilities of a bank, not a country, greece owes money TO the bank.

Your right about Germany they did default and they got out fine.

[ComradeMan]

Gacky... it's not as simple as that, and remember we are dealing with solutions within the economic models that we have, not the models that we may desire. It's a bit of a no-win situation, however I still don't think you appreciate the problems with nationalising banks.

[RGacky3]

Nationalizing a bank is better than bailing it out, bailing them out is socializing their losses and privatizing their gains, the US did that, it does'nt work, Iceland nationalized, it did work out.

I get there are problems with it, but the alternative is worse.

[RichardAWilson]

Germany has been impacted more by this crisis than any other country... trillions upon trillions of market cap wiped out, and GDP estimates shrinking. And that is only the tip of the iceberg.

Have you been smoking something other than cigarettes?

The Germans have benefited from a high growth rate. Unlike America and Britain, the German economy has been creating jobs since 2009.


http://www.economist.com/node/18061550

http://media.economist.com/images/images-magazine/2011/02/05/FN/20110205_FNC087.gif

How the hell can you make the claim that the Germans were "the worst affected?"

As The Economist noted, German GDP Growth has been higher than America's during the past decade.

Germany's GDP is expected to grow an additional 3% in 2011 and another 3% in 2012.

Meanwhile, we're averaging a growth rate that's much lower, even though our workforce (population) is growing faster than Germany's.

[ComradeMan]

You're on crack.

The Germans have benefited from a high growth rate. Unlike America and Britain, the German economy has been creating jobs since the Fourth Quarter of 2009.

A higher growth rate than others, but can we deem that high in real terms when the growth of China is over 10% and Germany is at 3.6%...?

I am not denying that Germany has a strong economy and a stronger position, but it isn't all roses and sunshine Germany either.

[RichardAWilson]

China is underdeveloped. (With a per head GDP that's a fraction of the Western World's)

It's easier for an underdeveloped nation to maintain a high growth rate. The Chinese are still embracing and implementing new technology that is common in the Western World.

After all, Japan, Korea and Taiwan once had Chinese-style growth.

You can't compare apples to oranges. A 3.6% annualized growth rate for an industrial power with a declining working aged population isn't bad.

I never claimed it couldn't be even better.

[RichardAWilson]

We weren't "devastated" here in America like you think.

Millions of unemployed Americans would disagree. - As would millions of young people and middle class shareholders that were preparing to retire.

Those fortunate enough to keep a job didn't know there was a crisis because it didn't affect them.


The crisis started in 2007 and snowballed.

Wrong. "The Crisis" began after the .Com Bubble Crashed. The truth is that we needed a bubble to sustain the economy.

If it wasn't for the wars in Iraq and Afghanistan, deficit-financed tax cutting and the housing bubble, the American economy wouldn't have grown (at all) between 2000 and 2008.

[kapitalyst]

And why has'nt German production been outsourced??? .... Ahhh yeah, Co-Determination.

Gee... I wonder if it could have anything to do with a simple 15% corporate tax? A myriad of other factors? Of course not... it must just be good ol' co-determination... ;)



Also good education, lots of countries have good education, why is German able to consume a large portion of its GDP as well? Oh yeah, a strong well paid working class.


And why might they have a well-paid working class?



Yeah ... I get your point, and what does that have to do with what I said?


Because you can live lavishly and be in serious trouble.



I don't give a shit about people you talk to, I look at statistics. 1/5 in poverty, almost 1/5 unemployed (real unemployment), huge student debt. The crisis started in 2007 and stowballed.

Oh, I didn't say we didn't have serious problems. But devastation has not yet happened. And the bulk of responsibility for our problems rests on the shoulders of our governments and their incompetence.

And btw, I don't give a shit about any statistics you cite which don't have a reliable source you can reference -- if you want to tout them as some sort of 'objective truths'. Though those, above, seem pretty good. :)

[RGacky3]

Gee... I wonder if it could have anything to do with a simple 15% corporate tax? A myriad of other factors? Of course not... it must just be good ol' co-determination... http://www.revleft.com/vb/european-debt-crisis-t162522/revleft/smilies/wink.gif


15% corporate tax is by no means low, as for the myriad of other factors tell me them, you have high labor costs and really strong unions, which is almost always the reason for outsourcing, whats keeping them behind is that they physically CANNOT outsource even if they wanted too.