Imagine inflation in the Eurozone was measured at 6 percent. That would be 3 times the 2 percent target rate for the ECB.
Panic and hysteria would reign. German police would draghi out Mario and put him in the stocks.
In fact inflation is now measured at 0.7%, or a little over 1/3 of the target rate.
Yet the expectation is that the the ECB will do nothing. Forget about going full Abe, the rumor is that Draghi won't even budge on conventional rate policy.
Far from there being outrage, eurozone policymakers seem perfectly content about this.
I've come to the conclusion that the euro is not inherently flawed. It can be made to work. It is just that those entrusted with the power to make it work elect to do otherwise.
I don't get that either. Seems to be a golden opportunity to print a trillion Euro or two and cancel some of the bad debt that is dragging the financial sector and governments down.
In Spain it's 0.3% and Italy's on 0.7% but looks like it'll decline. It's hard to see how those countries can avoid deflation, by the policies the Eurozone's followed. It's also tough to see how long that can be sustained politically.
Quote from: Sheilbh on November 06, 2013, 02:28:57 PM
It's also tough to see how long that can be sustained politically.
Unemployment in the zone is at 12.2% and is projected to be the same in 2014. There just doesn't seem to be a level of urgency in the political class equal to the extent of the problem.
The theoretical justification for pursuing fiscal austerity in the teeth of a recession is that you can compensate with monetary offset. But that obviously doesn't work if the monetary authority sits on its hands. There is no mainstream school of economics that supports the notion that one can simultaneously pursue fiscal contraction and hawkish monetary policy in a recession and have a good outcome. It is as if the entire EZ has become raving Austrian School acolytes.
Quote from: The Minsky Moment on November 06, 2013, 03:35:59 PMUnemployment in the zone is at 12.2% and is projected to be the same in 2014. There just doesn't seem to be a level of urgency in the political class equal to the extent of the problem.
But political power isn't in the Eurozone - it might be working better if it were. Instead there's a number of countries (most of them running primary surpluses) suffering and that's where the political pressure will be. As I say I can't see it being sustainable for several years.
US inflation is 2% but monetary policy here can hardly be described as contractionary.
After all those years of high inflation many of us have been conditioned to think low inflation = good. It will probably take years of low inflation for us to realize that is not necessarily true.
Quote from: Admiral Yi on November 06, 2013, 03:53:16 PM
US inflation is 2% but monetary policy here can hardly be described as contractionary.
Scott Sumner might beg to differ. (ex: http://www.themoneyillusion.com/?p=24378) And I think he has a point.
What looks like is happening in the US is a monetary offset effort as the Fed moves to counteract the sequester. But it still may be too conservative. The Fed has increased the monetary base by about 25% over the course of the year, but compare Japan where Kuroda is targeting a doubling the base.
"Not as expansionary as I'd like" and contractionary are not synonyms Joan.
Quote from: Admiral Yi on November 06, 2013, 05:23:49 PM
"Not as expansionary as I'd like" and contractionary are not synonyms Joan.
It's either/or.
If policy is insufficiently expansive, then it is too tight.
Quote from: Sheilbh on November 06, 2013, 02:28:57 PM
In Spain it's 0.3% and Italy's on 0.7% but looks like it'll decline. It's hard to see how those countries can avoid deflation, by the policies the Eurozone's followed. It's also tough to see how long that can be sustained politically.
Those figures are bollocks. If you factor taxes in both countries (and quite a few more) have been in deflation for a while.
How do you factor taxes into inflation Iormlund?
Quote from: The Minsky Moment on November 06, 2013, 03:35:59 PM
It is as if the entire EZ has become raving Austrian School acolytes.
Hasn't that been the case for, like, five years?
Quote from: Admiral Yi on November 07, 2013, 07:44:27 AM
How do you factor taxes into inflation Iormlund?
I assumed he meant when you got rid of VAT, the scourge of Europe, prices would actually have dropped.
I would also assume that the statistics would account for that, but he does live there. Of course deflation is pretty much what you would expect when two-thirds/three-quarters of your country is destitute.
Looks like the ECB has decided to cut interest rates after all, to 0.25%.
Quote from: Admiral Yi on November 07, 2013, 07:44:27 AM
How do you factor taxes into inflation Iormlund?
There's been a >30% increase in VAT rates in the last few years, plus excise taxes (especially gas which has an economy-wide feedback).
Healthcare costs have also gone up due to reduced medication coverage and so on.
Quote from: Ideologue on November 07, 2013, 07:48:32 AM
I assumed he meant when you got rid of VAT, the scourge of Europe, prices would actually have dropped.
I would increase VAT further actually. Same with property tax (this one I'd make much higher). Trade that for a reduction in payroll tax.
Quote
I would also assume that the statistics would account for that, but he does live there.
Standard Spanish CPI doesn't.
Raise property tax? That's just bizarre.
Property tax? We need more land, not less.
Quote from: Neil on November 07, 2013, 08:31:42 AM
Raise property tax? That's just bizarre.
It's harder to move your luxury villa from Marbella to a tax haven than set up a tax dodging scheme for your income there.
It's easier to burn down a luxury villa than it is to increase property taxes.
Wow. Draghi stepped up after all.
Not unanimous though. I imagine there'll be a clarifying speech from the Bundesbank soon :lol:
Quote from: Iormlund on November 07, 2013, 12:02:37 PM
Quote from: Neil on November 07, 2013, 08:31:42 AM
Raise property tax? That's just bizarre.
It's harder to move your luxury villa from Marbella to a tax haven than set up a tax dodging scheme for your income there.
Still, don't you think that a confiscatory property tax scheme will have some negative effects on middle class homeowners? I mean, I realize that it's pretty popular in Europe to hate that sort of person, but do they really deserve to take the hit that you're aiming at the rich?
Quote from: Neil on November 07, 2013, 01:42:02 PM
Still, don't you think that a confiscatory property tax scheme will have some negative effects on middle class homeowners? I mean, I realize that it's pretty popular in Europe to hate that sort of person, but do they really deserve to take the hit that you're aiming at the rich?
It is precisely the middle class that now pays disproportionately, because their salaries are so easy to tap into. There's almost 40% payroll tax on top of income tax.
I just propose shifting some of that burden to the one thing the rich and megacorporations like Apple can't hide behind tax code loopholes.
Property taxes on typical homeowners is evil. If the land itself is not producing income, it is just a scheme to eventually try to force those owners off that land.
Quote from: Tonitrus on November 10, 2013, 08:34:36 PM
Property taxes on typical homeowners is evil. If the land itself is not producing income, it is just a scheme to eventually try to force those owners off that land.
Also motor vehicles. I once had to beg some money off my parents to pay my property taxes on a car.
That must be a South Carolina thing.
Get rid of capital gains taxes!
Quote from: Tonitrus on November 10, 2013, 08:34:36 PM
Property taxes on typical homeowners is evil. If the land itself is not producing income, it is just a scheme to eventually try to force those owners off that land.
Not a very successful scheme.
Quote from: Tonitrus on November 10, 2013, 08:38:14 PM
That must be a South Carolina thing.
KEEP GOVERNMENT OUT OF EVERYTHING unless it's taxes on a necessity of life.
I will give us credit for reducing the sales tax on food items to a nominal 1% (although not restaurant items, which seems to get just higher and higher, unfortunately).
Toni's point is a good one though. Taxing property that is not revenue-generating is basically a tax on existing. Sorry, maam, but you can either pay this tax or pay rent to some fatcat. We already tax income, so the revenue-generating ones are covered. Why are we doing this?
Exactly...to even have it possible for a situation where 90-year old grandma Peterson has to sell the home she has lived in her entire life, just because the neighborhood has become gentrified/hipsterized, and is now worth 10,000% more than she and her late husband paid 70 years ago, but the assessed propery tax value is now also 10,000% more than her Social Security income...equates to that de facto "scheme to force people off their land".
Sure it may not be a common scenario. But that it can occur at all, is evil.
Now property tax on Google's Mountain View corporate HQ...or even Farmer Bob's 20,000 acres of genetically-modified soybean fields? That's fair.
Grandma Peterson just better watch out if she starts growing too many tomatoes in the backyard garden.
Quote from: Iormlund on November 07, 2013, 06:59:14 PM
Quote from: Neil on November 07, 2013, 01:42:02 PM
Still, don't you think that a confiscatory property tax scheme will have some negative effects on middle class homeowners? I mean, I realize that it's pretty popular in Europe to hate that sort of person, but do they really deserve to take the hit that you're aiming at the rich?
It is precisely the middle class that now pays disproportionately, because their salaries are so easy to tap into. There's almost 40% payroll tax on top of income tax.
I just propose shifting some of that burden to the one thing the rich and megacorporations like Apple can't hide behind tax code loopholes.
Why not just close loopholes? What you're proposing is even worse than the existing situation. Sure, you might get a bit of money out of those who can afford it, but the effect on regular people will be so much worse.
Quote from: Neil on November 11, 2013, 12:38:05 AM
Why not just close loopholes? What you're proposing is even worse than the existing situation. Sure, you might get a bit of money out of those who can afford it, but the effect on regular people will be so much worse.
Some loopholes don't necessarily involve just one country.
Apple, for example, sets up a corporation in low tax Ireland (within EU) to which it assigns patents. Then Apple Spain (or Apple UK) licenses said patents and sells its crap to local customers. The result is that Apple Spain generates a shitload of revenue, yet operates at a loss. This not only deprives the state of revenues but puts local firms at a disadvantage.
Quote from: MadImmortalMan on November 10, 2013, 10:28:34 PM
Toni's point is a good one though. Taxing property that is not revenue-generating is basically a tax on existing. Sorry, maam, but you can either pay this tax or pay rent to some fatcat. We already tax income, so the revenue-generating ones are covered. Why are we doing this?
That's why I support a land value tax (though there's also a place for property taxes).
But I thought this was part of the general consensus, that we should move from income taxes to taxes on consumption and property :mellow:
Quote from: Sheilbh on November 11, 2013, 06:45:21 AM
Quote from: MadImmortalMan on November 10, 2013, 10:28:34 PM
Toni's point is a good one though. Taxing property that is not revenue-generating is basically a tax on existing. Sorry, maam, but you can either pay this tax or pay rent to some fatcat. We already tax income, so the revenue-generating ones are covered. Why are we doing this?
That's why I support a land value tax (though there's also a place for property taxes).
But I thought this was part of the general consensus, that we should move from income taxes to taxes on consumption and property :mellow:
:wacko:
Quote from: Iormlund on November 11, 2013, 12:53:30 AM
Quote from: Neil on November 11, 2013, 12:38:05 AM
Why not just close loopholes? What you're proposing is even worse than the existing situation. Sure, you might get a bit of money out of those who can afford it, but the effect on regular people will be so much worse.
Some loopholes don't necessarily involve just one country.
Apple, for example, sets up a corporation in low tax Ireland (within EU) to which it assigns patents. Then Apple Spain (or Apple UK) licenses said patents and sells its crap to local customers. The result is that Apple Spain generates a shitload of revenue, yet operates at a loss. This not only deprives the state of revenues but puts local firms at a disadvantage.
If Spain feels that Apple Spain is playing them false, then yank their charter.
Quote from: Sheilbh on November 11, 2013, 06:45:21 AM
Quote from: MadImmortalMan on November 10, 2013, 10:28:34 PM
Toni's point is a good one though. Taxing property that is not revenue-generating is basically a tax on existing. Sorry, maam, but you can either pay this tax or pay rent to some fatcat. We already tax income, so the revenue-generating ones are covered. Why are we doing this?
That's why I support a land value tax (though there's also a place for property taxes).
But I thought this was part of the general consensus, that we should move from income taxes to taxes on consumption and property :mellow:
I don't think that such a consensus exists, at least not with places with a functioning middle class.
Quote from: Neil on November 11, 2013, 10:43:05 AM
Quote from: Iormlund on November 11, 2013, 12:53:30 AM
Quote from: Neil on November 11, 2013, 12:38:05 AM
Why not just close loopholes? What you're proposing is even worse than the existing situation. Sure, you might get a bit of money out of those who can afford it, but the effect on regular people will be so much worse.
Some loopholes don't necessarily involve just one country.
Apple, for example, sets up a corporation in low tax Ireland (within EU) to which it assigns patents. Then Apple Spain (or Apple UK) licenses said patents and sells its crap to local customers. The result is that Apple Spain generates a shitload of revenue, yet operates at a loss. This not only deprives the state of revenues but puts local firms at a disadvantage.
If Spain feels that Apple Spain is playing them false, then yank their charter.
It's an EU wide issue, and the main reason why the EU is putting a lot of pressure on Ireland to increase their corporate taxes.
Quote from: Ideologue on November 10, 2013, 08:46:22 PM
Quote from: Tonitrus on November 10, 2013, 08:38:14 PM
That must be a South Carolina thing.
KEEP GOVERNMENT OUT OF EVERYTHING unless it's taxes on a necessity of life.
you are a shame to communists everywhere
How so?
Quote from: The Larch on November 11, 2013, 11:11:47 AM
Quote from: Neil on November 11, 2013, 10:43:05 AM
Quote from: Iormlund on November 11, 2013, 12:53:30 AM
Quote from: Neil on November 11, 2013, 12:38:05 AM
Why not just close loopholes? What you're proposing is even worse than the existing situation. Sure, you might get a bit of money out of those who can afford it, but the effect on regular people will be so much worse.
Some loopholes don't necessarily involve just one country.
Apple, for example, sets up a corporation in low tax Ireland (within EU) to which it assigns patents. Then Apple Spain (or Apple UK) licenses said patents and sells its crap to local customers. The result is that Apple Spain generates a shitload of revenue, yet operates at a loss. This not only deprives the state of revenues but puts local firms at a disadvantage.
If Spain feels that Apple Spain is playing them false, then yank their charter.
It's an EU wide issue, and the main reason why the EU is putting a lot of pressure on Ireland to increase their corporate taxes.
So... Ireland has low taxes. Therefore the job of the EU is to make sure that their taxes are raised to accomodate badly run countries like Spain? Shouldn't the pressure be on Spain to get it's shit together?
Quote from: Threviel on November 11, 2013, 02:46:46 PM
Quote from: The Larch on November 11, 2013, 11:11:47 AM
Quote from: Neil on November 11, 2013, 10:43:05 AM
Quote from: Iormlund on November 11, 2013, 12:53:30 AM
Quote from: Neil on November 11, 2013, 12:38:05 AM
Why not just close loopholes? What you're proposing is even worse than the existing situation. Sure, you might get a bit of money out of those who can afford it, but the effect on regular people will be so much worse.
Some loopholes don't necessarily involve just one country.
Apple, for example, sets up a corporation in low tax Ireland (within EU) to which it assigns patents. Then Apple Spain (or Apple UK) licenses said patents and sells its crap to local customers. The result is that Apple Spain generates a shitload of revenue, yet operates at a loss. This not only deprives the state of revenues but puts local firms at a disadvantage.
If Spain feels that Apple Spain is playing them false, then yank their charter.
It's an EU wide issue, and the main reason why the EU is putting a lot of pressure on Ireland to increase their corporate taxes.
So... Ireland has low taxes. Therefore the job of the EU is to make sure that their taxes are raised to accomodate badly run countries like Spain? Shouldn't the pressure be on Spain to get it's shit together?
It is not a matter of getting shit together, it's a matter of distorting the internal EU market through borderline (if not outright) tax haven practices that give international corporations loopholes to take their inmense profits home without leaving almost any taxes in the countries where they actually conduct their business. This hits Luxembourg as well.
Quote from: The Larch on November 11, 2013, 03:16:59 PM
Quote from: Threviel on November 11, 2013, 02:46:46 PM
Quote from: The Larch on November 11, 2013, 11:11:47 AM
Quote from: Neil on November 11, 2013, 10:43:05 AM
Quote from: Iormlund on November 11, 2013, 12:53:30 AM
Quote from: Neil on November 11, 2013, 12:38:05 AM
Why not just close loopholes? What you're proposing is even worse than the existing situation. Sure, you might get a bit of money out of those who can afford it, but the effect on regular people will be so much worse.
Some loopholes don't necessarily involve just one country.
Apple, for example, sets up a corporation in low tax Ireland (within EU) to which it assigns patents. Then Apple Spain (or Apple UK) licenses said patents and sells its crap to local customers. The result is that Apple Spain generates a shitload of revenue, yet operates at a loss. This not only deprives the state of revenues but puts local firms at a disadvantage.
If Spain feels that Apple Spain is playing them false, then yank their charter.
It's an EU wide issue, and the main reason why the EU is putting a lot of pressure on Ireland to increase their corporate taxes.
So... Ireland has low taxes. Therefore the job of the EU is to make sure that their taxes are raised to accomodate badly run countries like Spain? Shouldn't the pressure be on Spain to get it's shit together?
It is not a matter of getting shit together, it's a matter of distorting the internal EU market through borderline (if not outright) tax haven practices that give international corporations loopholes to take their inmense profits home without leaving almost any taxes in the countries where they actually conduct their business. This hits Luxembourg as well.
Or Spain could compete with Ireland on lowering corporate taxes. But of course, much easier to punish Ireland than to change something in Spain.
Great, a race to the bottom, just what our economy needs!
But tax evasion isn't just about rates. Ireland gets picked on over this and shouldn't budge. Far worse offenders are the Netherlands, Austria and Luxembourg, despite having higher headline rates.
Quote from: The Larch on November 11, 2013, 04:03:20 PM
Great, a race to the bottom, just what our economy needs!
Surely that would be making Ireland less competitive and more expensive to do business in - while they're going through their own economic crisis - because other countries can't keep up?
Quote from: Threviel on November 11, 2013, 03:55:39 PM
Or Spain could compete with Ireland on lowering corporate taxes. But of course, much easier to punish Ireland than to change something in Spain.
Ireland can afford the low corporate tax rate for reasons that Spain and other countries cannot emulate and can never compete on.
Ireland has just 4.6 million people to Spain's 46 million people. So let's assume that Spain roughly needs ten times the government revenue that Ireland needs.
There is a finite number of multi-national corporations in the world and they typically need just one HQ in the EU due to it being a common market.
As Ireland just needs a tenth of Spain's government revenue it can compensate a low tax rate for its domestic corporations by enticing a higher than proportional number of multi-nationals to open shop in Ireland and paying taxes there.
Spain cannot do that as it will never be able to attract enough multi-nationals to offset the loss in tax revenue for lowering the tax rate for its domestic companies to match Ireland's low rate.
And if you look beyond Spain, Ireland has less than 1% of the EU population. For simplicity sake, let's assume the EU was perfectly equal in tax revenues and government expenditures. If a tiny piece of the EU attracts a lot of multi-nationals through a low corporate tax rate, the other 99% of the EU can't just lower their tax rate accordingly and hope for multi-nationals to somehow materialize out of nowhere and start paying taxes to compensate. Mainly because there just aren't that many multi-nationals.
Ireland is only in this position thanks to their membership in the EU. But they exploit that by establishing a policy that the bigger EU countries cannot enact themselves. The only other countries that can compete on this policy are typically considered tax havens as well, e.g. Luxembourg.
Quote from: Sheilbh on November 11, 2013, 04:11:18 PM
But tax evasion isn't just about rates. Ireland gets picked on over this and shouldn't budge. Far worse offenders are the Netherlands, Austria and Luxembourg, despite having higher headline rates.
There should only be one European tax policy. There should be only one American tax policy, but that's a different issue.
God, federalism is so fucking stupid.
Quote from: Sheilbh on November 11, 2013, 04:11:18 PM
But tax evasion isn't just about rates. Ireland gets picked on over this and shouldn't budge. Far worse offenders are the Netherlands, Austria and Luxembourg, despite having higher headline rates.
Fine. Make them change their tax regime as well.
And we should shut down all those pseudo-independent tax havens while we are at it. We should not rest until the twelve golden stars on azure are hoisted over tax havens from Jersey to Monaco to Liechtenstein. I hope Europe grows some Imperial spine in this regard soon. We should then partner with the Americans and smoke out the rest of the tax havens in the world.
You know Zanza, I'm not usually a fan of tax harmonization arguments but you make a decent case above.
Quote from: Admiral Yi on November 11, 2013, 04:55:10 PM
You know Zanza, I'm not usually a fan of tax harmonization arguments but you make a decent case above.
Seconded.
Quote from: Zanza on November 11, 2013, 04:38:20 PM
Quote from: Sheilbh on November 11, 2013, 04:11:18 PM
But tax evasion isn't just about rates. Ireland gets picked on over this and shouldn't budge. Far worse offenders are the Netherlands, Austria and Luxembourg, despite having higher headline rates.
Fine. Make them change their tax regime as well.
And we should shut down all those pseudo-independent tax havens while we are at it. We should not rest until the twelve golden stars on azure are hoisted over tax havens from Jersey to Monaco to Liechtenstein. I hope Europe grows some Imperial spine in this regard soon. We should then partner with the Americans and smoke out the rest of the tax havens in the world.
Mirage IVs and B-52s flying together. :wub:
Quote from: WikipediaThe Mirage IV was retired from the nuclear strike role in 1996, and the type was entirely retired from operational service in 2005.
Oh, so it's America does all the heavy lifting again. Euros. :rolleyes:
For the record, I don't mind Ireland setting low corporate taxes for companies that actually operate there, no argument from me in that regard, it's their country and they set the rules there. What I oppose is funneling all EU sales through them for stuff that is not actually sold there. I don't know how EU tax regulations work in that regard, and maybe my way of thinking about this is outdated, but if Apple (or Amazon, or some other retailer) sells stuff in countries A, B, C and so on, each of their units should pay taxes in countries A, B, C and so on for their profits made there, not in country L where all the profits from their operations all over the EU are collected, but where only a tiny amount of EU sales are actually made.
Another example about corporations taking advantage of this, maybe a bit more unrelated. A few months ago Ryanair was fined by a Spanish court to pay a smallish fine (several hundred euros) for some shenanigans that prevented a passenger to board a plane because they required unnecessary documents for that, so they had to give the passenger the money back and a small amount of compensation. Ryanair didn't even bother to appear on court, and ignored the court's demand for payment, so the judge ordered to seize the money from their bank accounts. They weren't able to collect the money because Ryanair's Spanish bank account only had something like 75€ at any given time.
Quote from: Zanza on November 11, 2013, 04:28:40 PMIreland can afford the low corporate tax rate for reasons that Spain and other countries cannot emulate and can never compete on.
Ireland has just 4.6 million people to Spain's 46 million people. So let's assume that Spain roughly needs ten times the government revenue that Ireland needs.
One of those reasons is that Ireland chose to have a small state. Until the crisis hit Irish government spending as a percent of GDP was well under 40%. The tax needs of a comprehensive Nordic social system and a bare-bones Anglo-Saxon one are entirely different.
This is like one of those abstract questions about how high or low taxes should be. What do you want government to do is the first bit, then you work out how to pay for it.
QuoteThere is a finite number of multi-national corporations in the world and they typically need just one HQ in the EU due to it being a common market.
As Ireland just needs a tenth of Spain's government revenue it can compensate a low tax rate for its domestic corporations by enticing a higher than proportional number of multi-nationals to open shop in Ireland and paying taxes there.
There's no doubt a low corporation tax is part of the attraction of Ireland, but there's significant other factors. The biggest as you say is probably market access. But even those two don't explain Ireland's success - lots of Eastern European countries have very low corporation tax rates, Bulgaria and Cyprus have the lowest rate in the EU at 10%, even Greece is below average at 20.8%.
In addition to that however Ireland has a liberal, stable system of regulation and doing business and a well-educated, English speaking workforce. I mean the percent of the Irish workforce who've completed some form of higher education is 87%, in Spain it's 65%. As well as that I think Ireland's proven far more comfortable and open to some aspects of the single market than other countries in Europe. They were only country to entirely open their labour markets to the new accession members. So in Ireland you have a well-educated, English speaking, flexible labour market into which it's uniquely easy to attract workers from all over Europe.
As well as that flexible labour market Ireland's got a very transparent, stable and liberal system of business regulation in general and a trusted, non-corrupt legal system. Overall they're ranked 15th in the World Bank's ease of doing business survey (up with the US, Singapore, UK and Nordic states) in comparison to France at 34, Spain at 44 and Italy at 73. A useful part of this regulatory system is a set of very attractive tax credits for R&D.
I don't see Ireland as some predatory country rather they've looked at the fact that they're a small country with no natural resources to speak of and successive governments have instead focused on what they can do to make themselves attractive to business. They're not like Jersey with hundreds of companies with no more than an address (the ECJ recently ruled on this actually). Many of the businesses who have European headquarters in Ireland really have a significant presence there - Pfizer have since 1960, Apple since 1980 (both back in the bad old days when corporation tax was over 40% which again suggests tax isn't the sole, or even the main motivator), Google have just built the tallest building in the country for their HQ and all told American high-tech firms employ over 100 000 people in Ireland. As you note that's a country of 4.6 million, it seems perverse for the EU to chip away at one of their advantages.
It's worth noting that Ireland does this despite very high personal tax rates and one of the highest VAT rates in Europe. I believe the former recently deterred Goldman Sachs from doing too much there :lol:
QuoteSpain cannot do that as it will never be able to attract enough multi-nationals to offset the loss in tax revenue for lowering the tax rate for its domestic companies to match Ireland's low rate.
Surely the answer isn't to pick out the mote in Ireland's eye but fix the beam in your own - liberalise, open markets, educate your workers and, yeah, reduce business taxes. Almost all of that is within Spain's powers and doesn't necessarily cost a lot. Even cutting corporation tax isn't a problem, headline rates across Europe have fallen from averages of over 40% to around 25% over the last couple of decades - Ireland's gone further, faster but that's all. For most countries now corporation tax is a comparatively small part of the revenue take.
When you look at effective average tax rates Ireland does have lower taxes but it's not as significant a difference. The EU has an average of around 20% and Ireland's is around 14.5%, which is around the level of Greece.
I also think a significant part of this problem could be solved by tax reform in the US, the UK, Germany and so on. The ECJ have said that in balancing the freedom of establishment and dealing with tax avoidance you can stop foreign subsidiaries with an artificial presence. But I don't think there's the political will to do it because so many American, British, German and so on companies benefit lax laws here.
QuoteYou know Zanza, I'm not usually a fan of tax harmonization arguments but you make a decent case above.
We need tax rules harmonisation. The same accounting rules, the same levels of transparency and information sharing so companies and individuals can't ferret money away. But none of that would really trouble Ireland.
QuoteWhat I oppose is funneling all EU sales through them for stuff that is not actually sold there. I don't know how EU tax regulations work in that regard, and maybe my way of thinking about this is outdated, but if Apple (or Amazon, or some other retailer) sells stuff in countries A, B, C and so on, each of their units should pay taxes in countries A, B, C and so on for their profits made there, not in country L where all the profits from their operations all over the EU are collected, but where only a tiny amount of EU sales are actually made./
Apple and Amazon actually do that via the Netherlands because they have a tax treaty with, I think it's Bermuda. Ireland doesn't so if you funnel money via Ireland there's still a 20% withholding tax. If you funnel the money through Ireland to the Netherlands and then to Bermuda then that can be avoided.
QuoteAnother example about corporations taking advantage of this, maybe a bit more unrelated.
That's just yet another example of Ryanair and Michael O'Leary being dicks :lol:
Quote from: Sheilbh on November 11, 2013, 08:01:49 PM
Surely the answer isn't to pick out the mote in Ireland's eye but fix the beam in your own ... reduce business taxes.
Right. Because wanting rich people to actually pay taxes is undesirable. Much better to tax the middle classes instead.
QuoteEven cutting corporation tax isn't a problem, headline rates across Europe have fallen from averages of over 40% to around 25% over the last couple of decades - Ireland's gone further, faster but that's all. For most countries now corporation tax is a comparatively small part of the revenue take.
Maybe corporation tax is such a low part of the revenue because a) we've been in a race to the bottom for a long time now and b) during a crisis there is not that much profit for SMEs and multinationals can squirrel their gains away.
Do middle class Spaniards not own stock, or have exposure to the market through private pensions? Semi-honest question.
Not that much. Wealth for the typical middle class family will be concentrated in your home (where you will have to invest most of your savings for 25-35 years). Private pension schemes are not that attractive and rare except for tax avoidance purposes (most people depend on public pensions when they retire). Savings rate is at historical minimums as well.
Being unemployed and starving will do that to a country.
Quote from: The Larch on November 11, 2013, 06:13:32 PM
They weren't able to collect the money because Ryanair's Spanish bank account only had something like 75€ at any given time.
Surely one EU jurisdiction will recognize and enforce civil judgments from another EU jurisdiction?
Quote from: Ideologue on November 12, 2013, 10:02:42 AM
Being unemployed and starving will do that to a country.
It is difficult in most countries to maintain membership in the middle class while unemployed and starving.
Quote from: Iormlund on November 12, 2013, 09:52:57 AMRight. Because wanting rich people to actually pay taxes is undesirable. Much better to tax the middle classes instead.
Corporation tax doesn't tax the rich. Personally I'd argue it is equally a tax on workers because of the impact it has on investment, jobs and wages. It taxes companies on their capital which then makes investment more expensive.
If you want to tax the rich - which is fine - then the more efficient way to do it is to tax capital gains and dividends at a higher rate. This has certainly been the trend in Western Europe. Cut corporation tax so companies, but raise taxes and close loopholes on income to shareholders.
QuoteMaybe corporation tax is such a low part of the revenue because a) we've been in a race to the bottom for a long time now and b) during a crisis there is not that much profit for SMEs and multinationals can squirrel their gains away.
Actually I think it's always been relatively low.
Huh? The Brits tax corporations on their capital instead of their profits?
And by the way, if you want to help workers get more jobs, lowering payroll tax is a much better idea (and one I support).
Quote from: Iormlund on November 12, 2013, 10:45:46 AMAnd by the way, if you want to help workers get more jobs, lowering payroll tax is a much better idea (and one I support).
Agreed.
And move the taxes to land, wealth and consumption :w00t:
:glare:
Quote from: The Minsky Moment on November 12, 2013, 10:11:57 AM
Quote from: The Larch on November 11, 2013, 06:13:32 PM
They weren't able to collect the money because Ryanair's Spanish bank account only had something like 75€ at any given time.
Surely one EU jurisdiction will recognize and enforce civil judgments from another EU jurisdiction?
I don't really know how it works, maybe it was not really worth it for such a small amount, or maybe they settled some other way.
Quote from: Sheilbh on November 12, 2013, 10:51:39 AM
Quote from: Iormlund on November 12, 2013, 10:45:46 AMAnd by the way, if you want to help workers get more jobs, lowering payroll tax is a much better idea (and one I support).
Agreed.
And move the taxes to land, wealth and consumption :w00t:
Only if it's 100%. :)
Consumption? Is this the 19th century?
Quote from: Ideologue on November 12, 2013, 11:16:55 AM
Quote from: Sheilbh on November 12, 2013, 10:51:39 AM
Quote from: Iormlund on November 12, 2013, 10:45:46 AMAnd by the way, if you want to help workers get more jobs, lowering payroll tax is a much better idea (and one I support).
Agreed.
And move the taxes to land, wealth and consumption :w00t:
Only if it's 100%. :)
:glare:
Quote from: Sheilbh on November 12, 2013, 10:51:39 AM
Quote from: Iormlund on November 12, 2013, 10:45:46 AMAnd by the way, if you want to help workers get more jobs, lowering payroll tax is a much better idea (and one I support).
Agreed.
And move the taxes to land, wealth and consumption :w00t:
Won't these two, particularly the latter be deleterious to the non-wealthy classes?
Not necessarily. You can mitigate against those effects - not least with redistribution like EITC or Switzerland's new minimum income proposal (which is very interesting). It'd also need to be part of wider tax reform.
Having said that I think it's wise for most countries to continue cut corporation tax but tax dividends and capital gains more regardless.
Quote from: garbon on November 12, 2013, 02:01:43 PM
Quote from: Sheilbh on November 12, 2013, 10:51:39 AM
Quote from: Iormlund on November 12, 2013, 10:45:46 AMAnd by the way, if you want to help workers get more jobs, lowering payroll tax is a much better idea (and one I support).
Agreed.
And move the taxes to land, wealth and consumption :w00t:
Won't these two, particularly the latter be deleterious to the non-wealthy classes?
Taxing land would wreck social security pensioners. Poor retired people vote, so that's not going to happen.
Quote from: MadImmortalMan on November 12, 2013, 06:25:10 PM
Taxing land would wreck social security pensioners. Poor retired people vote, so that's not going to happen.
Exempt the first 1/4 acre.
Quote from: The Minsky Moment on November 12, 2013, 06:33:20 PM
Quote from: MadImmortalMan on November 12, 2013, 06:25:10 PM
Taxing land would wreck social security pensioners. Poor retired people vote, so that's not going to happen.
Exempt the first 1/4 acre.
And tax land value not the value of the property/development.
There are again calls that Germany should lessen its trade surplus/current account surplus. I always wonder what kind of policies the government could actually enact to achieve that.
Quote from: Zanza on November 13, 2013, 01:48:08 PM
There are again calls that Germany should lessen its trade surplus/current account surplus. I always wonder what kind of policies the government could actually enact to achieve that.
Significant deficit spending. Wage increases.
Deficit spending on what? Investment in infrastructure which is most commonly cited will mostly go to German companies. As it happens, we make just about everything. I guess we could start buying a lot of Carrara marble for public buildings.
Wage increases? For whom? The government employs about 10% of the workforce. Government employees are probably paid less than average as they get better long-term benefits. Even doubling the wages of all government employees would only increase aggregate foreign demand by a few percent at best. As most money isn't spent on imported products, but on domestic services, that percentage can't be that big. The government has no role in setting wages in the private sector in Germany (enshrined in the constitution).
It's not terribly important what you deficit spend on. Deficit spending will increase aggregate demand, which will leak into imports, and bid up factor prices, decreasing competitiveness.
Mind you, I'm not one of those insisting Germany take steps to reduce its current account.
Germany's current account surplus is about 6.7% of GDP though. If deficit spending just "leaks" into imports, you need to do a lot of it to make a dent. Is there any kind of empirical data how much government spending leaks into imports in an economy like Germany's?
Decreased competitiveness is only indirect and you would need a lot of deficit spending to bid up factor prices as Germany's private employers and unions are not interested in eroding the competitive basis of Germany's industry, so they'll not join into a general wage increase. There has been a remarkable restraint in the last decade and a half or so and Germans are very safety-oriented and will trade workplace safety for a wage increase.
Germany has a huge government debt of about 80% of GDP already. It has very unfavorable demographics which suggest that it will struggle in just a few years to service that debt as its workforce is currently at peak strength and is bound to decline in the next decades. You also have to consider that Germany is a democracy and there is very little support for deficit spending. And that Germans have been made to fear the future for decades and they have a very high savings quota due to that.
Quote from: Zanza on November 13, 2013, 02:36:55 PM
Is there any kind of empirical data how much government spending leaks into imports in an economy like Germany's?
To be clear, I'm not only talking about the federal government buying Italian marble. Government spending eventually ends up in the pockets of German consumers. Those people buy olive oil and Spanish vacations. Hence imports rise.
As for everything else, you're preaching to the choir.
Quote from: Admiral Yi on November 13, 2013, 02:40:29 PM
To be clear, I'm not only talking about the federal government buying Italian marble. Government spending eventually ends up in the pockets of German consumers. Those people buy olive oil and Spanish vacations. Hence imports rise.
Sure. But Germany already has a very high import penetration rate compared to other big countries like France, the UK, the USA or Japan, meaning a much higher percentage of domestic demand is already satisfied by imports than in other big economies. And it already spends more in nominal terms than every other country but China on international tourism, so I guess there is a limit to that too.
Your point about high propensity to import reinforces my point. That means a given euro of deficit spending would result in more imports.
And if one has more money in one's pocket, one can always spend a little more on a vacation.
Here's Olli Rehn's blog on the subject. He's the Commissioner in charge of the MIP into Germany so could require changes to economic policy:
QuoteTurning Germany's surplus into a win-win for the eurozone
November 11, 2013
Germany's current account surplus has been a subject of heated debate for some time. On the one side, there are regular calls for the country to reduce its surplus through fiscal stimulus, to lift southern Europe from its doldrums. On the other side, in Germany these calls are often regarded as jealous attacks against the country's extraordinary economic performance.
Both extremes bluntly simplify a complex reality in a way that kills any serious policy debate. Especially in the current context of coalition talks in Germany about a new government programme, it is important to look at the matter in an analytical manner to provide substantive elements for a well-informed debate.
Let's look at the facts and consider what can be done in their light. For several years, Germany has run a sizeable current account surplus. Recent data indicate that the surplus has surpassed 6% of GDP in every year since 2007.
What is behind the large surplus? A key factor has been the deepening of European integration in the past ten years, since this has helped strengthen Germany's industrial competitiveness in many ways. First, the creation of the euro prevented the German exchange rate from appreciating to reflect the large surplus. Second, the integration of the production chains with central and eastern Europe allowed Germany to diversify and profit from a large pool of well-educated and cheaper labour. And third, financial market integration and interest rate convergence drove international capital flows which mirrored these current account developments.
Equally important, adjustment channels are influenced significantly by global economic interdependence. Essentially, the eurozone is neither a small open economy nor a large closed one, but a large open economy that trades a lot with the rest of the world. Germany is specialised in products that are in demand in the rest of the world and is highly competitive on both quality and price. High savings and low investment in many sectors have contributed to the large and persistent current account surplus.
The prospect of Germany's ageing population translates today into lower consumption and higher savings for retirement. Investment should go up now because an ageing population should see the economy becoming more capital-intensive. When ageing kicks in, savings should start going down and consumption up.
Moreover, around a third of the German current account surplus can be explained by returns on assets accumulated abroad in the years before the crisis, when excess savings in Germany and other core countries were redistributed throughout the eurozone and further afield. Instead of boosting productivity-enhancing investment, which would have enhanced sustainable growth, they largely ended up fuelling the credit booms and subsequent asset and housing bubbles in recipient countries. That mispricing of risk was detrimental to both sides: the catastrophic busts that hit the peripheral economies led to losses for the German banks themselves, adding to those incurred from their investments in toxic US assets. Meanwhile, investment in Germany has fallen from 21.5% of GDP in 2000 to 17.6%, a significantly lower proportion than in other eurozone countries.
In the economic analysis that the European Commission provides for the reinforced policy coordination, we have looked at the best ways of creating a win-win outcome for both Germany and the eurozone as a whole.
Removing the bottlenecks to domestic demand would contribute to a reduction in Germany's external trade surplus. True, the increase in domestic demand has doubled in the past two years when compared to the eurozone as a whole, but it is still modest. Meanwhile, private investment is set to fall again this year.
The EU Council's recommendations to Germany, adopted in July, urge the country to open up the bottlenecks to the growth of domestic demand. In particular, Germany should create the conditions for sustained wage growth, for instance by reducing high taxes and social security contributions, especially for low-wage earners. The country should further stimulate competition in services – construction in particular, but also in certain crafts, as well as professional services – in order to boost domestic sources of growth.
There are other pressing challenges too. The energy transition requires an improved regulatory framework to unlock private investment in energy networks. Boosting investment in infrastructure will help sustain domestic demand not only in the short term, but also in the longer term via its positive impact on productivity.
All this would enhance Germany's economic performance and welfare and could help reduce the inequalities that have accumulated in recent years. But it would also have a significant positive impact on the eurozone economy. For while a rise in demand in Germany might not lead directly or immediately to a large rise in exports from southern Europe, the reforms the EU is advocating for Germany would facilitate a genuine and mutually beneficial rebalancing in the eurozone economy. Crucially, a rise in domestic demand in Germany should help to reduce upward pressure on the euro exchange rate, easing access to global markets for exporters in the periphery. To profit fully from this opportunity, there should be no easing of the drive to boost competitiveness through structural reforms.
Because these important issues deserve further analysis, the European Commission will this week need to consider whether to launch an in-depth review of the German economy in the framework of the EU's Macroeconomic Imbalances Procedure. Such a review would provide both European and German policymakers with a detailed picture of the economic challenges and opportunities facing the eurozone's largest economy.
Of course, Germany is not the only country whose policies have spillover effects on the rest of the eurozone. As the two largest eurozone economies, Germany and France together hold the key to a return to growth and employment in Europe. If Germany can take steps to lift domestic demand and investment, while France embraces reforms to its labour market, business environment and pension system to support competitiveness, they will together do a great service to the entire eurozone – providing stronger growth, creating more jobs and reducing social tensions.
A version of this article appeared in German on 11 November 2013 in the Frankfurter Allgemeine Zeitung.
QuoteIn particular, Germany should create the conditions for sustained wage growth, for instance by reducing high taxes and social security contributions, especially for low-wage earners.
Ok. Income taxes are already low for low-wage earners. The 50% of the population with the lowest income paid about 5% on income tax, the 25% of the population with the lowest incomes paid just 1% of income tax on their income. So that leaves social security contributions, which are fairly high for them. I guess there is room for changing that. But sadly that won't happen. Especially pension contributions will not go down anytime soon as the party's are hostage to an ever-older electorate.
QuoteThe country should further stimulate competition in services – construction in particular, but also in certain crafts, as well as professional services – in order to boost domestic sources of growth.
Definitely.
QuoteThe energy transition requires an improved regulatory framework to unlock private investment in energy networks.
Ok. Not very popular in Germany. There were recent plebiscites that mandated e.g. the government of Hamburg to buy back the energy network into public ownership. I am also not convinced that energy networks are something that private investors should own. You can only build them with eminent domain and they seem to be a natural monopoly as it doesn't really make sense to have two energy networks next to each other.
QuoteBoosting investment in infrastructure will help sustain domestic demand not only in the short term, but also in the longer term via its positive impact on productivity.
German companies and private persons have long found it more lucrative to invest in other markets. No idea what the government could really do to change that, especially in a single market without capital controls. The company I work for deliberately invests a lot in emerging markets because they consider the German market to be saturated with the type of products we make and the strategy is to invest where market growth is expected.
I was reading through that and thinking to every idea that I was sure I'd read the exact opposite being proposed in the coalition negotiations :lol:
They actually proposed any policies in that borefest? I can't be bothered to follow anymore.
Quote from: The Minsky Moment on November 12, 2013, 06:33:20 PM
Quote from: MadImmortalMan on November 12, 2013, 06:25:10 PM
Taxing land would wreck social security pensioners. Poor retired people vote, so that's not going to happen.
Exempt the first 1/4 acre.
And the first 1/160th of a mule?
Quote from: Zanza on November 13, 2013, 03:47:39 PM
They actually proposed any policies in that borefest? I can't be bothered to follow anymore.
Question for you. How does government work during coalition negotiations? Are the FDP ministers still ministers even though they've lost all their seats?
Quote from: Zanza on November 13, 2013, 01:48:08 PM
There are again calls that Germany should lessen its trade surplus/current account surplus. I always wonder what kind of policies the government could actually enact to achieve that.
Inflation.
Quote from: Sheilbh on November 13, 2013, 03:55:48 PM
Question for you. How does government work during coalition negotiations? Are the FDP ministers still ministers even though they've lost all their seats?
Yes, the government is only "acting" since the new parliament constituted itself. One of the lessons of the Weimar Republic was that Germany should always have a government without interruption. So all of them serve until their successor is sworn in.
Quote from: The Minsky Moment on November 13, 2013, 03:56:00 PM
Quote from: Zanza on November 13, 2013, 01:48:08 PM
There are again calls that Germany should lessen its trade surplus/current account surplus. I always wonder what kind of policies the government could actually enact to achieve that.
Inflation.
Can that be created by fiscal policy? The German government has only indirect influence on monetary policy.
Quote from: Zanza on November 13, 2013, 03:58:02 PM
Yes, the government is only "acting" since the new parliament constituted itself. One of the lessons of the Weimar Republic was that Germany should always have a government without interruption. So all of them serve until their successor is sworn in.
Same in the UK then. Is it, like in the UK, under a 'purdah' so very limited in what it can do?
Quote from: Zanza on November 13, 2013, 04:00:47 PM
Can that be created by fiscal policy? The German government has only indirect influence on monetary policy.
I suspect Joan is being facetious.
Quote from: Zanza on November 13, 2013, 04:00:47 PM
Can that be created by fiscal policy? The German government has only indirect influence on monetary policy.
Not really if you are in a fiscal union as you say,
But Germany does happen to have a relatively corporatist wage bargaining regime.
My impression is that since Shroeder, the government has tended to put its thumb on the wage restraint end of the scale. If social and administrative pressure pushed the other way, that could have an effect.
But politically I don't see it happening.
QuotePurdah or pardah (from Persian : پرده, meaning "curtain") is a religious and social institution of female seclusion observed by some women in Afghanistan, Bangladesh, Pakistan and Northern India . More simply, it is the practice of preventing men from seeing women. This takes two forms: physical segregation of the sexes and the requirement that women cover their bodies so as to cover their skin and conceal their form.
Hmm, I am pretty sure Merkel is still allowed to meet her male ministers. So I have no idea what "purdah" means in this context.
I don't think the government is limited in its activities. Parliament will probably not pass any new laws until the coalition talks are concluded though, so the government can only administrate, not actively set policy anymore.
Quote from: The Minsky Moment on November 13, 2013, 04:14:22 PMBut Germany does happen to have a relatively corporatist wage bargaining regime.
Yes. That's even specifically protected in our constitution.
QuoteMy impression is that since Shroeder, the government has tended to put its thumb on the wage restraint end of the scale. If social and administrative pressure pushed the other way, that could have an effect.
But politically I don't see it happening.
That was definitely the case under Schröder, but I would say it has since been adopted by the unions too. They are more interested in equality, meaning getting better conditions for temporary workers at the low-end of the wage scale. And they'll regularly trade higher wage increases for more job security.
And skilled labor in Germany is already fairly well paid by all international standards. It's really the lower end of the job market and that's where the corporatist model often fails as the lower end of the job market is not organized into unions and has very little bargaining power against the still corporatist employers.
Germany will likely introduce a kind of minimum wage soon, so that will at least support the very worst paid employees.
Quote from: Zanza on November 13, 2013, 04:15:35 PMHmm, I am pretty sure Merkel is still allowed to meet her male ministers. So I have no idea what "purdah" means in this context.
QuotePurdah is the pre-election period in the United Kingdom, specifically the time between an announced election and the final election results.[1] The time period offers a prior opportunity for government departments to develop guidance and policy due to any impact resulting from the election. It also prevents central and local government departments from making announcements about any new or controversial government initiatives (such as modernisation initiatives, administrative and legislative changes) which could be seen to be advantageous to any candidates or parties in the forthcoming election, or which may commit any incoming new administration to policies which it wouldn't support.
...
Purdah does not have actual legal force, rather is considered a 'self-denying ordinance', and has considerable moral authority; because of the lack of statute different local authorities adopt different standards as to the extent to which they observe the convention,[6] and authorities are always mindful of the possibility of results and decisions being open to challenge in the event of a breach of purdah. When local elections are being held at the same time as a general election a higher standard is usually applied.[7]
At the national level, major decisions on policy are postponed until after the purdah period, unless it is in the national interest to proceed or a delay would waste public money. The Cabinet Office issues guidance before each election to civil servants, including those in the devolved national parliaments and assemblies.[1] Purdah also continues after the election during the time in which new MPs and ministers are sworn in. In the event of an inconclusive election result, purdah does not end until a new government forms. When no party has an overall majority, it may take some time before a minority or coalition government is formed.
Hmm, no, I don't think our political culture really knows that concept. Our legislative periods are typically of fixed length so the concept of announcing an election is not really relevant as we already know the next election will be in 46-48 months after the last one.
Our local authorities are state governments that have their own democratic legitimization and don't adhere to the federal legislative cycle and will make whatever policy decision they want - certainly trying to favor their federal candidates. The civil service is expected to be impartial anyway and doesn't get any specific political guidance as far as I know.
Quote from: Sheilbh on November 13, 2013, 04:28:49 PM
Quote from: Zanza on November 13, 2013, 04:15:35 PMHmm, I am pretty sure Merkel is still allowed to meet her male ministers. So I have no idea what "purdah" means in this context.
QuotePurdah is the pre-election period in the United Kingdom, specifically the time between an announced election and the final election results.[1] The time period offers a prior opportunity for government departments to develop guidance and policy due to any impact resulting from the election. It also prevents central and local government departments from making announcements about any new or controversial government initiatives (such as modernisation initiatives, administrative and legislative changes) which could be seen to be advantageous to any candidates or parties in the forthcoming election, or which may commit any incoming new administration to policies which it wouldn't support.
...
Purdah does not have actual legal force, rather is considered a 'self-denying ordinance', and has considerable moral authority; because of the lack of statute different local authorities adopt different standards as to the extent to which they observe the convention,[6] and authorities are always mindful of the possibility of results and decisions being open to challenge in the event of a breach of purdah. When local elections are being held at the same time as a general election a higher standard is usually applied.[7]
At the national level, major decisions on policy are postponed until after the purdah period, unless it is in the national interest to proceed or a delay would waste public money. The Cabinet Office issues guidance before each election to civil servants, including those in the devolved national parliaments and assemblies.[1] Purdah also continues after the election during the time in which new MPs and ministers are sworn in. In the event of an inconclusive election result, purdah does not end until a new government forms. When no party has an overall majority, it may take some time before a minority or coalition government is formed.
While the concept is entirely familiar to me, the term "purbah" is not. Is it a fairly recent term?
I don't think so, it's not terribly politically correct if so. I think it dates back to Empire given that it's an Indian term.
It's a Islamic term - it just means "curtain" in Persian.
Not sure how long it's been used in British politics. Ceratinly since the 70s, perhaps much longer. It's much more than Shelibh's quote implies. It's not just that there is a break in policy making, it requires a clear separation between political parties and government (central and local) machinery.
Quote from: Admiral Yi on November 13, 2013, 01:49:48 PM
Quote from: Zanza on November 13, 2013, 01:48:08 PM
There are again calls that Germany should lessen its trade surplus/current account surplus. I always wonder what kind of policies the government could actually enact to achieve that.
Significant deficit spending. Wage increases.
I don't think Germany needs more deficit spending. They can barely balance their books in a period of extremely favorable conditions as it is.
The best solution to trade balance is simply to make the periphery more competitive vis a vis Germany. To do that we need structural reforms and debt relief (so the process doesn't take 20 or 30 years). We should simply implement a roadmap for monetizing debt in exchange for concrete reforms. Such an avenue should be open to every Euro country interested (including Germany).
Not sure how debt forgiveness would improve your competitive position.
This interview seems to have got some people excited that the ECB's about to go Anglo-Saxon:
QuoteECB's Praet: All Options on Table
Central Bank Could Adopt Negative Deposit Rate, Asset Purchases If Needed
By BRIAN BLACKSTONE CONNECT
Updated Nov. 13, 2013 2:13 p.m. ET
FRANKFURT—The European Central Bank could adopt negative interest rates or purchase assets from banks if needed to lift inflation closer to its target, a top ECB official said, rebutting concerns that the central bank is running out of tools or is unwilling to use them.
"If our mandate is at risk we are going to take all the measures that we think we should take to fulfill that mandate. That's a very clear signal," ECB executive board member Peter Praet said in an interview Tuesday with The Wall Street Journal.
Annual inflation in the euro zone slowed to 0.7% in October, far below the central bank's target of just below 2% over the medium term. The euro dipped briefly after the comments appeared on the Journal's website.
Mr. Praet didn't rule out what some analysts see as the strongest, and most controversial, option: purchases of assets from banks to reduce borrowing costs in the private sector.
"The balance-sheet capacity of the central bank can also be used," said Mr. Praet, whose views carry added weight as he also heads the ECB's powerful economics division. "This includes outright purchases that any central bank can do."
Additional stimulus from the ECB isn't needed right now, Mr. Praet signaled, noting that inflation risks for the euro zone as a whole are balanced after last week's unexpected ECB interest-rate cut.
On Thursday the central bank reduced its key lending rate to 0.25%, a record low.
The move came days after the October inflation report fanned fears that the euro zone may slip into a period of excessively low inflation or, in some places, persistent declines in consumer prices, known as deflation. This cripples economic activity by holding wages and profits down and hampering efforts by the private sector and governments to reduce debt.
Some of the countries hit hardest by the euro zone's debt crisis, including Ireland, Greece, Cyprus and Spain, have inflation rates of zero or lower.
The ECB could do more if necessary, Mr. Praet said. "On standard measures, interest rates, we still have room and that would also include the deposit facility," he said.
The central bank's deposit rate has been set at zero for several months. Making it negative would effectively levy a fee on commercial banks that park funds at the ECB.
That would be aimed at spurring bank lending to the private sector, which would boost growth and inflation. However, a negative deposit rate would also weigh on bank profits.
Another option is to make more cash available to financial institutions, as it has in the past with cheap, long-term loans, known as LTROs, Mr. Praet said.
The ECB has so far resisted large-scale asset purchases as a means to boost growth.
The Federal Reserve and Bank of Japan 8301.TO +2.36% have used this tool, known as quantitative easing, aggressively to spur lending and keep inflation from falling too low, buying large swaths of government and private debt.
The ECB purchased safe bank and government bonds at the height of the global financial crisis and Europe's sovereign-debt crisis, but in small amounts compared with other major central banks.
Such bond purchases are deeply unpopular in Germany, where long-standing fears of inflation inspire doubts about easy-money policies.
Jens Weidmann, who heads the German central bank as well as serving on the ECB's Governing Council, opposed the ECB's decision last year to create a program to buy government bonds. Nevertheless, the program, which hasn't even been used, has been widely credited with helping calm the bloc's debt crisis.
The ECB's charter forbids it from financing governments, and Mr. Praet said the bank must respect such legal constraints. However the rules "do not exclude that you intervene in the markets outright," he said.
Mr. Weidmann was also in the minority of ECB officials who opposed last week's rate reduction, preferring to wait for more information on the inflation outlook. This has led to some concern that if the ECB can't unanimously agree on a cut to its key lending rate, reaching consensus on more outside-the-box monetary policies will prove tricky.
"For some decisions it's easier than others" to gain consensus, Mr. Praet said. "One thing is clear: the Governing Council has been able to decide. That's really the message."
The need for more aggressive stimulus is increasingly being debated by economists and investors.
Economists at BNP Paribas BNP.FR +2.19% argue the ECB should buy €50 billion ($67 billion) per month of government bonds of euro-zone countries and start doing so "the sooner the better." Still the French bank places the odds of that happening at under 50-50, "probably by a wide margin," in part because of likely resistance from the ECB's conservative wing.
Mr. Praet rejected fears, particularly in Germany, that low ECB interest rates harm savers by reducing the interest rate they earn on deposits. Low interest rates tend to favor borrowers over savers.
"Creditors and debtors always have an interest in a stable anchor, which is price stability in the medium term," Mr. Praet said. "The action to reduce uncertainty is good for the climate for savers."
The comments sent the euro tumbling to a session low of $1.3391, from $1.3455, just minutes after they appeared on the Journal's newswire and website. The currency later rallied to trade at $1.3447, from $1.3435 late Tuesday.
The euro losses were held in check, as many investors believe the ECB will not make a sudden shift to negative deposit rates, electing instead to stimulate the economy through less-dramatic steps, such as lowering its main refinancing rate below 0.25% or cutting minimum reserve requirements for banks.
—Todd Buell, Christopher Lawton and Ira Iosebashvili contributed to this article.
Write to Brian Blackstone at [email protected]
The emphasis that the Governing Council has been able to decide seems important, it's pointing out that the ECB actually has a majority for this sort of thing.
http://blogs.wsj.com/moneybeat/2013/11/14/german-gdp-release-highlights-rebalancing/
QuoteGermany's quarterly expansion was solely driven by domestic demand, as both private consumption and public spending slightly increased and corporate investment continued to recover. By comparison, net exports were a drag on third-quarter GDP growth.
German private consumption growth since 2009 has been the strongest of all 17 euro-zone countries, except for Luxembourg, ING economist Carsten Brzeski said. This has helped bring down Germany's trade surplus vis-à-vis the rest of the euro zone.
In fact, it has fallen to below 2% of GDP in the second quarter of this year from nearly 5.5% of GDP in 2007, UniCredit's chief German economist, Andreas Rees, said.
While exports to the euro zone declined, imports rose significantly, highlighting what Mr. Rees calls "an enormous rebalancing" between Germany and the rest of the euro zone. If this speed of adjustment continues, Germany's trade balance with the euro zone will hit zero in about four years' time, he said.
This shows that the country's high trade surplus stems from strong demand for German industrial goods from outside the 17-nation euro bloc.
Quote from: Admiral Yi on November 14, 2013, 09:34:21 AM
Not sure how debt forgiveness would improve your competitive position.
I'll give you a practical example: Drawing on my experience, I have dozens of ideas, big and small, on how I would improve things if I got the chance to become the boss. I know what technologies to use, who to hire, and so on.
What I don't have, are the means to do so. Because there are no clients to be had. And even if I wooed some, the bank would ask me for an interest rate much higher than say, in Bavaria. And even if I got the contracts and the loan, there is no guarantee that my customers would actually pay me in time to avoid bankruptcy or at all.
So all those ideas are pretty much useless and will not result in enhanced competitiveness. Not at my non-existant new business. Nor at my old employer, which has rid itself from younger employees - those that could bring new ideas.
Now extrapolate that to an entire country.
Eurozone recovery fades as growth stalls:
http://money.cnn.com/2013/11/14/news/economy/europe-economy-gdp/index.html?iid=HP_LN&hpt=ieu_c2 (http://money.cnn.com/2013/11/14/news/economy/europe-economy-gdp/index.html?iid=HP_LN&hpt=ieu_c2)
Quote
LONDON (CNNMoney)
Europe's recovery from 18 months of recession stalled in the third quarter as exports slowed and the region's second-biggest economy slipped back into reverse gear.
The 17-nation eurozone's first estimate of GDP showed growth of just 0.1% over the previous quarter, when the economy grew by 0.3% after contracting for six consecutive quarters through the depths of the region's debt crisis.
Analysts were predicting growth would slow as one-off factors such as a seasonal rebound in German construction faded, but the regional figures were weaker than some had expected.
Subdued global growth and a relatively strong euro hit exports from Europe's leading economies. Germany's rate of growth more than halved to 0.3%, while the French economy shrank by 0.1%.
The figures confirm suspicions that the eurozone is struggling to generate any real momentum, as record levels of unemployment, weak investment, tight credit conditions and government austerity -- albeit at a slower pace than last year -- are weighing on demand.
Industrial production and retail sales both fell in September, and inflation plunged to 0.7%. That prompted the European Central Bank to cut interest rates to a new record low last week in an attempt to prevent the region slipping into deflation and stagnation.
And ECB President Mario Draghi said the bank was ready to take further measures, including another rate cut, if the move fails to have the desired effect.
Related: Are German exports holding back Europe?
Unemployment won't start falling until 2015 at the earliest, according to recent EU forecasts. The European Commission has trimmed its estimate of GDP growth next year to 1.1%, and said it was too early to declare an end to the region's crisis.
With 19 million out of work and wages barely rising, domestic demand in the eurozone remains very weak.
"While there's not much difference between the second and third quarter GDP figures, the deceleration is, psychologically speaking, a major setback for the eurozone," said Nicholas Spiro, managing director of Spiro Sovereign Strategy.
German domestic demand was responsible for most of the slim growth, with a recovery in exports from countries such as Spain and Portugal helping too.
Italy's economy continued to shrink, although by much less than in previous quarters, but France was weaker than expected.
Last week, ratings agency S&P downgraded France on fears the government will be unable to restore the economy's competitiveness, and the Organization for Economic Cooperation and Development weighed in Thursday, urging the country to be more ambitious with its reforms.
It highlighted relatively high tax rates, insufficient research and development, strict product market regulation and barriers to competition in business services.
Related: Surging U.K. economy surprises central bank
The faltering nature of the eurozone recovery contrasts strongly with accelerating growth and a surge in confidence in the U.K., where the talk is now about when the Bank of England will move to tighten monetary policy.
The central bank raised its growth forecasts on Wednesday and said it expected unemployment to fall much faster than expected just a few months back. Governor Mark Carney said he would be prepared to raise interest rates before May 2015 if it was the right decision for the economy.
I don't normally post Ambrose Evans-Pritchard because he's a bit florid, but I thought this piece interesting:
QuoteDowngraded Netherlands is another victim of EMU money mess
By Ambrose Evans-Pritchard Economics Last updated: November 29th, 2013
Standard & Poor's has stripped The Netherlands of its AAA rating. It is a symbolic gesture. The spread between 10-year German Bunds and Dutch bonds has barely moved.
It matters a great deal more in Dutch politics, though the ever-entertaining Jeroen Dijsselbloem said the downgrade to AA+ was "encouraging" for reform efforts. We are glad that the Dutch finance minister is encouraged.
S&P more or less said the Netherlands has tipped into a bad equilibrium. The trend growth of per capita income is "persistently lower" than peers. The economy will contract by 1.2pc this year. Real per capita growth will average minus 0.1pc from 2006-2016. Output will not regain its peak until 2017.
The erosion of real income is actually worse in the UK but the British adjustment has happened in an entirely different way, through a burst of inflation and a lower pound. The outcome is chalk and cheese.
Dutch debtors are in a trap. House prices have fallen 20pc from the peak and are expected to fall yet further. Some 16pc of mortgages are already under water. Dutch household debt is 110pc of GDP, and total private/public debt is 300pc of GDP – far higher than Italy.
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It is dangerous to flirt with deflation when debt ratios are so high, yet that is exactly what is now happening in Holland. The latest data from Eurostat shows that HICP inflation has been running at around minus 0.8 annualised, once adjusted for taxes, as you can see here.
The Netherlands has great reserves of wealth, much of it is locked up in pension funds. It should be able to muddle through provided the deflation scare abates – as confidently expected by all those officials who never saw it coming in the first place – and provided the eurozone economy does in fact rebound next year.
What is clear is that the country no longer has a safety buffer. Any external shock will push Holland into Japanese-style deflation, greatly complicating Dutch debt dynamics. This is not a risk that any advanced economy should ever take.
The whole saga has been a case of misaligned of monetary policy for the Netherlands, degenerating over time into plain policy error. The ECB's interest rates were too low for Dutch needs during the credit bubble. Monetary policy has since been too tight, trapping the country in a slow bust. Dutch M3 money growth dropped to minus 3.6pc in October, as you can see in this chart from Ed Yardeni.
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The reality is that even The Netherlands has been destabilised by monetary union despite being a creditor state and despite close trade ties to Germany. The country is now stuck. S&P expects the Dutch current account surplus to rise to 10pc of GDP from 2013-2016. And no, this is not a sign of health. Extreme imbalances are always bad. A deformed structure has become entrenched.
What surprises me is that the Dutch central bank has gone along with the ECB's over-tight policy so lamely. Why did Governor Klaas Knot vote with the hawks against the ECB's rate cut earlier this month? Is it some sort of Calvinist solidarity, "zachte heelmeesters maken stinkende wonden" as the old Dutch saying goes?
Why is he lining up with the hardliners when the ECB is missing its own M3 and inflation targets by a country mile, and when this policy mistake is doing so much damage to both Europe and his country?
No doubt Mr Knot has many excellent technical explanations. I would like to hear them. Perhaps the Tweede Kamer would like to hear them too.
So far because everyone's always been focused on government debt the worry about deflation has been about that debt dynamic. But the problems in the Netherlands (where the government's running a deficit over the GSP limit, so having to cut the budget and raise taxes) show how the effects of deflation on household and corporate debt could be really important too. What would the effects be? He compares it to Japan, but surely it's very different because they're like Italy massive government debt but enormous private sector savings.
I'd read before that the Netherlands were in trouble because of a household debt bubble but presumably if the Eurozone can't solve it this could also start to affect other high private sector debt nations like Finland and Belgium.
Also while there's some good points I'm not convinced the German Grand Coalition agreement's going to be great for promoting demand, reform and a vibrant Euro-economy :lol: :blink:
QuoteKey points of the deal
National minimum wage of 8.50 euros, from January 2015
Opposition to mutualisation of eurozone countries' debt
No more new debt at federal level from 2015
Children born in Germany to foreign parents after 1990 allowed dual citizenship
Electricity to be 40-45% from renewable sources by 2025, but subsidies cut
Levy for foreign motorists using German motorways
Workers who contributed to pensions for 45 years able to retire at 63
Also just to come back to the purdah questions. While the coalition negotiations were happening, there was the deal agreed with Iran. How did that work, constitutionally, in Germany? Westerwelle was there, I think, despite his party no longer having any seats. It's a major foreign policy decision. How is that taken during the negotiations? Do the SPD temporarily join the cabinet because it's a decision that will bind their government too?
Interesting piece on the German Constitutional Court's ruling. I always find stories about their judgements really interesting because it's so alien from the British system (and given their costumes, possibly earth):
QuoteEurope or Democracy? What German Court Ruling Means for the Euro
By SPIEGEL Staff
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REUTERS
The German Constitutional Court last June during hearings on the ECB bond buying program.
Germany's Constitutional Court ruling last Friday marks a significant escalation in efforts to rein in the European Central Bank. The ruling's message? Either the European Court of Justice has to stop bond purchases or German justices will.
Last Friday, when six justices on Germany's Constitutional Court cast doubt on European efforts to save the euro, the man who initiated the case was sitting obliviously at his desk. It was only when his secretary burst excitedly into his office that Peter Gauweiler understood that his case had created legal history.
Gauweiler, a member of German parliament who also has a legal firm located in Munich, managed to convince a majority of justices on the court's second senate that the ECB's program to save the European common currency is contrary to European law. The court referred the case onward to the European Court of Justice in Luxembourg, a first for the Karlsruhe-based German court. "Karlsruhe has shown ECB President Mario Draghi what a bazooka really is," Gauweiler crowed.
Gauweiler is likely the only German parliamentarian for whom the ruling is cause for such elation. The case regarding the legality of ECB efforts to assist ailing euro-zone member states has been ongoing for more than a year -- and Friday's move to refer the issue onward to Luxembourg has triggered concern and impatience among politicians in Berlin and the rest of Europe.
Sending the case to Luxembourg only appears to be an act of European conviction at first glance. In truth, it is nothing less than a final reckoning with the crisis-management strategy pursued by the ECB. There can be no doubt about it: The Constitutional Court is threatening to cause trouble.
The German justices insist that the German constitution sets limits on the ECB's strategy in the crisis. And that could have consequences that go far beyond the jurisdiction of the court in Karlsruhe. In a worst-case scenario, the Constitutional Court could forbid Berlin from contributing to efforts to save the euro or even force Germany to leave the currency zone entirely.
Premature Relief?
At first, however, the ECB reacted with relief on Friday when the German ruling was announced. It is what they had hoped for, said many within the Frankfurt-based bank. The European court is seen as being much more conciliatory than the German court and most believe that a complete cancellation of the bond-buy program (known officially as "Outright Monetary Transactions" or OMT) is unlikely. "The constitutional court is apparently unable to deal with the complexities of the issue and is now seeking to push responsibility onto the European Court of Justice," says Michael Hüther from the Cologne Institute for Economic Research.
But the relief might be premature. Even if the ECB wins the battle in the Luxembourg courtroom, it remains to be seen if the German court would be satisfied. A thorough reading of the decision reveals that, after spending months looking into the OMT program, a majority of the German justices have come to the conclusion for the first time that Draghi's bond purchases are unconstitutional. Only massive changes could make it acceptable.
Clemens Furst, head of the Center for European Economic Research, calls last Friday's ruling a "thunderbolt." The German court, he said, has made it clear that it finds OMT to be extremely problematic. "It is a clear signal," he says.
Hans-Werner Sinn, the euro-skeptic head of the Munich-based Ifo Institute, believes that the German court's position "will not remain without consequences for ECB monetary policies." Furthermore, the ruling "will strengthen the position of euro critics and the general skepticism Germans have of the ECB."
Politicians in Berlin, by contrast, are furious. "Why not just go ahead and continually review everything the government does?" snapped one conservative. He says the referral to the European court could slow euro-zone policy for the foreseeable future.
"Stability can only be established where there is trust," warns Michael Meister, parliamentary state-secretary in the Finance Ministry. "And you can't establish trust where there are open legal questions in the euro zone."
'Important Boost'
Conservatives are even more concerned because both Chancellor Angela Merkel's Christian Democrats and their Bavarian sister party, the Christian Social Union, face a not insignificant challenge in the run-up to the European Parliamentary elections in May from the anti-euro party Alternative for Germany (AfD). Of course, members of AfD are extremely pleased with last Friday's ruling. "I am enormously satisfied with the decision," says party head Bernd Lucke. "Finally, a court has found that the ECB's bond-buying program is a clear violation of European law." He adds that the ruling provides "an important boost for the campaign."
It is also a clear indication that Germany's highest court is extremely skeptical of the ECB. Draghi's 2012 announcement that the ECB would embark on unlimited sovereign bond purchases from ailing euro-zone member states, the court found, is incompatible with European law. The ruling notes that OMT "exceeds the mandate" of the ECB and "encroaches on the responsibility of the member states for economic policy." Furthermore, it finds that the purchasing of sovereign bonds on secondary markets represents a "circumvention" of the prohibition against direct state financing.
The logic followed by Karlsruhe has been considered to be incontrovertible since the 2009 ruling on the Lisbon Treaty. Measures taken by European institutions that are not covered by treaties occur "ultra vires," meaning they violate the sovereignty of EU member states.
By extension, that means that if the German government and parliament do not protect the country from the multibillion euro policies of the ECB, then the Constitutional Court must step in -- even by way of a verdict which could force Berlin to withdraw from the euro zone. Germany, after all, is liable for a lion's share of the billions spent by the ECB on bailouts. That liability, however, limits parliament's constitutionally guaranteed control over how tax money is spent. Furthermore, that budgetary right is what gives German voters a say in economic and budgetary policy. Thus, the right to vote grants every German the power to challenge policy overreaches in the attempt to save the common European currency.
This link-up of law and politics, the court made clear on Friday, is preliminary, and thus "subject to the interpretation by the Court of Justice." But several of the ruling's passages seem to indicate that the repeated references to the preliminary nature of the Constitutional Court's finding are little more than politesse. Karlsruhe, the document makes clear, will not shy away from conflict.
Germany's Conditions
The German court's strategy is clear. Should justices in Luxembourg share the German interpretation, then the Constitutional Court could hide behind the European Court of Justice and pose as model Europeans in the ongoing battle over final jurisdiction on the Continent.
In the case, however, that Luxembourg doesn't completely share the view articulated in Friday's verdict, the German court has built a bridge. Should Luxembourg interpret OMT as being "in conformity with primary law," it could, within the conditions set by the German court, satisfy the Constitutional Court's concerns, the ruling notes.
Essentially, there are three conditions set by Karlsruhe to ensure that a bond-buying program not be ultra vires: An upper limit to the bond purchases must be set; debt haircuts for the countries in question must be excluded; and the same conditions that apply to recipients of European Stability Mechanism (ESM) aid must apply to those countries benefitting directly from the bond purchases.
It is, once again, the German hardline. The question as to whether such a program would sufficiently impress the markets is one to which Draghi would likely respond in the negative. But can European justices really set binding guidelines? And what happens if Luxembourg accepts only some of the conditions set by the German court?
Should the European Court of Justice come to a different conclusion than that reached by the German court, then the conflict promises to escalate. The German court, after all, has reserved the right to reject a European court ruling should it not fulfill the legal standards applied in German jurisprudence. Such a situation, in which the German high court simply disregards a ruling from the European Court of Justice, would be the worst-case scenario for Europe.
"Democracy is more important to us than the euro." That, roughly, is how court insiders describe the mood among the justices of the court's second senate. It is also an approach that helps one understand comments made by Constitutional Court President Andreas Vosskuhle during oral arguments last summer. The court, he said, is focused on establishing "legal boundaries to the ECB mandate" and seeks to "strengthen the guarantees provided by our constitution."
Many, though, find that intention to be little more than hubris -- including the two Constitutional Court justices that dissented in the 6-2 vote last Friday. Central bank tools applied in a crisis, they say, do not fit neatly into legal frameworks.
Hüther, from the Cologne Institute for Economic Research, says that the entire proceedings in Karlsruhe were misguided. "The discussion as to whether the ECB is allowed to purchase sovereign bonds should not be held before the court," he says. "That decision has to be made by the central bank, which is independent and thus not bound by the rulings of German justices either."
Marcel Fratzscher, president of the German Institute for Economic Research, agrees: "A central bank must be able to act without limits on monetary policy," he says. "If this right is restricted, it erodes its credibility." The German court ruling, he says, introduces new uncertainties because it opens up the possibility of court action on future monetary policy decisions.
Just how intense the conflict between monetary policy and jurisprudence might become can be seen by the attempt made by German justices to access information regarding the true intentions of Draghi's announcement regarding unlimited sovereign bond purchases. The ECB considers the details of the resolution to be classified. "We have had to make do with press releases," complained one participant in the proceedings prior to oral arguments.
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Graphic: The ECB's weapons and their effectiveness.
Not Good for the Markets
And that is how it should be. Clarity over the details of the program may be good for legal professionals, but it isn't good for the markets. Former Constitutional Court Justice Udo Di Fabio, who was instrumental in the court's Lisbon Treaty ruling, likewise sees how dangerous the conflict between jurisprudence and the markets can be for the markets. It is, of course, "difficult" for the ECB head to deal with such a situation, he says. "He announced a huge weapon and now the courts have begun discussing the conditions under which such a weapon can be used," Di Fabio says.
Already, the lack of clarity has begun to affect the ECB. After all, it wants to go even further. Even if the debt crisis appears to have passed, Europe's central bankers have begun combatting other apparitions. The inflation rate in the euro zone is currently so low that some economists have begun warning of deflation -- an economically damaging reduction in prices.
The ECB has long since developed contingency plans to combat such a development. Should the situation deteriorate further, the Frankfurt-based bank is prepared to unveil new monetary policy weapons. Furthermore, the possibility of the ECB purchasing certain types of securitized debt is likewise under consideration.
"Quantitative easing" is another key phrase that has re-entered the debate in recent weeks, a reference to broad and unconditional bond purchases of the type the US Federal Reserve has been undertaking for years. Such purchases go far beyond those made under the OMT program. But because they include bonds from all euro-zone member states, and not just those that are suffering under high interest rates, they are considered by many to be more compatible with the ECB's mandate.
Stronger Than Ever
Still, such ideas regularly trigger fierce debates with conservative monetary policy experts who want to prevent the ECB from devolving into a euro-zone development bank. The finding of the German Constitutional Court, say European central bankers, is even more critical than the skepticism voiced internally. The justices, it is felt, would likely forbid instruments such as Quantitative Easing as well.
They could be right. The Karlsruhe justices feel stronger than ever. For the first time, they dared to do what they had been threatening to do for years: They branded a European decision as ultra vires and thus found it to be inconsistent with the German constitution. Sending this finding to a European court has far-reaching implications for the court's reputation and authority: "The ruling will now be translated into the 23 other official EU languages and sent to all EU member states," one Constitutional Court insider noted with gratification.
Only an application for expedited proceedings could prevent the European Court of Justice from taking its time in examining the German ruling. Such an application, however, has not been made.
BY MELANIE AMANN, SVEN BÖLL, THOMAS DARNSTÄDT, DIETMAR HIPP, GORDON REPINSKI AND ANNE SEITH
Worth remembering Draghi's never used OMT. Just announcing he'd do 'whatever it takes' to save the Euro was enough to reassure the markets. I wonder if they'll start testing again if that's in doubt?
The Euro: single currency or suicide pact?
Germany leaving wouldn't help the periphery directly. They want inflation and their currency is controlled by an ECB with the sole mission of preventing inflation. German exodus would merely make things more chaotic and squeeze the rest with higher rates.
Quote from: MadImmortalMan on February 11, 2014, 07:23:34 PM
Germany leaving wouldn't help the periphery directly. They want inflation and their currency is controlled by an ECB with the sole mission of preventing inflation. German exodus would merely make things more chaotic and squeeze the rest with higher rates.
Don't agree. German exodus would provoke a big instant devaluation which would more than offset any potential problems with higher rates. This would definitely help create inflation in the system which is badly needed, especially in the periphery that's has the biggest deflation concerns.
Germany will never leave the Euro.
Quote from: Zanza on February 12, 2014, 05:27:02 AM
Germany will never leave the Euro.
Never is a long time in politics.
Quote from: Gups on February 12, 2014, 06:49:08 AM
Quote from: Zanza on February 12, 2014, 05:27:02 AM
Germany will never leave the Euro.
Never is a long time in politics.
I think the Euro is basically the deutschmark at this stage.
I don't want a euro currency breakup. I don't want my property over there valued in more worthless francs.
Fucking President Hollindaise
Quote from: Tamas on February 12, 2014, 06:59:29 AM
Quote from: Gups on February 12, 2014, 06:49:08 AM
Quote from: Zanza on February 12, 2014, 05:27:02 AM
Germany will never leave the Euro.
Never is a long time in politics.
I think the Euro is basically the deutschmark at this stage.
Yes, back in the 90s I was in favour of the single currency. Then, some time before the actual launch I realised it was probably going to be effectively the Dm.......which would have buggered up the UK totally, so I turned against it.
Future generations will remember Gordon Brown with gratitude for that, Blair would have had us in it.
Quote from: Tamas on February 12, 2014, 06:59:29 AM
I think the Euro is basically the deutschmark at this stage.
Isn't this WAD?
The DM is always right.
It really is not the DM.
People seem to have forgotten this, but the DM was kept somewhat undervalued for much of its existence as a matter of policy.
Quote from: The Minsky Moment on February 12, 2014, 11:58:17 AM
It really is not the DM.
People seem to have forgotten this, but the DM was kept somewhat undervalued for much of its existence as a matter of policy.
It's still undervalued for Germany. :P
We used to get 12Dm for a £ back when I was a kid in Germany, it is now 1.25 euro for a £ which is equivalent to 2.50Dm; persistently higher inflation in the UK that has led to a very different approach to borrowing in the citizens of the two countries.
Quote from: Richard Hakluyt on February 12, 2014, 01:41:01 PM
We used to get 12Dm for a £ back when I was a kid in Germany, it is now 1.25 euro for a £ which is equivalent to 2.50Dm; persistently higher inflation in the UK that has led to a very different approach to borrowing in the citizens of the two countries.
Why are we the worst big economy for inflation?
It makes sense when we didn't have inflation targeting of any kind and interest rates were set by the Chancellor but apparently we're still the worst over the last 20 years or so :mellow:
Your central bank printed money the fastest?
I don't think that's true Shelf. Our inflation was lower than most big counties for the first half of the last decade
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Quote from: Richard Hakluyt on February 12, 2014, 01:41:01 PM
We used to get 12Dm for a £ back when I was a kid in Germany, it is now 1.25 euro for a £ which is equivalent to 2.50Dm; persistently higher inflation in the UK that has led to a very different approach to borrowing in the citizens of the two countries.
I think the DM won value against every big currency, except perhaps the SFR. The exchange rate was 4.20 DM to 1 $ under Bretton Woods, nowadays it would be about a third of that.
That explains it then :lol:
Interesting statistic on the German wiki site on the Deutsche Mark. In 1977, the DM had about 44% of the domestic purchasing power it had in 1950. The USD and SFR had about 40% and 42%. The Franc had 21%, the Yen 19% and the worst was the pound which had just 18% of the value it had in 1950.
Incredibly, the Eurozone is *still* way below the inflation target, and the ECB is *still* expected to do nothing at the next meeting.
We already have enough perspective on 2008-14 that I think it is quite plausible to say that the Eurozone's collective management of the crisis and recovery will be a classic case study for future economist on how not to manage policy. Particularly on the monetary side although the whole bizarre process whereby Eurozone policy makers and pundits somehow turned a classic financial crisis/cyclical downturn into a governmental solvency crisis is part of the story.
It's funny - the CNBC crowd tends to think of Euros as "socialists" - the reality is that Eurozone economic policy over the last 5-6 years has been a horrifying experiment in applying the tenets of Austrian economic theory to the world's second largest economic bloc. I can't fathom how these ideas have taken root, or why they are politically viable, except perhaps that it does seem to feed into the seductive narrative of dividing the zone into "good" and "bad" (PIIGish) students.
Quote from: The Minsky Moment on August 04, 2014, 07:09:17 PM
Particularly on the monetary side although the whole bizarre process whereby Eurozone policy makers and pundits somehow turned a classic financial crisis/cyclical downturn into a governmental solvency crisis is part of the story.
Come again?
Euro fiscal policy = bad.
Quote from: The Minsky Moment on August 05, 2014, 12:08:58 PM
Euro fiscal policy = bad.
Spare me your fancy mumbo jumbo Minkey and give it to me straight.
Quote from: The Minsky Moment on August 05, 2014, 12:08:58 PM
Euro fiscal policy = bad.
Bad fiscal policy turned a financial crisis into a governmental solvency crisis?
There was no general government solvency crisis in the Eurozone.
I need another hint Joan.
OK
The Great Recession lowered tax revenues, and caused cyclically related spending to spike (e.g. unemployment insurance). This happens in every business cycle, which is why economists usually refer to cyclically adjusted deficits.
However, the Eurozone mandarins either panicked or were deliberate obtuse and treated the cyclical impact as deficits as a structural problem requiring immediate action and pushed austerity. That made the underlying problem worse.
We know that the Eurozone underperformed in growth during the Great Recession and aftermath. The tough question is to what extent that is due to the fiscal austerity and what extent due to monetary tightness.
I see. So the really clever thing for the Greeks to do would have been to raise debt/GDP even further? Say, to 200% of GDP? Or infinity plus 2?
Greece is what, 1% of the Eurozone? Greece is not the issue. Nor is Cyprus, or Estonia, or Slovenia.
Greece should have never been admitted in the first place - they weren't close to the criteria. But having let them in, their Eurozone partners should have accepted the reality of sunk costs and bailed them out for real. Instead they did a half ass bailout that has let the problem fester for a few more years. But it's not up to me to tell them how to run their railroad, unless there are global impacts. Germany, France, Italy, Spain, Netherlands - that is where the high impact was/is.
OK, not Greece. Italy and Spain should have piled on more debt, is that what you are saying?
Quote from: Admiral Yi on August 05, 2014, 04:59:49 PM
OK, not Greece. Italy and Spain should have piled on more debt, is that what you are saying?
Question,
Is not invoking austerity measures during an economic downturn the same as piling on debt?
Quote from: Admiral Yi on August 05, 2014, 04:59:49 PM
OK, not Greece. Italy and Spain should have piled on more debt, is that what you are saying?
They did pile on more debt. Both countries had their debt-to-GDP ratios rise. Austerity in the teeth of the a recession is counter-productive.
It is plain as day in the data. Both countries were recovering slowly in 2011, then they passed their austerity budgets and plunged back into negative growth.
Quote from: The Minsky Moment on August 05, 2014, 05:08:50 PM
They did pile on more debt. Both countries had their debt-to-GDP ratios rise. Austerity in the teeth of the a recession is counter-productive.
It is plain as day in the data. Both countries were recovering slowly in 2011, then they passed their austerity budgets and plunged back into negative growth.
Pile on even more debt than they did under so-called austerity. That's what your recommendation is, no? Death to austerity, run deficits of 9-14%?
Who was going to lend them that money Joan?
Quote from: crazy canuck on August 05, 2014, 05:02:50 PM
Question,
Is not invoking austerity measures during an economic downturn the same as piling on debt?
Almost definitionally. The greater your annual deficit, the more your debt will increase. Not cutting your deficit ("austerity") means more debt.
Quote from: Admiral Yi on August 05, 2014, 07:38:46 PM
Quote from: crazy canuck on August 05, 2014, 05:02:50 PM
Question,
Is not invoking austerity measures during an economic downturn the same as piling on debt?
Almost definitionally. The greater your annual deficit, the more your debt will increase. Not cutting your deficit ("austerity") means more debt.
What if "austerity", does not cut your deficit?
Quote from: Admiral Yi on August 05, 2014, 07:38:46 PM
Quote from: crazy canuck on August 05, 2014, 05:02:50 PM
Question,
Is not invoking austerity measures during an economic downturn the same as piling on debt?
Almost definitionally. The greater your annual deficit, the more your debt will increase. Not cutting your deficit ("austerity") means more debt.
CC's post doesn't contain the word "deficit", so the use of the word "definitionally" is extremely improper.
If austerity measures tank your economy, receipts go down and non-discretionary outlays go up. Hence deficits can go up.
And since debt doesn't really matter per se, but rather debt/GDP, the problem is compounded because GDP is going down.
Quote from: Razgovory on August 05, 2014, 08:15:38 PM
What if "austerity", does not cut your deficit?
I give up.
Quote from: The Minsky Moment on August 05, 2014, 08:48:58 PM
CC's post doesn't contain the word "deficit", so the use of the word "definitionally" is extremely improper.
If austerity measures tank your economy, receipts go down and non-discretionary outlays go up. Hence deficits can go up.
And since debt doesn't really matter per se, but rather debt/GDP, the problem is compounded because GDP is going down.
I noticed you still haven't answered my question about who is going to finance these non-austere budgets
Quote from: Admiral Yi on August 05, 2014, 07:06:36 PM
Pile on even more debt than they did under so-called austerity. That's what your recommendation is, no?
No
QuoteDeath to austerity, run deficits of 9-14%?
Who was going to lend them that money Joan?
For several the US was running deficits in that range.
The cost of borrowing went
downIt is error to think of a government like a household. It is error to think of a government budget constraint like a household budget restraint.
The problem in the Eurozone was a lack of federal fiscal authority, the presence of a highly constrained central bank, and the lack of political boldness at the inter-governmental level. The Eurozone economies paid the price; their growth has lagged.
Quote from: Admiral Yi on August 05, 2014, 08:51:48 PM
I noticed you still haven't answered my question about who is going to finance these non-austere budgets
With its austerity package, Spain ran bigger and bigger deficits and its debt continued to climb. Because the real economy collapsed, and revenue along with it.
And yet not only were they able to finance these deficits, but the interest rate cost declined.
Governmental budget constraints are not like private company/household budget constraints
Quote from: Admiral Yi on August 05, 2014, 08:51:48 PM
Quote from: The Minsky Moment on August 05, 2014, 08:48:58 PM
CC's post doesn't contain the word "deficit", so the use of the word "definitionally" is extremely improper.
If austerity measures tank your economy, receipts go down and non-discretionary outlays go up. Hence deficits can go up.
And since debt doesn't really matter per se, but rather debt/GDP, the problem is compounded because GDP is going down.
I noticed you still haven't answered my question about who is going to finance these non-austere budgets
For the most part, the interest rates of the troubled european countries stayed somewhat reasonable, and that was without a strong commitment by the eurozone monetary and fiscal authorities to back them up (certainly exceptions existed). Had the leaders of the eurozone decided that they would work to keep Spain from having to impose austerity into the teeth of a recession, I think the financing would have been there.
Quote from: The Minsky Moment on August 05, 2014, 08:55:41 PM
No
You're being a little too mysterious. Don't cut deficits, but don't raise them either. The only conclusion left is that the whatever deficits they were running before the crisis were optimal, the one sweet spot. IIRC for Greece (which doesn't count) that was 16% and for Spain that was 9%.
QuoteFor several the US was running deficits in that range.
The cost of borrowing went down
Are you suggesting that other indebted countries operate just like the US?
QuoteIt is error to think of a government like a household. It is error to think of a government budget constraint like a household budget restraint.
What's your point?
QuoteThe problem in the Eurozone was a lack of federal fiscal authority, the presence of a highly constrained central bank, and the lack of political boldness at the inter-governmental level. The Eurozone economies paid the price; their growth has lagged.
What I *think* this means is (a) net creditor countries should have given more free money to the debtors, (b) the ECB should have started monetizing debt quicker and more energetically, and (c) Germany in particular should have given more free money.
Quote from: alfred russel on August 05, 2014, 09:00:38 PM
For the most part, the interest rates of the troubled european countries stayed somewhat reasonable, and that was without a strong commitment by the eurozone monetary and fiscal authorities to back them up (certainly exceptions existed). Had the leaders of the eurozone decided that they would work to keep Spain from having to impose austerity into the teeth of a recession, I think the financing would have been there.
Spanish yields were up at 6% and international investors were fleeing the market before the EU intervened.
Quote from: Admiral Yi on August 05, 2014, 08:50:33 PM
Quote from: Razgovory on August 05, 2014, 08:15:38 PM
What if "austerity", does not cut your deficit?
I give up.
Now, now you can't chide Minksy for not answering your question if you take that tact can you? The Austerity programs didn't actually reduce defict spending, for the reasons Minksy outlined. What good are they if they don't actually work?
Quote from: Razgovory on August 05, 2014, 09:46:03 PM
Now, now you can't chide Minksy for not answering your question if you take that tact can you? The Austerity programs didn't actually reduce defict spending, for the reasons Minksy outlined. What good are they if they don't actually work?
You're confusing two different things. When you say "the Austerity programs didn't reduce deficit spending," you're referring to the UK's experience, where deficits as a % of GDP rose. Joan is talking about the Keynesian drag deficit reduction (a deficit that is actually reduced) has on GDP.
Quote from: Admiral Yi on August 05, 2014, 09:44:29 PM
Spanish yields were up at 6% and international investors were fleeing the market before the EU intervened.
6% isn't that high, but yes international investors were fleeing. Would they have been fleeing if the ECB announced a policy of looser monetary policy and stood behind Spain with large purchases of Spanish bonds and an announcement to continue doing so?
Quote from: Admiral Yi on August 05, 2014, 09:44:29 PM
Spanish yields were up at 6% and international investors were fleeing the market before the EU intervened.
Bingo
Even a weak promise of EU support/backstop was enough to staunch the wound. Not the austerity. Austerity only mattered because the EU players demanded it as a condition to take useful action. If they had demanded the hokey-pokey instead then Rajoy could have brought rates down by turning around in place.
As to the earlier questions, Spain is not the US. It doesn't control it's own currency, its own central bank. It isn't part of a larger federal system that has automatic fiscal stabilizers. But the EU could so some or even in theory all those things. Instead it "wasted" the crisis. But even taking a few baby steps helped stabilize the markets.
You raised the specter of debt monetization, I don't see that as dirty words per se. A central bank can be a powerful tool. the mere ability to act decisively and pump liquidity can affect the market even if not fully used. Mario Draghi stopped the euro crisis in its tracks simply by saying 3 words. He didn't actually do anything, just said the words. If the ECB hadn't been hamstrung with constitutional limits and Bundesbank scolds, there could have been real growth over the past few years.
As for the other prescription, history is littered with plenty examples of failed austerity packages. Bruning had a terrific austerity program, instead of stabilizing debt though Germany got mass unemployment and Nazis. That's an extreme case but an illustration nonetheless.
Quote from: Admiral Yi on August 05, 2014, 09:56:09 PM
You're confusing two different things. When you say "the Austerity programs didn't reduce deficit spending," you're referring to the UK's experience, where deficits as a % of GDP rose. Joan is talking about the Keynesian drag deficit reduction (a deficit that is actually reduced) has on GDP.
I'm talking both really
This is not a Keynesian vs nonkeynsian issue, most monetarists would agree that if for some reason monetary policy can't be effectively employed than fiscal retrenchment into a recession is dangerous. This is all very mainstream macro stuff.
Nyeah, Nyeah! :blurgh:
Quote from: Admiral Yi on August 05, 2014, 09:44:29 PM
Quote from: alfred russel on August 05, 2014, 09:00:38 PM
For the most part, the interest rates of the troubled european countries stayed somewhat reasonable, and that was without a strong commitment by the eurozone monetary and fiscal authorities to back them up (certainly exceptions existed). Had the leaders of the eurozone decided that they would work to keep Spain from having to impose austerity into the teeth of a recession, I think the financing would have been there.
Spanish yields were up at 6% and international investors were fleeing the market before the EU intervened.
Yet they are now down to 2% while still running a 7% deficit in 2013, having failed to meet all deficit reduction targets despite austerity. It was ECB's assurances what reduced our yields, not austerity.
Quote from: celedhring on August 06, 2014, 04:56:12 AM
Quote from: Admiral Yi on August 05, 2014, 09:44:29 PM
Quote from: alfred russel on August 05, 2014, 09:00:38 PM
For the most part, the interest rates of the troubled european countries stayed somewhat reasonable, and that was without a strong commitment by the eurozone monetary and fiscal authorities to back them up (certainly exceptions existed). Had the leaders of the eurozone decided that they would work to keep Spain from having to impose austerity into the teeth of a recession, I think the financing would have been there.
Spanish yields were up at 6% and international investors were fleeing the market before the EU intervened.
Yet they are now down to 2% while still running a 7% deficit in 2013, having failed to meet all deficit reduction targets despite austerity. It was ECB's assurances what reduced our yields, not austerity.
But do you guys really believe this can go on to infinity? Will ECB's assurance carry weight ad infinitum as all members state continue to drawn in debt?
Our GNP is projected to grow again. That will reduce the debt, plus people actually being able to pay taxes once they find jobs, while also reducing unemployment benefit spending.
The problem is we are now burdened by the dead weight of several million unemployable workers, which was entirely avoidable.
Quote from: Tamas on August 06, 2014, 05:18:39 AM
But do you guys really believe this can go on to infinity? Will ECB's assurance carry weight ad infinitum as all members state continue to drawn in debt?
Eh. Spain cut its debt during the good times. You are thinking about Greece.
Quote from: Tamas on August 06, 2014, 05:18:39 AM
But do you guys really believe this can go on to infinity? Will ECB's assurance carry weight ad infinitum as all members state continue to drawn in debt?
Different times call for different policies. There are times for austerity, and times for spending, and during a recession is when the government should be spending.
No political organization lasts forever, so no I don't think ECB's assurances will carry weight ad infinitum. That's true whether the member states draw in debt or not.
Quote from: celedhring on August 06, 2014, 05:31:44 AM
Our GNP is projected to grow again. That will reduce the debt
No it won't. It will increase the income.
It will reduce the debt to GNP ratio at the very least, and I meant all the positive effects derived from economic growth that I spoke about; less social benefits paid, more taxes paid.
As Iormlund said, we did reduce our debt during the good times, it's not that we are chronically addicted to it.
Quote from: Admiral Yi on August 05, 2014, 07:06:36 PM
Who was going to lend them that money Joan?
Same people who were, at low levels, and who have been at record lows since Draghi's speech?
https://www.youtube.com/watch?v=I5QwKEwo4Bc
As expected, no ECB action.
Quote from: celedhring on August 06, 2014, 04:56:12 AM
Yet they are now down to 2% while still running a 7% deficit in 2013, having failed to meet all deficit reduction targets despite austerity. It was ECB's assurances what reduced our yields, not austerity.
Yep.
Yi's view is dogmatic not based on the facts. Yields have fallen despite massively rising debt and constant (EU-mandated) failure to meet austerity targets because it was never an issue of government debt/deficits but one of confidence and contagion that the ECB and EU could have ended far earlier.
Having said that the crisis seems to me to be dormant rather than dead. If the German Constitutional Court prohibits OMT, or if the markets test the substance behind Draghi's words over, say, Italy then we could be back in the same situation of panic cresting at every European Council summit.
:lol: I'm dogmatic? "Confidence and contagion" are pretty much what I've been talking about. Investors lost confidence that they would be repaid, and Greece and Ireland "contaminated" other countries because they made investors realize those valuations were absurd as well.
The fact that the ECB pledge to effectively cap EU sovereign yields has had the intended effect doesn't mean deficits and debt stocks were and are subjects of purely academic interest. The interesting question is why ECB monetization of debt hasn't led to inflation. Every single instance of hyperinflation in history has been caused by monetization of large public sector deficits. Every single one. Very concievably it's because the staggering unemployment rates and the reduction in aggregate demand caused by the "unnecessary" "austerity" are putting strong downward pressure on wages.
So what happens to yields and debt service as the weaker economies start to recover, as i believe Spain has already begun to? Will investors continue to buy bonds yielding 2% in full confidence that the ECB will maintain the cap at the cost of price increases? Or is there something unique about the Eurozone that will allow it to monetize deficits in perpetuity?
Look. Nothing happens in perpetuity. The ECB's fix was a good one in this environment and might be a bad one in a different hypothetical environment.
My only question is, when interest rates hit ten or fifteen percent, can they keep doing the same thing?
Japan has taken 25 years and is still in this place. Can they keep doing this? If they can for that long, then we can too, but what then? Maybe Japan will break first and we'll know.
It's questionable if the ECB's fix fixed anything, in the sense of a permanent solution. I tend to think they bought some time for member countries to get their acts together, at God only knows what future price.
Quote from: Admiral Yi on August 07, 2014, 07:58:27 PMThe interesting question is why ECB monetization of debt hasn't led to inflation.
Since when is the ECB monetizing debt? :huh:
Is it not? I thought they were buying up bonds in the secondary market.
They bought bonds under SMP, but those were sterilized operations (or at least that was the idea).
AFAIK there hasn't been any bond buying after Draghi's last-second intervention two summers ago. Everyone assumed after it that the ECB would monetize debt, but OMT hasn't been invoked yet (and it doesn't look like it'll have to).
What exactly has the ECB done then?
Quote from: Admiral Yi on August 08, 2014, 04:15:42 AM
What exactly has the ECB done then?
Absolutely nothing.
Quote from: Admiral Yi on August 08, 2014, 04:15:42 AM
What exactly has the ECB done then?
Announced that OMT is an option and said they'll do 'whatever it takes' to save the Euro. Unless we're in a brave new age of performative central banking they're not monetising anything.
Which is the problem. In a context of rigid monetary policy, austerity and private sector deleveraging it's no mystery why Europe's on the edge of deflation (with perilous consequences for deficits and debts).
Even if carried out, OMT would not be debt monetization. OMT is limited to buying bonds in the secondary market. The debt is already issued and financed. So OMT is basically just a garden variety open market operation, except targeted to certain bonds. The Fed has been doing that sort of thing for a while now.
The Euro area has now had a full year of inflation below 0.5%. If there really was concern about indebtedness - either public or private - you would think this would be a priority.
Quote from: MadImmortalMan on August 07, 2014, 11:45:24 PM
My only question is, when interest rates hit ten or fifteen percent, can they keep doing the same thing?
When do you think we will see interest rates of 10 to 15 percent?
Quote
Submitted by Ben Hunt of Epsilon Theory
Here We Go Again
From an Epsilon Theory perspective, the scariest, most market risk-creating event of the past 48 hours had nothing to do with Iraq, nothing to do with Israel, nothing to do Russia. It was Mario Draghi's press conference.
Yesterday Draghi re-launched the Great Fiscal Consolidation War of 2012, a multi-level game where the ECB attempts to force spendthrift sovereigns to undertake structural reforms while ostensibly going about their business of maintaining their single mandate of price stability. It's a neat trick if you can pull it off, as Draghi kinda sorta did with the PIIGS two summers ago, but ... geez, do we really have to go through this all over again?
Multi-level games live at the intersection of politics and economics. I wrote about them earlier this year in the Epsilon Theory note "The Play's the Thing", and the basic idea is that public communication policy has a recursive, strategic nature. That is, while there's an ostensible meaning and an ostensible audience for any performance, there are almost always one or more deeper levels of real meaning and real audience for any political performance. And Mario Draghi is one heck of a political performer.
The press conference delivered two ostensible messages yesterday.
First, Draghi called out Italy and France. Why is Italian GDP back in the red? Why is France threatened by deflation, the Great Satan of modern monetary policy dogma? "It's mostly the lack of structural reforms", something "that has nothing to do with monetary policy".
Second, Draghi put the kibosh on monetary easing beyond what was announced months ago. Why not do more to force credit into the European economy? "If one can't open a new business [because of structural impediments], there's no point in giving more credit. You won't know what to do with this."
The linkage of the messages is the real communication here. Memo to France and Italy: you want more easy money? Then stop spending so much and pass meaningful labor and tax reform legislation. It's a giant game of Chicken, just like in 2012, and the big question now is who will blink first, ECB/Germany or Italy/France.
What do I think is going on? Why do I think that Draghi felt compelled to pull this stunt now?
I think that the looming conflict with Russia is a big problem for the German economy, which means that Germany's degrees of freedom to accommodate bad actors in the EU club are dramatically reduced, which means that Germany's overwhelming macroeconomic focus – a weaker euro and fiscal consolidation in the periphery (and France) – is now Draghi's overwhelming macroeconomic focus.
I think that the ECB's asset quality review and stress test of major EU banks has revealed just what a bitter pill it's going to be to assume regulatory control (see "The Red King" for more). Does anyone else find it odd that Espirito Santo, which has been under troika supervision for years, is only now revealed as a basket case, right before the ECB becomes its primary regulator? Sorry, but it seems like a kitchen-sink quarterly earnings announcement to me, where new management comes in and blames everything on the prior gang of incompetents. The last thing in the world these undercapitalized, overlevered, and stuffed-to-the-gills-with-sovereign-debt banks need is more pressure to finance their sovereigns, but that's exactly what they will face without structural reform and fiscal consolidation.
I also think that Draghi believes he's mastered the Common Knowledge Game, that he is confident he can always save the day if markets get too squirrelly by invoking the magic spell of the OMT or some other phantom policy. The difference between 2014 and 2012 is that Draghi believes he has established a safety net of sorts, at least to prevent a sovereign-level liquidity crisis as in 2012, with his command and control of the Narrative.
And trust me, the Narrative of Central Bank Omnipotence is alive and well. Want to read a really terrifying article? Take a look at this August 6th Op-Ed piece in the FT by Draghi's former colleague, Lorenzo Bini Smaghi: "The ECB Must Move to Counteract Market Turbulence". Are you kidding me? This is what we have come to ... that the proper role of a central bank is to counteract "market turbulence" before it happens? I'd laugh, but then I remember that Yellen means exactly the same thing when she refers to "macroprudential policy", and I want to cry.
Draghi is playing a variation on this theme. He's intentionally injecting "market turbulence" in order to achieve larger political goals, but only because he is of one mind with Bini Smaghi and Yellen and the rest of the Central Banking nomenklatura – central banks can control market outcomes. Period, end of story. And so far he's been absolutely right. Will the winning streak continue? I have no idea.
What I am certain of, however, is that this is a very dangerous game. It's obviously a disaster if the game spirals out of Draghi's control, if he's unable to put the inevitable market freak-out genie back in the bottle as he was in the summer of 2012. But it's a different kind of disaster, at least to my way of thinking, if Draghi succeeds, because then the Narrative of Central Bank Omnipotence will just be stronger than ever. If you like the notion of capital markets transformed into public utilities, then this is great news. For everyone else, not so much.
I'm having a little trouble getting my head around this concept that other than Draghi's statement about doing whatever it takes, the ECB has done nothing at all, and that has been all it takes to drive down periphery bond yields.
I woll read this threads tommmorrow. I rpromise.
Nothing good comes out off keynesisan thinking.
Quote from: Admiral Yi on August 09, 2014, 09:38:03 PM
I'm having a little trouble getting my head around this concept that other than Draghi's statement about doing whatever it takes, the ECB has done nothing at all, and that has been all it takes to drive down periphery bond yields.
I would say it has to do with currency convertibility risk (but I'm not an economist).
Until the late summer of 2012 investors were worried about the periphery abandoning the Euro. This affected bonds directly but also lead to, for example, multinationals putting investments on their local plants in stand-by (something I saw regularly). This economy-wide lack of funding in turn worsened the economy, creating a perverse feedback loop.
When the ECB finally decided to overstep its mandate and announced OMT this risk was deemed gone. Without the spectre of a forced conversion to New Pesetas bonds were instantly more attractive and projects for which money had been withheld resumed slowly. For example, I'm leaving today to work for a couple months in an car factory not far from here, where my employer has been carrying out retrofits non-stop for the last year and a half - or in other words, working on delayed projects that were finally launched not long after Draghi's intervention.
Quote from: Admiral Yi on August 09, 2014, 09:38:03 PM
I'm having a little trouble getting my head around this concept that other than Draghi's statement about doing whatever it takes, the ECB has done nothing at all, and that has been all it takes to drive down periphery bond yields.
He did announce OMT too.
Not only that but their debt has skyrocketed in the last couple of years and the deficits aren't much lower. This is what I mean by it being about confidence. It was never about debt, but the Euro.
As I say I don't think it's gone away yet. If OMT is illegal or, say, Italy got in trouble the panic could return. I still think the Eurozone's some way from the scale of integration they need.
Quote from: Sheilbh on August 10, 2014, 06:05:15 AM
This is what I mean by it being about confidence.
I don't know what you mean by this.
Quote from: Admiral Yi on August 09, 2014, 09:38:03 PM
I'm having a little trouble getting my head around this concept that other than Draghi's statement about doing whatever it takes, the ECB has done nothing at all, and that has been all it takes to drive down periphery bond yields.
Just translate "Don't fight the Fed" into French, German, Italian, Spanish, etc.
It wasn't just those three words by themselves, but just those three words had big impact.
Now imagine if the ECB really had the full powers of the Fed, had a two-way mandate, and/or wasn't checked by Bundesbank retreads and Euro-constitutional lawyers.
Because if you do, then what?
According to official data, we hit -0,3% inflation this past month. Woot!
Quote from: celedhring on August 13, 2014, 04:30:22 AM
According to official data, we hit -0,3% inflation this past month. Woot!
See, austerity works - if the goal is to reduce inflation.
Poland has also experienced deflation, probably for the first time in recorded history, and we were not doing much austerity. Kinda begin to get scared now.
Also there's a lot of worries about Germany's economy.
Thank God the EU spent the last four crisis years fixing the structural problems in the Eurozone.
Quote from: celedhring on August 13, 2014, 04:30:22 AM
According to official data, we hit -0,3% inflation this past month. Woot!
Milton Friedman is rolling over in his grave.
Quote from: Martinus on August 13, 2014, 01:30:34 PM
Poland has also experienced deflation, probably for the first time in recorded history, and we were not doing much austerity. Kinda begin to get scared now.
The thread got sidetracked into an austerity discussion but I do think the problem here is primarily monetary. The markets believe the ECB will take action to protect the integrity of the currency bloc but the inflation target has lost credibility on the underside.
Yeah. It's not really a Keynesian thing. The most stinging jermiads I've read on Eurozone policy are coming from monetarists and the odd wonderful crackpot like Ambrose Evans-Pritchard.
Euro growth figures out.
Germany and Italy shrinking, France has stalled. Small growth in Spain. Overall the Eurozone economy had no growth and the EU as a whole had 0.2% growth. Inflation in the Eurozone is now 0.4% and across the EU:
(https://languish.org/forums/proxy.php?request=http%3A%2F%2Fstatic.guim.co.uk%2Fsys-images%2FGuardian%2FPix%2Fpictures%2F2014%2F8%2F14%2F1408007848236%2F4c1ee0d7-0387-465f-b470-bcef9ca3875d-460x177.png&hash=b8f7a753ed8e63b4a68b793c9a2282ac6a151c4e)
:bleeding:
The aforementioned AEP:
QuoteGermany is itself a victim of EMU's austerity fanatics
By Ambrose Evans-Pritchard Economics Last updated: August 14th, 2014
So now we learn. Germany had a double-dip recession last year without telling us. This could soon turn into triple-dip after contraction of 0.2pc in the second quarter.
German bond yields are pricing in stagnation as far as the eye can see. 10-year Bunds fell below 1pc this morning for the first time in history, and far below levels seen during the deflationary episodes of the Second Reich in the late 19th Century.
(https://languish.org/forums/proxy.php?request=http%3A%2F%2Fblogs.telegraph.co.uk%2Ffinance%2Ffiles%2F2014%2F08%2Fchart1ambrose-460x259.png&hash=04aff5c9bea8461c1b6544383a45077a989cda20)
The bond markets are flashing deflation warnings, but they are also indicting the European authorities for gross incompetence. Professor Paul De Grauwe from the London School of Economics says policy elites have misdiagnosed the fundamental cause of Europe's chronic slump and its failure to recover. They are treating a demand crisis as if it were a supply crisis, imposing "reforms" – an Orwellian touch – that can only exacerbate EMU-wide distress in the short-run.
"They are doing everything they can to stop recovery taking off, so they should not be surprised if there is in fact no take-off," he said.
"It is balanced-budget fundamentalism, and it has become religious. We know from the 1930s that if everybody is trying to pay off debt and the government then deleverages at the same time, the result is a downward spiral," he said.
"The rigidities in the European economy have been there for ages. They have absolutely nothing to do with the problem we face today."
The claim that Spain's recovery validates the EMU strategy of retrenchment and reform makes you want to weep. To the extent that Spain has reached self-sustaining take-off – questionable given the collapse of investment and the damage from labour hysteresis – it is largely because Spain is pursuing a beggar-thy-neighbour wage squeeze policy, just as Germany did nine years ago with such malign effects for the eurozone as a whole.
This displaces the contractionary pressures into France and Italy. "You can do this in one country but it can't possibly be a model for the whole eurozone. If everybody does this it leads to generalised deflation, and that is what we are seeing," he said.
The outcome of Europe's strategic incoherence is that EMU output is still 2.5pc below its 2008 peak. This six-year slump is worse than Europe's performance the early 1930s by a wide margin. It is the most serious European depression seen in peacetime for 170 years, and I would wager that the 1840s were better.
By contrast, US output is nearly 8pc above its old peak. America has achieved escape velocity. It is growing at a sustained rate that is 2pc to 3pc faster than in the eurozone. The compound effects of this are devastating. Europe is falling off the economic map.
(https://languish.org/forums/proxy.php?request=http%3A%2F%2Fblogs.telegraph.co.uk%2Ffinance%2Ffiles%2F2014%2F08%2Fambrose-chart2.png&hash=41df9719b62d13ee045487fa2d78b52884be8270)
While growth is allowing the US to reduce its aggregate debt ratio, slump is causing Europe's ratios to ratchet higher. There is no reward for hair-shirt policies. Calvinism is best kept in the Presbystery.
Europe's relapse is entirely self-inflicted. It is the result of policy failure by the European Central Bank, by the European Commission, by the Eurogroup (much of it under Jean-Claude Juncker), and above all by the German finance ministry, the body that is ultimately responsible for EMU crisis strategy.
The revised figures this morning from Wiesbaden (Destastis) show that the German economy has been far weaker than originally supposed. GDP contracted by 0.4pc in Q4 2012, and again in Q1 2013. Average growth over the last two years has been little more that 0.6pc.
Germany is the victim of its own policy of pro-cyclical fiscal austerity and its refusal to invest. It is gaining nothing from a current account surplus of 7.5pc of GDP (in breach of EU limits). The secondary effects on other countries are so damaging that they more than negate any gain for Germany itself.
The eurozone as a whole has stalled to zero growth. It has no safety margin as the effect of Russian sanctions start to bite, lopping 0.3pc off Europe's GDP this year (according to a leaked document by the Commission). It has no margin against a potential credit shock from China, nor against knock-on effects from Fed tightening in the US.
The ECB is paralysed by politics. It cannot secure German assent for quantitative easing because Berlin/Buba are using stimulus as an instrument to enforce their reform dictates, and they are not yet satisfied that Italy is complying. Monetary policy has been contaminated.
Those in charge are so stubborn, ideological, and certain of their cause, that they are willing to drive Europe over the edge to force obeisance. They are doing so even though credit is still contracting, the M3 money supply has ground to a halt, a third of the eurozone is in outright deflation, and now Germany itself has buckled. Policy is too tight even for Germany itself. Yet it goes on, because otherwise Latins might get off too lightly.
If you want a good target for "structural reform" – the mantra that grates, the more it is repeated – you might start with institutional governance of the eurozone itself. That certainly cries out for a neutron bomb.
Since we all know that EMU politics are intractably hopeless, we can only conclude that Europe will lurch from debacle to debacle until the Project is shut down for the good of humanity.
Thank you. Now I will take my medicine.
They're turning Japanese. I really think so.
Draghi wants a relaxation on austerity:
QuoteE.C.B. Chief Seeks Tax Cuts and State Spending
By BINYAMIN APPELBAUMAUG. 22, 2014
JACKSON HOLE, Wyo. — Mario Draghi, president of the European Central Bank, said Friday that European governments needed to move from a focus on austerity to a "more growth-friendly composition of fiscal policies."
Mr. Draghi's comments were a change in tone for him, reflecting mounting concern that economic growth is sputtering in many European countries and that existing efforts have proved insufficient to spur faster growth.
Speaking before an annual gathering of central bankers and economists at a resort in the Rocky Mountains, Mr. Draghi said that the central bank was moving to increase its own stimulus campaign but that governments in the eurozone also needed to help bolster demand for goods and services.
"Since 2010, the euro area has suffered from fiscal policy being less available and effective," he said. "It would be helpful for the overall stance of policy if fiscal policy could play a greater role alongside monetary policy, and I believe there is scope for this."
Mr. Draghi's comments underscored a growing divide between the United States, where the economy appears to be gaining strength, and Europe, where an enduring malaise has kept unemployment painfully high while the rate of inflation, generally considered most beneficial when it is running around 2 percent annually, has nearly come to a halt.
The aggregate economy of the 18 euro area countries did not grow in the second quarter, according to an initial estimate published this week. The data provided ammunition for critics who say European countries have undermined growth by curtailing government spending.
The central bank moved in June to expand its own campaign to stimulate the economy, and Mr. Draghi emphasized that the effort would continue.
"Our preparations for outright purchases in ABS markets is fast moving forward," he said, referring to the bank's plans to begin a broad bond-purchase program, emulating the Federal Reserve and the Bank of Japan.
He also noted that the euro's recent decline was likely to continue as the American economy gains strength, a development he characterized as favorable because it would help to increase exports.
Mr. Draghi suggested that European countries should consider public investments and tax cuts to complement the central bank's stimulus campaign. Countries like Germany, which are relatively healthy, have the most room to adopt such policies without breaking the rules of the euro area.
Mr. Draghi appeared to refer to the need for such countries to reconsider their commitment to austerity in calling for the euro area to move to "a more growth-friendly" fiscal stance. Some German officials, however, have already signaled a reluctance to move in this direction. They argue that the onus is on struggling European countries like Spain, Italy and Greece to make painful economic adjustments intended to increase long-term growth, like reducing legal protections for workers, cutting back on social welfare programs and reducing public spending.
Mr. Draghi was careful to say that those countries could not avoid such adjustments. The argument he made on Friday, however, was that such policies are by themselves insufficient.
"Without higher aggregate demand, we risk higher structural unemployment, and governments that introduce structural reforms could end up running just to stand still," he said. "Without determined structural reforms, aggregate demand measures will quickly run out of steam and may ultimately become less effective."
Funny how despite all this Keynes is generally derided in Europe and even proles worship at the altar of Hayek and von Mises these days.
BINYAMIN APPELBAUMAUG reporting from JACKSON HOLE? You realize this is fake, right?
Thing is: we have the US as a counter-example where printing money like there is no tomorrow helped at least pretend there has been a recovery (stock prices recovered, so all is well, yay!).
However: the US being the only superpower left, and the dollar long has been the default currency for the world, they can get away with whatever they do. Could the Eurozone has, though? Behind the Euro there is no massive superpower, but a bickering slow-moving collection of states with vastly different growth potentials and laws and issues. Could they get away with Euro QE? Would it not carry some big risks?
The UK has. The Eurozone, not the US, is the exception.
Also the US recovery looks pretty broad and solid. The UK better fits your description as the government's decided to start re-inflating the housing bubble :bleeding:
Quote from: Sheilbh on August 25, 2014, 07:44:46 AM
The UK has. The Eurozone, not the US, is the exception.
Also the US recovery looks pretty broad and solid. The UK better fits your description as the government's decided to start re-inflating the housing bubble :bleeding:
I guess London prices were not high enough. :bowler:
Quote from: Duque de Bragança on August 25, 2014, 08:12:48 AM
Quote from: Sheilbh on August 25, 2014, 07:44:46 AM
The UK has. The Eurozone, not the US, is the exception.
Also the US recovery looks pretty broad and solid. The UK better fits your description as the government's decided to start re-inflating the housing bubble :bleeding:
I guess London prices were not high enough. :bowler:
Not enough Russians.
Quote from: Tamas on August 25, 2014, 05:34:44 AM
Thing is: we have the US as a counter-example where printing money like there is no tomorrow helped at least pretend there has been a recovery (stock prices recovered, so all is well, yay!).
There is no pretend about it. Eurozone unemployment rates are a 12% and trending worse.
US unemployment rates have been steadily dropping the past few years and are now down to about 6.2%. That is - around half.
QuoteCould they get away with Euro QE? Would it not carry some big risks?
The real question is can they get away with not doing it. The problems the Euro economies face are deflation, zero growth, and Euro (currency) strength. So when I hear the neo-Austrians in Europe drone on about inflation risks and not weakening the Euro it is like Alice in Wonderland. The Japanese experience shows that deflationary expectations can become so anchored an economy can just stagnate for decades. Europe could be headed in that direction.
Spanish year-on-year inflation down to -0,5%, second month in a row of deflation, and the largest price fall since 2009.
Deflation can be a good thing. I enjoyed HK's deflationary years greatly, and our deflation rate was like 4 or 5%.
Quote from: Sheilbh on August 24, 2014, 08:02:09 AM
Draghi wants a relaxation on austerity:
Wait, aren't those the things that Berkut and Grumbler are always harping on about?
Quote from: Monoriu on August 28, 2014, 05:15:29 AM
Deflation can be a good thing. I enjoyed HK's deflationary years greatly, and our deflation rate was like 4 or 5%.
Deflation can be good for someone with a fixed nominal income - a civil servant perhaps, or a bondholder
Not so great overall. Not so great for HK for that matter - it appears real GDP dropped during the deflationary period.
Draghi fires his bazooka, although because of the weird way the ECB rules are written, he is buying private-sector ABS rather than government bonds.
This confirms my suspicion above that Draghi is basically the good guy here but is working within tight political and institutional constraints.
This would have been a marvelous day for a daytrade. Sadly, I was doing other things. S&P looks like it will hold above 2000.
Quote from: MadImmortalMan on September 05, 2014, 02:34:20 PM
This would have been a marvelous day for a daytrade. Sadly, I was doing other things.
Better off going to Vegas. Games aren't nearly as stacked against you there.
Spain's GNP rises 2,6% after implementing new UE accounting rules that include - among others - drug trafficking and prostitution :yeah:
In broken record news, Spain gets its third deflationary month in a row with a -0,2% decrease in prices.
Tim Geithner on Europe. Also it seems Draghi's 'whatever it takes' was indeed an off-the-cuff statement (with some impact) after chatting to hedge fund managers in London:
QuoteDraghi's ECB management: the leaked Geithner files
Peter Spiegel Author alerts | Nov 11 15:35 | 33 comments | Share
At a time when Mario Draghi's style of running the European Central Bank is under question – there's reportedly been grumbling he's setting monetary policy in off-the-cuff public remarks rather than in consultation with the bank's board members – it is easy to forget that Draghi's most famous act as ECB chief was also an unscripted public utterance: "whatever it takes".
The now-famous 2012 remark, which is widely credited with ending the hair-on-fire phase of the eurozone crisis by hinting the ECB would use its printing presses to buy up sovereign debt of besieged governments, has long been viewed as a masterstroke of market management, since the ECB has yet to spend a cent on such bond purchases.
But as the FT and other news organisations have reported, many on the ECB governing council were taken aback by the remarks because the issue wasn't discussed more widely before Draghi declared it as ECB policy.
The Brussels Blog recently got its hands on yet more evidence that Draghi's remarks – made at a conference in London in July 2012 – were inserted at the last minute without wider consultation: raw transcripts of discussions with Timothy Geithner, who was US treasury secretary at the time, about the eurozone crisis.
The 100 pages of transcripts we obtained are of interviews Geithner gave to assistants preparing his book, Stress Test: Reflections on Financial Crises, which was published in May. Many of the recollections also appear in the book, but Geithner provides more detail and more bluntness – including a fondness for the f-word – in the pages we obtained.
This is particularly the case for the "whatever it takes" speech. In his book, Geithner mentions the remark was impromptu. But in the transcript, Geithner reveals his source for that passage: Draghi himself, who told Geithner he had decided to insert the words into his address after meeting with London financiers who were convinced the eurozone was on the brink of implosion. Here's the section of the transcript relating to Draghi's speech:
QuoteGeithner: [T]hings deteriorated again dramatically in the summer which ultimately led to him saying in August, these things I would never write, but he off-the-cuff – he was in London at a meeting with a bunch of hedge funds and bankers. He was troubled by how direct they were in Europe, because at that point all the hedge fund community thought that Europe was coming to an end. I remember him telling me [about] this afterwards, he was just, he was alarmed by that and decided to add to his remarks, and off-the-cuff basically made a bunch of statements like 'we'll do whatever it takes'. Ridiculous.
Interviewer: This was just impromptu?
Geithner: Totally impromptu.... I went to see Draghi and Draghi at that point, he had no plan. He had made this sort of naked statement of this stuff. But they stumbled into it.
Similarly, Geithner's account of a Group of Seven finance ministers' meeting in the remote Canadian town of Iqaluit – the first time he met his German counterpart Wolfgang Schäuble – is far more colourful in the transcripts than it is in the book. The meeting was held in February 2010, just as panic over Greece's restating of its accounts was beginning to grip the bond market. In his book, Geithner recalls there were calls for "Old Testament justice" at the meeting. But in the transcripts, he's a bit more explicit:
QuoteGeithner: I remember coming to the dinner and I'm looking at my Blackberry. It was a fucking disaster in Europe. French bank stocks were down 7 or 8 per cent. That was a big deal. For me it was like, you know, you were having a classic complete carnage because of people [who] were saying: crisis in Greece, who's exposed to Greece?....
I said at that dinner, that meeting, you know, because the Europeans came into that meeting basically saying: "We're going to teach the Greeks a lesson. They are really terrible. They lied to us. They suck and they were profligate and took advantage of the whole basic thing and we're going to crush them," was their basic attitude, all of them....
But the main thing is I remember saying to these guys: "You can put your foot on the neck of those guys if that's what you want to do. But you've got to make sure that you send a countervailing signal of reassurance to Europe and the world that you're going to hold the thing together and not let it go. [You're] going to protect the rest of the place." I just made very clear to them right then. You hear this blood-curdling moral hazard-y stuff from them, and I said: "Well, that's fine. If you want to be tough on them, that's fine, but you have to make sure you counteract that with a bit more credible reassurance that you're going to not allow the crisis to spread beyond Greece and that's going to require, you've got to make sure you're putting enough care and effort into building that capacity to make that commitment credible as you are to teaching the Greeks a lesson...."
Interviewer: I mean was that, did you have this kind of foreboding like: oh my god, these guys are just going to...?
Geithner: Yeah. I had like a definite, and of course I, as I think I've said separately, I completely underweighted the possibility they would flail around for three years. I thought it was just inconceivable to me they would let it get as bad as they ultimately did. But the early premonitions of that were in that initial debate. They were lied to by the Greeks. It was embarrassing to them because the Greeks had ended up like borrowing all this money and they were mad and angry and hey were like: "Definitely get out the bats." They just wanted to take a bat to them. But in taking a bat to them, they were feeding a fire that was in its early stages. There were a lot of dry tinders.
Intriguingly, the transcript includes more than a full page of redacted comments on what emerged as the most explosive eurozone revelation in Geithner's book: that EU leaders approached President Barack Obama ahead of the November 2011 Group of 20 summit in Cannes, France, with a plan to deny financial aid to Italy unless Silvio Berlusconi, then Italian prime minister, resigned.
In his book, Geithner recounts that he told Obama: "We can't have blood on our hands," and pushed him to reject the Italian plan – something he did during a tense late-night meeting with eurozone leaders the FT recounted in a recent series on the crisis. Those events appear to have been blackened out in the transcript we have (the words "potential privilege" are stamped over the black-outs), but Geithner still provides some colour that was not in his book:
QuoteGeithner: [T]o be sympathetic to them, the Germans' experience has been every time they buy a little bit of calm [on the] markets and the Italian spreads start to come down, Berlusconi reneges on anything he committed to do. So they were just paranoid that every act of generosity was met by sort of a "fuck you" from the establishment of the weaker countries in Europe, political establishment of those weaker countries in Europe, and so the Germans were just apoplectic. Sarkozy, who is trying to navigate between the Germans' view of the crisis and the fact that France was suffering a fair amount of collateral damage, too, because Europe's getting somewhat weak, he's in election [campaigning]. He's trying to figure out how to bridge this difference....
There's a G20 meeting in France that Sarkozy hosts which was really incredibly interesting, fascinating thing for us and for the president and I'll tell you just a few quick things in passing so we can come back to those things. The Europeans actually approach us softly, indirectly before the thing saying: "We basically want you to join us in forcing Berlusconi out." They wanted us to basically say that we wouldn't support IMF money or any further escalation for Italy if they needed it if Berlusconi was prime minister. It was cool, interesting. I said no....
But I really actually felt, I thought what Sarkozy and Merkel were doing was basically right which is: this wasn't going to work. Germany, the German public were not going to support, like, a bigger financial firewall, more money for Europe, if Berlusconi was presiding over that country.
There are some other, less consequential revelations in the transcript, such as the fact Angela Merkel, the German chancellor, never wanted to meet Geithner. The two would exchange words when Geithner accompanied Obama in meetings with Merkel, but unlike Sarkozy – who would summon Geithner to the Elysée whenever he arrived in Paris – Merkel was not interested, ever when Lael Brainard, then the US treasury's chief international affairs official, would put in an informal request:
QuoteInterviewer: And at this point were you talking to Merkel at all?
Geithner: No. Merkel would never speak to me. I never called Merkel directly. I would always be with meetings with her and the president, but she would never – and I went to Germany a couple of times. She would never see me. She was, I think she was quite respectful of me and she listened and engaged with me directly in those meetings, but when I went to Germany, didn't do it that often, a couple of times. I never like to ask to see a head of state. I find it, like, offensive. My general view is: they know I'm coming, if the finance minister wants me to see the head of state, and they decide to ask me to do it, I'll do it, but I never wanted to ask. But usually Lael, who was a different approach to these kind of things, Lael would generally get somebody to ask on my behalf, and [Merkel] never wanted to see me. I would see Sarkozy or, you know, normally in those countries they would all want to see me.
A few other nuggets on major events and personalities:
On Wolfgang Schäuble:
QuoteSchäuble was the former interior minister who was shot by a terrorist in Germany, disabled by it, consigned to a wheelchair and had moments when he was hospitalised during that period of time, during the crisis, which was sort of consequential. But he's like a really impressive, I really like the guy, even when we disagreed a lot on the substance and response. He's a Europeanist, older than Merkel, was I think more powerful in his party, the CDU, than Merkel and they always had a very interesting relationship. Somebody [who's] out in front of her...he's a really interesting guy.
On Olli Rehn, then European Commissioner in charge of economic affairs:
QuoteOlli Rehn is the guy, the economic guy on the commission, who is always in the papers about this kind of stuff, who doesn't have much authority, so [garbled] the commission. But he's definitely a force for reason and an interesting guy and generally, I think, on the side of angels in this stuff.
On the infamous October 2010 "Deauville Declaration", where Merkel and Sarkozy agreed that future bailouts could include forced losses or "haircuts" on eurozone bondholders – regarded as the decision which sparked a broader panic in European debt markets:
QuoteThat was, like, [an] incredible miscalculation for damage. They had a summit in Deauville, France, where Sarkozy, in order to get Merkel to back off her "fiscal union" stuff, which was very hard for him politically because, you know, France in that [was] agreeing to come under the thumb of Germany on fiscal policy – at least that's what the French politics was. He, Sarkozy, agrees to back Merkel on this haircut stuff....
I was on the Cape [Cod] for Thanksgiving and I remember doing a G7 call from the Cape and being in my little hotel room. And I basically, and Trichet did the same thing, I was, I'm sure I was rude and I said: basically, if you guys do that, you will, you know, all you will do is accelerate the run from Europe. No one will lend a dollar, a euro to a European government if they're weak in that context because the fear will be, if they need money, you've got to force some restructuring, haircut [garbled]. It completely inverts the incentives you want to create. I was fucking apoplectic about it and I said it may be that you're going to have to – I can't remember how I said it – you may be, if you're going to restructure Greece, but until you have the ability to in effect protect or guarantee the rest of Europe from the ensuing contagion, this is just [a] metaphor for our fall of '08. You can't do that....
At that point, Trichet was completely apoplectic about these guys, [and] said that you cannot afford to have all this loose haircut talk until you are in a better position to be able to guarantee and protect the rest of Europe from the contagion and the run of what happened.
On Maria Fekter, Austrian finance minister, and a meeting of EU finance ministers he attended in Poland in September 2011:
QuoteThey invited me to go to a meeting of their Ecofin, which is their group of finance ministers, and central bankers in Poland in September. And they, the Austrian finance minister and a couple others – I think I'm very polite in the meeting. They asked me to come to the fucking meeting. I call them in advance and say: "You really sure you want me to come? It's kind of a sensitive thing for me to come to your meeting."
They turn to me in their meeting, they ask me for my views, my normal views which you'll find boringly familiar at this point, and a bunch of their ministers go walk out afterwards and say: "Who's Geithner to tell us what to do?" Very disparaging, like quite disrespectful from their peripheral ministers. And the fucking New York Times writes a story – I can't remember who wrote the story – somebody at the Times wrote a story that I came home to see at that point, or maybe it was after that, just like a really brutal story: end of American influence, [garbled] lack of influence of American officials, using anecdotes of that meeting for that. That wasn't so great.
On Ireland's decision to guarantee all its banks in 2008:
QuoteIreland, most people view in retrospect, was stupid to guarantee all their banks. They couldn't afford it. They were eight times the size of their economy. Now it's easy for us to say that. If they had haircut all their bondholders to the banks, then there probably would have been other forms of contagion. The rest of Europe maybe shouldn't have guaranteed them, but the rest of Europe could afford to guarantee. The Irish couldn't.
Great stuff from the leak.
I love the "completely underweighted the possibility they would flail about for three years.". TG is a smart guy but I guess prior to the point his exposure to European institutions was limited. :D
Quote from: The Minsky Moment on November 12, 2014, 12:43:04 PM
Great stuff from the leak.
I love the "completely underweighted the possibility they would flail about for three years.". TG is a smart guy but I guess prior to the point his exposure to European institutions was limited. :D
Americans, used to functioning government bodies like Congress, were amazed at European inaction :lol:
He says "like" too much.
He has admitted he's a terrible public speaker.
Quote
Tim Geithner: "It Was A F$&king Disaster In Europe"
The name Tim Geithner has mercifully disappeared from the front pages, and instead has receded into the far more lucrative and circumspect confines of private equity behemoth Warburg Pincus. That doesn't mean that he is forgotten, and as the FT's Brussels Blog reveals (http://blogs.ft.com/brusselsblog/2014/11/11/draghis-ecb-management-the-leaked-geithner-files/), having "gotten its hands on... raw transcripts of discussions with Timothy Geithner, who was US treasury secretary at the time, about the eurozone crisis", Geithner was intimately involved in both the collapse and subsequent impromtpu "bailout" of Europe, which hinged on the biggest bluff of all time: Draghi's "whatever it takes."
Here is what the former Treasury Secretary had to say about that:
<blockquote> Geithner: [T]hings deteriorated again dramatically in the summer which ultimately led to him saying in August, these things I would never write, but he off-the-cuff – he was in London at a meeting with a bunch of hedge funds and bankers. He was troubled by how direct they were in Europe, because at that point all the hedge fund community thought that Europe was coming to an end. I remember him telling me [about] this afterwards, he was just, he was alarmed by that and decided to add to his remarks, and off-the-cuff basically made a bunch of statements like 'we'll do whatever it takes'. Ridiculous.
Interviewer: This was just impromptu?
Geithner: Totally impromptu.... I went to see Draghi and Draghi at that point, he had no plan. He had made this sort of naked statement of this stuff. But they stumbled into it.
</blockquote> Which of course explains why almost three years later, the OMT which was conceived as part of Draghi's consummate bluff, still doesn't exist and never will. It also explains why the central banks can never take their foot off the gas pedal ever again, as it would mean the ECB would finally have to make good on three years of promises, which as we all now know, were nothing but bluffs. In fact, the next time the ECB is taken to task and is forced to follow through with action, may be the last days of the Eurozone because by now it should be clear to everyone that Draghi is the paperst tiger in existence.
Then there is the US intervening in European politics and determining the fate of Berlusconi:
<blockquote> In his book, Geithner recounts that he told Obama: "We can't have blood on our hands," and pushed him to reject the Italian plan – something he did during a tense late-night meeting with eurozone leaders the FT recounted in a recent series on the crisis. Those events appear to have been blackened out in the transcript we have (the words "potential privilege" are stamped over the black-outs), but Geithner still provides some colour that was not in his book:
Geithner: [T]o be sympathetic to them, the Germans' experience has been every time they buy a little bit of calm [on the] markets and the Italian spreads start to come down, Berlusconi reneges on anything he committed to do. So they were just paranoid that every act of generosity was met by sort of a "fuck you" from the establishment of the weaker countries in Europe, political establishment of those weaker countries in Europe, and so the Germans were just apoplectic. Sarkozy, who is trying to navigate between the Germans' view of the crisis and the fact that France was suffering a fair amount of collateral damage, too, because Europe's getting somewhat weak, he's in election [campaigning]. He's trying to figure out how to bridge this difference....
There's a G20 meeting in France that Sarkozy hosts which was really incredibly interesting, fascinating thing for us and for the president and I'll tell you just a few quick things in passing so we can come back to those things. The Europeans actually approach us softly, indirectly before the thing saying: "We basically want you to join us in forcing Berlusconi out." They wanted us to basically say that we wouldn't support IMF money or any further escalation for Italy if they needed it if Berlusconi was prime minister. It was cool, interesting. I said no....
But I really actually felt, I thought what Sarkozy and Merkel were doing was basically right which is: this wasn't going to work. Germany, the German public were not going to support, like, a bigger financial firewall, more money for Europe, if Berlusconi was presiding over that country.
</blockquote> And finally, Geithner's candid take on Europe:
<blockquote> Geithner: I remember coming to the dinner and I'm looking at my Blackberry. It was a fucking disaster in Europe. French bank stocks were down 7 or 8 per cent. That was a big deal. For me it was like, you know, you were having a classic complete carnage because of people [who] were saying: crisis in Greece, who's exposed to Greece?....
I said at that dinner, that meeting, you know, because the Europeans came into that meeting basically saying: "We're going to teach the Greeks a lesson. They are really terrible. They lied to us. They suck and they were profligate and took advantage of the whole basic thing and we're going to crush them," was their basic attitude, all of them....
But the main thing is I remember saying to these guys: "You can put your foot on the neck of those guys if that's what you want to do. But you've got to make sure that you send a countervailing signal of reassurance to Europe and the world that you're going to hold the thing together and not let it go. [You're] going to protect the rest of the place." I just made very clear to them right then. You hear this blood-curdling moral hazard-y stuff from them, and I said: "Well, that's fine. If you want to be tough on them, that's fine, but you have to make sure you counteract that with a bit more credible reassurance that you're going to not allow the crisis to spread beyond Greece and that's going to require, you've got to make sure you're putting enough care and effort into building that capacity to make that commitment credible as you are to teaching the Greeks a lesson...."
Interviewer: I mean was that, did you have this kind of foreboding like: oh my god, these guys are just going to...?
Geithner: Yeah. I had like a definite, and of course I, as I think I've said separately, I completely underweighted the possibility they would flail around for three years. I thought it was just inconceivable to me they would let it get as bad as they ultimately did. But the early premonitions of that were in that initial debate. They were lied to by the Greeks. It was embarrassing to them because the Greeks had ended up like borrowing all this money and they were mad and angry and hey were like: "Definitely get out the bats." They just wanted to take a bat to them. But in taking a bat to them, they were feeding a fare that was in its early stages. There were a lot of dry tinders.
</blockquote> Which explains why Greece now has all the leverage to do nothing and to demand infinite bailouts from Europe.
And incidentally, where Geithner says "It was a fucking disaster in Europe", he was right. What's worse is that nothing at all has changed in the doomed Europe with an excess of "political capital (http://www.zerohedge.com/news/2013-04-04/mario-draghi-responds-zero-hedge-there-no-plan-b)" which it turns out is a synonmic for "improvisation."
http://www.bbc.com/news/business-30020565
QuoteThe Bank of England has warned that inflation could fall below 1% in the next six months, owing to lower food, energy and import prices, as well as feeble growth in Europe and elsewhere.
Governor Mark Carney said he did not expect inflation to reach the targeted rate of 2% for three years.
The Bank also cut its prediction for UK economic growth in 2015 to 2.9%.
However, the Bank said it expected average salaries to be growing by 2% by the end of 2015.
Earlier, official figures showed average wages excluding bonuses grew by 1.3%, which was just above the latest rate of Consumer Prices Index inflation and the first time it has risen above that measure in five years.
The Office for National Statistics figures also showed that unemployment in the UK fell by 115,000 in the three months to the end of September, to a total of 1.96 million.
'Encouraging signs'
The governor said the UK was witnessing "the start of real pay growth".
"We are seeing encouraging signs with respect of pay... we expect this pick-up to accelerate," he told reporters.
However, the governor had more sombre news on the rate of inflation, which the Bank wants to see reach 2%.
In a news conference at the Bank of England, Mr Carney said it was likely he would soon have to write a letter to the Chancellor, George Osborne, explaining why inflation had dropped below 1%.
But he added that inflation was expected to recover in the long term, and that the Bank would continue to keep its interest rate at 0.5% for some time.
The governor also sounded a warning on the state of Europe's economy.
"A spectre is now haunting Europe," he said, "the spectre of economic stagnation, with growth disappointing again and confidence falling back."
I do love the sentiment that, on the bright side, skirting with deflation means real pay growth!
Quote from: Sheilbh on November 12, 2014, 01:10:44 PM
Quote from: The Minsky Moment on November 12, 2014, 12:43:04 PM
Great stuff from the leak.
I love the "completely underweighted the possibility they would flail about for three years.". TG is a smart guy but I guess prior to the point his exposure to European institutions was limited. :D
Americans, used to functioning government bodies like Congress, were amazed at European inaction :lol:
Like, dude, there's a reason we gave our central bank real authority and minimal congressional oversight. Rand be damned.
(https://languish.org/forums/proxy.php?request=http%3A%2F%2Fmrkash.com%2Factivities%2Fimages%2Fjacksonmonster.jpg&hash=71d14fb0f2b20d64de7d02fb3d41252a984874d2)
Quote from: celedhring on September 29, 2014, 06:06:24 AM
In broken record news, Spain gets its third deflationary month in a row with a -0,2% decrease in prices.
Official inter-annual price index is now on -1.1%. Stagnant prices in most sectors could not compensate for Telco and fuel cost decrease.
Incidentally Greece failed to elect a President so the country's going into an election. Latest polls:
QuoteThe recent polls have shown that the governing New Democracy have closed the gap somewhat on SYRIZA. An Alco poll for Proto Thema released on Saturday put SYRIZA on 28.3%, New Democracy on 25%, Golden Dawn on 5.2%, PASOK on 4.6%, To Potami on 4.4%, the Greek Communist Party on 4.2%, and the Independent Greeks on 3%. Previous polls had put the gap between the top two parties at almost eight percentage points.
The German government now apparently thinks that Greece leaving the Eurozone wouldn't be an issue anymore and would become a necessity if Tsirpas wins the election.
Though every previous opinion from the German government has either been wrong or abandoned at 4am in Brussels :lol:
Everyone does seem relatively sanguine about the prospect of Grexit now. I think there may be a little bit too much confidence, though obviously I've no idea. In my view the Greeks (also the Spanish and Italians) need to leave the Euro and if the Greeks do hopefully they'll cause enough turbulence to force the ECB into QE.
I'm now losing value on my Normandy holdings. Plz fix Euro.
What some people seemed to have forgotten that if Greece leaves the Euro, is that it will actually make the Euro stronger relative to other countries. Therefore, the next weakest economy in the Euro will be the most adversely affected, and be the target of speculators, until they too are kicked out of the Euro, making it stronger still, until the next victim is found and kicked out, and so on.
I suspect though if Greece is kicked out, everyone else (including the Germans) will ring-fence everyone else from it. Greece will be made an example, which will scare the others into being more compliant. At the same time there will be some concessions to the countries that have behaved well and adhered to the prescription.
I'm betting on Portugal.
Quote from: Sheilbh on January 03, 2015, 01:09:28 PM
Everyone does seem relatively sanguine about the prospect of Grexit now. I think there may be a little bit too much confidence, though obviously I've no idea. In my view the Greeks (also the Spanish and Italians) need to leave the Euro and if the Greeks do hopefully they'll cause enough turbulence to force the ECB into QE.
I don't think it makes much sense for us to exit the Euro any more. The main problem a couple years back was convertibility risk scaring investors off. Once Draghi put an end to that, Spain started to stabilize.
That is not to say everything is peachy. There are still millions of unemployed, many of whom won't ever work again. Every year pensioners grow in number. And many youngsters have emigrated.
My own family is a reflection of this situation: my parents are retired, one of my siblings unemployed, the other works in Germany, and I too will sign for a German firm in a couple weeks.
Yeah. I understand de Guindos made a distinction by saying the 'recession' was over, but not mentioning the crisis which I think is accurate. I still can't see how Eurozone policies lead to an end to the crisis. But you're probably right I think Ireland, Spain and Portugal are countries that would probably benefit less than Italy, Greece and possible France and Belgium.
The Euro would probably appreciate if Greece left but the ECB could probably intervene enough to keep the pressure off other crisis countries.
The problem, as ever, is political. I don't think these levels of unemployment and deflation and minimal growth are sustainable indefinitely. What's more is that Germany seems really unaware or just doesn't care about political pressure. I remember sitting a few weeks ago and reading two articles next too each other. One was that the FN had polled their highest ever figure in one of the French papers. Next to it was a story about how Schaeuble wanted Brussels to have a right of veto over French budgets :lol:
As you'll know Podemos are polling well. The FN are polling well. In Ireland the largest number of votes will go independents, after them the largest party could be Sinn Fein. All of those elections in the next two years will be difficult and even if the mainstream still wins they may cause significant policy shifts (see Sarko). Germany may feel that letting Greece go if Syriza wins is manageable, what about Spain if Podemos win and start implementing their policies, or France if Sarkozy has been run close by Le Pen?
The other risk is that Greece would be doing what orthodox economists have been arguing for from the start and they'd be doing what the IMF normally proposes. They've got a primary budget surplus. It wouldn't be easy but they'd be doing what a country in a debt crisis should: devaluation and renegotiation of debt. I think the first 12 months would be pretty awful with high inflation and high interest rates but after that you'd start to expect a pretty robust recovery - especially given how far the Greek economy has fallen.
If that happens which is basically what, from my understanding, most economists would expect which is why in a Greek-style crisis most would prescribe (and the IMF does) devaluation and renegotiation then I think the rosiness of staying in the Euro looks a lot less positive for, for example, Italy or France.
Edit: And of course despite most countries piling on the debt European bond yields have fallen to the lowest point 'since the Black Death' according to the Telegraph :lol:
Podemos winning is a distinct possibility. If that happens all bets are off. Whether their Dear Leader plans to implement their populist agenda or will moderate his stances when he accedes to power is impossible to know.
Quote from: Iormlund on January 04, 2015, 12:27:02 PM
Podemos winning is a distinct possibility. If that happens all bets are off. Whether their Dear Leader plans to implement their populist agenda or will moderate his stances when he accedes to power is impossible to know.
We will see a PP-PSOE coalition/kiss of death before a Podemos government, imho.
I've seen talk of a Labour-Tory Grand Coalition here. Trouble with it is I can't see how it wouldn't destroy both parties.
Would it be similar in Spain?
Not PP, as there are no alternatives. But it would most likely destroy the Socialists (which I pointed out in the Euro Left thread).
Quote from: Sheilbh on January 04, 2015, 12:34:26 PM
I've seen talk of a Labour-Tory Grand Coalition here. Trouble with it is I can't see how it wouldn't destroy both parties.
Would it be similar in Spain?
It worked well in the Weimar Republic! Oh, wait... :P
This interview with Draghi is really fascinating:
http://www.ecb.europa.eu/press/inter/date/2015/html/sp150102_1.en.html
Quote from: PJL on January 03, 2015, 06:31:29 PM
What some people seemed to have forgotten that if Greece leaves the Euro, is that it will actually make the Euro stronger relative to other countries.
Greece is so small this effect is not significant. But more significant is the cascade effect you mentioned - once the principle of exit is made a reality, it makes it more likely to manifest as an outcome for others. And I think the impact of that is to push the Euro down because it created uncertainty about its global viability - in particular I don't think the institution would survive a broader "Southern Exit"
Quote from: Sheilbh on January 04, 2015, 09:45:04 PM
This interview with Draghi is really fascinating:
http://www.ecb.europa.eu/press/inter/date/2015/html/sp150102_1.en.html
It's fascinating (in a horror show way) to the extent the Handelsblatt reporter reflects mainstream thought in Germany. How can Germans of all people be so blasé about deflation - don't they teach the consequences of Breuning's policy in the schools?
Draghi says a lot I'd take issue with, but I hesitate to be too critical because it reads like someone trying to talk down a crazy person, like Bernanke fielding questions from Paul pere et fils
Quote from: Ed Anger on January 03, 2015, 05:49:03 PM
I'm now losing value on my Normandy holdings. Plz fix Euro.
FIX NOW.
9000 dollars in lost value. :cry:
I am all for higher interest rates and deflation :menace:
Quote from: Monoriu on January 05, 2015, 06:42:01 PM
I am all for higher interest rates and deflation :menace:
Alas, your ability to influence either is limited to posting silly smilie faces like :menace:
Quote from: Jacob on January 05, 2015, 07:07:35 PM
Quote from: Monoriu on January 05, 2015, 06:42:01 PM
I am all for higher interest rates and deflation :menace:
Alas, your ability to influence either is limited to posting silly smilie faces like :menace:
Well, maybe if I post enough simlies :menace: :menace: :menace: :menace: :menace: :menace: :menace: :menace: :menace: :menace:
Quote from: Monoriu on January 05, 2015, 06:42:01 PM
I am all for higher interest rates and deflation :menace:
Higher interest rates would lower the value of your bond portfolio.
Quote from: Admiral Yi on January 05, 2015, 07:21:27 PM
Quote from: Monoriu on January 05, 2015, 06:42:01 PM
I am all for higher interest rates and deflation :menace:
Higher interest rates would lower the value of your bond portfolio.
I don't care about the resale value of my bonds because I always hold until maturity.
Quote from: Monoriu on January 05, 2015, 07:26:32 PM
Quote from: Admiral Yi on January 05, 2015, 07:21:27 PM
Quote from: Monoriu on January 05, 2015, 06:42:01 PM
I am all for higher interest rates and deflation :menace:
Higher interest rates would lower the value of your bond portfolio.
I don't care about the resale value of my bonds because I always hold until maturity.
If only Ed had done this.
:lol:
Quote from: Monoriu on January 05, 2015, 07:26:32 PM
Quote from: Admiral Yi on January 05, 2015, 07:21:27 PM
Quote from: Monoriu on January 05, 2015, 06:42:01 PM
I am all for higher interest rates and deflation :menace:
Higher interest rates would lower the value of your bond portfolio.
I don't care about the resale value of my bonds because I always hold until maturity.
See - opportunity cost.
The Swiss dropped their Euro exchange rate limit this morning and now CHF is moving a lot. What's the thinking there? Are they anticipating the ECB?
Quote from: MadImmortalMan on January 15, 2015, 10:24:30 AM
The Swiss dropped their Euro exchange rate limit this morning and now CHF is moving a lot. What's the thinking there? Are they anticipating the ECB?
That was very dramatic, at one stage the euro was down 35% against the swiss franc.
Quote from: MadImmortalMan on January 15, 2015, 10:24:30 AM
The Swiss dropped their Euro exchange rate limit this morning and now CHF is moving a lot. What's the thinking there? Are they anticipating the ECB?
The Euro has been losing value against all currencies, especially the dollar, for several months now. And because of the different economic development and monetary policy in the US and the Eurozone, this trend will likely continue. The Swiss had to build hundreds of billions in assets over the last years to keep the value of the Franc at a stable level compared to the Euro. These assets were becoming more and more risky and had lost a lot of value already. So it was now with high losses or later with even higher losses.
Their tourism and export industries will be hurt. A lot. Tourism becomes prohibitively expensive for all their neighbors. About 60% of their exports go to the Eurozone, so raising prices by 20% across the board will hurt competitiveness.
They already have a deflation and this is like to accelerate. The main interest rate of the SNB is already at -0.75%, so there is also little they can do to fire up inflation.
This must suck for those Eastern Europeans that still have mortgages denominated in CHF. Their own currencies are probably roughly in sync with the Euro, so they might have seen their mortgage growing by 20% in a day.
Quote from: The Brain on January 06, 2015, 01:16:00 AM
Quote from: Monoriu on January 05, 2015, 07:26:32 PM
I don't care about the resale value of my bonds because I always hold until maturity.
If only Ed had done this.
(https://languish.org/forums/proxy.php?request=http%3A%2F%2Fwww.lostlettermen.com%2Ffiles%2Fimages%2Fuploads%2Fslideshow%2F1-Jerome-Lane.gif&hash=3bd4def8dae32aa04df2dd323afaf235f07b0aa5)
Quote from: Zanza on January 15, 2015, 01:08:45 PM
This must suck for those Eastern Europeans that still have mortgages denominated in CHF. Their own currencies are probably roughly in sync with the Euro, so they might have seen their mortgage growing by 20% in a day.
Oh damn. A lot of people are probably pissed off right now.
Quote from: Ed Anger on January 05, 2015, 05:57:05 PM
Quote from: Ed Anger on January 03, 2015, 05:49:03 PM
I'm now losing value on my Normandy holdings. Plz fix Euro.
FIX NOW.
9000 dollars in lost value. :cry:
18000 now. :mad:
Also, I laughed Seedy.
The Danish krone seems to be next in line after the Swiss. Apparently the national bank is under "attack" from foreign investors forcing them to buy foreign assets to keep the krone level to the euro.
Is this going to be a domino effect? I mean, none of the small currencies can hope to have the firepower to keep parity with the euro for long.
Some Danesplaining:
https://ello.co/guan/post/2vJyUspQhHPHopAetAnHiw
I'm really not :weep:
Quote from: Sheilbh on February 03, 2015, 06:53:51 PM
Some Danesplaining:
https://ello.co/guan/post/2vJyUspQhHPHopAetAnHiw
Looks like it's good for Danish house owners, as they can refinance their mortgages at very low rates.
UK government just sold bonds at negative interest :mellow:
Quote from: Sheilbh on February 04, 2015, 10:11:07 AM
UK government just sold bonds at negative interest :mellow:
We've been doing that for a while, what's new here is that banks are starting to charge customers negative interests on bank accounts. OH HELLS NO, WHERE'S MY MATTRESS?!
I don't really understand how it's possible. Some Euro-companies have issued negative interest rate debt too :mellow: :blink:
Our inflation-tied bonds are inching towards negative yield too. Deflation ahoy!
We do it to scare away investors, but they all think they'll be able to earn tonnes of money like on the Swiss franc, so it's not working. :(
Seriously economics folks. How does this happen?
(https://pbs.twimg.com/media/B9WcyDdIYAErMOy.jpg)
:mellow:
Especially for short term paper, paying someone a few basis points to hold your money is not that crazy. In the US, bank CDs and shorter term corporate bonds are paying negative real rates.
Nestle are issuing one year bonds with negative interest. The Swiss government 13 year bonds. The Netherlands, Austria, Denmark, Sweden, Finland and Germany have all issued them for more than 5 years.
I'm not sure about the length on the UK bonds with negative interest but even France and Slovakia are issuing short-term debt with negative interest rates. In terms of corporate bonds Shell's also been issuing negative interest short-term debt.
I get Liep's point about Denmark and so maybe Switzerland, the UK and Sweden that it's a currency play. But the Eurozone rest and the corporate bonds just baffle. I genuinely don't really understand how this is possible and would love an explanation :mellow: :blink:
Presumably they're denominated in the relevant currency and are considered almost as safe as government bonds I terms of reliability, so for the POV of the people making currency plays they're just as useful, and for the issuers it's (slightly) profitable debt?
http://www.reuters.com/article/2015/02/08/us-eurozone-greece-idUSKBN0LC0E920150208
Quote[...]
In a symbolic move that appeared to take direct aim at Greece's biggest creditor, Tsipras finished off his speech with a pledge to seek World War Two reparations from Germany.
[...]
Somebody is really ought to make a clip about the Euro crisis with the Benny Hill soundtrack under it.
Quote from: Jacob on February 09, 2015, 12:28:45 AM
Presumably they're denominated in the relevant currency and are considered almost as safe as government bonds I terms of reliability, so for the POV of the people making currency plays they're just as useful, and for the issuers it's (slightly) profitable debt?
Yep. And if there's deflation then money is losing its value so having something as safe as a bond with a negative interest rate that still higher than the rate of deflation is profitable?
Quote from: Sheilbh on February 09, 2015, 10:33:45 AM
Quote from: Jacob on February 09, 2015, 12:28:45 AM
Presumably they're denominated in the relevant currency and are considered almost as safe as government bonds I terms of reliability, so for the POV of the people making currency plays they're just as useful, and for the issuers it's (slightly) profitable debt?
Yep. And if there's deflation then money is losing its value so having something as safe as a bond with a negative interest rate that still higher than the rate of deflation is profitable?
I'm guessing they expect the increase in relative value of the forex markets to outpace inflation. If you do your business in Euro, you can probably handle interest of -0.5% if the value if the currency appreciates 10% relative to the Euro, no?
And I'm guessing that they have some regulatory, taxation, or internal reason to prefer bonds over simply holding piles of cash.
I mean, I don't know... I'm merely guessing here.
Quote from: Tamas on February 09, 2015, 08:46:40 AM
Somebody is really ought to make a clip about the Euro crisis with the Benny Hill soundtrack under it.
http://bennyhillifier.com/?id=gbZWsjePl-Q
Quote from: Ed Anger on February 09, 2015, 03:12:05 PM
Quote from: Tamas on February 09, 2015, 08:46:40 AM
Somebody is really ought to make a clip about the Euro crisis with the Benny Hill soundtrack under it.
http://bennyhillifier.com/?id=gbZWsjePl-Q
That goes well with your current avatar/motto.
Does this make sense?
QuoteNEGATIVE INTEREST RATES ARE HERE TO STAY
Add to Reading ListPosted by Frances Coppola on Feb 9th 2015, 2 Comments
Last year, the ECB cut deposit rates on reserves into negative territory, the first major central bank to do so. So far other major central banks have not followed suit, but smaller ones have: in January the Swiss National Bank slashed deposit rates to -0.7%, and the Danish central bank has now cut deposit rates further into negative territory at -0.75%. Both moves were prompted by the ECB's QE programme, which by putting downwards pressure on Eurozone interest rates forced satellite countries to cut interest rates in response or face sharply appreciating currencies. Unfortunately neither rate cut has had much effect: the Swiss franc, freed from its Euro exchange rate cap, has soared and the Danish krone is struggling to stay in its ERM II narrow band despite the Danish central bank intervening directly in the market.
A similar story is happening on the other side of the world. Japanese QE is forcing South East Asian countries to cut interest rates in order to prevent their currencies appreciating, damaging their export-led growth models.
In fact interest rates are tumbling everywhere, as a quick look at this summary of rate decisions shows. India, Pakistan, Australia, Canada, Turkey, Egypt and Peru have all cut rates within the last month, and China cut rates in December. Even Russia, which unwisely raised rates in December in response to a precipitate fall in the ruble, has now cut them again. These are financing rates, of course, not deposit rates: not all central banks are dealing with banking systems awash with reserves.
Most of these cuts are in response to the deflationary effect of oil and commodity price falls. Just as an inflationary shock causes global interest rates to rise, so a deflationary shock causes them to fall. Central banks with an inflation-targeting mandate are supposed to protect their economies from the effects of external price shocks. The argument is, therefore, that central banks should cut rates in response to a deflationary shock. Those central banks that do not cut rates risk allowing their economies to become uncompetitive, with serious impact on both current and future growth: competitiveness, once lost, is hard to recover. Although there are strong arguments for NOT responding to a short-term supply-side shock, the fear of deflation is very powerful: not surprisingly, most central banks are choosing to cut. The problem is that because the world has not recovered from the 2008 and 2012 shocks, interest rates are already very low, so some central banks are having to cut rates into negative territory - even though this means some people may hoard physical cash, as the Swiss central bank seems to have accepted.
But there are some countries that are raising interest rates because of high domestic inflation and a falling currency. These are mostly countries experiencing capital flight due to raised political risk and/or severe economic distress. Ukraine – unsurprisingly – is the latest to raise rates, but others that have raised rates recently include Belarus, Armenia, Nigeria, Ghana and Brazil.
To me, the antics of central banks all look like attempts to hold back the tide. If investors wish to remove their money from a country experiencing political uncertainty and economic distress, they will do so, however high the central bank pushes interest rates. In 1998 Russian interest rates rose to 160%, but it was still forced into default and currency collapse. And the same applies in the opposite direction, too. Investors removing capital from troubled areas will put that money somewhere safe even if they have to pay to do so. The rise in the Swiss franc, along with negative yields in Swiss and other "safe" government debt such as German bunds, JGBs, USTs and even UK gilts, is due not to falling oil and commodity prices but to elevated political risk, particularly within the Eurozone, along the EU border and in the Middle East.
But.... falling oil and commodity prices, elevated geopolitical risks, the resurgent Greek crisis. Aren't all of these transient shocks? Surely central banks should be looking at the medium-term – and isn't the medium-term trend for interest rates to rise gradually as growth recovers?
That's what Western central banks say. But I fear they are wrong. Far from rising, global interest rates will fall in the medium term. And since global interest rates are already on the floor, that means that they will eventually turn negative everywhere. The long-term trend of interest rates has been evident for many years: yields on government debt in all developed countries have been falling since the early 1980s. A key driver of this is demographics. The "baby boom" of the 1950s & 60s gave way in most countries (with the notable exceptions of India and countries in sub-Saharan Africa) to gently falling fertility. China's one-child policy caused a much faster drop in fertility, and fertility also fell precipitately in the former Soviet Union and its satellites after its collapse in 1989. Meanwhile, improvements in nutrition and healthcare meant that average lifespans gradually extended. Putting it bluntly, we now live longer and produce fewer children than we did half a century ago. Consequently, the age profile in most countries is rising.
And nowhere more so than in Europe. We are used to thinking of Japan as an aging society: but Germany's median age is actually higher than Japan's, and many other countries in Europe are fast heading for similar levels. Indeed with the exception of Japan, the countries with the highest proportion of over-65s are all in Europe. Edward Hugh argues that the current economic stagnation and political tension in the EU can largely be laid at the door of its unfavourable demographics.
I don't buy the argument that households in the US, UK and European countries such as Spain and Italy have low saving ratios. They have low levels of liquid savings, yes – but they invest hugely in illiquid assets, particularly property, usually as a leveraged investment. Even after the recent crisis, over 60% of UK households own the property they live in, and the majority of them have mortgages. The cost of servicing that debt takes up on average a third of their income. That is, by any standard, a very large amount of saving. Households also invest in corporate and private pension schemes, which also are not included in liquid "savings": increasingly, such investments are mandated by governments seeking to reduce the pressure on fiscal finances from future unfunded public pension commitments. It speaks volumes about the beliefs of some economists that they choose to ignore households' investments in property and pensions when talking about "savings", and complain that households don't save enough. The fact is that there has never in the history of the world been so much saving by households – and so little productive use made of that capital.
The lack of productive uses for the considerable saving of households not only in the Western world but also in emerging markets depresses long-term interest rates. It also blows up asset bubbles: while an asset bubble is growing, interest rates start to rise, but they then fall precipitately when it bursts, ending up lower than they were before the bubble burst. The most recent asset bubble is not in property, but in oil and commodities: the oil and commodity price bubbles of 2009-13 are bursting, causing precipitate falls in prices and in exchange rates tied to those prices (hence the collapsing currencies of oil and commodity exporting countries), and further downwards pressure on global interest rates.
But will the growing proportion of elderly in the global population cause interest rates to start rising, as those people dis-save? Well, no. After retirement, people switch to dis-saving – but as their resources are limited, they have no prospect of earning more and they do not know how long they will live (and they like to pass money on to their children), elderly people tend to live frugally in order to preserve capital. It is very sad that the expectations of the elderly that they will be able to live on the returns from their savings, rather than drawing on capital, are being dashed, but it is an inevitable consequence of their own saving behaviour. And it is in my view very wrong of governments to give the elderly false hope by paying them above-market interest rates on their holdings of public debt, as the UK's government is currently doing. The fact is that the savings of the elderly will never give the returns that they budgeted for. They should not be fooled into thinking that they might.
If the elderly actually spent their savings, rather than living frugally to preserve capital, the release of that money into the economy would be a demand stimulus that would both raise inflation and arrest falling interest rates. And if those saving for retirement risked their money in young, growing enterprises rather than seeking low-risk passive investments in mature industries, property and government debt, it might dampen the cycle of asset price booms and busts and reverse the long-term trend of interest rates. But while governments buy votes by supporting unproductive investments and promising the elderly returns on their savings that they have no right to expect, and while we remain unable to find a more productive use for those savings than blowing up asset bubbles, interest rates will continue to fall. Negative interest rates are here to stay.
Quote from: Ed Anger on February 09, 2015, 03:12:05 PM
Quote from: Tamas on February 09, 2015, 08:46:40 AM
Somebody is really ought to make a clip about the Euro crisis with the Benny Hill soundtrack under it.
http://bennyhillifier.com/?id=gbZWsjePl-Q
read that as bennyhitlerfier what with everyone crappy country mentioning the war and such
Quote from: Crazy_Ivan80 on February 10, 2015, 06:06:13 AM
Quote from: Ed Anger on February 09, 2015, 03:12:05 PM
Quote from: Tamas on February 09, 2015, 08:46:40 AM
Somebody is really ought to make a clip about the Euro crisis with the Benny Hill soundtrack under it.
http://bennyhillifier.com/?id=gbZWsjePl-Q
read that as bennyhitlerfier what with everyone crappy country mentioning the war and such
:lol:
Benny Hitler, car salesman.
"Yes, you can actually fit five Jews in the ashtray".
Quote from: Norgy on February 10, 2015, 06:56:59 AM
Benny Hitler, car salesman.
"Yes, you can actually fit five Jews in the ashtray".
An ashtray? You pro-tobacco monster!
The cost for new loans are down to 161kr a month ($24.38) for 1,000,000kr ($151405.05) thanks to a negative interest of 0.53%
Holy housing bubble!
This still makes no sense to me:
(https://pbs.twimg.com/media/B-xG7MvWoAA-LEO.jpg)
It's a club. You use them bash people in the head with. Presumably it's one to hit people with a "Negative yield", I guess that's the length of the club in each country.
Quote from: Sheilbh on February 26, 2015, 11:54:20 PM
This still makes no sense to me:
(https://pbs.twimg.com/media/B-xG7MvWoAA-LEO.jpg)
It allows governments to reduce their deficit and debt. I would expect it to stay like this for a while. As long as it costs interest to deposit money at the ECB, negative yields can be the less costly option.
There is now more than 2 trillion in EZ debt with negative yield.
But surely the worry is why do large funds want to sit on deposit, or with negative yield bonds? Are there so few growth opportunities? Do the markets think there's going to be a prolonged period of low growth and/or deflation (a la Japan)? Or is it because they need to build up their capital requirements? Why is there so little appetite for risk?
As I say I still don't understand and there's signs the EZ could be on the turn. Is this just part of the 'new normal'?
QuoteIt allows governments to reduce their deficit and debt.
Doesn't that depend on the rate of deflation as well?
If the markets will pay you to borrow money and there's any infrastructure work needing doing, now's the time to do it, especially for the countries on the left of that chart.
Quote from: Sheilbh on February 27, 2015, 01:29:08 AM
But surely the worry is why do large funds want to sit on deposit, or with negative yield bonds? Are there so few growth opportunities? Do the markets think there's going to be a prolonged period of low growth and/or deflation (a la Japan)? Or is it because they need to build up their capital requirements? Why is there so little appetite for risk?
Aren't large funds mainly pension funds? I believe they are heavily regulated as to what they can invest in and are mandated to put at least a part of their money into safest assets. It could very well be that German bonds and the like are the only such available asset.
And yes, at least in Europe right now, a lot of private equity funds are sitting on money, as there are so few good targets.
Quote from: Martinus on February 27, 2015, 01:41:46 AM
Aren't large funds mainly pension funds? I believe they are heavily regulated as to what they can invest in and are mandated to put at least a part of their money into safest assets. It could very well be that German bonds and the like are the only such available asset.
That would also explain why certain big companies have been able to have negative interest bonds. What's safer than Nestle?
Quote from: Sheilbh on February 27, 2015, 01:48:03 AM
Quote from: Martinus on February 27, 2015, 01:41:46 AM
Aren't large funds mainly pension funds? I believe they are heavily regulated as to what they can invest in and are mandated to put at least a part of their money into safest assets. It could very well be that German bonds and the like are the only such available asset.
That would also explain why certain big companies have been able to have negative interest bonds. What's safer than Nestle?
Yup. Many pension funds, especially in Western countries, have also an "ethics" requirement. Likewise, Islamic sovereign funds cannot invest in some businesses. All of this makes the investment decisions not entirely driven by profit.
As awful as this possibly this, that's why I plan to invest my (putative, imaginary, future) pension savings into tobacco and booze companies :Embarrass: :P
Is that chart showing negative nominal or real yields?
Few investment opportunities as and a glut of risk-averse savings by an affluent and aging society. The problem we have is over-saving. Which is a obvious result of capital based pensions.
These types of bonds should not be counted as valid for reserve purposes at this point.
Quote from: Sheilbh on February 27, 2015, 02:04:11 AM
As awful as this possibly this, that's why I plan to invest my (putative, imaginary, future) pension savings into tobacco and booze companies :Embarrass: :P
:D
The companies or their products. :)
Quote from: Sheilbh on February 27, 2015, 02:04:11 AM
As awful as this possibly this, that's why I plan to invest my (putative, imaginary, future) pension savings into tobacco and booze companies :Embarrass: :P
You just do it to have an excuse that, when you are buying smokes and booze, you are indirectly helping your pension. :P
Quote from: MadImmortalMan on February 27, 2015, 04:17:34 AM
These types of bonds should not be counted as valid for reserve purposes at this point.
Which ones?
Quote from: Martinus on February 27, 2015, 08:12:45 AM
Quote from: Sheilbh on February 27, 2015, 02:04:11 AM
As awful as this possibly this, that's why I plan to invest my (putative, imaginary, future) pension savings into tobacco and booze companies :Embarrass: :P
You just do it to have an excuse that, when you are buying smokes and booze, you are indirectly helping your pension. :P
:)
Yes it really is a virtuous circle.
And for the tax payer too. :D
I will benefit from this ultra-low interest regime now. I just signed up for an apartment, which is admittedly extremely expensive, but I can finance it for a bit more than 1% interest for the next 15 years.
Quote from: Zanza on February 27, 2015, 03:12:52 PM
I will benefit from this ultra-low interest regime now. I just signed up for an apartment, which is admittedly extremely expensive, but I can finance it for a bit more than 1% interest for the next 15 years.
:showoff:
Lucky you to get a fixed rate loan. In Poland most loans are variable rate.
In Germany, you can get a fixed rate for 5, 10, 15 or 20 years. Five years is ultra-cheap, below 1% in some cases. But I'll probably need about 15 years to pay it, so I want to limit my risk of rising interest.
Quote from: Sheilbh on February 27, 2015, 01:29:08 AM
But surely the worry is why do large funds want to sit on deposit, or with negative yield bonds?
1) ECB is charging penalty on reserves. So if you have excess reserves, even negative yield bonds might be better
2) bubble logic - bond prices could go up further.
QuoteGreek Defence Minister Panos Kammenos Sunday threatened to unleash a massive outpouring of refugees within Europe over Athens' economic standoff with the rest of the eurozone.
"If they deal such a blow to Greece, then they should know that the migrants will receive (travel) documents and head to Berlin," Kammenos said at a meeting of his far-right Independent Greeks party.
The party is the junior partner in the new coalition government of leftist Prime Minister Alexis Tsipras.
Kammenos said that if there were members of the terrorist militia Islamic State among the refugees, then Europe is itself responsible through its stance in the question of Greece's debt and reforms, Kammenos said.
Just a week ago, Vice Interior Minister Giannis Panousis issued a similar warning. The German police union responded with the suggestion that Greece should be excluded from the Schengen Area of 26 European countries that has abolished passport and other border controls within their internal borders.
Greek Foreign Minister Nikos Kotzias warned on Friday on the sidelines of a meeting of EU foreign ministers in Riga that Greece could become the entry gate for "millions of immigrants and thousands of jihadists" if the country's economy collapses.
Athens and its creditors agreed in late February to prolong the European portion of the Greek bailout, following fraught negotiations with the Tsipras government.
The country has hinted that it may face difficulties meeting major debt repayments this summer.
But it cannot access the 7.2 billion euros (7.8 billion dollars) left in its bailout until it agrees reforms with its creditors - the European Commission, the European Central Bank and the International Monetary Fund.
Lovely. Time to throw these fuckers out like the dead weight they are.
http://www.theguardian.com/world/2015/mar/12/german-anger-over-greek-demand-for-war-reparations
QuoteGerman anger over Greek demand for war reparations
Berlin incredulous at justice minister's threat to seize German property and repatriate antiquities unless €341bn compensation is paid
Germany has reacted with anger and defiance to Greek government demands for multibillion-euro reparation payments over first and second world war atrocities.
Greece's justice minister, Nikos Paraskevopoulos, said Athens was prepared to approve a court ruling to seize German property in the country – including the Goethe Institute, the German Archaeological Institute, German schools and holiday homes if Berlin refused to pay €341bn (£240bn) in compensation.
The demands, which also included the return of 8,500 archaeological treasures and artefacts in Germany, were met with incredulity in Berlin.
Seizures of property that could extend to holiday homes of private German citizens would be used to compensate victims of a second world war Nazi massacre of 218 Greek civilians in the village of Distomo, the government said.
Bela Anda, who was a spokesman for Gerhard Schröder when he was German chancellor, now an editor at tabloid Bild, branded the threats "bizarre, presumptuous and impertinent".
"The government of [Alexis] Tsipras positions the lever where Germany is most vulnerable – the crimes committed by Germany in the first and second world wars. It's moral blackmail," he said.
The demands stem from a Greek finance ministry report published in December 2014 which calculated on the basis of expert assessment that Germany "owed" Greece €9.2bn for the first world war, €322bn for the second world war and €10bn for money Greece was forced to lend the Nazi regime in 1942.
Resentment in Greece over Nazi atrocities remains high, and has been greatly exacerbated by frustrations over its bailout and the widespread feeling that Germany is largely to blame for Greece's woes.
The German chancellor, Angela Merkel, and her finance minister, Wolfgang Schäuble, have been repeatedly depicted in the Greek media in Nazi uniform.
Upping the ante
The German television channel ZDFneo has responded with a music video which has gone viral, which makes fun of both sides of the dispute and mocks both the Greek finance minister, Yanis Varoufakis, and Schäuble.
Greek politicians have been upping the ante in their dispute with Germany ever since last month's renegotiation of the country's €240bn international bailout, in which both sides claimed victory for a deal that gave Athens a four-month reprieve and more leeway over economic reform.
Relations appeared to hit a new low when the defence minister, Panos Kammenos, of the rightwing populist party Independent Greeks, this week threatened to send Islamist fundamentalists to Germany from among tens of thousands of migrants currently in Greece, in revenge for the austerity measures that Berlin is widely seen to have imposed on Athens.
"If you deliver a blow to Greece, then you should know that migrants will be given papers and sent to Berlin," Kammenos told a meeting of his party, in remarks passed to the media. "If members of the terror militia Islamic State are among them then Europe only has itself to blame because of its attitude towards Greece with regards to the debt question."
The reparations demands have increased the tension still further. The issue dominated the news agenda in Germany on Thursday, with some commentators saying that the government should review at least certain aspects of Greece's claims.
The respectable daily Frankfurter Allgemeine Zeitung (faz.net) accused Tsipras of "living in cloud cuckoo land", saying that the issue had been resolved years ago. "Germany has always lived up to its responsibility for what is anyway an injustice that can never be repaired – and paid for it. To pull this card now ... is dangerous mischief in the time of the euro rescue."
Die Welt called on German politicians to remain resolute in their handling of Greece, accusing Athens of using the reparations issue to deflect attention from its failure to tackle economic reform. "The Athens government is refusing to carry out existential reforms. It prefers instead to befuddle its people with the fiery booze of anti-German rhetoric," the paper wrote in its main editorial. "If they continue to rage, to toy with the idea of sending Islamists to Germany, to close the Goethe Institute, the only answer can be to remain steadfast."
While polls indicate most Germans are against further compensation payments, the issue remains divisive. Members of the Left party have insisted Berlin should compensate Greeks with €11bn for a so-called "occupation loan" that the Bank of Greece was forced to make to Nazi Germany in 1942.
"It is Germany's moral duty to pay the money, even if there are different opinions on international law," Annette Groth of the Left party told Reuters.
The Cottbus-based Lausitzer Rundschau backed the idea, writing in its editorial this morning that Germany should be prepared to consider compensation payments linked to the "occupation loan".
"Ten billion euros for education projects, infrastructure measures, or as start-up money for companies ... maybe concentrated on the very villages and regions in which the Germans staged their worst massacres ... would be a forward-looking signal of active recompense 70 years on," it wrote.
The German government has so far refused to comment on the specific threats to seize property, appearing determined not to rise to the bait. On Wednesday, it rejected the reparation claims in general, saying that it had paid Greece 115m Deutschmarks in 1960, as part of a global agreement covering war reparations with 12 countries, to which Athens signed up.
"The question of reparations and compensation payments has been both legally and politically resolved," a government spokesman, Steffen Seibert, said. His statement was backed up by similar reactions from the foreign and finance ministries.
German reunification
Berlin also points to the 1990 Two-plus-Four Treaty, which was signed by the then East Germany and West Germany as well as second world war allies before German reunification, which was meant to end to any claims.
Silja Vöneky, an expert in international law at the University of Freiburg said that sovereign assets belonging to the German state – including the Goethe Institute and German schools – may not be confiscated.
She pointed to the 2012 ruling by the international court of justice under which states cannot be forced to pay compensation for war crimes by rulings from foreign courts. The ruling followed a claim brought by the relatives of victims of the 1944 Distomo massacre in Greece, who sought the confiscation of German property as compensation. The court ruled that individuals could not take a state to court and that the Greek government itself would have to take a case before the international court.
Ulf Brunnbauer, a German historian at Regensburg University, said he found Greece's demands "thoroughly understandable" but counterproductive. Speaking on German public radio, DLF, he called for a closer dialogue between the government and Greek historians over German crimes committed during its three-and-a-half-year Nazi occupation of the country. "I think that's very necessary," he said.
Former Greek government spokesman Evangelos Antonaros told the same radio station that the Tsipras government would turn the row with Germany into one of the defining elements of its time in office, largely because it would help keep it in power.
"Germany has been turned into the scapegoat and the bogeyman," Antonaros said. "Unfortunately, it clicks with the majority of the people ... though the more sensible voices are warning of the dangers of a very severe crisis in relations between Greece and Germany."
Wut
This is what you get for not just surrendering to the Italians Greece.
But seriously WTF
QuoteThe German government has so far refused to comment on the specific threats to seize property, appearing determined not to rise to the bait. On Wednesday, it rejected the reparation claims in general, saying that it had paid Greece 115m Deutschmarks in 1960, as part of a global agreement covering war reparations with 12 countries, to which Athens signed up.
Like you can trust anything the Greeks sign.
I was a bit optimistic about syriza at first, but they are really looking like amateurish clowns at this point.
The reparations amount they're asking for is incidentally a couple billions higher than Greece's state debt.
They may have a point on the €10 billion forced loan.
But this is dog bites man stuff. It's something every Greek government since 2000 has done. That estimate was made by a commission (appointed by the Papademos government) that reported to the last government.
Maybe it sounds more reasonable in the original Turkish.
Quote from: MadImmortalMan on March 12, 2015, 01:46:22 PM
I was a bit optimistic about syriza at first, but they are really looking like amateurish clowns at this point.
like all national-socialist governments
Syriza's jumped the shark, I'm afraid.
Quote from: celedhring on March 12, 2015, 03:35:53 PM
Syriza's jumped the shark, I'm afraid.
Disagree. I think they're still the only reason to have any hope in Europe.
That's because you rate political parties on style Shelf.
Quote from: Sheilbh on March 12, 2015, 07:44:19 PM
Quote from: celedhring on March 12, 2015, 03:35:53 PM
Syriza's jumped the shark, I'm afraid.
Disagree. I think they're still the only reason to have any hope in Europe.
That's probably the saddest thing you've ever posted; you are admitting that it's hopeless in Europe.
Out of curiosity for the Euros: What does actually cost less now than it did five or ten years ago?
Where's the deflation happening?
Not here. Inflation has been between 1 and 2 % for the last years.
Quote from: MadImmortalMan on March 12, 2015, 10:53:05 PM
Out of curiosity for the Euros: What does actually cost less now than it did five or ten years ago?
Where's the deflation happening?
For Germany: The only noticeable thing with nominal deflation is energy (oil, gas) in the last months. But that's very volatile. Other than that stuff might stay the same price for long times, which I guess denotes real deflation. Electronics and communications have a "tech-induced" deflation I guess.
But normal consumer goods (food, clothes, cars), virtually all services and real estate (buying and renting) don't seem to have deflation here. Quite the contrary in some cases.
My father and me recently discussed that, apparently car prices (mostly those of low and medium end) seem to have either stagnated or gone down in the last few years (apparently for less than 15k € you can get a pretty decent new car nowadays, and if you lower your standards even for less than 10k €), although it might be due to the generous subsidies that have been in place over this time.
Quote from: Sheilbh on March 12, 2015, 07:44:19 PM
Quote from: celedhring on March 12, 2015, 03:35:53 PM
Syriza's jumped the shark, I'm afraid.
Disagree. I think they're still the only reason to have any hope in Europe.
We're screwed then.
Quote from: Sheilbh on March 12, 2015, 07:44:19 PM
Quote from: celedhring on March 12, 2015, 03:35:53 PM
Syriza's jumped the shark, I'm afraid.
Disagree. I think they're still the only reason to have any hope in Europe.
:lol: We are really, really fucked then.
Just learned a new word: "Grexident". Wouldn't be surprised to see that happen...
Quote from: Sheilbh on March 12, 2015, 07:44:19 PM
Quote from: celedhring on March 12, 2015, 03:35:53 PM
Syriza's jumped the shark, I'm afraid.
Disagree. I think they're still the only reason to have any hope in Europe.
What is the vision for Europe that they represent?
Quote from: Valmy on March 13, 2015, 07:40:22 AM
Quote from: Sheilbh on March 12, 2015, 07:44:19 PM
Quote from: celedhring on March 12, 2015, 03:35:53 PM
Syriza's jumped the shark, I'm afraid.
Disagree. I think they're still the only reason to have any hope in Europe.
What is the vision for Europe that they represent?
There is free lunch.
Quote from: Valmy on March 13, 2015, 07:40:22 AM
Quote from: Sheilbh on March 12, 2015, 07:44:19 PM
Quote from: celedhring on March 12, 2015, 03:35:53 PM
Syriza's jumped the shark, I'm afraid.
Disagree. I think they're still the only reason to have any hope in Europe.
What is the vision for Europe that they represent?
When you are deep in the ditch, stop digging.
Quote from: The Minsky Moment on March 13, 2015, 09:00:07 AM
Quote from: Valmy on March 13, 2015, 07:40:22 AM
Quote from: Sheilbh on March 12, 2015, 07:44:19 PM
Quote from: celedhring on March 12, 2015, 03:35:53 PM
Syriza's jumped the shark, I'm afraid.
Disagree. I think they're still the only reason to have any hope in Europe.
What is the vision for Europe that they represent?
When you are deep in the ditch, stop digging.
:unsure:
Quote
Europe Has A Modest Proposal For Greece: "Don't Pay Wages For One Or Two Months"
The Greek liquidity, pardon "cash flow" problems are so bad, not only Zero Hedge, but also Bloomberg has launched a daily maturity tracker of how much money Greece has to pay either to the IMF or to prefund T-Bill rollovers. This is what Bloomberg blasted out earlier today:
Greece is preparing for another week of hurdles that ends with a ~EU2b repayment on March 20. Most economists say that it will be difficult for Greece to get past end of March without fresh EU funds. Here's a timeline of the most important events scheduled this week:
Monday, March 16: Greece to repay about EU577m in IMF loans
Wednesday, March 18: Greece's debt agency PDMA to sell 13- week treasury bills
Which explains why as we reported yesterday, Greece passed a law to plunder pension funds, one which would allow the government to fully invest reserves of pension funds and other public entities kept in Bank of Greece deposit accounts in Greek sovereign notes.
None of this is news: that Greece will run out of cash absent another check from the Troika, pardon Instituions, pardon creditors, is clear. The only question is what happens after, if Europe indeed leaves Greece hanging.
Today, the Greek media is ablaze with just what Europe's proposed solution to this issue may be. As Protothema and Capital report, the Troika proposed that Athens halt the payment of salaries and pensions for one to two months. This, according to Europe, would promptly tackle the problem of liquidity and find a solution to Greek problem of how to pay back bailout loan tranches to creditors when suffering from liquidity problems.
Via @capitalgr: Creditors suggested2 #Greece govt "if u face liquidity problems,dont pay wages for a couple of months http://t.co/HJMum0FINT
— Efthimia Efthimiou (@EfiEfthimiou) March 13, 2015
As Keep Talking Greece reports, the creditors' proposal was revealed by Varoufakis' aide Elena Panarity at an event of the Deree College on Thursday and was confirmed by Finance Ministry officials on Friday.
"When we say that we have liquidity problems, they tells us to make no payment of salaries and pensions for one or two months," Panariti said as quoted by Greek media.
The creditors made this proposal at the side talks the Brussels Group meeting in Brussels on Tuesday.
Panariti did not reveal which one of Greece's creditors ECB, IMF and EU made this proposal. She is part of the Greek team negotiating with creditors the reforms that Athens has to fulfill in the next months.
In seems that the proposal was made to Finance Minister Yanis Varoufakis who rejected it right away, describing it as "shameful".
Shameful indeed, but the question remains: where does Greece, which tax revenues continue to suffer, find the cash it needs to fund upcoming payments not just to the IMF but all other creditors?
So to summarize, once again, the peculiar debt payment dynamics in Greece: first the "anti-austerity", "ultra-leftist" government is about to use what little Greek pensions are left, and now - if the Troika has its way - will stop paying government salaries for a month or so, so that Greece can find enough funds to pay the IMF, which then can promptly use the same funds to pay the US muppet government in Kiev which is just as broke as Greece, and needs to pay Gazprom yesterday to keep gas deliveries coming, with Gazprom promptly remitting the funds into Putin's personal money vault.
Rinse repeat.
Meanwhile, Greece, where apathy just hit unseen levels (http://www.zerohedge.com/news/2015-03-10/meanwhile-greece-emotional-apathy-sinking), will end up so poor it can't even afford to conduct the next elections in which, as many have warned, none other than the neo-nazi party may finally take power.
(https://languish.org/forums/proxy.php?request=http%3A%2F%2Fwww.zerohedge.com%2Fsites%2Fdefault%2Ffiles%2Fimages%2Fuser5%2Fimageroot%2F2015%2F03%2Fgreece%2520beggar_0.jpg&hash=eee3a08059668772c57da571f6e4ec2aa09833d2)
Quote from: citizen k on March 13, 2015, 02:04:40 PM
Quote
US muppet government in Kiev
Here is a picture of their leader:
(https://languish.org/forums/proxy.php?request=http%3A%2F%2Fwww.freakingnews.com%2Fpictures%2F41000%2FKermit-Frog-Portrait-41319.jpg&hash=ba1bafa012273c02eda12aff30839500a2cf8f71)
Quote from: The Minsky Moment on March 13, 2015, 09:00:07 AM
Quote from: Valmy on March 13, 2015, 07:40:22 AM
Quote from: Sheilbh on March 12, 2015, 07:44:19 PM
Quote from: celedhring on March 12, 2015, 03:35:53 PM
Syriza's jumped the shark, I'm afraid.
Disagree. I think they're still the only reason to have any hope in Europe.
What is the vision for Europe that they represent?
When you are deep in the ditch, stop digging.
Oh, I very much dig that; it's the whole war reparations, we-will-set-the-muslims-loose-on-you stuff that's discrediting their political position, which is a shame and not conductive to see it implemented.
Quote from: celedhring on March 13, 2015, 03:13:39 PM
Quote from: The Minsky Moment on March 13, 2015, 09:00:07 AM
Quote from: Valmy on March 13, 2015, 07:40:22 AM
Quote from: Sheilbh on March 12, 2015, 07:44:19 PM
Quote from: celedhring on March 12, 2015, 03:35:53 PM
Syriza's jumped the shark, I'm afraid.
Disagree. I think they're still the only reason to have any hope in Europe.
What is the vision for Europe that they represent?
When you are deep in the ditch, stop digging.
Oh, I very much dig that; it's the whole war reparations, we-will-set-the-muslims-loose-on-you stuff that's discrediting their political position, which is a shame and not conductive to see it implemented.
The "we will set the refugees loose on you if you don't agree" spiel was IIRC by the Defence minister, which does not belong to Syriza but to their right wing nationalist coalition partners.
Quote from: The Minsky Moment on March 13, 2015, 09:00:07 AM
When you are deep in the ditch,
Push d + i then make a stairway in the side wall going to the surface.
Quote from: celedhring on March 13, 2015, 03:13:39 PM
Oh, I very much dig that; it's the whole war reparations, we-will-set-the-muslims-loose-on-you stuff that's discrediting their political position, which is a shame and not conductive to see it implemented.
Okay I agree.
But the reparations thing is something every Greek government has done - my understanding is that its basis was a court case by individual civil claimants, not the Greek state and every Greek government keeps that judgement alive without ever signing the seizure orders.
And I think the Greeks have an arguable case over the forced loan. My understanding is that if the position is that that money was stolen by the German occupiers then it's covered by all the reparations treaties. If, however, it was a forced zero-interest loan, but a loan nonetheless then it isn't covered under any of the reparations treaties. On the one hand it was effectively stolen, on the other the Nazis had actually made repayments on it. Obviously the Greek government shouldn't bring it up, but it's an interesting point.
I also think part of this is that Greece seems to have a uniquely unresolved post-war. In that I think the outside world has given an anti-German spin on some symbolic gestures by Syriza - laying a rose at the Communist victims grave, or the way they sing Bella Ciao all the time. But I think a lot of that's similar to the Syriza ministers taking an atheist oath. It's a gesture that they see themselves as belonging to the defeated left-wing resistance and the left-wing side of the civil war and that's who they're claiming inheritance from. As well as his own moral standing, it's probably partly what gives Manolis Glezos such authority.
It seems to go to questions of who was resisting in the occupation and then who were beaten and how afterwards. I think, though I could be wrong, that there was a similar dynamic in Italy for a long time - maybe it hasn't lasted because the Italians managed to avoid an immediate post-occupation civil war.
The Islamic terrorist quote's also absurd, though I thought that was from the far-right coalition partner so it's to be expected. The migrant situation in Greece is incredibly difficult though. Not helped by a racist population and a history of racist governments :bleeding:
QuoteWhen you are deep in the ditch, stop digging.
Or as Wolfgang Munchau put it, the rational reason for leaving the Eurozone is the opportunity to be less stupid :lol:
I'd add that I think that Europe should think very carefully before saying the democratic left is incompatible with Europe.
QuoteJust learned a new word: "Grexident". Wouldn't be surprised to see that happen...
That word's a lie. It will always be a political choice and always be avoidable.
Quote from: Sheilbh on March 13, 2015, 04:26:12 PM
I'd add that I think that Europe should think very carefully before saying the democratic left is incompatible with Europe.
At least in the case of Greece, the democratic left is incompatible with reality.
Seems to be the only people trying to grapple with it. They're the empiricists to Europe's idealists.
Trying to grapple with it? I don't see any grappling going on. I see the desire to eat cake combined with the desire to have cake.
Quote from: Admiral Yi on March 12, 2015, 07:45:36 PM
That's because you rate political parties on style Shelf.
Bit like my interest in some Republicans is motivated by drama :P
Neither's true :P
QuoteTrying to grapple with it? I don't see any grappling going on. I see the desire to eat cake combined with the desire to have cake.
I see someone who's not actually read any of this thread. Do you not remember all the shouting that they'd surrendered?
I'm pretty sure I've read every post in this thread.
Quote from: Sheilbh on March 13, 2015, 04:26:12 PMBut the reparations thing is something every Greek government has done - my understanding is that its basis was a court case by individual civil claimants, not the Greek state and every Greek government keeps that judgement alive without ever signing the seizure orders.
That's the Distomo massacre case, brought by survivors of an SS massacre in 1944 against Germany in the 90s in which the Greek court awarded them 28 million € in damages that have not been paid by Germany, arguing that the 1961 agreement freed them from any responsability.
http://en.wikipedia.org/wiki/Distomo_massacre (http://en.wikipedia.org/wiki/Distomo_massacre)
Btw, I think this would go better in the "European populist left" thread, as this discussion has very little to do with the ECB. :P
Quote from: celedhring on March 13, 2015, 03:13:39 PM
Oh, I very much dig that; it's the whole war reparations, we-will-set-the-muslims-loose-on-you stuff that's discrediting their political position, which is a shame and not conductive to see it implemented.
Their pre-election manifestos were filled with incomprehensible pseudo-Marxist gibberish, so it's not surprising to see them go off the deep end. But the core problem here is a dysfunctional continental wide policy that was allowed to run for years without any real peep out of any of the mainstream parties; a feverish breakout like Syriza is just a symptom of the disease.
Quote from: The Larch on March 13, 2015, 04:08:41 PM
The "we will set the refugees loose on you if you don't agree" spiel was IIRC by the Defence minister, which does not belong to Syriza but to their right wing nationalist coalition partners.
Somehow I doubt that the economic and social policies of that party are about liberalisation of the market and responsibilisation of the individual, in which case we can wonder if many of these so-called right-wing parties are really right-wing.
Quote from: Crazy_Ivan80 on March 14, 2015, 01:24:48 PM
Quote from: The Larch on March 13, 2015, 04:08:41 PM
The "we will set the refugees loose on you if you don't agree" spiel was IIRC by the Defence minister, which does not belong to Syriza but to their right wing nationalist coalition partners.
Somehow I doubt that the economic and social policies of that party are about liberalisation of the market and responsibilisation of the individual, in which case we can wonder if many of these so-called right-wing parties are really right-wing.
It's these guys, you label them yourself if you don't like my clasification: http://en.wikipedia.org/wiki/Independent_Greeks (http://en.wikipedia.org/wiki/Independent_Greeks)
They're an euroskeptic and populist splinter group from New Democracy, the main right wing Greek party.
The Greeks should be calling for reparations from Turkey for the conquest of Constantinople.
Quote from: The Larch on March 14, 2015, 07:07:44 PM
Quote from: Crazy_Ivan80 on March 14, 2015, 01:24:48 PM
Quote from: The Larch on March 13, 2015, 04:08:41 PM
The "we will set the refugees loose on you if you don't agree" spiel was IIRC by the Defence minister, which does not belong to Syriza but to their right wing nationalist coalition partners.
Somehow I doubt that the economic and social policies of that party are about liberalisation of the market and responsibilisation of the individual, in which case we can wonder if many of these so-called right-wing parties are really right-wing.
It's these guys, you label them yourself if you don't like my clasification: http://en.wikipedia.org/wiki/Independent_Greeks (http://en.wikipedia.org/wiki/Independent_Greeks)
They're an euroskeptic and populist splinter group from New Democracy, the main right wing Greek party.
it's hardly your classification given that the classicification is the result from the fucked-up situation that was WW2 where two parties that wanted to establish their version of the Workers' Paradise(tm) duked it out with a third party (which wasn't located on the left of the Workers' Paradise scale of placing parties) leading to one of the first two being labeled "right" and the other "left". Probably the only genuine victory of the Left: having labeled one type of leftism as rightism while portraying the equally rotten other version of Leftism as true Leftism. A nice sample of succesfull framing.
doesn't change the fact that I'm in agreement on the fact that this small party is odious, and very much so.
Quote from: Tonitrus on March 14, 2015, 07:20:53 PM
The Greeks should be calling for reparations from Turkey for the conquest of Constantinople.
Greece should be paying reparations to all of Alexander's conquest nations I guess. :P
Surely those fall on the artist formerly known as Macedonia. :sleep:
Quote from: Admiral Yi on March 15, 2015, 05:38:52 PM
Surely those fall on the artist formerly known as Macedonia. :sleep:
FYROM :ultra:
/greek
Quote from: MadImmortalMan on March 15, 2015, 04:44:47 PM
Greece should be paying reparations to all of Alexander's conquest nations I guess. :P
I bet then they would suddenly change their tune on the 'Macedonia is Greek!' thing.
See, mono,
this is a riot:
http://www.bbc.com/news/world-europe-31938592
QuoteGermany riot in Frankfurt targets new ECB headquarters
Dozens of people have been hurt and some 350 people arrested as anti-austerity demonstrators clashed with police in the German city of Frankfurt.
Police cars were set alight and stones were thrown in a protest against the opening of a new base for the European Central Bank (ECB).
Violence broke out close to the city's Alte Oper concert hall hours before the building's official opening.
Thousands of "Blockupy" activists were due to take part in a rally.
Organisers were bringing a left-wing alliance of protesters from across Germany and the rest of Europe to voice their anger at the ECB's role in austerity measures in EU member states, most recently Greece.
Police set up a cordon of barbed wire outside the bank's new 185m (600ft) double-tower skyscraper, next to the River Main.
But hopes of a peaceful rally were dashed as clashes began early on Wednesday.
Tyres and rubbish bins were set alight and police responded with water cannon as firefighters complained they were unable to get to the fires to put them out.
Police spokeswoman Claudia Rogalski spoke of an "aggressive atmosphere".
The ECB's new headquarters cost an estimated €1.3bn (£930m; $1.4bn) to build and is the new home for thousands of central bankers.
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Quote from: Syt on March 18, 2015, 04:46:10 AM
See, mono, this is a riot:
:D
Though "Blockupy" :bleeding:
Quote from: garbon on March 18, 2015, 04:52:53 AM
Though "Blockupy" :bleeding:
Ed suffers from this as well.
Best time of the year to be out of Frankfurt. :)
New ECB location is less central so there's less trouble. The old one was two stops away from the Central Station.
Though, they don't seem to be blocking any roads...:huh:
Quote from: Sheilbh on March 18, 2015, 07:34:51 AM
Though, they don't seem to be blocking any roads...:huh:
:hmm:
I mean I can't say on that 2nd one, but the 3rd photo seems to show people marching in the street. :unsure:
Quote from: Sheilbh on March 18, 2015, 07:34:51 AM
Though, they don't seem to be blocking any roads...:huh:
It kind of looks like they piled up a bunch of shit in the middle of the road and lit it on fire to me. That strikes me as a possible obstacle on German Mono's commute.
Quote from: Valmy on March 18, 2015, 07:38:34 AM
Quote from: Sheilbh on March 18, 2015, 07:34:51 AM
Though, they don't seem to be blocking any roads...:huh:
It kind of looks like they piled up a bunch of shit in the middle of the road and lit it on fire to me. That strikes me as a possible obstacle on German Mono's commute.
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From Bild :)
Quote from: Sheilbh on March 18, 2015, 07:34:51 AM
Though, they don't seem to be blocking any roads...:huh:
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Unlike Mono I consider this a necessary evil of democracy. I rather have few burned police cars and hurt police officers occasionally due to idiots rioting than limiting the right to protest against whatever grievance one can think of.
A police speaker says it's "a new quality of violence." Some former police have replied, "Meh, we've had MUCH worse in the past." (Personally, I think the protests against nuclear power/weapons in the 80s or the between left scene and police in Hamburg's Hafenstraße were bigger/worse than this.)
Quote from: Zanza on March 18, 2015, 01:07:15 PM
Unlike Mono I consider this a necessary evil of democracy. I rather have few burned police cars and hurt police officers occasionally due to idiots rioting than limiting the right to protest against whatever grievance one can think of.
I don't see the conflict. The right to burn cop cars and hurt cops is limited. The right to protest peacefully is not.
Quote from: Syt on March 18, 2015, 04:46:10 AM
See, mono, this is a riot:
http://www.bbc.com/news/world-europe-31938592 (http://www.bbc.com/news/world-europe-31938592)
QuoteGermany riot in Frankfurt targets new ECB headquarters
Dozens of people have been hurt and some 350 people arrested as anti-austerity demonstrators clashed with police in the German city of Frankfurt.
Police cars were set alight and stones were thrown in a protest against the opening of a new base for the European Central Bank (ECB).
Violence broke out close to the city's Alte Oper concert hall hours before the building's official opening.
Thousands of "Blockupy" activists were due to take part in a rally.
Organisers were bringing a left-wing alliance of protesters from across Germany and the rest of Europe to voice their anger at the ECB's role in austerity measures in EU member states, most recently Greece.
Police set up a cordon of barbed wire outside the bank's new 185m (600ft) double-tower skyscraper, next to the River Main.
But hopes of a peaceful rally were dashed as clashes began early on Wednesday.
Tyres and rubbish bins were set alight and police responded with water cannon as firefighters complained they were unable to get to the fires to put them out.
Police spokeswoman Claudia Rogalski spoke of an "aggressive atmosphere".
The ECB's new headquarters cost an estimated €1.3bn (£930m; $1.4bn) to build and is the new home for thousands of central bankers.
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Damn those Muslims! Another failure of MultiCulti! :(
What about when the Muslims slaughtered the people of Amorium? Were they failures of multiculti then?
All rioters in free countries should fucking hang. Stick to legal means, faggots.
Quote from: Syt on March 18, 2015, 04:46:10 AM
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....
That demonstration was clearly Not carbon neutral. <_<
Quote from: mongers on March 18, 2015, 05:06:06 PM
Quote from: Syt on March 18, 2015, 04:46:10 AM
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....
That demonstration was clearly Not carbon neutral. <_<
:homestar:
What was the appeal of homestar runner?
Quote from: Valmy on March 18, 2015, 01:57:39 PM
What about when the Muslims slaughtered the people of Amorium? Were they failures of multiculti then?
I don't know where Amorium is.
Quote from: Razgovory on March 18, 2015, 07:08:13 PM
Quote from: Valmy on March 18, 2015, 01:57:39 PM
What about when the Muslims slaughtered the people of Amorium? Were they failures of multiculti then?
I don't know where Amorium is.
Central Anatolia, IIRC.
Well shouldn't it be was?
http://www.economist.com/news/europe/21647691-greece-looks-china-and-russia-help-cannot-get-around-its-euro-zone-partners-running-out
QuoteGreece's cash crunch
Running out of room
Greece looks to China and Russia for help but cannot get around its euro zone partners
Apr 1st 2015 | ATHENS | Europe
ALEXIS TSIPRAS, the Greek prime minister, and his radical Syriza party are beginning to feel the heat. Two months of bluster by Greece's first left-wing government have failed to produce the results it wanted. Those include an injection of fresh cash from the country's current €172 billion ($185 billion) bail-out programme, and a new deal with the European Union and the International Monetary Fund (IMF) that would allow Athens, not its creditors, to decide on future economic reforms.
Greece's eurozone partners are still waiting for Athens to come up with details, promised two weeks ago, on the country's deteriorating public finances. Mr Tsipras has promised Greek voters that Syriza has banned the hated "troika" of bail-out monitors (from the European Commission, the IMF and the European Central Bank) from Athens. To protect that political narrative, a team of mid-level officials from the three institutions sits ensconced in a four-star Athens hotel, gathering information by exchanging e-mails with their finance ministry counterparts. The ministry itself is strictly off-limits. "This system works quite well," claims Dimitris Mardas, the budget minister. The visitors disagree, complaining about delays and inaccurate replies that could be avoided if they were allowed to meet Greek colleagues face-to-face.
Meanwhile, a three-member Greek team of senior economists in Brussels does the actual negotiating with the troika. Not much progress has been made. European officials criticised Greek revenue projections, for example, as over-optimistic. Yet officials in Athens claim that all is well and that a deal could be wrapped up as early as next week, opening the way for a cash handout of about €2 billion later this month.
Greece is getting desperately short of cash. It was a stretch last month to pay pensions and civil servants' wages after repaying a €1.4 billion IMF loan instalment. Another €450m must be paid to the IMF on April 9th. Foreign investors must be repaid about €700m when a €1.4 billion treasury bill expires on April 14th. If both payments are made there will probably not be enough left in the government's coffers to pay wages and pensions in April, according to officials at the central bank.
Mr Tsipras is hunting for new potential sources of financial support. One is China, which invested about €100m in two recent issues of T-bills as a token of goodwill. That gesture followed the Syriza government's decision to revive the privatisation of the port of Piraeus, which China's Cosco shipping group is keen to buy. Giannis Dragasakis, the deputy premier, returned from a visit to Beijing last week with a promise of more purchases of Greek T-bills by Chinese state financial institutions.
Another option is Russia. Mr Tsipras has brought forward to next week a visit to Moscow that had been set for May. In an interview with Tass, the Russian news agency, he said that Greece opposes EU sanctions against Russia, which badly hit Greek fruit exporters. He added that Greece wants to participate in Russia's project of building a second gas pipeline across the Black Sea to Turkey. Russia's foreign minister, Sergey Lavrov, told his visiting Greek counterpart Nikos Kotzias in February that a Greek request for a loan would be "considered".
Yet if Mr Tsipras did pull off a deal in Moscow, Greece's European creditors would push all the harder to protect their influence. They would be more likely to keep their bail-out funds out of his reach. Greece may consider Russia an option, but it is one they cannot turn to without alienating the countries they ultimately need to placate: their euro zone partners.
http://www.telegraph.co.uk/finance/economics/11509302/Greece-threatens-international-default-without-fresh-bail-out-cash.html
QuoteThe Greek government has threatened to default on its loans to the International Monetary Fund, as Athens continued its battle to convince creditors for a fresh injection of bail-out cash.
Greece's interior minister told Germany's Spiegel magazine, his country would not respect a looming €450m loan repayment to the fund on April 9, without a release of much-needed bail-out funds.
"If no money is flowing on April 9, we will first determine the salaries and pensions paid here in Greece and then ask our partners abroad to achieve consensus that we will not pay €450 million to the IMF on time," said Nikos Voutzis.
The cash-strapped government has struggled to keep up with its wage and pensions obligations having agreed a bail-out extension on February 20.
Athens insists it has enough money to last it until the middle of April, but a final agreement on any bail-out deal is unlikely to be secured before the end of the month.
A Greek government spokesperson later denied the reports of a deliberate default, saying the country still hoped for a "positive outcome" to its debt negotiations.
"If no money is flowing on April 9, we will first determine the salaries and pensions paid here in Greece and then ask our partners abroad to achieve consensus that we will not pay €450 million to the IMF on time," said Nikos Voutzis."
:lol: These guys are a bad joke.
EU numbers on deflation and jobs a little better for February.
Quote from: The Brain on March 18, 2015, 04:53:44 PM
All rioters in free countries should fucking hang. Stick to legal means, faggots.
Free countries are too effective at building bureaucracies that specialize in blocking legal means. :(
A committee of the Greek parliament that was set up to investigate the causes of the debt crisis didn't yet come to a conclusion. But they did find that Germany owes them 278.7 billion Euro as reparations for WW2. I wonder how you come up with a number like that. I guess the decimal number is there to suggest objectivity.
Surely the IMF must owe them some reparations too?
Damn euro is weakening again. Fuckers are ruining my house value in my overseas territories. :mad:
Quote from: Zanza on April 07, 2015, 12:09:52 AM
A committee of the Greek parliament that was set up to investigate the causes of the debt crisis didn't yet come to a conclusion. But they did find that Germany owes them 278.7 billion Euro as reparations for WW2. I wonder how you come up with a number like that. I guess the decimal number is there to suggest objectivity.
That figure was provided by the Deputy Finance Minister and is based on a Finance Ministry Commission (set up by the previous government) that's reported recently. It was to the Parliamentary Commission into reparations and re-appropriation of historical artefacts.
It's nice to see a Greek government moan about something other than the fucking Elgin Marbles :lol: <_<
As I've said I think on the forced loan at least I think they've got a case - but that's a small element of the total.
QuoteDamn euro is weakening again. Fuckers are ruining my house value in my overseas territories. :mad:
I bought my holiday Euros last week and have been watching it every day since getting better and better :weep:
Actually going to Greece for the first time, which'll be nice.
Quote from: WSJ
Tumbling Interest Rates in Europe Leaves Some Banks Owing Money on Loans to Borrowers
Subzero rates have put some lenders in an inconceivable position
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Residential properties in Lisbon. As Euribor, an interest-rate benchmark commonly used in the eurozone for setting mortgage rates, heads into negative territory, banks face the possibility of having to pay borrowers. Photo: MARIO PROENCA/Bloomberg News
By Patricia Kowsmann in Lisbon and
Jeannette Neumann in Madrid
Updated April 13, 2015 7:13 p.m. ET
71 COMMENTS
Tumbling interest rates in Europe have put some banks in an inconceivable position: owing money on loans to borrowers.
At least one Spanish bank, Bankinter SA, the country's seventh-largest lender by market value, has been paying some customers interest on mortgages by deducting that amount from the principal the borrower owes.
The problem is just one of many challenges caused by interest rates falling below zero, known as a negative interest rate. All over Europe, banks are being compelled to rebuild computer programs, update legal documents and redo spreadsheets to account for negative rates.
Interest rates have been falling sharply, in some cases into negative territory, since the European Central Bank last year introduced measures meant to spur the economy in the eurozone, including cutting its own deposit rate. The ECB in March also launched a bond-buying program, driving down yields on eurozone debt in hopes of fostering lending.
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In countries such as Spain, Portugal and Italy, the base interest rate used for many loans, especially mortgages, is the euro interbank offered rate, or Euribor. The rate is based on how much it costs European banks to borrow from each other.
Banks set interest rates on many loans as a small percentage above or below a benchmark such as Euribor. As rates have declined, sometimes to below zero, some banks have faced the paradox of paying interest to those who have borrowed money from them.
Lenders, hoping to avoid the expense of having to pay borrowers, are turning to central banks for guidance. But what they are hearing is less than comforting.
Portugal's central bank recently ruled that banks would have to pay interest on existing loans if Euribor plus any additional spread falls below zero. The central bank, however, said lenders are free to take "precautionary measures" in future contracts. More than 90% of the 2.3 million mortgages outstanding in Portugal have variable rates linked to Euribor.
In Spain, a spokesman for the central bank said it is studying the issue.
The vast majority of Spanish home mortgages have rates that rise and fall tied to 12-month Euribor, said Irene Peña, an economist with Spain's mortgage association. That rate stands at 0.187%.
Bankers in Italy said they are awaiting guidance from their local banking association, because loan contracts don't include any clause on what happens if benchmark rates go below zero. About half of the mortgages outstanding in Italy have variable rates, most of them linked to Euribor, according to mortgage broker Mutuionline. Some other countries, such as Germany, often use fixed rates.
In Spain, Bankinter has been forced to deduct some clients' mortgage principal payments because an interest-rate benchmark tied to Switzerland's currency has dipped into negative territory.
In January, the Swiss National Bank ended a 3½-year policy of capping the strength of the franc against the euro, sending the Swiss currency soaring against the common currency and U.S. dollar, and cut bank deposit rates into negative territory. The move to end the cap on the franc was designed to relieve pressure on Swiss exporters, many of which are reliant on the eurozone for sales.
During Spain's home-building frenzy in the middle of the last decade, Bankinter issued mortgages tied to the one-month Swiss franc iteration of the London interbank offered rate, or Libor. At the time, clients were attracted to the offer because Swiss franc Libor was lower than Euribor, the traditional reference for Spanish mortgages.
"I'm going to frame my bank statement, which shows that Bankinter is paying me interest on my mortgage," said a customer who lives in Madrid. "That's financial history."
The client in 2006 took out a roughly €500,000 ($530,000) home mortgage loan based on Swiss franc Libor, plus 0.5 percentage point. Since then, Swiss franc Libor has fallen far enough into negative territory to make his mortgage rate negative.
It is hardly a windfall for this customer, however, because, while Swiss franc Libor has fallen, the Swiss franc itself has risen in value against the euro. That means the value in euros of the total mortgage debt he owes Bankinter has also increased, because that debt is denominated in Swiss francs.
Bankinter has few such mortgages tied to a negative Libor rate, a spokesman said, declining to provide a figure.
An executive at another Spanish bank said the lender in recent months has started to put in place an interest-rate floor on thousands of short-term business loans that are tied to short-term variations of Euribor. Two-month Euribor, is at minus 0.004%. For new loans, the bank is increasing the cushion it charges customers above Euribor.
Hundreds of thousands of additional loans would be affected if medium-term Euribor rates enter negative territory, the executive said. The six-month rate is currently at 0.078%.
Meanwhile, some borrowers in Spain haven't found relief.
A Madrid judge in November ruled against a client of Banco Santander SA who claimed that Spain's largest bank inappropriately established a floor on his mortgage in 2013 and therefore owed him money. The plaintiff had taken out a mortgage in 2005 that offered a fixed rate of 2% in the first year and Euribor minus 1.1 percentage points thereafter. The plaintiff said he was now owed money from the bank.
To buttress his argument that a bank shouldn't have to pay a borrower for a loan, the judge quoted from a June 2014 statement from the Bank of Spain that "a payment in favor of the client in these situations would never apply, but rather the application of an interest rate of zero by the entity." The Bank of Spain spokesman said the statement cited in the case was issued by the central bank's customer-complaints service, which typically responds to particular cases. The Bank of Spain hasn't issued a systemwide decision on how banks should treat negative interest rates, he said.
In Portugal, interest rates on most mortgages are linked to a monthly average of three- and six-month Euribor. Both have been steadily sinking and are hovering just above zero.
João Coelho da Silva, a 53-year-old real-estate agent in Lisbon, has seen his mortgage payments fall from about €450 a month when his loan began in 2008 to €235 now, thanks to a falling three-month Euribor. "With the economy in such a bad state, these monthly savings are more than welcomed," Mr. da Silva said.
Time again for an Iberi-bubble.
Looks like the latest round of talks between the Eurozone and Greece have failed and there won't be a deal on further financial aid during the EU summit on April 24th. That leaves Greece in a precarious situation where they could face default in the next weeks. Let's see.
In general the risk of contagion is no longer seen with a default, but rather with giving in to the demands and brinkmanship of the Greek government. So there is a certain willingness not to bail out Greece in the last minute this time.
I don't think it is just about Greece anymore. If Greek voters elect a radical left party and then are allowed off the hook, the message to voters in other countries is to do the same. If Spain, Italy, Portugal and others all want their debt to just magically disappear, that could be a real problem.
Quote from: Zanza on April 07, 2015, 12:09:52 AM
A committee of the Greek parliament that was set up to investigate the causes of the debt crisis didn't yet come to a conclusion. But they did find that Germany owes them 278.7 billion Euro as reparations for WW2. I wonder how you come up with a number like that. I guess the decimal number is there to suggest objectivity.
Isn't their claim supposedly based on a loan the Nazis forced them to give that was never repaid, and this is the result of 70 years of interest or something like that?
@Tim: Only about 10 billion. The rest is reparations for loss of life and property.
@Mono: Exactly.
Quote from: Monoriu on April 15, 2015, 03:31:21 AM
I don't think it is just about Greece anymore. If Greek voters elect a radical left party and then are allowed off the hook
I don't get this narrative, how is Greece being "allowed off the hook"?
If Greece were a normal country their present problems while severe would not provoke an immediate crisis because they could just issue debt. They are running a primary surplus, no question it could be done in theory.
It can't be done in practice though because Greece is not a normal country, it is a Eurozone country. They can't sell their own domestic debt, because the ECB won't let them - the ECB forbid Greek bank members of the EZ to use Greek debt as collateral, and it has instructed Greek banks not to increase their stock of Greek government bonds. I.e. the ECB is artificially cutting off any financial options for the Greek government other than getting money from EU creditors or the IMF.
The sryiza government is a train wreck, no doubt - it is amateurish and full of suspiciously Marxist ideologues. But the main problem here is an always has been a boneheaded EU policy that has discredited all other political forces and reinforced the crisis. The current policy is the most idiotic of all - it seeks to force the country into a settlement that settles nothing and keeps the underlying problem- an unmanageable stock of debt - intact and festering.
At this point, hard to see a better option for Greece than outright default.
Their bonds were trading at a yield of 40% before the bailout Joan. If they tried to solve their problems by issuing new debt the interest bill would kill them.
In related news Italy's debt/GDP is now 132%.
They should have defaulted years ago.
Quote from: Admiral Yi on April 15, 2015, 11:35:25 AM
Their bonds were trading at a yield of 40% before the bailout Joan. If they tried to solve their problems by issuing new debt the interest bill would kill them.
If they had their own central bank that would treat domestic debt as good collateral, then the commercial banks would buy on good terms. Sure this would imply creeping debt monetization but so what - there are bigger problems.
Quote from: Zanza on April 15, 2015, 11:36:46 AM
They should have defaulted years ago.
Yes.
But the "responsible" governments wanted to be good Europeans and play ball.
That was the time for EZ governments and authorities to step in and say good enough we will cut you a break.
I get why for moral hazard reasons the EZ feels it has to play hardball with Syriza but that just underlines the folly of failing to address this much earlier.
No comments about Draghi being doused with confetti by a Femen activist today? :P
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Quote from: The Minsky Moment on April 15, 2015, 11:29:38 AM
I don't get this narrative, how is Greece being "allowed off the hook"?
maybe because the greeks are notoriously bad at paying taxes and the state is notorious for wasting what little money it gets, making it look as if the greek state (of which the greeks still elect the government) is spending the money but letting the others pick up the tab when it's time to pay up. Make the Greeks pay their taxes before spending ours in other words. And more importantly, make the prove that they've changed their mentality in regards to the collecting and spending of money cause otherwise they'll be begging again before too long
She did the V sign? What a dork.
Quote from: The Minsky Moment on April 15, 2015, 11:39:11 AM
If they had their own central bank that would treat domestic debt as good collateral, then the commercial banks would buy on good terms. Sure this would imply creeping debt monetization but so what - there are bigger problems.
Do you think that's sufficient demand to take care of their financing needs/wants?
Quote from: Admiral Yi on April 15, 2015, 11:35:56 AM
In related news Italy's debt/GDP is now 132%.
10 year yield - 1.03%.
Germany's selling debt to 2024 at negative and responding to Commossion and IMF criticisms of their current account surplus and lack of investment said it's true, but spending now would be pro-cyclical. Just like every other bit of Eurozone economic policy.
Quote from: Valmy on April 15, 2015, 01:11:41 PM
She did the V sign? What a dork.
she's ordering two beers
Quote from: The Minsky Moment on April 15, 2015, 11:41:26 AM
That was the time for EZ governments and authorities to step in and say good enough we will cut you a break.
The problem with that approach would have been what crazy ivan says: The Greeks would just have continued as it is. Without a common economic and fiscal policy in the EZ (and no one seriously pushes for that), the only lever the other governments have is the bailout program as it is.
Quote from: Sheilbh on April 15, 2015, 02:17:51 PM
Germany's selling debt to 2024 at negative and responding to Commossion and IMF criticisms of their current account surplus and lack of investment said it's true, but spending now would be pro-cyclical.
State investments will never be able to compensate the lack of private investment in Germany. I am not sure how to address the fact that it is more profitable for German companies to invest abroad. Germans are just miserable consumers and our aging society doesn't look like that will change anytime soon.
Aging society also means that Germany has a strategic goal to lessen debt to have a long-term viability of the state budget considering that our workforce will start to shrink soon. I think the current plan is to go from like 78% of GDP to about 62% of GDP in the next 5 years...
Quote from: Zanza on April 15, 2015, 03:43:05 PM
Quote from: Sheilbh on April 15, 2015, 02:17:51 PM
Germany's selling debt to 2024 at negative and responding to Commossion and IMF criticisms of their current account surplus and lack of investment said it's true, but spending now would be pro-cyclical.
State investments will never be able to compensate the lack of private investment in Germany. I am not sure how to address the fact that it is more profitable for German companies to invest abroad. Germans are just miserable consumers and our aging society doesn't look like that will change anytime soon.
Aging society also means that Germany has a strategic goal to lessen debt to have a long-term viability of the state budget considering that our workforce will start to shrink soon. I think the current plan is to go from like 78% of GDP to about 62% of GDP in the next 5 years...
Not much time but while I don't think public investment can compensate for private investment it has a role. Especially given that I understand German infrastructure is in pretty bad state - like the Kiel canal having to close because the locks broke down which hadn't happened in decades not uncoincidentally maintenance spending is now around 20% what it was a few years ago. As the IMF has put it Germany could afford 'much-needed public investment in infrastructure, without violating fiscal rules'. It's a baffling choice not to.
Private investment's an issue everywhere and it's not entirely clear why - I think in the UK and US at least it's possibly to do with remuneration. But of the Eurozone Germany's productivity growth through investment is the lowest - lower than Greece. Germany's productivity growth has come through wage restraint (in part, perhaps, because the country experienced a sort-of internal globalisation).
I think the bigger problem is trying to copy the German model in a far larger economic unit. Schaeuble today said the biggest success of Greece's reforms was lower wage costs and that risked being undone. The problem I see with that view is that according to the Commission in the particular case of Greece, labour costs are a very small part of overall export costs (hence why, despite that reduction, Greek exports haven't recovered). Then there's the paradox of thrift problem within the Eurozone and beyond that I'm just not that it's a viable model for a currency union that's in the developed world and possibly the world's biggest or second biggest economy. I think you have to look more broadly for the productivity gains.
The other problem is that, you're right German money may be more profitable elsewhere - but that's precisely what got us into trouble in the first place. It was those imbalances of German money looking for a return that dangerously inflated Irish and Spanish banks and credit boom. Just as surely as Chinese, developing market and oil producer money globally helped drive the credit boom in the US and the UK. Ultimately you can no more blame the debtor than the creditor in this situation, deep distortions in savings and investment somewhere will lead to irrational debt accumulation/credit booms somewhere else. If we don't fix that then it's only a matter of time before we're back in the same cycle. And I think the Eurozone - even with the steps made towards banking union - could be more at risk than most other markets because of how fragmented banking supervision still is and free movement of capital. If banks and businesses in Germany can't get a return domestically, of course they're going to banks and businesses and people in other countries - despite how unstable this may make the Eurozone there is nothing that either the debtor or creditor country can do, due to free movement of capital.
The ageing thing is interesting because by definition an ageing society should consume more. Pensioners live on their savings. Old people stop saving and start spending. My understanding is that while that's held true in most economies there's something particular in the German that means it isn't happening at anywhere near the rate it is elsewhere. But from what I've read no-one has any idea what.
Quote from: Sheilbh on April 15, 2015, 04:14:03 PM
The other problem is that, you're right German money may be more profitable elsewhere - but that's precisely what got us into trouble in the first place. It was those imbalances of German money looking for a return that dangerously inflated Irish and Spanish banks and credit boom. Just as surely as Chinese, developing market and oil producer money globally helped drive the credit boom in the US and the UK. Ultimately you can no more blame the debtor than the creditor in this situation, deep distortions in savings and investment somewhere will lead to irrational debt accumulation/credit booms somewhere else. If we don't fix that then it's only a matter of time before we're back in the same cycle. And I think the Eurozone - even with the steps made towards banking union - could be more at risk than most other markets because of how fragmented banking supervision still is.
So we're fixing a problem that was caused by cheap credit with cheap credit.
Quote from: The Minsky Moment on April 15, 2015, 11:29:38 AM
Quote from: Monoriu on April 15, 2015, 03:31:21 AM
I don't think it is just about Greece anymore. If Greek voters elect a radical left party and then are allowed off the hook
I don't get this narrative, how is Greece being "allowed off the hook"?
If Greece were a normal country their present problems while severe would not provoke an immediate crisis because they could just issue debt. They are running a primary surplus, no question it could be done in theory.
It can't be done in practice though because Greece is not a normal country, it is a Eurozone country. They can't sell their own domestic debt, because the ECB won't let them - the ECB forbid Greek bank members of the EZ to use Greek debt as collateral, and it has instructed Greek banks not to increase their stock of Greek government bonds. I.e. the ECB is artificially cutting off any financial options for the Greek government other than getting money from EU creditors or the IMF.
The sryiza government is a train wreck, no doubt - it is amateurish and full of suspiciously Marxist ideologues. But the main problem here is an always has been a boneheaded EU policy that has discredited all other political forces and reinforced the crisis. The current policy is the most idiotic of all - it seeks to force the country into a settlement that settles nothing and keeps the underlying problem- an unmanageable stock of debt - intact and festering.
At this point, hard to see a better option for Greece than outright default.
If Greece is allowed to issue debt, isn't that like printing Euros? Sounds reasonable for ECB to prohibit Greece from doing so, otherwise they'll just print Euros endlessly until their debt disappears.
Quote from: Monoriu on April 15, 2015, 08:36:24 PM
If Greece is allowed to issue debt, isn't that like printing Euros?
No. The opposite, if anything.
Quote from: Admiral Yi on April 15, 2015, 08:41:40 PM
Quote from: Monoriu on April 15, 2015, 08:36:24 PM
If Greece is allowed to issue debt, isn't that like printing Euros?
No. The opposite, if anything.
What is the rationale for ECB to not let Greece sell their own debt? :unsure:
Quote from: Monoriu on April 15, 2015, 08:51:16 PM
What is the rationale for ECB to not let Greece sell their own debt? :unsure:
I don't think they can really stop them, can they?
But I guess because the ECB is trying to get inflation up.
Quote from: Monoriu on April 15, 2015, 08:51:16 PM
What is the rationale for ECB to not let Greece sell their own debt? :unsure:
I imagine it's that the original rationale of this entire deal was to get Greek deficits down to a level where the debt burden was sustainable.
Quote
http://www.zerohedge.com/news/2015-04-15/meet-mario-draghis-attacker-her-own-words (http://www.zerohedge.com/news/2015-04-15/meet-mario-draghis-attacker-her-own-words)
(https://languish.org/forums/proxy.php?request=http%3A%2F%2Fwww.zerohedge.com%2Fsites%2Fdefault%2Ffiles%2Fimages%2Fuser5%2Fimageroot%2F2015%2F04%2Fdraghi%2520attacked%2520woman_0.jpg&hash=46f3432ed670d70119345efaca851826c8c02082)
Quote from: MadImmortalMan on April 15, 2015, 08:54:33 PM
Quote from: Monoriu on April 15, 2015, 08:51:16 PM
What is the rationale for ECB to not let Greece sell their own debt? :unsure:
I don't think they can really stop them, can they?
Of course. The ECB limits the amount of T-Bills they can sell.
This would be the way Europe would get around the problem of not disbursing money to Greece until the end of the program and Greece having a number of short-term payments to make in the meantime - like to the IMF. And there is precedent for it. It's what the ECB did in 2012 when the Samaras government was newly elected and negotiating over the second bailout. But they didn't.
The ECB wanted to keep the pressure on the Greeks to make concessions to get a deal so, yet again the ECB became a political actor rather than behaving like a central bank.
Quote from: The Larch on April 15, 2015, 12:21:30 PM
No comments about Draghi being doused with confetti by a Femen activist today? :P
No boobs, no comments.
Quote from: Tonitrus on April 16, 2015, 01:01:07 AM
No boobs, no comments.
There is obvious g-string.
Some people are never satisfied. :P
Quote from: MadImmortalMan on April 16, 2015, 01:13:39 AM
Quote from: Tonitrus on April 16, 2015, 01:01:07 AM
No boobs, no comments.
There is obvious g-string.
Some people are never satisfied. :P
For a moment I thought it was absolutely amazing that she jumped onto the desk while wearing high heels. The photograph seemed to show that her right foot was wearing high feels. But then I looked at the other foot and realised that she was wearing flat shoes. That was probably a microphone that appeared to be under her right foot.
Quote from: Sheilbh on April 16, 2015, 12:56:47 AM
The ECB wanted to keep the pressure on the Greeks to make concessions to get a deal so, yet again the ECB became a political actor rather than behaving like a central bank.
It acted like a creditor.
I think it acted like a central bank.
Quote from: MadImmortalMan on April 15, 2015, 08:54:33 PM
Quote from: Monoriu on April 15, 2015, 08:51:16 PM
What is the rationale for ECB to not let Greece sell their own debt? :unsure:
I don't think they can really stop them, can they?
But I guess because the ECB is trying to get inflation up.
Unrelated.
Greece is not significant enough to have a material impact on EZ wide inflation.
I'll come back to this thread with more. But just read this fascinating piece from October 1992, so a month or so after we'd been forced out of ERM. On Maastricht and the structure of EMU:
http://www.lrb.co.uk/v14/n19/wynne-godley/maastricht-and-all-that
Quote from: Zanza on April 14, 2015, 01:00:58 PM
In general the risk of contagion is no longer seen with a default, but rather with giving in to the demands and brinkmanship of the Greek government. So there is a certain willingness not to bail out Greece in the last minute this time.
Default within the Eurozone could be okay - interesting S&P have confirmed that according to the way rating agencies work if Greece stopped paying the ECB it wouldn't count as a selective default.
I think there's a lot of overconfidence about Grexit. Arguably what's driving this crisis is that the negotiations are between one side who don't believe Grexit will or can happen and another who think they can contain it if it does.
Edit: Also interesting piece on IMF involvement in the Eurozone crisis which makes you very thankful Mario Draghi's at the ECB now:
https://www.cigionline.org/sites/default/files/cigi_paper_no.61web.pdf
Draghi, the IMF and the Commission have all warned about a Grexit this week. It's on the cards and being publicly discussed now. The IMF and Draghi have also said the EU should shorten and simplify their list of issues in negotiations.
I can't help but feel that all the IMF and ECB talk of 'uncertainty', 'uncharted waters' and emphasising that 'one should not underestimate the risk of a Greek exit' are aimed at one, famously cautious woman - who is, according to Greek sources, the only friend the Greeks have left in Europe :lol:
Edit: Incidentally, on the madness of Germany not taking advantage to invest in infrastructure, apparently the German Economy Ministry says there's more than €150 billion worth of investments in municipalities needed.
According to various rankings, Germany (still?) has among the best infrastructure in the world. Sure, you can always build more. I wonder what the supposed positive benefit for the Eurozone is supposed to be though. Just increased economic activity in Germany that may then trickle down to the other EZ countries? If so, that seems insignificant.
Anyway, Germany has a rapidly aging society and will soon have a shrinking workforce. Using the current windfall to prepare for the next crisis and the predictable loss in economic dynamism when more and more people retire seems sensible. The current debt level is not sustainable long term.
The issue with Germany is not so much insufficient infrastructure expenditure (*cough* USA *cough*) but how the corporatist labor structure, which once was a vehicle for improving worker living standards, turned into a vehicle for coordinated wage suppression as part of national strategy of internal devaluation. There might have been a brief period in the Schroeder era were that might have made sense, but it passed a while ago. Germany is now running current account surpluses of over 7.5 % which in the current context is really not helpful.
Somehow the history of whatever they call the Trente Glorieuses in German has been forgotten - namely that Germany initially regained competitiveness not through wage restraint but by trying to keep the D-mark on the weak side pre-Plaza Accords. When the history of the Euro is written, someone may observe that one of the problems of the Euro was it made German economists go nuts; the latent fear of sharing their currency with Italians and Spaniards drove them into currency perma-hawkishness, thus leading to this voguish but dangerous fascination with internal devaluation as a policy tool.
The era of wage suppression in Germany might finally be over if you follow the latest news. But the corporatist stakeholders are interested in keeping Germany competitive and as our absolute wage levels are still high compared to most countries, they will not let them grow too much.
http://www.ft.com/intl/cms/s/0/b8af9568-d844-11e4-8a68-00144feab7de.html#axzz3XmdN0MWU
When you refer to the pre-Plaza accords weak exchange rate of the DM, the same currently happens. Most economists seem to agree that the Euro is too weak for Germany when seen as a separate unit.
Quote from: Zanza on April 19, 2015, 11:43:44 AM
According to various rankings, Germany (still?) has among the best infrastructure in the world. Sure, you can always build more. I wonder what the supposed positive benefit for the Eurozone is supposed to be though. Just increased economic activity in Germany that may then trickle down to the other EZ countries? If so, that seems insignificant.
I'll add more later. I think broadly you're right it would be relatively low trickle-down benefit - though after 5 years of almost 0% growth even the possible 0.2% benefit to, say France, would be good. The biggest argument for improving German infrastructure is self-interest. My issue with it from a Eurozone perspective is more the monomania it indicates about debt in Berlin that despite problems with interest and 30 year bonds at 2.3% (so quite possible free once inflation's taken into account) there's a huge reluctance to invest.
But yes, Germany has some of the best infrastructure in the world but it is one of the only major advanced economies that's persistently declining in the ratings and has been for about 10 years the other exception is the US.
German public investment is at a historic low and compared with similar nations - ie. advanced export focused economies - is investing significantly less. As an export and trade driven nation infrastructure matters even more and your competitors are putting money into getting equal with or overtaking Germany, while Germany - despite being able to fund hundreds of billions of Euros worth without breaking the fiscal rules - is continuing to decline in the ratings. I think Germany's got an economic advantage in her infrastructure but no right to successfully compete if it's allowed to continue to decline.
Quote from: Zanza on April 19, 2015, 02:05:10 PM
The era of wage suppression in Germany might finally be over if you follow the latest news.
Yes. Too late, hopefully not too little.
QuoteWhen you refer to the pre-Plaza accords weak exchange rate of the DM, the same currently happens. Most economists seem to agree that the Euro is too weak for Germany when seen as a separate unit.
Same now but look how long it took before the ECB could break through the Bundesbankish* lobby. Way behind the UK, US, Japan. The Euro should be too weak for Germany now. That is what it means to have a unified currency bloc. No one frets in the US when inflation goes up in one state or region. It's part of the process of getting to balance.
*because the tendency is not a purely German phenomenon.
Is there more than the one study by the WEF that actually shows a decline in German infrastructure?
Worldbank "Logistics Performance Index" rates German infrastructure best in the world.
WEF "Global Competitiveness Index" rates German infrastructure seventh and shows a declining trend.
When I look at a report by a German institute, it ranked Germany third in the world (after HK and Singapore). But what is more interesting is the longer term trend they showed: namely that Germany made massive progress since reunification in 1990 when it was 14th.
I wonder if the people that say Germany has declining public infrastructure ever drove on the perfect autobahns we built in Eastern Germany or took the new train lines from e.g. Hanover to Berlin. I would definitely agree that too much infrastructure was built in Eastern Germany and too little in Western Germany in the last two decades or so. But too little in general...hmm.
Quote from: Zanza on April 19, 2015, 02:05:10 PM
The era of wage suppression in Germany might finally be over if you follow the latest news. But the corporatist stakeholders are interested in keeping Germany competitive and as our absolute wage levels are still high compared to most countries, they will not let them grow too much.
Absolute wages only tells you part of the story. What you really need is unit labor costs.
Zanza, have you read this article? http://www.zeit.de/mobilitaet/2014-09/deutsche-bahn-bruecken-zustand
Quote from: Syt on April 19, 2015, 02:23:48 PM
Zanza, have you read this article? http://www.zeit.de/mobilitaet/2014-09/deutsche-bahn-bruecken-zustand
I read it now. The article says it is not economical to renovate a lot of the railway bridges in Germany and it is more economical to build a new bridge. It also says that all bridges are safe. I don't see why this would be alarming at all. I expect that a state-owned company like DB evaluates whether renovation or replacement is the more economical option for each bridge. It also doesn't say much about the general state of infrastructure. Even a perfectly sound bridge might be extremely expensive to maintain and could be replaced cheaper with a new bridge.
Quote from: Admiral Yi on April 19, 2015, 02:19:25 PM
Quote from: Zanza on April 19, 2015, 02:05:10 PM
The era of wage suppression in Germany might finally be over if you follow the latest news. But the corporatist stakeholders are interested in keeping Germany competitive and as our absolute wage levels are still high compared to most countries, they will not let them grow too much.
Absolute wages only tells you part of the story. What you really need is unit labor costs.
German unit labor costs are probably pretty high but German labor productivity is high too. I.e unit labor costs should be high.
Interesting:
http://www.reuters.com/article/2015/04/20/ecb-policy-greece-idUSL5N0XH35120150420
Constancio has also been breaking the rules in his comments on the effects of fiscal consolidation recently.
http://www.zerohedge.com/news/2015-04-20/stunned-greeks-react-initial-capital-controls-and-decree-confiscate-reserves-and-the (http://www.zerohedge.com/news/2015-04-20/stunned-greeks-react-initial-capital-controls-and-decree-confiscate-reserves-and-the)
Quote
And the punchline is that the use of confiscated proceeds is unclear: the government says it is to pay pensions and wages, but recall that the same government recently confiscated pensions to repay the IMF, so according to the chain of logic, the government first raided pensions, and now municipalities, just to repay the dreaded Troika.
Quote from: citizen k on April 20, 2015, 06:31:27 PM
http://www.zerohedge.com/news/2015-04-20/stunned-greeks-react-initial-capital-controls-and-decree-confiscate-reserves-and-the (http://www.zerohedge.com/news/2015-04-20/stunned-greeks-react-initial-capital-controls-and-decree-confiscate-reserves-and-the)
Quote
And the punchline is that the use of confiscated proceeds is unclear: the government says it is to pay pensions and wages, but recall that the same government recently confiscated pensions to repay the IMF, so according to the chain of logic, the government first raided pensions, and now municipalities, just to repay the dreaded Troika.
The author at zerohedge.com should learn what the word "fungible" means (beside the fact that it means his argument is silly).
Quote from: The Minsky Moment on April 19, 2015, 03:50:42 PM
German unit labor costs are probably pretty high but German labor productivity is high too. I.e unit labor costs should be high.
Unit labor costs incorporate productivity. They are the labor costs to produce a unit of output. Theoretically, German unit labor costs should trend towards parity with ROW.
I like how this thread is now quite dead, given that Grexit is more likely now than ever.
Ever?
Just realised I'll be on a Greek Island when thir next IMF payment is due... :ph34r:
Varoufakis writing for Project Syndicate:
QuoteA New Deal for Greece
ATHENS – Three months of negotiations between the Greek government and our European and international partners have brought about much convergence on the steps needed to overcome years of economic crisis and to bring about sustained recovery in Greece. But they have not yet produced a deal. Why? What steps are needed to produce a viable, mutually agreed reform agenda?
We and our partners already agree on much. Greece's tax system needs to be revamped, and the revenue authorities must be freed from political and corporate influence. The pension system is ailing. The economy's credit circuits are broken. The labor market has been devastated by the crisis and is deeply segmented, with productivity growth stalled. Public administration is in urgent need of modernization, and public resources must be used more efficiently. Overwhelming obstacles block the formation of new companies. Competition in product markets is far too circumscribed. And inequality has reached outrageous levels, preventing society from uniting behind essential reforms.
This consensus aside, agreement on a new development model for Greece requires overcoming two hurdles. First, we must concur on how to approach Greece's fiscal consolidation. Second, we need a comprehensive, commonly agreed reform agenda that will underpin that consolidation path and inspire the confidence of Greek society.
Beginning with fiscal consolidation, the issue at hand concerns the method. The "troika" institutions (the European Commission, the European Central Bank, and the International Monetary Fund) have, over the years, relied on a process of backward induction: They set a date (say, the year 2020) and a target for the ratio of nominal debt to national income (say, 120%) that must be achieved before money markets are deemed ready to lend to Greece at reasonable rates. Then, under arbitrary assumptions regarding growth rates, inflation, privatization receipts, and so forth, they compute what primary surpluses are necessary in every year, working backward to the present.
The result of this method, in our government's opinion, is an "austerity trap." When fiscal consolidation turns on a predetermined debt ratio to be achieved at a predetermined point in the future, the primary surpluses needed to hit those targets are such that the effect on the private sector undermines the assumed growth rates and thus derails the planned fiscal path. Indeed, this is precisely why previous fiscal-consolidation plans for Greece missed their targets so spectacularly.
Our government's position is that backward induction should be ditched. Instead, we should map out a forward-looking plan based on reasonable assumptions about the primary surpluses consistent with the rates of output growth, net investment, and export expansion that can stabilize Greece's economy and debt ratio. If this means that the debt-to-GDP ratio will be higher than 120% in 2020, we devise smart ways to rationalize, re-profile, or restructure the debt – keeping in mind the aim of maximizing the effective present value that will be returned to Greece's creditors.
Besides convincing the troika that our debt sustainability analysis should avoid the austerity trap, we must overcome the second hurdle: the "reform trap." The previous reform program, which our partners are so adamant should not be "rolled back" by our government, was founded on internal devaluation, wage and pension cuts, loss of labor protections, and price-maximizing privatization of public assets.
Our partners believe that, given time, this agenda will work. If wages fall further, employment will rise. The way to cure an ailing pension system is to cut pensions. And privatizations should aim at higher sale prices to pay off debt that many (privately) agree is unsustainable.
By contrast, our government believes that this program has failed, leaving the population weary of reform. The best evidence of this failure is that, despite a huge drop in wages and costs, export growth has been flat (the elimination of the current-account deficit being due exclusively to the collapse of imports).
Additional wage cuts will not help export-oriented companies, which are mired in a credit crunch. And further cuts in pensions will not address the true causes of the pension system's troubles (low employment and vast undeclared labor). Such measures will merely cause further damage to Greece's already-stressed social fabric, rendering it incapable of providing the support that our reform agenda desperately needs.
The current disagreements with our partners are not unbridgeable. Our government is eager to rationalize the pension system (for example, by limiting early retirement), proceed with partial privatization of public assets, address the non-performing loans that are clogging the economy's credit circuits, create a fully independent tax commission, and boost entrepreneurship. The differences that remain concern how we understand the relationships between the various reforms and the macro environment.
None of this means that common ground cannot be achieved immediately. The Greek government wants a fiscal-consolidation path that makes sense, and we want reforms that all sides believe are important. Our task is to convince our partners that our undertakings are strategic, rather than tactical, and that our logic is sound. Their task is to let go of an approach that has failed.
Read more at http://www.project-syndicate.org/commentary/greece-debt-deal-by-yanis-varoufakis-2015-04#LOF31yADLfTbaJzt.99
Syndicate was awesome. :wub:
Quote from: Admiral Yi on April 21, 2015, 11:12:20 AM
Unit labor costs incorporate productivity. They are the labor costs to produce a unit of output. Theoretically, German unit labor costs should trend towards parity with ROW.
Quite so. My bad.
Anyways, looking at the OECD numbers, with 2005 indexed at 100, Germany is at 100 for 1995, 101 for 2000, 104 for 2010 and 111 today. Basically 11% increase over 20 years.
By comparison Italy is 81, 86, 114, 122. 50% increase over 20 years.
France is 94 to 115 over the same period - 22% increase
UK - 80 to 120. 50% increase.
Just focusing on the increase since 2005, the German increase is one of the lowest in Europe; other than the Czechs, Ireland, Spain and Portugal. (i.e. the restructuring economies). BTW the Greeks are not far behind,.
In fairness to Germany it could be argued that their ULC were improperly elevated by unification; the data seem to support this because there is a big increase in German ULC in 1991-1993. The need to squeeze that out IIRC was cited as justification for the Schroeder reforms. But 25 years out it shouldn't be such a significant influence anymore.
I'm not sure Germany's international competitiveness is best determined by comparison to the rest of Europe.
http://www.nytimes.com/2015/04/24/opinion/nikos-konstandaras-greeces-eerie-calm.html
QuoteGreece's Eerie Calm
APRIL 23, 2015
Nikos Konstandaras
As Greece teeters on the edge of default and possible exit from the European common currency, foreign officials cannot understand how Greek government officials can appear so sanguine.
An explanation of the government's motives and behavior can be found in spheres beyond the economy, where the government has moved swiftly to impose its agenda on domestic and foreign policy — to the alarm of allies, opposition parties and investors.
Nowhere has the government shown an appetite to compromise. This mentality is rooted in a century of conflict between left and right, when foreign powers helped right-wing governments maintain power at the expense of leftist forces. Now, with a radical leftist party, Syriza, in power for the first time, working through this situation could be as self-destructive as it is inevitable.
Since its election on Jan. 25, Syriza has adopted programs aimed at easing some of the effects of austerity, while promising to crack down on tax evasion, particularly by the rich.
It has taken a more tolerant policy toward migrants and refugees, tested relations with foreign partners, and frozen or rolled back a number of reforms, not only in the economy.
In education, a new law would give students and political parties greater influence in the running of universities, restoring a model adopted in the early 1980s that seriously undermined universities (and was changed only in 2011).
The police have been instructed to tolerate self-described "anti-establishment" activists, to the point that protesters painted insults against the police on riot squad buses.
On judicial issues, prosecutors claim that a new law aimed at easing prison congestion and setting free ailing prisoners will release too many convicts unconditionally; the United States and families of the victims of the November 17 terrorist group condemn an impending decision that would allow Savvas Xiros, who is serving five life terms (for, among other crimes, the murder of a United States defense attaché in 1988 and a United States Air Force sergeant in 1991), to finish his sentence at home because of injuries sustained in 2002 when a bomb he had intended to plant at a shipping company's office exploded in his hands.
In foreign policy, Prime Minister Alexis Tsipras raised eyebrows in Washington and Brussels when he visited President Vladimir V. Putin in Moscow earlier this month, after his government had made clear its opposition to sanctions against Russia for its incursion into Ukraine. Last week, his defense minister was also in Russia, renewing calls for an end to sanctions. (Apart from words, however, Athens has not broken ranks with its partners.)
And even as the government says it wants investments and growth, several ministers and Syriza deputies oppose a Canadian company's gold-mining operation in northern Greece, while government members have given out conflicting signals about the potential expansion of a Chinese company's container terminal in Piraeus.
Mr. Tsipras's first act as prime minister was to visit a site where German occupying forces carried out a mass execution during World War II. Since then, Parliament has debated Greek claims for reparations for German atrocities and damages, and for the repayment of a loan the Nazis forced the Greek central bank to provide during the occupation.
A government official said that the total claim came to 278.7 billion euros. Germany, which directly or indirectly guarantees some €65 billion of the €240 billion bailout, says this was dealt with in past agreements.
But the Greek Parliament has set up a committee to investigate — and press — the issue.
Another inquiry is looking into how Greece amassed a debt that reached €317 billion at the end of 2014; the committee is expected to recommend that part of the debt not be paid. A third committee is investigating the circumstances of the bailout deal signed in 2010.
The reparation and debt inquiries are headed by Zoe Konstantopoulou, the Parliament's speaker, a high-profile opponent of the bailout agreement. They appear designed to play on the government's message that Greece is the victim of foreign loan sharks and of a corrupt local elite, rather than a country that needs to reform its economy and public administration.
Suspicion of foreign powers is the glue that holds the coalition's two disparate parties together. Independent Greeks, the junior partner, is a hard-line right-wing nationalist group born out of opposition to the bailout; Syriza is the offspring of part of the Communist-led resistance against the Germans in World War II. In the civil war that followed Germany's defeat, first Britain and then the United States backed a right-wing government, and during most of the Cold War leftists were marginalized in Greece.
Challenging Greece's allies and highlighting claims against Germany give Syriza street credibility, and allow it to appear more "patriotic" than previous governments, which had raised but not forced the issue of reparations.
In negotiations with creditors, the government refuses to reform pensions and labor law, increase value-added taxes and encourage privatization. Yet it expresses confidence that Greece's European Union partners, the European Central Bank and the International Monetary Fund will back down.
"I remain firmly optimistic that there will be an agreement by the end of the month," Mr. Tsipras told Reuters on April 16. Europe would not "choose the path of unethical and brutal financial blackmail," he said, but would opt for "the path of bridging differences."
To avoid rifts in his party, save face over unrealistic promises he made to voters and underline that he will not be "blackmailed," Mr. Tsipras prefers to risk a breakup with creditors, which could destroy the economy.
Relishing their rise to power, he and his party display intransigence while demanding compromise. They either have unshakable confidence that they will get their way, or blind faith that, as time runs out, others will care more about the Greek people than they appear to and will step in to avert disaster.
Nikos Konstandaras is the managing editor and a columnist at the newspaper Kathimerini.
http://www.theguardian.com/commentisfree/2015/apr/23/germany-grexit-eu-greece-leaving-europe
QuoteGermany is becoming relaxed about a Grexit – perhaps too relaxed
Charles Grant
Many EU member states and the US still fear the consequences of Greece leaving Europe. They need to get their voices heard in Berlin
In Berlin, views on Greece's possible exit from the eurozone are shifting. "We have never been closer to a Grexit, and we are close," said a senior official. The last time a Greek departure looked likely, in 2012, Angela Merkel worried that it would provoke panic in financial markets and pulled back from the brink. This time, Germany's leaders think a Grexit would not destabilise the eurozone.
Merkel's officials say that she would be willing to compromise with Greece – if prime minister Alexis Tsipras, whose Syriza party was elected in January, came up with a serious reform programme. Germany wants his socialist government to commit to fighting corruption, improving tax collection, strengthening fiscal discipline, modernising labour markets and attacking vested interests. But three months after being elected, Tsipras seems unwilling or unable to do any of these things.
Germany is losing patience. Until Greece comes up with a viable plan, Merkel will block the release of existing bailout funds, and ensure there is no new money. Meanwhile, the Greek government is struggling to repay foreign debts and to pay salaries and pensions. A Greek default, which could easily lead to a Grexit, is looming.
One key point for Merkel, say officials, is that Germany should not be blamed. A recent visitor reports her as saying: "If Grexit happens, people will see the cause was that Greece failed to do its homework, not that we withheld solidarity." In this blame game, Merkel is – at least for now – succeeding. Many of those – including France and Italy, and to some degree the European Commission and the International Monetary Fund – who agree with Greece that Germany has imposed excessive austerity, have been alienated by Syriza's chaotic style of governing, its extreme rhetoric and its inept diplomacy. Countries such as Finland, the Netherlands, Slovakia and Estonia are pushing Germany to take a hard line. So are Spain and Portugal, proud to have carried out painful reforms.
Some German officials think Greece would be better off out. "As an economist, I am not sure Greece should stay in the euro," said one. It is structurally uncompetitive and could stagnate like southern Italy, he believes. Alhough Latvia, Lithuania, Spain and Ireland had understood the need for change, "sometimes the pressure to reform does not work", and he worries that keeping Greece in at all costs could undermine European cohesion.
Advocates of a Grexit believe that if Greece had an autonomous monetary policy and a weaker currency, the economy – which has shrunk by a quarter since the crisis began – could recover more rapidly than if it remained locked in an austerian eurozone. Yet leaving the euro would mean millions of contracts having to be rewritten; and foreign debt (in euros or dollars) would balloon when measured in new drachma, forcing companies and banks into default. Inflationary pressure and financial chaos would ensue. The deeper institutional and structural problems of the Greek state and economy would remain unresolved, constraining long-term growth prospects.
As for the impact on the rest of the eurozone, German officials are remarkably sanguine. German taxpayers are liable for around €70bn of Greece's €240bn of official debt, the loss of which, they say, would be manageable. Over the past five years, the EU has created the European stability mechanism, with €500bn for helping troubled banks or governments, while the European Central Bank has unveiled a bond-buying scheme for emergencies. So the officials not expect systemic threats to the eurozone.
"Spain, Portugal and Ireland would be alright because they have done their homework," said one German official. When pressed, he said that if a Grexit drove the financial markets to demand a premium before lending to another country, Germany would reassure them by proposing more integrated eurozone policy-making.
But such attitudes may be too nonchalant. A Grexit would demonstrate that the euro lacked the political foundations to ensure its permanence, and the markets' reaction is unknowable. The ESM lacks the resources to bail out, says, Italy. Those worried that a Grexit could trigger a partial unravelling of the eurozone include the IMF, the European Commission, the ECB, France, Italy and the Obama administration. The US also frets about the geopolitical context: what if a bust-up between Athens and its partners fuelled a Greek-Russian rapprochement?
These governments and institutions are urging Merkel to be patient with Athens, and to explore every option for compromise. If a Grexit triggered significant economic or political damage, they would put much of the blame on Germany. The US has long understood that in its role as the transatlantic alliance's hegemon, it must accept some costs for the greater good of the alliance's stability. It expects as much from the EU's hegemon.
But in Berlin, which plays a decisive role in eurozone crisis management, the key decision-makers believe Greek membership of the euro is becoming unsustainable. Germany does not always listen to voices in other capitals. Its friends should make every effort to help it to see the bigger picture.
Everybody seems awefully relaxed about the situation. I wonder if we are approaching disaster with a seeing eye here...
My guess that in the event of Grexit, Germany would be prepared to help bail out the others who followed their austerity programs in order to prevent further contagion. It would probably be more expensive than bailing out Greece, but politically more palatable. Certainly a continuing feature of the Euro-crisis so far.
Quote from: Zanza on April 24, 2015, 12:35:44 PM
Everybody seems awefully relaxed about the situation. I wonder if we are approaching disaster with a seeing eye here...
That Charles Grant and Christian Odendahl piece was edited from the Centre for European Reform with a wonderful title:
http://www.cer.org.uk/insights/vorsprung-durch-grexit
I think everyone is a little relaxed. As I see it the only way Grexit is safe is if there's never a Eurozone crisis or an economic crisis in a Euro country again - probably through full fiscal union.
My view, I think, is roughly what Draghi said. The ECB now has the tools to probably calm the markets and stop contagion. However while QE is active, OMT and 'whatever it takes' are still untested so it may be that what the ECB deemed necessary the markets may judge differently. But the Eurozone would also be entering uncharted waters, as he said. The ECB could fix the short-term problems (though I've read money managers are starting to hold back in Europe because they're worried about volatility in Europe - not just Greece) but that may not be enough in the long-run.
For me the biggest risk is political. At the minute the Euro is seen as a single currency in large part because it's seen as irreversible. I think that is a bit like virginity, you can only lose it once (and you should probably think carefully about it, make sure it's for someone special and don't throw it away on the first sleazy Greek who comes your way).
So to take that Charles Grant piece. Currently contracts are written across Europe without any provision for the break-up of the EU. After it happens once I imagine lawyers and companies across the Eurozone will want to make sure that their contracts stipulate exactly what happens in the case of another country leaving the Eurozone.
If, as everyone expects, outside of the Euro at some point the Greek economy starts to recover quite well (I'd guess within 12-18 months they'd have one hell of a rebound) then doesn't a Eurozone exit look more of a positive prospect to Iberian countries or Ireland, or France, or Italy.
And on Italy, the polls there show support for the Euro is roughly 50-50 and three of the opposition parties back a referendum on Euro membership (Italy is apparently the country that would benefit the most from leaving the Euro, however in theory it should also benefit the most from the fall in oil prices, the value of the Euro and QE so things should turn up there). Once exit's happened practically, rather than just a theory, and if it's benefiting the Greeks how much do the markets get sucked back into judging the Euro on polls and politicians' statements rather than economics? Is that a viable currency?
And in that situation isn't the shoe on the other foot? Don't the dynamics change to trying to convince countries that may consider leaving to stay?
I'm not convinced that the long-term consequence of Grexit wouldn't be that the Eurozone became little more than ERM III, and I wonder how long it would before the markets did actually manage to force a country out (my money's on Portugal).
I think the immediate crisis from Grexit is probably quite easily containable. I am very unsure what the long-term implications are and I think anyone who says they're confident one way or the other is either an idiot or lying.
For what it's worth I expect/hope that as in 2012 Merkel will pull everyone back from the brink.
Edit: Incidentally it's worth saying that when I say everyone is very relaxed I'm not including the City. I've read a few papers by the banks and they're struggling with such a default situation: European muddle or default and probable Grexit. Most still bet on the former but do highlight the profound uncertainty of the latter.
I think you're probably right Zanza that we'll eventually - by July? - move to a situation where Greece can default within the Eurozone. I don't think the Greeks can go any further without further social collapse and for some baffling reason it may be that other politicians get more reward from voters by not conceding and losing billions of Euros than conceding and actually getting some credit back.
State insolvencies really are very different from the private sector :lol:
Quote from: Admiral Yi on April 24, 2015, 04:39:15 AM
I'm not sure Germany's international competitiveness is best determined by comparison to the rest of Europe.
Who else would you compare to?
BTW the US rate of increase is much higher as well
Quote from: The Minsky Moment on April 25, 2015, 02:42:24 PM
Who else would you compare to?
BTW the US rate of increase is much higher as well
Why, everyone of course.
Quote from: Admiral Yi on April 25, 2015, 02:45:25 PM
Why, everyone of course.
So like Burkina Faso, Myanmar and Peru, say? ;)
Quote from: The Minsky Moment on April 25, 2015, 02:48:56 PM
So like Burkina Faso, Myanmar and Peru, say? ;)
Why not? If Burkina Fasoenes start producing high quality luxury automobiles at a half the price Germans do, they're fucked.
Quote from: Admiral Yi on April 25, 2015, 02:53:21 PM
Quote from: The Minsky Moment on April 25, 2015, 02:48:56 PM
So like Burkina Faso, Myanmar and Peru, say? ;)
Why not? If Burkina Fasoenes start producing high quality luxury automobiles at a half the price Germans do, they're fucked.
You're right Burkina Faso would be fucked in that odd hypothetical, since having made so much effort making luxury autos, they have no domestic market to sell to, nor anything close to a proper infrastructure for export.
Especially since as they are landlocked, they have no ports. :D
Yet you previously mentioned the Czech Republic. :contract:
Huh?
The Czechs are not landlocked. They have access to the biggest market in the world, as well as all the major ports in Europe.
I have generally understood landlocked to be a strictly geographic term.
Similar to the Czech Republic, I doubt Burkina Faso is surrounded by countries that prohibit it transshipment of good.
However, this is all very tangential to the original issue, which is the appropriate German wage level.
Quote from: Admiral Yi on April 25, 2015, 04:11:21 PM
I have generally understood landlocked to be a strictly geographic term.
Similar to the Czech Republic, I doubt Burkina Faso is surrounded by countries that prohibit it transshipment of good.
However, this is all very tangential to the original issue, which is the appropriate German wage level.
They don't prohibit but there isn't a highly developed multi-modal transport infrastructure, a single market with predictable rules, relatively corruption free bureaucracy, etc.
It's not an apples to apples comparison b/c fundamentally at different stages of development.
Quote from: The Minsky Moment on April 23, 2015, 08:00:26 PM
In fairness to Germany it could be argued that their ULC were improperly elevated by unification; the data seem to support this because there is a big increase in German ULC in 1991-1993. The need to squeeze that out IIRC was cited as justification for the Schroeder reforms. But 25 years out it shouldn't be such a significant influence anymore.
That makes me wonder how much of what Germany achieved and the model that's talked about of them taking their medicine through wage restraint and Hartz IV is applicable outside of Germany? How much is a consequence of reunification?
If the question is if there's still differences between Germany West and East - yes, there are.
E.g. 2013 GDP/capita, and productivity/capita:
(https://languish.org/forums/proxy.php?request=http%3A%2F%2Fwww.dw.de%2Fimage%2F0%2C%2C17734179_401%2C00.jpg&hash=26fee79788b04dbc4eb7318fa61ce4dc03419216)
(https://img.washingtonpost.com/blogs/worldviews/files/2014/10/Screen-Shot-2014-10-31-at-06.20.43.png)
(https://img.washingtonpost.com/blogs/worldviews/files/2014/10/Screen-Shot-2014-10-31-at-06.21.44.png)
Quote from: Sheilbh on April 25, 2015, 09:36:09 PM
That makes me wonder how much of what Germany achieved and the model that's talked about of them taking their medicine through wage restraint and Hartz IV is applicable outside of Germany? How much is a consequence of reunification?
Germany was the sick man of Europe at the end of the 1990s and early 2000s. One reason was over-regulation, another was the massive disruptions in the East German economy from reunification and a third was arguably that Germany entered the Euro at an uncompetitive rate, especially for the depressed regions in Eastern Germany and the Ruhr Area. Adjustment through internal deflation together with Germany's uniquely export-oriented industry made the development of the last 12-15 years possible. It's not a model that can really be emulated anywhere else as it required some unique factors such as strong growth and inflation in the rest of the Euro area, Germany's industrial structure with lots of mid-sized world champion exporters and the corporatist-unionist model that made the institutional wage restraint possible in the first place. Without consumers elsewhere, Germany would be in the doldrums. It might (have?) work(ed?) for Northern Italy as they have a similar structure, but it wouldn't work for Greece. They need to find another way to make their economy grow again. It won't be through exporting machinery to China...
Quote from: Sheilbh on April 24, 2015, 05:55:54 PM
For me the biggest risk is political. At the minute the Euro is seen as a single currency in large part because it's seen as irreversible.
That's Merkel's core message throughout the crisis. She'll likely do whatever it takes as well. In the last minute as usual.
QuoteIf, as everyone expects, outside of the Euro at some point the Greek economy starts to recover quite well (I'd guess within 12-18 months they'd have one hell of a rebound) then doesn't a Eurozone exit look more of a positive prospect to Iberian countries or Ireland, or France, or Italy.
Not sure if everyone expects that. I have read very pessimistic takes as well which expect hyperinflation and even more economic woes.
QuoteI think you're probably right Zanza that we'll eventually - by July? - move to a situation where Greece can default within the Eurozone.
Default and staying in the Euro might be the best or worst of all choices. Not sure.
Quote from: Zanza on April 26, 2015, 05:51:21 AM
That's Merkel's core message throughout the crisis. She'll likely do whatever it takes as well. In the last minute as usual.
Quite. I mean Schaeuble was pro-Grexit in 2012, it's hardly a surprise how he is now. As I say at least one senior Greek minister said their only friend left in Europe is Merkel.
QuoteNot sure if everyone expects that. I have read very pessimistic takes as well which expect hyperinflation and even more economic woes.
There''ll be inflation for sure, I imagine it'll be higher than would be tolerable in Germany but I mean Greece had inflation over 20% in the 90s. I think the bigger risk is that Greece gets sucked into the sort of Latin American cycle politically and economically. Which would be difficult for the EU to deal with.
QuoteDefault and staying in the Euro might be the best or worst of all choices. Not sure.
It was Martin Wolf's suggestion in 2010. Several US states have gone bankrupt without calling the dollar into question. Why should it be any different in the Eurozone.
Quote from: Sheilbh on April 26, 2015, 08:33:12 AM
...Several US states have gone bankrupt without calling the dollar into question. Why should it be any different in the Eurozone.
Which US states have gone bankrupt? I was under the impression that there was no mechanism by which they could do so, and that is why Congress was looking to create such a mechanism a few years ago.
Really? I thought Michigan and New York had or was that just the cities?
So what would happen if a state were effectively insolvent and neede to default?
Quote from: Sheilbh on April 26, 2015, 10:30:00 AM
Really? I thought Michigan and New York had or was that just the cities?
So what would happen if a state were effectively insolvent and neede to default?
I believe only Arkansas has ever declared bankruptcy among the states. A few cities.
Quote from: Sheilbh on April 26, 2015, 08:33:12 AM
Quite. I mean Schaeuble was pro-Grexit in 2012, it's hardly a surprise how he is now. As I say at least one senior Greek minister said their only friend left in Europe is Merkel.
I don't think Schäuble is in favor of Grexit. He is member of the old guard of convinced European federalists in Germany. It's a bit of a good cop, bad cop act by Schäuble and Merkel.
QuoteIt was Martin Wolf's suggestion in 2010. Several US states have gone bankrupt without calling the dollar into question. Why should it be any different in the Eurozone.
Let's see.
Quote from: Admiral Yi on April 26, 2015, 12:01:41 PM
Quote from: Sheilbh on April 26, 2015, 10:30:00 AM
Really? I thought Michigan and New York had or was that just the cities?
So what would happen if a state were effectively insolvent and neede to default?
I believe only Arkansas has ever declared bankruptcy among the states. A few cities.
Did Arkansas actually declare bankruptcy? With whom did they file? I know cities can file for bankruptcy; they aren't in any way sovereign.
Butting in tad rudely here, since I'm a non-American, but some browsing I did earlier would suggest that States can't legally/constitutionally go bankrupt, and that no state ever has.
http://www.csg.org/pubs/capitolideas/enews/issue65_3.aspx
Quote"There are two reasons why state governments currently cannot use the federal bankruptcy system to reorganize their debt. First, the federal bankruptcy code does not allow—and has never allowed—state governments to declare bankruptcy. Since 1937, the bankruptcy code has allowed 'municipalities' to declare bankruptcy. The term 'municipality' is defined in the bankruptcy code as a 'political subdivision or public agency or instrumentality of a state.' This definition is broad enough to include cities, counties, townships, school districts and public improvement districts. It also includes revenue-producing bodies that provide services which are paid for by users rather than by general taxes, such as bridge authorities, highway authorities and gas authorities. But it does not include state governments.
"The second reason stems from the U.S. Constitution. The contracts clause of the U.S. Constitution prohibits state governments from 'impairing the obligation of contracts.' As originally understood and enforced, this clause prohibited state legislatures from passing any laws to relieve either private debt or the state government's own debt. Beginning in 1934, however, the Supreme Court began to interpret the contracts clause more flexibly and not as an absolute bar to state debt relief laws. Even under the flexible modern approach, however, the Supreme Court in 1977 reiterated that 'a state cannot refuse to meet its legitimate financial obligations simply because it would prefer to spend the money (on something else.)' Thus, were Congress to amend the federal bankruptcy code to authorize states to repudiate debt, the Supreme Court would then need to decide the novel constitutional question of whether such debt repudiation would nonetheless violate the contracts clause of Article I, Section 10."
Also see below for municipal bankruptcies and defaults since 2010.
http://www.governing.com/gov-data/municipal-cities-counties-bankruptcies-and-defaults.html
http://www.nytimes.com/2011/01/23/weekinreview/23davey.html?_r=0
Call it what you will. Arkansas didn't pay back what they said they would.
Quote from: Admiral Yi on April 26, 2015, 02:45:52 PM
http://www.nytimes.com/2011/01/23/weekinreview/23davey.html?_r=0
Call it what you will. Arkansas didn't pay back what they said they would.
That's called a default. It isn't bankruptcy. Lots of sovereigns have defaulted.
That's not how this reads.
https://books.google.co.uk/books?id=C2RKp_VCshcC&pg=PA5&lpg=PA5&dq=Refunding+Act+arkansas+1933&source=bl&ots=a5cm--pbKM&sig=9Ni17J6dv8CLZHXT_8z-t2kCu8g&hl=en&sa=X&ei=LUw9VavyLtXvaMKcgagJ&ved=0CCcQ6AEwAQ#v=onepage&q=Refunding%20Act%20arkansas%201933&f=false
A temporary default, an extension of maturities in 1933 and a successful refunding in 1941 does not a bankruptcy make as far as I am aware.
Did the bondholders actually lose any money? Any of the principal, at least?
Quote from: Agelastus on April 26, 2015, 03:52:23 PM
That's not how this reads.
https://books.google.co.uk/books?id=C2RKp_VCshcC&pg=PA5&lpg=PA5&dq=Refunding+Act+arkansas+1933&source=bl&ots=a5cm--pbKM&sig=9Ni17J6dv8CLZHXT_8z-t2kCu8g&hl=en&sa=X&ei=LUw9VavyLtXvaMKcgagJ&ved=0CCcQ6AEwAQ#v=onepage&q=Refunding%20Act%20arkansas%201933&f=false
A temporary default, an extension of maturities in 1933 and a successful refunding in 1941 does not a bankruptcy make as far as I am aware.
Did the bondholders actually lose any money? Any of the principal, at least?
As you already pointed out, bankruptcy was not an option. However, a missed payment, a reduction of interest and an extension of maturity certainly meets my definition of sovereign default/restructuring.
Basically any time you don't pay back what you borrowed under the terms of the original agreement. Whether that means you missed the deadline or the terms were changed or renegotiated or whatever. It's a default.
Quote from: Admiral Yi on April 26, 2015, 04:26:16 PM
As you already pointed out, bankruptcy was not an option. However, a missed payment, a reduction of interest and an extension of maturity certainly meets my definition of sovereign default/restructuring.
So, are you still arguing that Arkansas declared bankruptcy, or not?
I asked Sheilbh about bankruptcy specifically because he called it bankruptcy. I cannot see any advantage for a sovereign to declare bankruptcy, even if there is (as in the US) a higher-level sovereign with which they could file. Bankruptcy allows a legal (or real) person to discharge its debts at less than face value, in return for losing some or all of its/his/her assets.
I's an alternative to being sued for breach of contract. A sovereign doesn't need that alternative, as the states can only be sued with their own permission.
An oversimplification:
Default: you don't make a specific payment you're supposed to make.
Bankruptcy: you aren't going to make any of the payments you're supposed to make, and seek the protection of a court so your creditors don't take everything you have.
Quote from: dps on April 26, 2015, 06:20:46 PM
An oversimplification:
Default: you don't make a specific payment you're supposed to make.
Bankruptcy: you aren't going to make any of the payments you're supposed to make, and seek the protection of a court so your creditors don't take everything you have.
Bankruptcy: You allow the court to make the payments on your behalf, dividing your assets as (nominally) fairly as possible among your creditors and forgiving the remaining debt.
Yeah bankruptcy is a legal thing. There are various types, but it's all under state authority.
Due to internal and external opposition, Renzi's made hus electoral reform a vote of confidence. Seeing a few people who think this is rather brave and war tying that he's overplaying his hand.
It'd certainly put Greece into perspective :lol:
Quote from: grumbler on April 26, 2015, 08:08:41 PM
Quote from: dps on April 26, 2015, 06:20:46 PM
An oversimplification:
Default: you don't make a specific payment you're supposed to make.
Bankruptcy: you aren't going to make any of the payments you're supposed to make, and seek the protection of a court so your creditors don't take everything you have.
Bankruptcy: You allow the court to make the payments on your behalf, dividing your assets as (nominally) fairly as possible among your creditors and forgiving the remaining debt.
The Court doesn't make any payments.
QuoteI.M.F. Says Accord Is Remote in Talks With Greece
PARIS — The International Monetary Fund has called its negotiating team in the Greek bailout talks back to Washington, a stark sign that Athens and its creditors are not close to reaching a deal.
While the I.M.F. said Thursday that it remained engaged in the talks, the frustration was palpable. Greece's main creditors expressed discontent this week at the state of the discussions and at statements by Greek officials at home, including Prime Minister Alexis Tsipras.
After recalling its team from Brussels, the I.M.F. said that "major differences remain" in the negotiations, adding that "we are well away from an agreement."
"The I.M.F. never leaves the table," a spokesman, Gerry Rice, said at a press briefing in Washington. "But the ball is very much in Greece's court right now."
The uncertainty over a deal ratchets up the pressure on Greece, which is quickly running out of money.
Unless a deal is reached soon, Greece may not be able to make debt payments to its creditors or meet other financial obligations.
Greece owes 1.6 billion euros ($1.8 billion) to the I.M.F. by the end of the month. But its creditors — the I.M.F., the European Central Bank and other eurozone countries — have refused to release €7.2 billion from Greece's international bailout program until they come to terms over economic reforms and spending cuts.
While the negotiations in Brussels have been at an impasse for months, the pace of the talks had increased in recent weeks. Greece and its creditors have worked on dueling proposals, and appeared to be making progress in certain areas.
But Greece continues to push back against creditors' demands, particularly around politically sensitive areas like pension cuts. Mr. Tsipras called the creditors' proposal "absurd."
Talks have continued.
Mr. Tsipras met with Chancellor Angela Merkel of Germany and President François Hollande of France on Wednesday night in Brussels. Afterward, a Greek government official said that the talks had been constructive and that the three had "agreed to intensify process of bridging differences."
The Greek prime minister and the president of the European Commission, Jean-Claude Juncker, met on Thursday. After the talks, Mr. Tsipras similarly spoke about the efforts to "bridge the differences that remain, especially in fiscal and funding issues."
"We are cooperating to reach an agreement that will ensure Greece can recover with social cohesion and sustainable debt," Mr. Tsipras said in a statement.
The I.M.F. and others, though, put a less optimistic view on the progress. The European Union president, Donald Tusk, bluntly took aim at Greece.
"We need decisions, not negotiations now," Mr. Tusk told reporters in Brussels on Thursday. "There is no more space for gambling; there is no more time for gambling. The day is coming, I am afraid, that someone says the game is over."
This seems to be a game of chicken where no one will dodge eventually. It's really silly how our politicians willfully steer towards a very dangerous situation here.
I don't agree with the chicken analogy. It's more a contest between reality and fantasy.
Quote from: Zanza on June 11, 2015, 12:30:46 PM
QuoteI.M.F. Says Accord Is Remote in Talks With Greece
PARIS — The International Monetary Fund has called its negotiating team in the Greek bailout talks back to Washington, a stark sign that Athens and its creditors are not close to reaching a deal.
While the I.M.F. said Thursday that it remained engaged in the talks, the frustration was palpable. Greece's main creditors expressed discontent this week at the state of the discussions and at statements by Greek officials at home, including Prime Minister Alexis Tsipras.
After recalling its team from Brussels, the I.M.F. said that "major differences remain" in the negotiations, adding that "we are well away from an agreement."
"The I.M.F. never leaves the table," a spokesman, Gerry Rice, said at a press briefing in Washington. "But the ball is very much in Greece's court right now."
The uncertainty over a deal ratchets up the pressure on Greece, which is quickly running out of money.
Unless a deal is reached soon, Greece may not be able to make debt payments to its creditors or meet other financial obligations.
Greece owes 1.6 billion euros ($1.8 billion) to the I.M.F. by the end of the month. But its creditors — the I.M.F., the European Central Bank and other eurozone countries — have refused to release €7.2 billion from Greece's international bailout program until they come to terms over economic reforms and spending cuts.
While the negotiations in Brussels have been at an impasse for months, the pace of the talks had increased in recent weeks. Greece and its creditors have worked on dueling proposals, and appeared to be making progress in certain areas.
But Greece continues to push back against creditors' demands, particularly around politically sensitive areas like pension cuts. Mr. Tsipras called the creditors' proposal "absurd."
Talks have continued.
Mr. Tsipras met with Chancellor Angela Merkel of Germany and President François Hollande of France on Wednesday night in Brussels. Afterward, a Greek government official said that the talks had been constructive and that the three had "agreed to intensify process of bridging differences."
The Greek prime minister and the president of the European Commission, Jean-Claude Juncker, met on Thursday. After the talks, Mr. Tsipras similarly spoke about the efforts to "bridge the differences that remain, especially in fiscal and funding issues."
"We are cooperating to reach an agreement that will ensure Greece can recover with social cohesion and sustainable debt," Mr. Tsipras said in a statement.
The I.M.F. and others, though, put a less optimistic view on the progress. The European Union president, Donald Tusk, bluntly took aim at Greece.
"We need decisions, not negotiations now," Mr. Tusk told reporters in Brussels on Thursday. "There is no more space for gambling; there is no more time for gambling. The day is coming, I am afraid, that someone says the game is over."
This seems to be a game of chicken where no one will dodge eventually. It's really silly how our politicians willfully steer towards a very dangerous situation here.
the greeks need to learn that the rest of europe will not pay for their happy-time
Quote from: Admiral Yi on June 11, 2015, 12:48:28 PM
I don't agree with the chicken analogy. It's more a contest between reality and fantasy.
It's a contest of two fantasies.
The IMF/EU fantasy is that one can indefinitely put off confronting the reality that some kind of write-down is inevitable.
The Syriza fantasy is that small country can be an EU member and an EZ member and still have full discretion in economic and fiscal policy, on the one hand, and that it can in theory exit those institutions without facing the brutal discipline of the market on the other.
But the chicken analogy works - both sides will be worse off with no deal but domestic political concerns on both sides are pushing in that direction.
Quote from: Crazy_Ivan80 on June 11, 2015, 12:53:26 PM
the greeks need to learn that the rest of europe will not pay for their happy-time
The rest of Europe already paid but then get bailed out by the ECB-system. The amounts involved are so small on a European wide scale that if they were simply written off entirely -- effectively monetized -- it would have no discernible effect.
The narrative of zero-sum trade off between Greece "paying" and ROE "paying" is nonsense. The determination of what Greece should pay is a question of no financial significance. It is purely a political economy question of incentives and moral hazard. The purpose of making Greece pay is not to "get money back" that no one has lost; it is a mechanism to compel structural reform.
Quote from: The Minsky Moment on June 11, 2015, 01:17:00 PM
It's a contest of two fantasies.
The IMF/EU fantasy is that one can indefinitely put off confronting the reality that some kind of write-down is inevitable.
I haven't seen anything that would support this characterization. The IMF in particular is on record as stating they view the debt as unsustainable. The only party that has flat out refused a write down is the ECB, based (in my understanding) on the ECB's existing rules.
Quote from: The Minsky Moment on June 11, 2015, 01:17:00 PM
The rest of Europe already paid but then get bailed out by the ECB-system. The amounts involved are so small on a European wide scale that if they were simply written off entirely -- effectively monetized -- it would have no discernible effect.
Yeah but you cannot do this in a club of sovereign states even if it would make good practical sense. That door cannot be opened.
Quote from: Admiral Yi on June 11, 2015, 01:42:31 PM
The IMF in particular is on record as stating they view the debt as unsustainable.
They have stated this, yes. But the last creditor proposal does nothing to address this. It is still extend and pretend.
It's really ridiculous that we even consider the possibility of a total breakdown of public governance in Greece over something like 0.05% of Europe's GDP.
Quote from: Zanza on June 15, 2015, 01:38:28 PM
It's really ridiculous that we even consider the possibility of a total breakdown of public governance in Greece over something like 0.05% of Europe's GDP.
:yes:
As long as Greece gets kicked out of the EU.
Quote from: Zanza on June 15, 2015, 01:38:28 PM
It's really ridiculous that we even consider the possibility of a total breakdown of public governance in Greece over something like 0.05% of Europe's GDP.
given that the Greek state was -and is- apparently unable to properly collect taxes due I'm wondering if Greece ever had public governance.
Better not give them any money anymore: might as well burn it instead. At least you can enjoy the heat then. Now we got nothing.
We don't have a failed at at in the South East of the union. That's surely worth a few billions to keep it that way.
I think it isn't just Greece. There are several marginal Euro countries as well. It is important to send the right signals about Greece to ensure that the rest fall in line.
Greece could at any point it pleases unilaterally forgive itself 0.5% of Europe's GDP.
Unfortunately for Greece, doing so would instantly render Greece's banks insolvent (because their holdings of Greek debt would now be worthless) and illiquid (because they would no longer have collateral acceptable to the ECB).
That's what the Syriza retards forgot about when they campaigned on fucking the troika in the ass. It also means if Europe wanted to completely forgive Greece's debt it would also have to pay to recapitalize Greek banks, or it would be a relatively meaningless gesture.
Quote from: Admiral Yi on June 15, 2015, 08:30:22 PM
Unfortunately for Greece, doing so would instantly render Greece's banks insolvent (because their holdings of Greek debt would now be worthless) and illiquid (because they would no longer have collateral acceptable to the ECB).
Unless the default is accompanied by Grexit.
Then Greece has its own central bank which can accept any collateral it is authorized to take.
Possibly. But the Greek banks currently have euro liabilities. Financing in ouzos might not do the trick. You would have to accompany it with asset theft a la Peronistan.
Quote from: Admiral Yi on June 17, 2015, 01:52:15 PM
Possibly. But the Greek banks currently have euro liabilities. Financing in ouzos might not do the trick. You would have to accompany it with asset theft a la Peronistan.
Depositors take a hit.
Argentina c.2001 may be an attractive model from the worldview of a typical Syriza deputy.
We got to fight the powers that be
Lemme hear you sayQuoteGreek debt 'illegal, illegitimate and odious'
18 June 2015 Last updated at 09:35 BST
A committee convened by the Greek parliament has claimed much of the country's debt of 320bn euros was illegally contracted and should not be paid.
Following an official parliamentary investigation, speaker Zoe Konstantopoulou described the debt as illegal, illegitimate and odious.
She told the BBC that Greek people "should fight for justice".
Opposition parties have criticised the move saying it was a political tactic by the cash strapped government.
However the evidence marshalled by he debt truth committee could be used in a potential court case by the Greek government, should it seek a legal route out of its massive debts.
The concept of odious debt is established in international law where dictatorships or illegitimate governments have borrowed money and later been succeeded by democratic regimes.
The debt truth committee? :huh:
:lol:
Next they should try claiming they've actually already paid it all back, but no one was paying attention.
Wait are they claiming the debts were borrowed by their previous military dictatorships?
QuoteThe debt truth committee?
It sounds better in Greek.
I think they should keep digging.
http://www.reuters.com/article/2015/06/18/eurozone-greece-imf-adults-idUSB5N0YP00920150618
QuoteGreece and its international creditors must discuss the Greek crisis as "adults", IMF Managing Director Christine Lagarde said on Thursday.
"We can only arrive at a resolution if there is a dialogue, and for the moment we are short of the dialogue, so the key emergency in my view is to restore the dialogue with adults in the room," Lagarde told a news conference.
Lagarde sounds like an idiot. Hope the Greeks have a plan B.
Seriously?
Having a plan B is not an issue. The problem is not having a viable Plan A.
Quote from: Crazy_Ivan80 on June 11, 2015, 12:53:26 PM
the greeks need to learn that the rest of europe will not pay for their happy-time
What school of economics emphasizes grudges and revenge?
Quote from: Razgovory on June 19, 2015, 10:35:23 PM
Quote from: Crazy_Ivan80 on June 11, 2015, 12:53:26 PM
the greeks need to learn that the rest of europe will not pay for their happy-time
What school of economics emphasizes grudges and revenge?
the school where the greeks learn to pay their taxes instead of leeching
You have to encourage the others.
Quote from: The Minsky Moment on June 19, 2015, 09:33:02 PM
Seriously?
Having a plan B is not an issue. The problem is not having a viable Plan A.
The obvious plan A hasn't been done for at least 5 years now, why it hasn't been done is baffling to me.
Quote from: Crazy_Ivan80 on June 20, 2015, 03:40:14 AM
Quote from: Razgovory on June 19, 2015, 10:35:23 PM
Quote from: Crazy_Ivan80 on June 11, 2015, 12:53:26 PM
the greeks need to learn that the rest of europe will not pay for their happy-time
What school of economics emphasizes grudges and revenge?
the school where the greeks learn to pay their taxes instead of leeching
I can't help but think that this might not be rational economic behavior.
(https://pbs.twimg.com/media/CIVRjP4WwAATleH.jpg)
Quote from: Razgovory on June 20, 2015, 10:35:53 AM
I can't help but think that this might not be rational economic behavior.
It is not economic it is political. This is the kind of problem you run into with confederations. We give lots of money to crap states like Mississippi because ultimately we know they have to do what the Feds say. If we had as little control as the EU does over the Greeks we would feel differently.
What does KYB stand for?
I presumed it was the IMF.
The wheelchair euro Nazis holding a gun to the head of the IMF? That doesn't make sense.
Quote from: Admiral Yi on June 25, 2015, 08:32:35 AM
The wheelchair euro Nazis holding a gun to the head of the IMF? That doesn't make sense.
"kyb hellas" led me to this place: http://www.kyb-hellas.gr/ :hmm:
Quote from: Admiral Yi on June 25, 2015, 08:32:35 AM
The wheelchair euro Nazis holding a gun to the head of the IMF? That doesn't make sense.
The guy in the wheelchair is the German finance minister, Wolfgang Schäuble (he's been in a chair since early 90s, after an attempt on his life severed his spine).
(https://kulturjord.files.wordpress.com/2007/10/wolfgang_schauble_strangelove.jpg)
:lol:
Greece.
One of the points of contention was apparently whether Greece's corporate tax rate should be 28% or 29%. It makes me wonder whether the negotiators have completely lost sight of what is at stake here and what needs to be done to resolve the Greek crisis. Obviously a one percentage point difference in tax rate is not going to make much of a difference.
Quote from: Zanza on June 25, 2015, 12:51:05 PM
One of the points of contention was apparently whether Greece's corporate tax rate should be 28% or 29%. It makes me wonder whether the negotiators have completely lost sight of what is at stake here and what needs to be done to resolve the Greek crisis. Obviously a one percentage point difference in tax rate is not going to make much of a difference.
I think it's more likely that at least some of the institutions now want Greece out. This feels different to the other deadlines that we've had. I actually now think it's probable that Greece will leave the Euro by the end of the month.
Quote from: PJL on June 25, 2015, 12:56:33 PM
Quote from: Zanza on June 25, 2015, 12:51:05 PM
One of the points of contention was apparently whether Greece's corporate tax rate should be 28% or 29%. It makes me wonder whether the negotiators have completely lost sight of what is at stake here and what needs to be done to resolve the Greek crisis. Obviously a one percentage point difference in tax rate is not going to make much of a difference.
I think it's more likely that at least some of the institutions now want Greece out. This feels different to the other deadlines that we've had. I actually now think it's probable that Greece will leave the Euro by the end of the month.
It works both ways. If your country is in such deep trouble and you don't want to yield on such a minor point, that means you don't really care if you receive help. You want out.
Quote from: Zanza on June 25, 2015, 12:51:05 PM
One of the points of contention was apparently whether Greece's corporate tax rate should be 28% or 29%. It makes me wonder whether the negotiators have completely lost sight of what is at stake here and what needs to be done to resolve the Greek crisis. Obviously a one percentage point difference in tax rate is not going to make much of a difference.
since the Greek state is incapable or/and unwilling to properly collect taxes to fund its follies discussing about taxrate isn't going to matter anyway. And I doubt the various governments of the eurozone have the political mandate to spend more of their taxpayers' cash to finance greece in perpetuum. "Let the communists get their money on the market, see how well it goes" has become a very common sentiment.
At this point no sane person wants to keep Greece in the EU.
Greece wants to hold a referendum on the latest proposal. Eurogroup recinds offer.
Grexit seems imminent now.
Quote from: Syt on June 25, 2015, 08:43:13 AM
Quote from: Admiral Yi on June 25, 2015, 08:32:35 AM
The wheelchair euro Nazis holding a gun to the head of the IMF? That doesn't make sense.
The guy in the wheelchair is the German finance minister, Wolfgang Schäuble (he's been in a chair since early 90s, after an attempt on his life severed his spine).
(https://kulturjord.files.wordpress.com/2007/10/wolfgang_schauble_strangelove.jpg)
Also the author of one of the funniest quotes in this whole debacle:
Quote from: Deranged lunatic
"The crisis has shown that one must act quickly and that Europe can act quickly... the notion that we would not be capable of reacting in the short term to something unforeseen is false."
Since he said that I was laid off, spent months on the dole, got a job, switched employers and even moved to another country. And we're still not done with this shit. That's how quickly Europe can react.
Why not just pay their tab, then send them out the door?
Quote from: Razgovory on June 27, 2015, 03:21:40 PM
Why not just pay their tab, then send them out the door?
because they'll just run up another tab and come begging again. It something people generally don't appreciate.
Bavarian minister president has called the Greek government and its conduct in the affair a circus.
The director of famous Circus Roncalli has protested, saying it's disrespectful, considering that a properly run circus thrives on precision and honesty. Additionally, his circus is not reliant on hand outs or subsidies.
Quote from: Razgovory on June 27, 2015, 03:21:40 PM
Why not just pay their tab, then send them out the door?
I believe there is no legal mechanism for evicting a country from the eurozone or EU.
Quote from: Admiral Yi on June 27, 2015, 04:16:26 PM
Quote from: Razgovory on June 27, 2015, 03:21:40 PM
Why not just pay their tab, then send them out the door?
I believe there is no legal mechanism for evicting a country from the eurozone or EU.
You can just do it. Swoosh.
Quote from: Admiral Yi on June 27, 2015, 04:16:26 PM
Quote from: Razgovory on June 27, 2015, 03:21:40 PM
Why not just pay their tab, then send them out the door?
I believe there is no legal mechanism for evicting a country from the eurozone or EU.
A country leaving the EU is possible since the Treaty of Lisbon.
Quote from: Duque de Bragança on June 27, 2015, 05:50:26 PM
A country leaving the EU is possible since the Treaty of Lisbon.
Involuntarily?
Quote from: Admiral Yi on June 27, 2015, 05:52:11 PM
Quote from: Duque de Bragança on June 27, 2015, 05:50:26 PM
A country leaving the EU is possible since the Treaty of Lisbon.
Involuntarily?
Exit has to be negotiated in any case during a European Council but some rights of a country may be suspended, though I don't believe it applies to the current situation.
An ad hoc solution would be found should the need arise, as said in other words by The Brain.
Quote from: Crazy_Ivan80 on June 27, 2015, 03:56:47 PM
Quote from: Razgovory on June 27, 2015, 03:21:40 PM
Why not just pay their tab, then send them out the door?
because they'll just run up another tab and come begging again. It something people generally don't appreciate.
So what? It won't be your problem, they won't be in the Eurozone. They can beg all the like, since you are not in a union with them, what does it matter to you? It's not a crisis if some third party messes up their finances only in a Eurozone member does.
Quote from: Admiral Yi on June 27, 2015, 05:52:11 PM
Quote from: Duque de Bragança on June 27, 2015, 05:50:26 PM
A country leaving the EU is possible since the Treaty of Lisbon.
Involuntarily?
No. Though the ECB has the tools to force an exit.
Quote from: Razgovory on June 27, 2015, 07:03:59 PM
Quote from: Crazy_Ivan80 on June 27, 2015, 03:56:47 PM
Quote from: Razgovory on June 27, 2015, 03:21:40 PM
Why not just pay their tab, then send them out the door?
because they'll just run up another tab and come begging again. It something people generally don't appreciate.
So what? It won't be your problem, they won't be in the Eurozone. They can beg all the like, since you are not in a union with them, what does it matter to you? It's not a crisis if some third party messes up their finances only in a Eurozone member does.
then why bother paying their tab before removing them from the eurozone. the money is gone until it isn't.
Quote from: Iormlund on June 28, 2015, 02:04:31 AM
No. Though the ECB has the tools to force an exit.
And they probably just did. They decided not to increase the emergency lending assistance program for Greek banks. With the currently ongoing bank run in Greece, it is only a matter of time until the first bank becomes illiquid.
And the Greek government is almost certain to default on its IMF loan on Tuesday.
Yep. As a response, Greece institutes capital controls, closes banks.
Isn't Shelf nibbling on feta cheese and olives right now?
I don't understand. What exactly are the Greeks voting on? To accept cuts in exchange for money? I thought the money is already due before the plebiscite takes place. Assume that they vote "yes, we are willing to cut our pensions and sell the Acropolis so that we won't default". IMF: "well, you had already defaulted 5 days ago."
Quote from: Monoriu on June 28, 2015, 08:21:05 PM
I don't understand. What exactly are the Greeks voting on? To accept cuts in exchange for money? I thought the money is already due before the plebiscite takes place. Assume that they vote "yes, we are willing to cut our pensions and sell the Acropolis so that we won't default". IMF: "well, you had already defaulted 5 days ago."
Once the suffering starts, Tspiras will have the cover of saying he did what the public wanted.
Quote from: Monoriu on June 28, 2015, 08:21:05 PM
I don't understand. What exactly are the Greeks voting on? To accept cuts in exchange for money? I thought the money is already due before the plebiscite takes place. Assume that they vote "yes, we are willing to cut our pensions and sell the Acropolis so that we won't default". IMF: "well, you had already defaulted 5 days ago."
Mono as always does not get politics. Film at 11.
If you owe someone 1 million Euro it's your problem. If you owe someone 323 billion Euro it's their problem. Tsirpas is probably playing right now on an extension of the loan until after the referendum results - I would be surprised if he does not get it.
It's funny how we went through this pantomime already back in February and nothing really changed.
Quote from: Martinus on June 28, 2015, 11:30:56 PM
Quote from: Monoriu on June 28, 2015, 08:21:05 PM
I don't understand. What exactly are the Greeks voting on? To accept cuts in exchange for money? I thought the money is already due before the plebiscite takes place. Assume that they vote "yes, we are willing to cut our pensions and sell the Acropolis so that we won't default". IMF: "well, you had already defaulted 5 days ago."
Mono as always does not get politics. Film at 11.
If you owe someone 1 million Euro it's your problem. If you owe someone 323 billion Euro it's their problem. Tsirpas is probably playing right now on an extension of the loan until after the referendum results - I would be surprised if he does not get it.
It's funny how we went through this pantomime already back in February and nothing really changed.
This is different. The markets are in turmoil at the moment, this didn't happen in February. Also Greece has issued capital controls as well. With the troika playing hardball, and refusing even minor extensions to the deadline, it means Greece will default on Wednesday. That much is certain.
Quote from: Crazy_Ivan80 on June 28, 2015, 05:58:35 AM
Quote from: Razgovory on June 27, 2015, 07:03:59 PM
Quote from: Crazy_Ivan80 on June 27, 2015, 03:56:47 PM
Quote from: Razgovory on June 27, 2015, 03:21:40 PM
Why not just pay their tab, then send them out the door?
because they'll just run up another tab and come begging again. It something people generally don't appreciate.
So what? It won't be your problem, they won't be in the Eurozone. They can beg all the like, since you are not in a union with them, what does it matter to you? It's not a crisis if some third party messes up their finances only in a Eurozone member does.
then why bother paying their tab before removing them from the eurozone. the money is gone until it isn't.
To prevent this catastrophe that everyone is predicting? But hey, you seem guys seem so goddamn eager to cut off your own nose to spite your face, don't let good sense stop you. I remember when you Euros were so goddamn smug with your European Union 10 years ago, I don't mind you continuing to destroy yourselves.
Quote from: Razgovory on June 29, 2015, 02:39:15 AM
To prevent this catastrophe that everyone is predicting?
the greater catastrophe would be enabling the Greeks to continue with their faulty behaviour while we pay for it, while signalling to other communist-types that it's a valid recipe to follow in places like Spain or Portugal. Better one crisis now, then crisis without end.
:yes: They tried appeasement in the movies and it didn't work.
Quote from: PJL on June 29, 2015, 02:21:59 AM
Also Greece has issued capital controls as well.
Please elaborate. Frozen bank accounts?
So...Greece is definitely going bankrupt, and is probably going to leave. What now for the Euro?
Quote from: jimmy olsen on June 29, 2015, 08:06:16 AM
So...Greece is definitely going bankrupt, and is probably going to leave. What now for the Euro?
Has some new development happen during the last hour or so that makes you think so?
Junker's terrible speech is going to go over like a lead balloon with the Greeks and I expect them to vote No.
Quote from: Crazy_Ivan80 on June 29, 2015, 04:27:05 AM
Quote from: Razgovory on June 29, 2015, 02:39:15 AM
To prevent this catastrophe that everyone is predicting?
the greater catastrophe would be enabling the Greeks to continue with their faulty behaviour while we pay for it, while signalling to other communist-types that it's a valid recipe to follow in places like Spain or Portugal. Better one crisis now, then crisis without end.
But what I suggested prevents that. Pay the debt, send them out of the Eurozone. You seem dead set on impoverishing yourselves to get back at Greeks. That's absurd behavior.
Greece has a pretty tiny economy. How does whatever happen in Greece impoverish Belgium?
This will be an error the Greeks will long regret I think. Being part of Euroland was one of few things they had going for them.
Belgium has its own debt problem. Wouldn't take all that much to bankrupt Belgium.
Quote from: Razgovory on June 29, 2015, 08:56:09 AM
Quote from: Crazy_Ivan80 on June 29, 2015, 04:27:05 AM
Quote from: Razgovory on June 29, 2015, 02:39:15 AM
To prevent this catastrophe that everyone is predicting?
the greater catastrophe would be enabling the Greeks to continue with their faulty behaviour while we pay for it, while signalling to other communist-types that it's a valid recipe to follow in places like Spain or Portugal. Better one crisis now, then crisis without end.
But what I suggested prevents that. Pay the debt, send them out of the Eurozone. You seem dead set on impoverishing yourselves to get back at Greeks. That's absurd behavior.
we've already payed, the costs are sunk. Paying some more is what is absurd and impoverishes us. It doesn't work cause it takes away incentive to reform. As we've seen in nearly 60 years of non-reform presided over by the PS in the south of Belgium. Countless billions wasted.
Quote from: Crazy_Ivan80 on June 29, 2015, 10:15:20 AM
As we've seen in nearly 60 years of non-reform presided over by the PS in the south of Belgium.
Good thing MR is in charge now -_-
Quote from: Valmy on June 29, 2015, 10:37:53 AM
Quote from: Crazy_Ivan80 on June 29, 2015, 10:15:20 AM
As we've seen in nearly 60 years of non-reform presided over by the PS in the south of Belgium.
Good thing MR is in charge now -_-
PS still rules in Wallonia and Brussel. It's still uncertain wether or not the MR-gambit will pay of for them.
Greek government will resign if they lose referendum, i.e. If voters vote pro deal.
Quote from: Crazy_Ivan80 on June 29, 2015, 04:27:05 AM
Quote from: Razgovory on June 29, 2015, 02:39:15 AM
To prevent this catastrophe that everyone is predicting?
the greater catastrophe would be enabling the Greeks to continue with their faulty behaviour while we pay for it, while signalling to other communist-types that it's a valid recipe to follow in places like Spain or Portugal. Better one crisis now, then crisis without end.
Even if Greece was bailed out with rainbows and lollipops, no one in their right mind would think that going through their experience would be desirable.
No Eurozone underwent as much austerity as Greece. So what's the message that gets sent when doing that ends in rejection and failure?
Quote from: The Minsky Moment on June 29, 2015, 04:50:27 PM
No Eurozone underwent as much austerity as Greece. So what's the message that gets sent when doing that ends in rejection and failure?
When you start with a 19% deficit and 130% debt, none of your options are going to be fun.
Quote from: Zanza on June 29, 2015, 04:19:35 PM
Greek government will resign if they lose referendum, i.e. If voters vote pro deal.
I wonder what would happen if Greece votes yes and if Syriza would win the election after the referendum. :sleep:
Quote from: Admiral Yi on June 29, 2015, 04:53:34 PM
Quote from: The Minsky Moment on June 29, 2015, 04:50:27 PM
No Eurozone underwent as much austerity as Greece. So what's the message that gets sent when doing that ends in rejection and failure?
When you start with a 19% deficit and 130% debt, none of your options are going to be fun.
Boom.
Quote from: Admiral Yi on June 29, 2015, 04:53:34 PM
Quote from: The Minsky Moment on June 29, 2015, 04:50:27 PM
No Eurozone underwent as much austerity as Greece. So what's the message that gets sent when doing that ends in rejection and failure?
When you start with a 19% deficit and 130% debt, none of your options are going to be fun.
Sure, but presumably the grownups in the room can choose the wisest path without worrying about punishing the Greeks sufficiently.
Quote from: The Minsky Moment on June 29, 2015, 04:50:27 PM
Quote from: Crazy_Ivan80 on June 29, 2015, 04:27:05 AM
Quote from: Razgovory on June 29, 2015, 02:39:15 AM
To prevent this catastrophe that everyone is predicting?
the greater catastrophe would be enabling the Greeks to continue with their faulty behaviour while we pay for it, while signalling to other communist-types that it's a valid recipe to follow in places like Spain or Portugal. Better one crisis now, then crisis without end.
Even if Greece was bailed out with rainbows and lollipops, no one in their right mind would think that going through their experience would be desirable.
No Eurozone underwent as much austerity as Greece. So what's the message that gets sent when doing that ends in rejection and failure?
Greeks aren't in their right minds. That's why there's a problem in the first place.
Isn't Sheilbn comfy on a beach there right now? Hope he brought enough cash with him.
Quote from: The Minsky Moment on June 29, 2015, 04:50:27 PM
Quote from: Crazy_Ivan80 on June 29, 2015, 04:27:05 AM
Quote from: Razgovory on June 29, 2015, 02:39:15 AM
To prevent this catastrophe that everyone is predicting?
the greater catastrophe would be enabling the Greeks to continue with their faulty behaviour while we pay for it, while signalling to other communist-types that it's a valid recipe to follow in places like Spain or Portugal. Better one crisis now, then crisis without end.
Even if Greece was bailed out with rainbows and lollipops, no one in their right mind would think that going through their experience would be desirable.
No Eurozone underwent as much austerity as Greece. So what's the message that gets sent when doing that ends in rejection and failure?
Yet there is an increasing appetite for anti-austerity parties like Podemos?
Quote from: Valmy on June 29, 2015, 10:01:10 AM
Greece has a pretty tiny economy. How does whatever happen in Greece impoverish Belgium?
This will be an error the Greeks will long regret I think. Being part of Euroland was one of few things they had going for them.
Actually, being in the Eurozone is one of the reasons this has become such an economic disaster. It took away the monetary controls that are often used to help these situations. Greece probably shouldn't have been let into the Eurozone in the first place.
Quote from: Valmy on June 29, 2015, 10:01:10 AM
Greece has a pretty tiny economy. How does whatever happen in Greece impoverish Belgium?
This will be an error the Greeks will long regret I think. Being part of Euroland was one of few things they had going for them.
I was under the impression that defaulting on the Euro would result in pain across the Eurozone.
Quote from: HisMajestyBOB on June 29, 2015, 07:01:23 PM
Quote from: Valmy on June 29, 2015, 10:01:10 AM
Greece has a pretty tiny economy. How does whatever happen in Greece impoverish Belgium?
This will be an error the Greeks will long regret I think. Being part of Euroland was one of few things they had going for them.
Actually, being in the Eurozone is one of the reasons this has become such an economic disaster. It took away the monetary controls that are often used to help these situations. Greece probably shouldn't have been let into the Eurozone in the first place.
And they probably should not have cooked their books.
Well, you have to admire that the European adhering to the spirit of '15. 1915.
I fear the greatest danger is that Greece leaves the Euro, and do relatively well after a few years. In that case there'll be a lot of incentive for others to follow instead of choosing the austerity path, eventually breaking up the common currency.
Quote from: Monoriu on June 29, 2015, 10:12:56 PM
I fear the greatest danger is that Greece leaves the Euro, and do relatively well after a few years. In that case there'll be a lot of incentive for others to follow instead of choosing the austerity path, eventually breaking up the common currency.
Oh no. :(
Quote from: The Minsky Moment on June 29, 2015, 04:50:27 PM
No Eurozone underwent as much austerity as Greece. So what's the message that gets sent when doing that ends in rejection and failure?
Greece apparently has 60 billion of uncollected taxes to collect. So what's the message that gets sent when you come leeching of other people's money and then calling them names when you don't get your way when you still have lots of taxes to collect but refuse to do so?
Quote from: Monoriu on June 29, 2015, 10:12:56 PM
I fear the greatest danger is that Greece leaves the Euro, and do relatively well after a few years. In that case there'll be a lot of incentive for others to follow instead of choosing the austerity path, eventually breaking up the common currency.
for the greeks to well they'll have to reform their entire state-apparatus. It's unlikely to happen. Didn't happen after the last 5 times they went bankrupt.
Quote from: Razgovory on June 29, 2015, 07:01:48 PM
Quote from: Valmy on June 29, 2015, 10:01:10 AM
Greece has a pretty tiny economy. How does whatever happen in Greece impoverish Belgium?
This will be an error the Greeks will long regret I think. Being part of Euroland was one of few things they had going for them.
I was under the impression that defaulting on the Euro would result in pain across the Eurozone.
It's a matter of expectations. If Greece can go, then much bigger countries like Spain or Italy suddenly don't look as safe as they did. Money is cowardly.
Our cabinet members are currently uttering the sentence "We are not Greece" approximately every 30 seconds.
Which is why Greece will be punished........pour encourager les autres.
Quote from: Legbiter on June 29, 2015, 05:49:57 PM
Isn't Sheilbn comfy on a beach there right now? Hope he brought enough cash with him.
The capital controls do not affect tourists (they only affect cards issued by Greek banks). So he should be fine.
Quote from: Richard Hakluyt on June 30, 2015, 02:51:44 AM
Which is why Greece will be punished........pour encourager les autres.
It's stupid though. Money doesn't care who is right, it only cares about the building not being rocked. Punishing Greece makes Spain, Italy, etc... look less safe, not more.
The problem comes from the fact that because of the intermediate nature of the EU monetary union (it is neither a confederation of fully sovereign states, each with its own currency; nor a unitary federation with a common currency) that any solution is subject to both a political and an economic test - and these two are growing more and more irreconcilable. And this is true on both sides - for example right now the biggest obstacle to an economically viable solution is German politics.
I definitely have a lot more sympathy for the Greek government than I have for the Greek people - but at the same time, there is also the issue that punishing a country smacks too much of a collective punishment - something that never works (and, if Versailles has taught us anything, can lead to very nasty unforeseeable consequences).
Quote from: Richard Hakluyt on June 30, 2015, 02:51:44 AM
Which is why Greece will be punished........pour encourager les autres.
If they get punished. Europe hasn't been ruled well in a long time.
Quote from: Martinus on June 30, 2015, 02:57:43 AM
The problem comes from the fact that because of the intermediate nature of the EU monetary union (it is neither a confederation of fully sovereign states, each with its own currency; nor a unitary federation with a common currency) that any solution is subject to both a political and an economic test - and these two are growing more and more irreconcilable. And this is true on both sides - for example right now the biggest obstacle to an economically viable solution is German politics.
I definitely have a lot more sympathy for the Greek government than I have for the Greek people - but at the same time, there is also the issue that punishing a country smacks too much of a collective punishment - something that never works (and, if Versailles has taught us anything, can lead to very nasty unforeseeable consequences).
Yes, heaven forbid a Greek Hitler tries to conquer the world. The only question is, would we notice the attempt?
So how is this going to play out? A no vote means the EU states will either have to backdown and lend money to Greece after all, or accept a Greece exit from the Euro. Presumably Syriza is banking on the former happening. A yes vote means the Syriza government will probably have to resign, and Greece will need to hold elections. The new government will negotiate with the EU states again.
IMHO a united currency only makes sense if you have a united economic policy (which the countries are unwilling to give up), with the same game rules (taxes, subsidies, pensions, welfare, social security etc.) in the whole Eurozone.
I.e. the member countries should have as much influence on their numbers as the states in Germany have on their state numbers. Of course that would require providing Brussels with a) more powers and b) more democratic legitimization. And also with transfer payments from the rich states to the weaker ones (as you have in Germany).
The Euro crisis would have been an opportunity to integrate further, but instead it may lead to more division.
Quote from: The Brain on June 30, 2015, 02:59:22 AM
Quote from: Martinus on June 30, 2015, 02:57:43 AM
The problem comes from the fact that because of the intermediate nature of the EU monetary union (it is neither a confederation of fully sovereign states, each with its own currency; nor a unitary federation with a common currency) that any solution is subject to both a political and an economic test - and these two are growing more and more irreconcilable. And this is true on both sides - for example right now the biggest obstacle to an economically viable solution is German politics.
I definitely have a lot more sympathy for the Greek government than I have for the Greek people - but at the same time, there is also the issue that punishing a country smacks too much of a collective punishment - something that never works (and, if Versailles has taught us anything, can lead to very nasty unforeseeable consequences).
Yes, heaven forbid a Greek Hitler tries to conquer the world. The only question is, would we notice the attempt?
Greece turning to a dictatorship and allying with Putin would not be a good development.
Quote from: Martinus on June 30, 2015, 03:05:12 AM
Quote from: The Brain on June 30, 2015, 02:59:22 AM
Quote from: Martinus on June 30, 2015, 02:57:43 AM
The problem comes from the fact that because of the intermediate nature of the EU monetary union (it is neither a confederation of fully sovereign states, each with its own currency; nor a unitary federation with a common currency) that any solution is subject to both a political and an economic test - and these two are growing more and more irreconcilable. And this is true on both sides - for example right now the biggest obstacle to an economically viable solution is German politics.
I definitely have a lot more sympathy for the Greek government than I have for the Greek people - but at the same time, there is also the issue that punishing a country smacks too much of a collective punishment - something that never works (and, if Versailles has taught us anything, can lead to very nasty unforeseeable consequences).
Yes, heaven forbid a Greek Hitler tries to conquer the world. The only question is, would we notice the attempt?
Greece turning to a dictatorship and allying with Putin would not be a good development.
I think you'll find that the threat in that lineup is Putin and not Greece.
Quote from: Monoriu on June 30, 2015, 03:00:15 AM
So how is this going to play out? A no vote means the EU states will either have to backdown and lend money to Greece after all, or accept a Greece exit from the Euro. Presumably Syriza is banking on the former happening. A yes vote means the Syriza government will probably have to resign, and Greece will need to hold elections. The new government will negotiate with the EU states again.
Greece does not want to exit from the Euro - and Varufakis has already stated that if there is an attempt to kick Greece out of Euro, Greece will fight that tooth and nail in the European Court of Justice. You have to update your game matrix, Mono. ;)
I don't see the point about getting angry with the Greek people, they are just being Greeks and have, unsurprisingly, failed to make the grade as pretend Germans. I prefer to blame the European elites who foisted this monster on a number of countries who should never have been in the frame for membership.
The EU has been putting the cart before the horse for some time now, hence the failures. We will not become primarily Europeans rather than Germans, French etc by executive fiat; it is a long process which will take decades of mingling. The impatience of the EU elite has set the project back by many years, they seem to have no understanding of human nature or think that it can be legislated away.
Quote from: Martinus on June 30, 2015, 03:07:58 AM
Quote from: Monoriu on June 30, 2015, 03:00:15 AM
So how is this going to play out? A no vote means the EU states will either have to backdown and lend money to Greece after all, or accept a Greece exit from the Euro. Presumably Syriza is banking on the former happening. A yes vote means the Syriza government will probably have to resign, and Greece will need to hold elections. The new government will negotiate with the EU states again.
Greece does not want to exit from the Euro - and Varufakis has already stated that if there is an attempt to kick Greece out of Euro, Greece will fight that tooth and nail in the European Court of Justice. You have to update your game matrix, Mono. ;)
I don't think it is a matter of whether they want to exit or not. They don't have enough Euros to pay their civil servants, pensioners, imported goods and whatnot. If they don't get the Euros from somebody, then they may be forced to print their own money to pay their bills.
Mono, you are repeating this bullshit again despite this has been explained many times before. Greece now actually has a domestic surplus (thanks to very heavy austerity they implemented) - they *can* pay their civil servants, pensioners etc. What they can't pay is interest on their external debt. And they are perfectly happy to stop doing that without leaving the Euro.
Quote from: Martinus on June 30, 2015, 03:16:05 AM
Mono, you are repeating this bullshit again despite this has been explained many times before. Greece now actually has a domestic surplus (thanks to very heavy austerity they implemented) - they *can* pay their civil servants, pensioners etc. What they can't pay is interest on their external debt. And they are perfectly happy to stop doing that without leaving the Euro.
Really? At least, their banks don't seem to be able to pay their depositors without EU help.
Quote from: Martinus on June 30, 2015, 02:52:43 AM
Quote from: Legbiter on June 29, 2015, 05:49:57 PM
Isn't Sheilbn comfy on a beach there right now? Hope he brought enough cash with him.
The capital controls do not affect tourists (they only affect cards issued by Greek banks). So he should be fine.
I heard on bloomberg that cabbies in santorini were getting stiffed because the tourists couldn't get cash out of atms.
Quote from: Monoriu on June 30, 2015, 03:19:45 AM
Quote from: Martinus on June 30, 2015, 03:16:05 AM
Mono, you are repeating this bullshit again despite this has been explained many times before. Greece now actually has a domestic surplus (thanks to very heavy austerity they implemented) - they *can* pay their civil servants, pensioners etc. What they can't pay is interest on their external debt. And they are perfectly happy to stop doing that without leaving the Euro.
Really? At least, their banks don't seem to be able to pay their depositors without EU help.
I think capital controls are more about preventing a bank run. No bank in the world would be able to pay all their depositors at once.
Quote from: citizen k on June 30, 2015, 03:23:31 AM
Quote from: Martinus on June 30, 2015, 02:52:43 AM
Quote from: Legbiter on June 29, 2015, 05:49:57 PM
Isn't Sheilbn comfy on a beach there right now? Hope he brought enough cash with him.
The capital controls do not affect tourists (they only affect cards issued by Greek banks). So he should be fine.
I heard on bloomberg that cabbies in santorini were getting stiffed because the tourists couldn't get cash out of atms.
Why would you use cash to pay a cab?
Quote from: Martinus on June 30, 2015, 03:24:34 AM
Quote from: Monoriu on June 30, 2015, 03:19:45 AM
Quote from: Martinus on June 30, 2015, 03:16:05 AM
Mono, you are repeating this bullshit again despite this has been explained many times before. Greece now actually has a domestic surplus (thanks to very heavy austerity they implemented) - they *can* pay their civil servants, pensioners etc. What they can't pay is interest on their external debt. And they are perfectly happy to stop doing that without leaving the Euro.
Really? At least, their banks don't seem to be able to pay their depositors without EU help.
I think capital controls are more about preventing a bank run. No bank in the world would be able to pay all their depositors at once.
I think the domestic surplus thing assumes a deal with the EU can be reached. Absent such a deal and with capital controls in place, the economy will tank. I find it hard to believe that they can stay in the Euro and refuse to honour their debts at the same time.
Quote from: Richard Hakluyt on June 30, 2015, 03:10:57 AM
I don't see the point about getting angry with the Greek people, they are just being Greeks and have, unsurprisingly, failed to make the grade as pretend Germans. I prefer to blame the European elites who foisted this monster on a number of countries who should never have been in the frame for membership.
The EU has been putting the cart before the horse for some time now, hence the failures. We will not become primarily Europeans rather than Germans, French etc by executive fiat; it is a long process which will take decades of mingling. The impatience of the EU elite has set the project back by many years, they seem to have no understanding of human nature or think that it can be legislated away.
Precisely. And Juncker has been a prominent member of these elites for a long time yet he does not come close to acknowledging any political responsibility.
Quote from: Martinus on June 30, 2015, 03:16:05 AM
Greece now actually has a domestic surplus
- Wasn't that like at the start of the year, before the communists made a mess of it and insulted everyone who's been pouring billions into that country of taxevaders.
- The bankrun -more like a bankwalk- has been going on for months now. To the tune of 90 billion euros total iirc.
- agree: the politicians who let in Greece in the euro need to be punished for their
stupidity arrogance, incompetence,corruptness,megalomania....
(edit: stupidity was indeed too generous)
It wasn't stupidity.
Edit: Thank you.
Quote from: Crazy_Ivan80 on June 30, 2015, 03:38:28 AM
Quote from: Martinus on June 30, 2015, 03:16:05 AM
Greece now actually has a domestic surplus
- Wasn't that like at the start of the year, before the communists made a mess of it and insulted everyone who's been pouring billions into that country of taxevaders.
- The bankrun -more like a bankwalk- has been going on for months now. To the tune of 90 billion euros total iirc.
- agree: the politicians who let in Greece in the euro need to be punished for their stupidity arrogance, incompetence,corruptness,megalomania....
(edit: stupidity was indeed too generous)
Well, you are a Belgian, so you don't get to diss other countries. ;)
We may diss other countries,
because we're experts in all what can go wrong and because we're the first to diss our own country :menace: ;)
The Krug says the Greeks should bolt.
http://www.nytimes.com/2015/06/29/opinion/paul-krugman-greece-over-the-brink.html?ref=opinion&_r=1
QuoteGreece Over the Brink
JUNE 29, 2015
It has been obvious for some time that the creation of the euro was a terrible mistake. Europe never had the preconditions for a successful single currency — above all, the kind of fiscal and banking union that, for example, ensures that when a housing bubble in Florida bursts, Washington automatically protects seniors against any threat to their medical care or their bank deposits.
Leaving a currency union is, however, a much harder and more frightening decision than never entering in the first place, and until now even the Continent's most troubled economies have repeatedly stepped back from the brink. Again and again, governments have submitted to creditors' demands for harsh austerity, while the European Central Bank has managed to contain market panic.
But the situation in Greece has now reached what looks like a point of no return. Banks are temporarily closed and the government has imposed capital controls — limits on the movement of funds out of the country. It seems highly likely that the government will soon have to start paying pensions and wages in scrip, in effect creating a parallel currency. And next week the country will hold a referendum on whether to accept the demands of the "troika" — the institutions representing creditor interests — for yet more austerity.
Greece should vote "no," and the Greek government should be ready, if necessary, to leave the euro.
To understand why I say this, you need to realize that most — not all, but most — of what you've heard about Greek profligacy and irresponsibility is false. Yes, the Greek government was spending beyond its means in the late 2000s. But since then it has repeatedly slashed spending and raised taxes. Government employment has fallen more than 25 percent, and pensions (which were indeed much too generous) have been cut sharply. If you add up all the austerity measures, they have been more than enough to eliminate the original deficit and turn it into a large surplus.
So why didn't this happen? Because the Greek economy collapsed, largely as a result of those very austerity measures, dragging revenues down with it.
And this collapse, in turn, had a lot to do with the euro, which trapped Greece in an economic straitjacket. Cases of successful austerity, in which countries rein in deficits without bringing on a depression, typically involve large currency devaluations that make their exports more competitive. This is what happened, for example, in Canada in the 1990s, and to an important extent it's what happened in Iceland more recently. But Greece, without its own currency, didn't have that option.
So have I just made the case for "Grexit" — Greek exit from the euro? Not necessarily. The problem with Grexit has always been the risk of financial chaos, of a banking system disrupted by panicked withdrawals and of business hobbled both by banking troubles and by uncertainty over the legal status of debts. That's why successive Greek governments have acceded to austerity demands, and why even Syriza, the ruling leftist coalition, was willing to accept the austerity that has already been imposed. All it asked for was, in effect, a standstill on further austerity.
But the troika was having none of it. It's easy to get lost in the details, but the essential point now is that Greece has been presented with a take-it-or-leave-it offer that is effectively indistinguishable from the policies of the past five years.
This is, and presumably was intended to be, an offer Alexis Tsipras, the Greek prime minister, can't accept, because it would destroy his political reason for being. The purpose must therefore be to drive him from office, which will probably happen if Greek voters fear confrontation with the troika enough to vote yes next week.
But they shouldn't, for three reasons. First, we now know that ever-harsher austerity is a dead end: after five years Greece is in worse shape than ever. Second, much and perhaps most of the feared chaos from Grexit has already happened. With banks closed and capital controls imposed, there's not that much more damage to be done.
Finally, acceding to the troika's ultimatum would represent the final abandonment of any pretense of Greek independence. Don't be taken in by claims that troika officials are just technocrats explaining to the ignorant Greeks what must be done. These supposed technocrats are in fact fantasists who have disregarded everything we know about macroeconomics, and have been wrong every step of the way. This isn't about analysis, it's about power — the power of the creditors to pull the plug on the Greek economy, which persists as long as euro exit is considered unthinkable.
So it's time to put an end to this unthinkability. Otherwise Greece will face endless austerity, and a depression with no hint of an end.
Quote from: jimmy olsen on June 30, 2015, 05:38:46 AM
The Krug says the Greeks should bolt.
http://www.nytimes.com/2015/06/29/opinion/paul-krugman-greece-over-the-brink.html?ref=opinion&_r=1
QuoteGreece Over the Brink
JUNE 29, 2015
Yes, the Greek government was spending beyond its means in the late 2000s. But since then it has repeatedly slashed spending and raised taxes.
Raising taxes in a country where people don't bother to pay taxes...
From what I have read, the Greeks have done very little about raising money from privatisation, and they still spend quite a lot on their military.
Considering that they guard the EU border in an area that is rife with conflict and streams of refugees, defense spending is one of the few things I have a problem with in regards to Greece. That they don't spend it in the most effective way is something else.
Quote from: Syt on June 30, 2015, 06:34:23 AM
Considering that they guard the EU border in an area that is rife with conflict and streams of refugees, defense spending is one of the few things I have a problem with in regards to Greece. That they don't spend it in the most effective way is something else.
That's like an impoverished man arguing why he still needs to buy beer. I mean, if they are in a desperate situation, then they should adopt desperate measures that put stabilising their public finances as top priority, i.e. willing to make the necessary sacrifices. Instead of saying, oh we can't give up this and that.
Quote from: Monoriu on June 30, 2015, 06:43:16 AM
Quote from: Syt on June 30, 2015, 06:34:23 AM
Considering that they guard the EU border in an area that is rife with conflict and streams of refugees, defense spending is one of the few things I have a problem with in regards to Greece. That they don't spend it in the most effective way is something else.
That's like an impoverished man arguing why he still needs to buy beer. I mean, if they are in a desperate situation, then they should adopt desperate measures that put stabilising their public finances as top priority, i.e. willing to make the necessary sacrifices. Instead of saying, oh we can't give up this and that.
Not really, it's more like an impoverished man arguing he needs to buy a new lock and some security cameras. This may seem unnecessary if he lives in a safe, well of neighborhood, but if he lives in the middle of a ghetto, I don't think it would be unreasonable.
Quote from: Martinus on June 30, 2015, 03:16:05 AM
Mono, you are repeating this bullshit again despite this has been explained many times before. Greece now actually has a domestic surplus (thanks to very heavy austerity they implemented) - they *can* pay their civil servants, pensioners etc.
No, they can't. Their current "surplus" is only because they are not paying their domestic obligations to suppliers etc. and plunder local governments.
Quote from: Syt on June 30, 2015, 06:34:23 AM
Considering that they guard the EU border in an area that is rife with conflict and streams of refugees, defense spending is one of the few things I have a problem with in regards to Greece. That they don't spend it in the most effective way is something else.
I'd watch the Turks too.
Quote from: Martinus on June 30, 2015, 02:57:43 AM
And this is true on both sides - for example right now the biggest obstacle to an economically viable solution is German politics.
How so? Did Germany somehow have to lean on the other 17 governments in the Eurogroup? It's just the biggest creditor with the most visible head of government and thus always in the limelight, but in the end, a lot of the other governments are in agreement with Germany's policy in this matter.
Quote from: celedhring on June 30, 2015, 02:39:17 AMOur cabinet members are currently uttering the sentence "We are not Greece" approximately every 30 seconds.
:lol: :cry:
Blood for the blood God.
Quote from: Zanza on June 30, 2015, 08:26:58 AM
Quote from: Martinus on June 30, 2015, 02:57:43 AM
And this is true on both sides - for example right now the biggest obstacle to an economically viable solution is German politics.
How so? Did Germany somehow have to lean on the other 17 governments in the Eurogroup? It's just the biggest creditor with the most visible head of government and thus always in the limelight, but in the end, a lot of the other governments are in agreement with Germany's policy in this matter.
Well, I have seen cartoons of "lazy Greeks" in German tabloids that would put Das Sturmer to shame. But then your public is good at demonising entire nations, I guess. :P
Maybe if the Greeks didn't constantly break their dinnerware after every meal they would have some money left over to pay their debts. See? You don't always have to use the 'lazy' stereotype.
Quote from: Martinus on June 30, 2015, 09:11:40 AM
Quote from: Zanza on June 30, 2015, 08:26:58 AM
Quote from: Martinus on June 30, 2015, 02:57:43 AM
And this is true on both sides - for example right now the biggest obstacle to an economically viable solution is German politics.
How so? Did Germany somehow have to lean on the other 17 governments in the Eurogroup? It's just the biggest creditor with the most visible head of government and thus always in the limelight, but in the end, a lot of the other governments are in agreement with Germany's policy in this matter.
Well, I have seen cartoons of "lazy Greeks" in German tabloids that would put Das Sturmer to shame. But then your public is good at demonising entire nations, I guess. :P
From "the biggest obstacle is German politics" to "I've seen some cartoons of 'lazy Greeks' in German tabloids". Is that it? Lame.
Quote from: Admiral Yi on June 29, 2015, 04:53:34 PM
Quote from: The Minsky Moment on June 29, 2015, 04:50:27 PM
No Eurozone underwent as much austerity as Greece. So what's the message that gets sent when doing that ends in rejection and failure?
When you start with a 19% deficit and 130% debt, none of your options are going to be fun.
True yet the option foisted by the troika and implemented by the prior two governments turned out to be a (predictable) disaster. A disaster for Greece that is - the foreign private creditors who received the bulk of the money and the bailout did quite nicely of course.
Foisted? I don't remember any foisting being done. I saw no one foisted. I saw an offer of help extended and accepted.
Quote from: Crazy_Ivan80 on June 30, 2015, 02:02:07 AM
Quote from: The Minsky Moment on June 29, 2015, 04:50:27 PM
No Eurozone underwent as much austerity as Greece. So what's the message that gets sent when doing that ends in rejection and failure?
Greece apparently has 60 billion of uncollected taxes to collect.
Forcing a country to slash civil servants and reduce compensation is not a great formula for increasing short term bureaucratic performance. Throwing the entire financial system into chaos and doubt and generating massive uncertainty about the currency is also not a successful formula for encouraging tax compliance.
QuoteSo what's the message that gets sent when you come leeching of other people's money and then calling them names when you don't get your way when you still have lots of taxes to collect but refuse to do so?
I don't know -ask me when something like that happens. You do realize that much of money is these various packages is used to payout interest and principal to creditors at well above market value? It's not going right into Zorba's pocket. If there is leeching here it is from the foreign creditors that bought Greek paper and were bailed out without loss.
As for Greece - the national economy - it implemented huge cuts since 2009. You can complain I suppose that benefits started from a high base but they get a least a B+ for effort.
Quote from: Admiral Yi on June 30, 2015, 12:20:04 PM
Foisted? I don't remember any foisting being done. I saw no one foisted. I saw an offer of help extended and accepted.
We don't have to speculate about what the "or else" would have been - it is playing out right now.
My point here is not to lay blame as between the troika and the Pap/Sampras governments. My point is that the program failed. We should not be surprised that the Greeks are balking at a new program that is more of the same.
Quote from: The Minsky Moment on June 30, 2015, 12:30:43 PM
We don't have to speculate about what the "or else" would have been - it is playing out right now.
You started it.
QuoteMy point here is not to lay blame as between the troika and the Pap/Sampras governments. My point is that the program failed. We should not be surprised that the Greeks are balking at a new program that is more of the same.
The Greeks are balking, but for all the wrong reasons. While they should be trying to negotiate the most favorable default terms possible, instead they have been asking permission to keep on borrowing *and* to increase spending. It would be insane for the troika to accept that.
I'm not defending Syriza
Your previous post suggested an assumption of Greek sanity.
Quote from: Admiral Yi on June 30, 2015, 01:02:28 PM
Your previous post suggested an assumption of Greek sanity.
Samaras was pretty sane. There was a lost opportunity there.
Greece had a 25% public sector before this came down. Foisted or not, they had to break that down.
Quote from: The Minsky Moment on June 30, 2015, 12:27:51 PM
Forcing a country to slash civil servants and reduce compensation is not a great formula for increasing short term bureaucratic performance.
Greece was incapable of getting the taxes collected even before the amount of civil servants was decreased. They were twiddling with their thumbs before, they were twiddling after.
Belgium is bad when it comes to government-efficiency, but compared to Greece we're Sweden.
"Greeks stop paying taxes in expectation of Syriza poll victory"
(http://www.ft.com/cms/s/0/b47c6d76-a320-11e4-bbef-00144feab7de.html)
Quote"It's normal for the tax take to decline during an election campaign
->No, it's not normal. It's bad faith, and it's probably the thing that pissed off a great many people -who are paying their taxes, and are often paying far more taxes than the Greeks would if they could be arsed to actually pay- in regards to the Greeks. The Syriza-shenanigans only made it worse afterwards.
Quote from: MadImmortalMan on June 30, 2015, 01:25:43 PM
Greece had a 25% public sector before this came down. Foisted or not, they had to break that down.
A country that fires a huge swath of its national workforce in a few years is going to have serious problems.
A country that cuts a huge swath of its national workforce in a few years, while in the middle of global financial crisis, with zero control over monetary policy, and with no possibility of currency adjustment is utterly and completely screwed.
Predictable.
Quote from: The Minsky Moment on June 30, 2015, 01:58:44 PM
A country that cuts a huge swath of its national workforce in a few years, while in the middle of global financial crisis, with zero control over monetary policy, and with no possibility of currency adjustment is utterly and completely screwed.
And from this we can reach the conclusion that Germany should have paid Greece's payroll for a couple years? Forever?
Quote from: Crazy_Ivan80 on June 30, 2015, 02:02:07 AM
Quote from: The Minsky Moment on June 29, 2015, 04:50:27 PM
No Eurozone underwent as much austerity as Greece. So what's the message that gets sent when doing that ends in rejection and failure?
Greece apparently has 60 billion of uncollected taxes to collect. So what's the message that gets sent when you come leeching of other people's money and then calling them names when you don't get your way when you still have lots of taxes to collect but refuse to do so?
Hey, that reminds me, on the topic of leeching is Belgium meeting the required 2% military spending for NATO?
Every time people tell me Greece has cut its pension system deeply, I can't help but remember that HK does not have a public pension system at all. I have a pension but that's a job benefit; it is not a public pension. We let our poor seniors go through trash to look for food, and we have huge budget surpluses.
QuoteHey, that reminds me, on the topic of leeching is Belgium meeting the required 2% military spending for NATO?
Are you suggesting we kick everybody who leeches out of NATO? Wait actually that is a great idea. Spend 2% or GTFO.
Quote from: Valmy on June 30, 2015, 02:45:45 PM
QuoteHey, that reminds me, on the topic of leeching is Belgium meeting the required 2% military spending for NATO?
Are you suggesting we kick everybody who leeches out of NATO? Wait actually that is a great idea. Spend 2% or GTFO.
That's the way Greece would stay without cooking the books :smarty:
France reaches that level as well but most members do not. :frog:
Quote from: Valmy on June 30, 2015, 02:45:45 PM
Are you suggesting we kick everybody who leeches out of NATO? Wait actually that is a great idea. Spend 2% or GTFO.
He's suggesting Ivan has no standing to criticize Greece.
Quote from: Valmy on June 30, 2015, 02:45:45 PM
QuoteHey, that reminds me, on the topic of leeching is Belgium meeting the required 2% military spending for NATO?
Are you suggesting we kick everybody who leeches out of NATO? Wait actually that is a great idea. Spend 2% or GTFO.
Well, not out, just in the balls occasionally. Interestingly the Greeks are paying their 2%. Belgium is not even paying half that, coasting along on the coat tails of small handful of more responsible countries.
Quote from: Duque de Bragança on June 30, 2015, 02:48:18 PM
That's the way Greece would stay without cooking the books :smarty:
France reaches that level as well but most member do not. :frog:
Even the UK is about to slip under 2% soon. FOR SHAME.
Quote from: MadImmortalMan on June 30, 2015, 01:25:43 PM
Greece had a 25% public sector before this came down. Foisted or not, they had to break that down.
Sure but over time. It took Canada something like 15 years to put our financial house in order and that was during generally good economic times and a low dollar. Greece has been asked to implement significant austerity measures during terrible economic times and while being bound to an expensive currency. How did anyone expect this to end up any other way?
Quote from: crazy canuck on June 30, 2015, 04:08:23 PM
Quote from: MadImmortalMan on June 30, 2015, 01:25:43 PM
Greece had a 25% public sector before this came down. Foisted or not, they had to break that down.
Sure but over time. It took Canada something like 15 years to put our financial house in order and that was during generally good economic times and a low dollar. Greece has been asked to implement significant austerity measures during terrible economic times and while being bound to an expensive currency. How did anyone expect this to end up any other way?
HK also was in significant trouble in 2003 or so. There was a big hole in the public finances. Unemployment went up 2-3 times. Real estate prices dropped by 60-70%, and a large chunk of the mortgages went under. We don't have any control over our monetary policy either. The HK dollar is pegged to the US dollar, and our interest rates were therefore decided by Mr Alan Greenspan, and nobody expects him to take into consideration HK's needs when deciding the rates.
Civil service pay were cut many times. Civil servants were let go. The HK government sold assets in fire sales. Fun times. No public pension, no unemployment insurance, no help for homeowners, no change in the mortage terms, and the peg to the US dollar was maintained. We raised taxes and cut spending, and endured a few years of 5% deflation. Fixing the public finances was top priority. Nothing else mattered. Everything else was sacrificed. We just told the masses to fuck off, despite huge street protests of half a million.
It took us less than 5 years. It could be done. Provided that the necessary sacrifices were made.
Wasnt that when George Soros attacked the peg?
Quote from: Admiral Yi on June 30, 2015, 04:45:08 PM
Wasnt that when George Soros attacked the peg?
That was in 98, not 03.
Asoka
Quote from: Admiral Yi on June 30, 2015, 04:47:53 PM
Asoka
I remember his boast that he could break the HK-US dollar peg, just like he broke the pound. He forgot that unlike the UK, HK has one of the largest foreign exchange reserves in the world. And we are not a democracy. We don't have to worry about making the people suffer and losing the next election.
Quote from: Monoriu on June 30, 2015, 04:52:58 PM
I remember his boast that he could break the HK-US dollar peg, just like he broke the pound. He forgot that unlike the UK, HK has one of the largest foreign exchange reserves in the world. And we are not a democracy. We don't have to worry about making the people suffer and losing the next election.
From what I've read he didn't actually launch an attack on the pound, he just made a huge bet on its fall.
Probably his most famous attack was on the ringit.
Quote from: Admiral Yi on June 30, 2015, 02:01:49 PM
And from this we can reach the conclusion that Germany should have paid Greece's payroll for a couple years? Forever?
The question not whether they should have paid the payroll but who pays on the bonds used to finance the payroll in the past. And even that's not an issue anymore - it was resolved when the ECB and Euro governments bought
Either way, the answer is simple. Germany should do what is in Germany's interest. And Germany's interest is having a strong and robust EU. The EU gave Germany peacefully what it failed to obtain through war: the pre-eminent position in Europe. The issue isn't "Germany vs. Greece". The issue is the political fallout for the favored center-right governments in Spain and Portugal vs. the fear of Grexit and all it might imply for the future. Germany has the power to sway the decision either way but its interests are indirect.
Quote from: The Minsky Moment on June 30, 2015, 05:33:41 PM
The question not whether they should have paid the payroll but who pays on the bonds used to finance the payroll in the past.
That's an intriguing question, but it's not the one that naturally arises from your condemnation of cutting public payroll in times of global recession etc, etc.
If it's not cut someone has to pay for it. Greek taxpayers were not willing, and even if they had been willing the increase in government revenue would have produced severe contractionary effects as well.
Private lenders were no longer willing to front the money, and even if they had been willing to the result would have been even more unsustainable debt.
So the question remains, who should have paid for these public sector jobs that it was criminally stupid to cut?
The condemnation of the cuts is based on the fact that they were done in such a way to depress output and deepen the debt burden further. So I dispute the premise.
Quote from: The Minsky Moment on June 30, 2015, 05:56:47 PM
The condemnation of the cuts is based on the fact that they were done in such a way to depress output and deepen the debt burden further. So I dispute the premise.
Meaning there was a way to cut those jobs that wouldn't have depressed output and deepened the debt burden?
Quote from: The Minsky Moment on June 30, 2015, 05:33:41 PM
And Germany's interest is having a strong and robust EU.
:yes: An EU without the soft underbelly of Europe.
Quote from: Admiral Yi on June 30, 2015, 02:49:38 PMHe's suggesting Ivan has no standing to criticize Greece.
which is damned true, but ivan is probably the most xenophobic poster on this board aside from grallon. so, what are ya gonna do.
Quote from: LaCroix on June 30, 2015, 06:40:00 PM
which is damned true, but ivan is probably the most xenophobic poster on this board aside from grallon. so, what are ya gonna do.
Me personally? I'm going to attempt to address issues and stay away from character assassination.
Quote from: Admiral Yi on June 30, 2015, 06:41:47 PMstay away from character assassination.
how was it unjustified?
Quote from: LaCroix on June 30, 2015, 06:46:04 PM
how was it unjustified?
How did it affect his point? If Belgium is niggling on NATO, does that change any objective facts about Greece? If Belgium doubled its defense budget, would Greece's economy decliine?
Quote from: Admiral Yi on June 30, 2015, 06:49:50 PM
Quote from: LaCroix on June 30, 2015, 06:46:04 PM
how was it unjustified?
How did it affect his point? If Belgium is niggling on NATO, does that change any objective facts about Greece? If Belgium doubled its defense budget, would Greece's economy decliine?
The Belgian is approaching the Greek problem as a moral problem rather then an economic one. The spendthrift Greeks need to be punished for their moral transgressions. Since his country is committing similar evils by letting the US pay the tab for what is suppose to be a collective defense, then crimes of Greece are not unlike those committed by the rest of Europe and his pontification carries much less weight.
Quote from: Razgovory on June 30, 2015, 07:15:04 PM
The Belgian is approaching the Greek problem as a moral problem rather then an economic one. The spendthrift Greeks need to be punished for their moral transgressions. Since his country is committing similar evils by letting the US pay the tab for what is suppose to be a collective defense, then crimes of Greece are not unlike those committed by the rest of Europe and his pontification carries much less weight.
I see. So you are performing a public service for the posters who are inclined to accept Ivan's positions because of his lofty (but in your mind, undeserved) moral stature.
You offer up an intriguing proposition, but I'm inclined to think you're trying to assassinate his character because that's what you do with all posters you disagree with.
However, if there are posters out there that count on you to disabuse them of their positive misconceptions, by all means carry on.
I don't think they're going to make their goal. :(
Kickstarter Greek Bailout (https://www.indiegogo.com/projects/greek-bailout-fund#/story)
Character assassination is odd thing to say when I point out Belgium doesn't pay it's share of defense spending. And morality is an odd way of looking at things when Greece's chief crime was being in to small a boat to survive the wave.
Quote from: jimmy olsen on June 30, 2015, 07:39:00 PM
I don't think they're going to make their goal. :(
Kicktarter Greek Bailout (https://www.indiegogo.com/projects/greek-bailout-fund#/story)
They should have spelled Kickstarter right if they wanted more people to see it. Also, actually put it on Kickstarter.
Quote from: Razgovory on June 30, 2015, 07:41:57 PM
Character assassination is odd thing to say when I point out Belgium doesn't pay it's share of defense spending. And morality is an odd way of looking at things when Greece's chief crime was being in to small a boat to survive the wave.
Greece's chief crime was borrowing more money than they could repay. Or were willing to pay.
Quote from: Admiral Yi on June 30, 2015, 07:44:41 PM
Quote from: Razgovory on June 30, 2015, 07:41:57 PM
Character assassination is odd thing to say when I point out Belgium doesn't pay it's share of defense spending. And morality is an odd way of looking at things when Greece's chief crime was being in to small a boat to survive the wave.
Greece's chief crime was borrowing more money than they could repay. Or were willing to pay.
The same crisis hit Ireland as well, what was their crime? Greece did borrow a lot of money, but that wasn't what caused it go under.
Quote from: Razgovory on June 30, 2015, 07:47:00 PM
The same crisis hit Ireland as well, what was their crime? Greece did borrow a lot of money, but that wasn't what caused it go under.
Ireland's crime was not watching their banks.
What caused Greece to go under Raz?
Quote from: Admiral Yi on June 30, 2015, 07:51:15 PM
Quote from: Razgovory on June 30, 2015, 07:47:00 PM
The same crisis hit Ireland as well, what was their crime? Greece did borrow a lot of money, but that wasn't what caused it go under.
Ireland's crime was not watching their banks.
What caused Greece to go under Raz?
The 2008 financial crisis and following recession. It was a big wave and smaller nations with small economy had their boats overturned.
Right. The George Bush theory of original sin. :D
Quote from: Admiral Yi on June 30, 2015, 07:57:27 PM
Right. The George Bush theory of original sin. :D
Are you suggesting that it's just some coincidence that these economies fell apart in 2008?
Quote from: Razgovory on June 30, 2015, 07:58:36 PM
Are you suggesting that it's just some coincidence that these economies fell apart in 2008?
I'm suggesting that when a country has 130% debt and a 19% deficit it's only a matter of time.
Quote from: Admiral Yi on June 30, 2015, 07:59:46 PM
Quote from: Razgovory on June 30, 2015, 07:58:36 PM
Are you suggesting that it's just some coincidence that these economies fell apart in 2008?
I'm suggesting that when a country has 130% debt and a 19% deficit it's only a matter of time.
Did Ireland have 130% debt and 19% deficit prior to the collapse?
Quote from: Razgovory on June 30, 2015, 08:00:48 PM
Did Ireland have 130% debt and 19% deficit prior to the collapse?
I think Ireland had an even crazier debt/GDP after it bailed out its banks' creditors.
But not before?
No.
So it's just a coincidence that Ireland and Greece both had economic trouble at the exact same time? Along with the other small economies of Europe. That "Matter of time" just happened to hit all at once? No external stimuli?
There was definitely a relation with Teh World's Greatest Recession.
Well then, I'm glad we are the same page. My theory is the these small Euro economies were not able to survive the wave as well as the larger more mature economies. What is your theory on why certain states countries like Ireland and Greece had much worse trouble then say Germany?
Quote from: Razgovory on June 30, 2015, 08:15:00 PM
Well then, I'm glad we are the same page. My theory is the these small Euro economies were not able to survive the wave as well as the larger more mature economies. What is your theory on why certain states countries like Ireland and Greece had much worse trouble then say Germany?
Germany has debt of 80% and is running a surplus.
Also, unlike Ireland, its banks weren't lending massively into a local real estate bubble, although they did take some hits on exposure to US subprimes.
One of my impressions is that it a German bank was the first to go under. One last question: Do you believe that a moral factor should be considered in Greece's case?
Quote from: Razgovory on June 30, 2015, 09:03:08 PM
One of my impressions is that it a German bank was the first to go under. One last question: Do you believe that a moral factor should be considered in Greece's case?
I think several moral factors should be considered. They lied about their deficit when applying to join the EU. Greeks cheat on their taxes. All that nonsense about German reparations was pure demagoguery. They promised to do a number of things as conditions of their bailout and didn't do many of them. They haven't demonstrated an ounce of gratitude to their creditors.
Quote from: Razgovory on June 30, 2015, 07:55:28 PM
It was a big wave and smaller nations with small economy had their boats overturned.
Hong Kong is smaller than Greece. We survivied a lot of financial crisis without help. Being small is not an excuse.
Quote from: Admiral Yi on June 30, 2015, 09:09:10 PM
Quote from: Razgovory on June 30, 2015, 09:03:08 PM
One of my impressions is that it a German bank was the first to go under. One last question: Do you believe that a moral factor should be considered in Greece's case?
I think several moral factors should be considered. They lied about their deficit when applying to join the EU. Greeks cheat on their taxes. All that nonsense about German reparations was pure demagoguery. They promised to do a number of things as conditions of their bailout and didn't do many of them. They haven't demonstrated an ounce of gratitude to their creditors.
I'll admit I find your stance both surprising and unsurprising. It fits with my "homo economicus" view I have, but contrasts with my "almost libertarian" view of you I have.
Quote from: Monoriu on June 30, 2015, 09:35:10 PM
Quote from: Razgovory on June 30, 2015, 07:55:28 PM
It was a big wave and smaller nations with small economy had their boats overturned.
Hong Kong is smaller than Greece. We survivied a lot of financial crisis without help. Being small is not an excuse.
Hong Kong is a part of China, a fairly large country. Before that it was part of Great Britain a smaller but still fairly large country.
Quote from: Razgovory on June 30, 2015, 10:03:41 PM
I'll admit I find your stance both surprising and unsurprising. It fits with my "homo economicus" view I have, but contrasts with my "almost libertarian" view of you I have.
I'll admit I find your effort to change the subject from Greece to me totally unsurprising.
Quote from: Razgovory on June 30, 2015, 10:05:09 PM
Quote from: Monoriu on June 30, 2015, 09:35:10 PM
Quote from: Razgovory on June 30, 2015, 07:55:28 PM
It was a big wave and smaller nations with small economy had their boats overturned.
Hong Kong is smaller than Greece. We survivied a lot of financial crisis without help. Being small is not an excuse.
Hong Kong is a part of China, a fairly large country. Before that it was part of Great Britain a smaller but still fairly large country.
Hong Kong's public finances are separate from them, and as I said, we did not receive help from either China or the UK during the financial crisis in recent decades. You can also look at Singapore if you still have a problem.
Being big helps. But being small is no excuse. Greece's real problem isn't its size. It is the gross negligence, irresponsibility and mismanagement.
Looks like NO is in the lead, but it's shrunk a bit
http://www.telegraph.co.uk/finance/economics/11709868/Greece-crisis-defaults-IMF-live.html
Quote
MacroPolis @MacroPolis_gr
Prorata poll for @efysn
bef cap controls:
YES 30%
NO 57%
undecided 13%
after:
Yes 37%
No 46%
undecided 17%
#Greece #Greferendum
Not surprising. It isn't about the actual proposals. It is about keeping one's head high and saying "we can say 'no' to the big guys".
Quote from: Admiral Yi on June 30, 2015, 08:16:58 PM
Quote from: Razgovory on June 30, 2015, 08:15:00 PM
Well then, I'm glad we are the same page. My theory is the these small Euro economies were not able to survive the wave as well as the larger more mature economies. What is your theory on why certain states countries like Ireland and Greece had much worse trouble then say Germany?
Germany has debt of 80% and is running a surplus.
Also, unlike Ireland, its banks weren't lending massively into a local real estate bubble, although they did take some hits on exposure to US subprimes.
That's the thing though. German banks did lend massively to foreign real estate bubbles.
http://www.wsj.com/articles/SB10000872396390443890304578008534178895560
Ultimately Germany was helping itself out. Which is fine, but makes the whole "helping the lazy south" rhetoric/narrative pretty grating.
Quote from: Razgovory on June 30, 2015, 07:41:57 PM
Character assassination is odd thing to say when I point out Belgium doesn't pay it's share of defense spending. And morality is an odd way of looking at things when Greece's chief crime was being in to small a boat to survive the wave.
There is more.
Belgium is a direct beneficiary of the fact that most of EU institutions are located there as it has no other substantial industry or exports to speak of (if not for the EU institutions, it is unlikely it would be in a better position than Greece). In fact, if you listen to an average Flemish nationalist, the Waloons are lazy and stupid just as the Greeks are. And the fact that it is located where it is located so does not have to spend money on either defense, border guard and the like, puts it in a much better position than Greece.
Quote from: Razgovory on June 30, 2015, 02:42:35 PM
Hey, that reminds me, on the topic of leeching is Belgium meeting the required 2% military spending for NATO?
Of course they are leeching, as every Atlanticist in Belgium will tell you, and they're none to happy about it too. And Belgium deserves to be pilloried (sp?) for it, especially given the current issues with Russia.
Quote from: LaCroix on June 30, 2015, 06:40:00 PM
but ivan is probably the most xenophobic poster on this board aside from grallon.
I doubt it.
Quote from: Admiral Yi on June 30, 2015, 09:09:10 PM
Quote from: Razgovory on June 30, 2015, 09:03:08 PM
One of my impressions is that it a German bank was the first to go under. One last question: Do you believe that a moral factor should be considered in Greece's case?
I think several moral factors should be considered. They lied about their deficit when applying to join the EU.
They didn't lie to join the EU. They applied creative accounting - and this was tolerated by the other EU countries because they wanted Greece in so turned a blind eye to that. The narrative that somehow Greece managed to pull one on the hapless and innocent EU is just patently false - EU wanted Greece in for political reasons (and they were right, imo). If the bank knows that the borrower has lied on his loan application and decides to lend the money anyway, the bank bears as much responsibility for the negative outcome as the borrower does.
Besides, that's quite a weird morality to punish a country now for what it did 35 years ago.
QuoteGreeks cheat on their taxes.
Mainly the big oligarchs (or is it not cheating, when the super rich do it under the guise of "tax planning"?) - and Syriza government is the first one to declare they want to put a stop to that. So shouldn't you be supporting them?
QuoteAll that nonsense about German reparations was pure demagoguery.
This one is laughable - "Greeks said something stupid, so let's run their country into the ground for that".
QuoteThey promised to do a number of things as conditions of their bailout and didn't do many of them.
Can you give examples?
QuoteThey haven't demonstrated an ounce of gratitude to their creditors.
This one is mind-boggling. Why would anyone demonstrate gratitude to one's creditors? Loans are not charity - they are a transaction (and the risk is well factored into the price). That would be like expecting you to demonstrate gratitude to your ISP or your grocer.
Quote from: Martinus on July 01, 2015, 02:45:18 AM
This one is mind-boggling. Why would anyone demonstrate gratitude to one's creditors? Loans are not charity - they are a transaction (and the risk is well factored into the price). That would be like expecting you to demonstrate gratitude to your ISP or your grocer.
Because nobody in their right mind will lend money to Greece. It isn't an arms-length, commercial transaction. It is help in the name of a loan. It is like when I am about to default on my mortgage, lose my flat, and a relative of mine "lends" me money. Sure, the relative may have other reasons for lending me the money, but if not for him, my situation would be a lot worse.
Quote from: Admiral Yi on June 30, 2015, 10:06:03 PM
Quote from: Razgovory on June 30, 2015, 10:03:41 PM
I'll admit I find your stance both surprising and unsurprising. It fits with my "homo economicus" view I have, but contrasts with my "almost libertarian" view of you I have.
I'll admit I find your effort to change the subject from Greece to me totally unsurprising.
I have done no such thing.
Quote from: Monoriu on July 01, 2015, 02:52:39 AM
Quote from: Martinus on July 01, 2015, 02:45:18 AM
This one is mind-boggling. Why would anyone demonstrate gratitude to one's creditors? Loans are not charity - they are a transaction (and the risk is well factored into the price). That would be like expecting you to demonstrate gratitude to your ISP or your grocer.
Because nobody in their right mind will lend money to Greece. It isn't an arms-length, commercial transaction. It is help in the name of a loan. It is like when I am about to default on my mortgage, lose my flat, and a relative of mine "lends" me money. Sure, the relative may have other reasons for lending me the money, but if not for him, my situation would be a lot worse.
You are wrong. The lenders were acting out of their self-interest, mainly to prevent the contagion from spreading to our Eurozone countries, and (in the case of national lenders) to bail out their own banks heavily exposed to Greek bonds.
Greeks don't want to live in a functioning society. If they did they would (it's a democracy). For instance, they want to have insane regulations that make running a business a chore and a state that can't collect taxes. I say let them live in their own private hell or Idaho.
Quote from: Martinus on July 01, 2015, 03:56:57 AM
Quote from: Monoriu on July 01, 2015, 02:52:39 AM
Quote from: Martinus on July 01, 2015, 02:45:18 AM
This one is mind-boggling. Why would anyone demonstrate gratitude to one's creditors? Loans are not charity - they are a transaction (and the risk is well factored into the price). That would be like expecting you to demonstrate gratitude to your ISP or your grocer.
Because nobody in their right mind will lend money to Greece. It isn't an arms-length, commercial transaction. It is help in the name of a loan. It is like when I am about to default on my mortgage, lose my flat, and a relative of mine "lends" me money. Sure, the relative may have other reasons for lending me the money, but if not for him, my situation would be a lot worse.
You are wrong. The lenders were acting out of their self-interest, mainly to prevent the contagion from spreading to our Eurozone countries, and (in the case of national lenders) to bail out their own banks heavily exposed to Greek bonds.
And they were also imposing rather severe austerity measures that caused a great deal of pain for the Greek citizens, hardly a case for showing gratitude.
The narrative that Germany was helping itself out with the various bailout programs is incomplete. Of course the bailouts served to stop contagion. But contagion in the affected countries would have been much worse than in Germany. Every single Greek bank would long be bankrupt without the bailouts. If Germany had just recapitalized its own banks, that would not have had the same effect as bailing out the banks in other countries.
The problem with the bailouts is that they were completely accounted for in the fiscal position of the respective national governments. Instead they should have been distributed across the EU - but the EU lacked (and probably still lacks despite EBA) the framework that would allow that.
Quote from: Martinus on July 01, 2015, 02:45:18 AM
They didn't lie to join the EU. They applied creative accounting - and this was tolerated by the other EU countries because they wanted Greece in so turned a blind eye to that. The narrative that somehow Greece managed to pull one on the hapless and innocent EU is just patently false - EU wanted Greece in for political reasons (and they were right, imo). If the bank knows that the borrower has lied on his loan application and decides to lend the money anyway, the bank bears as much responsibility for the negative outcome as the borrower does.
Besides, that's quite a weird morality to punish a country now for what it did 35 years ago.
That's not what I've read, and who said anything about punishing anyone?
QuoteMainly the big oligarchs (or is it not cheating, when the super rich do it under the guise of "tax planning"?) - and Syriza government is the first one to declare they want to put a stop to that. So shouldn't you be supporting them?
Not what I've read.
QuoteThis one is laughable - "Greeks said something stupid, so let's run their country into the ground for that".
Who said anything about running them into the ground?
QuoteCan you give examples?
Privatization, public jobs, pensions, tax collections.
QuoteThis one is mind-boggling. Why would anyone demonstrate gratitude to one's creditors? Loans are not charity - they are a transaction (and the risk is well factored into the price). That would be like expecting you to demonstrate gratitude to your ISP or your grocer.
What Mono said. No one else is lining up to lend Greece money at 2.04%.
Quote from: The Larch on July 01, 2015, 05:45:03 AM
And they were also imposing rather severe austerity measures that caused a great deal of pain for the Greek citizens, hardly a case for showing gratitude.
The case for showing gratitude is they are not getting shit from anybody else.
Quote from: Valmy on July 01, 2015, 07:56:44 AM
Quote from: The Larch on July 01, 2015, 05:45:03 AM
And they were also imposing rather severe austerity measures that caused a great deal of pain for the Greek citizens, hardly a case for showing gratitude.
The case for showing gratitude is they are not getting shit from anybody else.
I guess that's like being grateful to mafia loan sharks. :P
Quote from: Martinus on July 01, 2015, 08:39:51 AM
I guess that's like being grateful to mafia loan sharks. :P
Do mafia loan sharks usually loan well below market rates? :hmm:
I mean less than 3% is so low that inflation will likely mean the lenders will lose value on this deal.
It's a lot like being thankful to a loan shark that charges below market rates and doesn't break your knees.
(https://languish.org/forums/proxy.php?request=http%3A%2F%2Fwww.titanic-magazin.de%2Ffileadmin%2Fcontent%2FPostkarten%2F150701_Rettungspaket.jpg&hash=7d0905f3bdb0d18767332d59ff7eb2ea6fce59e3)
"Final help for Greece: EU ties new rescue package!"
Courtesy BBC:
(https://languish.org/forums/proxy.php?request=http%3A%2F%2Fichef.bbci.co.uk%2Fnews%2F624%2Fcpsprodpb%2F78D6%2Fproduction%2F_83943903_who_owns_greeces_deb_v2_624.png&hash=b3b9645dc2a66ae28acd8c9b40ac5298bde77ee7)
Only 11.3 billion? Oh good I thought we were talking about real money here.
Quote from: Admiral Yi on June 30, 2015, 09:09:10 PMI think several moral factors should be considered. They lied about their deficit when applying to join the EU. Greeks cheat on their taxes. All that nonsense about German reparations was pure demagoguery. They promised to do a number of things as conditions of their bailout and didn't do many of them. They haven't demonstrated an ounce of gratitude to their creditors.
Whenever economic issues are made into a morality play, sound analysis inevitably goes out the window. This isn't about feckless Greeks charging their credit cards to someone else any more than it is about Sieg Heiling Teutons bullying the little guy
Greece did fudge their finances when they joined the EZ (not the EEC). And everyone knew it. It was discussed openly in the newspapers at the time, and the decision was made to admit anyway on the theory that the Greek economy was too small to matter anyway. In my business we call that assumption of risk.
Greeks cheat on their taxes as do Italians and Frenchmen. The German reparation demand was a non sequitur when Syriza raised it in this context, and it still is when you raise it in this context. The Greeks have no particular reason to show gratitude to "their creditors" - their actual creditors sold out their positions, and their current creditors bought to bail out bondholders - and then pressured Greece into a misguided and counter-productive adjustment program.
I know you disagree with the policy views and that's fine - this isn't an exact science and I may be wrong about all this. But to elevate the policy difference to a moral stance is another thing - that's the sort of analysis one gets from the tabloids.
Quote from: The Minsky Moment on July 01, 2015, 09:31:58 AM
Greece did fudge their finances when they joined the EZ (not the EEC).
Yeah I also thought this was the case but didn't have time to check and didn't want to challenge Yi's statement without being sure.
Anyways, I hope this is resolved one way or another by September, as I was planning to go there on vacation with my mother. I hope everything will be dirt cheap.
Quote from: Martinus on July 01, 2015, 09:57:34 AM
Anyways, I hope this is resolved one way or another by September, as I was planning to go there on vacation with my mother. I hope everything will be dirt cheap.
I also considered going to Greece next. While things could be dirt cheap, another way to look at it is that things become so dire that the only way for many people to survive is to engage in criminal activities. Like robbing cash-rich tourists :ph34r:
Quote from: Admiral Yi on July 01, 2015, 08:53:46 AM
It's a lot like being thankful to a loan shark that charges below market rates and doesn't break your knees.
I think you can make a good argument that they did charge below market rates
and still broke Greece's knees.
Quote from: The Minsky Moment on July 01, 2015, 09:31:58 AM
Whenever economic issues are made into a morality play, sound analysis inevitably goes out the window. This isn't about feckless Greeks charging their credit cards to someone else any more than it is about Sieg Heiling Teutons bullying the little guy
Greece did fudge their finances when they joined the EZ (not the EEC). And everyone knew it. It was discussed openly in the newspapers at the time, and the decision was made to admit anyway on the theory that the Greek economy was too small to matter anyway. In my business we call that assumption of risk.
Greeks cheat on their taxes as do Italians and Frenchmen. The German reparation demand was a non sequitur when Syriza raised it in this context, and it still is when you raise it in this context. The Greeks have no particular reason to show gratitude to "their creditors" - their actual creditors sold out their positions, and their current creditors bought to bail out bondholders - and then pressured Greece into a misguided and counter-productive adjustment program.
I know you disagree with the policy views and that's fine - this isn't an exact science and I may be wrong about all this. But to elevate the policy difference to a moral stance is another thing - that's the sort of analysis one gets from the tabloids.
I'm not writing a morality play. Raz asked me a question about morality and I answered it. I have never said that just because Greeks are lazy, ungrateful, spendthrift, lying leeches they should be punished.
Two points, or rather questions, about the self-serving nature of the bailouts. Did the creditors come out ahead (as a nation) by cycling the money through Greece rather than giving it directly to their banks? Did all countries who participated in the bailout have banks with exposure to Greece?
Quote from: Zanza on July 01, 2015, 10:25:48 AM
I think you can make a good argument that they did charge below market rates and still broke Greece's knees.
The only way you can sustain that argument is if you equate not paying someone's credit card bill for an extended period with breaking their knees.
Quote from: Admiral Yi on July 01, 2015, 10:40:16 AM
Two points, or rather questions, about the self-serving nature of the bailouts. Did the creditors come out ahead (as a nation) by cycling the money through Greece rather than giving it directly to their banks? Did all countries who participated in the bailout have banks with exposure to Greece?
The creditors wouldn't be able to give money directly to their banks without running afoul EU state aid rules - so such help would need to be pre-approved by the European Commission. Of course here it was done with the EU Commission's blessing as well (as it is a part of the Troika) but as you can see the political ramifications were quite different.
For example, if the EU Commission started to allow bailing out of French and German banks en bloc by their governments, Poland would get pissy about not being to do the same about our coal mines and shipyards, for example.
Quote from: Admiral Yi on July 01, 2015, 10:42:09 AM
Quote from: Zanza on July 01, 2015, 10:25:48 AM
I think you can make a good argument that they did charge below market rates and still broke Greece's knees.
The only way you can sustain that argument is if you equate not paying someone's credit card bill for an extended period with breaking their knees.
I think Zanza meant austerity measures as equivalent to breaking knees. Given the effects they had on Greek economy, I don't think this is so far fetched.
Quote from: Martinus on July 01, 2015, 10:46:07 AM
I think Zanza meant austerity measures as equivalent to breaking knees. Given the effects they had on Greek economy, I don't think this is so far fetched.
I understand that. Try and think what no austerity would mean.
And to add to my point there, there was also a risk of contagion and German and other banks were exposed to Italian, Spanish or Portuguese bonds as well (and in fact, if contagion spread, there was even a risk that France - now a Greece's creditor - would itself be in trouble). So if the creditor governments just bailed out their own banks and let Greece fall, there was a substantial risk that they will have to do this again very shortly with Italy, Spain and Portugal etc. and eventually run out of bail out money.
Quote from: Admiral Yi on July 01, 2015, 10:47:00 AM
Quote from: Martinus on July 01, 2015, 10:46:07 AM
I think Zanza meant austerity measures as equivalent to breaking knees. Given the effects they had on Greek economy, I don't think this is so far fetched.
I understand that. Try and think what no austerity would mean.
Positive economic growth and actual debt reduction?
Quote from: Razgovory on July 01, 2015, 10:50:40 AM
Positive economic growth and actual debt reduction?
How was that working out for Greece before the crisis hit Raz? Was that 19% deficit shrinking the hell out of their debt?
Quote from: Admiral Yi on July 01, 2015, 10:52:38 AM
Quote from: Razgovory on July 01, 2015, 10:50:40 AM
Positive economic growth and actual debt reduction?
How was that working out for Greece before the crisis hit Raz? Was that 19% deficit shrinking the hell out of their debt?
I think they were closer to shrinking debt then they were with Austerity.
Wasn't the debt accumulated in the first place because of deficit spending? :huh:
Economics makes no sense.
Quote from: Martinus on July 01, 2015, 09:39:51 AM
Quote from: The Minsky Moment on July 01, 2015, 09:31:58 AM
Greece did fudge their finances when they joined the EZ (not the EEC).
Yeah I also thought this was the case but didn't have time to check and didn't want to challenge Yi's statement without being sure.
Giscard d'Estaing, French president in the 70's, is commonly seen as having facilitated and accelerated Greece's entry in the EEC, compared to Spain and Portugal.
Quote"Monsieur, on ne fait pas jouer Platon en deuxième division"
But then French farmers feared Iberian competition a lot. ;)
Greek entry was widely seen as premature back then, but was motivated by political reasons, NATO member who had a very recent (Sorry Pericles) and fragile democracy to support after the Colonels' period.
Similar arguments were used for Portugal and Spain, Chirac was very much against it, while famously being pro-Turkey in the EU as a French president...
Quote from: Razgovory on July 01, 2015, 11:01:01 AM
I think they were closer to shrinking debt then they were with Austerity.
Running a 19% deficit, it would have taken Greece about 2 and a half years to go from 130% debt to 180. You would need 20% annual growth for the debt to shrink with a 19% deficit.
I think noone is questioning that Greeks have lived above their station for the last two decades or so. This is beyond dispute. The dispute is that (1) can they get out of the fiscal trap they ended up in without a serious debt principal reduction (my answer is no) and (2) can they be expected to behave once they get out of it, so they do not repeat their earlier mistakes (my answer is maybe, and probably they have a better chance of that under Syriza than under Pasok).
There is, of course, an argument that once you make your bed, you should be made to lie in it but it does not work for countries as well as it works for individuals - both because of unforeseen consequences and because of the fact that it is really not that moral to punish children for sins of their fathers.
Incidentally - and this is the point against my position, mind you - in addition to the "Rich North vs. Poor South" there is also another argument coming from the "Poor East" - people in countries like Poland, Romania and Bulgaria are looking at Greece and asking why Greece should be bailed out, if the minimum and average wage are still 2-3 times higher than those in Poland - why shouldn't Greeks be forced down to the same standard of living as, say, Romanians and Poles have - who have been subject to much harder austerity measures in the 90s and worked much harder to get where they are today. I admit that this argument is much harder to counter than the ones coming from Germans or Finns.
Quote from: Martinus on July 01, 2015, 10:45:10 AM
The creditors wouldn't be able to give money directly to their banks without running afoul EU state aid rules - so such help would need to be pre-approved by the European Commission. Of course here it was done with the EU Commission's blessing as well (as it is a part of the Troika) but as you can see the political ramifications were quite different.
For example, if the EU Commission started to allow bailing out of French and German banks en bloc by their governments, Poland would get pissy about not being to do the same about our coal mines and shipyards, for example.
Bailouts typically don't take the form of a gift. In the US at least it has taken the form of a combination of loans and takeover of an equity stake, which is then sold off to the public.
Would this also have run afoul of EU rules?
Quote from: Martinus on July 01, 2015, 11:09:37 AM
I think noone is questioning that Greeks have lived above their station for the last two decades or so. This is beyond dispute. The dispute is that (1) can they get out of the fiscal trap they ended up in without a serious debt principal reduction (my answer is no) and (2) can they be expected to behave once they get out of it, so they do not repeat their earlier mistakes (my answer is maybe, and probably they have a better chance of that under Syriza than under Pasok).
There is, of course, an argument that once you make your bed, you should be made to lie in it but it does not work for countries as well as it works for individuals - both because of unforeseen consequences and because of the fact that it is really not that moral to punish children for sins of their fathers.
How are these Greek man-children going to learn about responsibility if they never have to face the consequences of their actions?
You sound like someone who wants to build a man a fire.
Quote from: Martinus on July 01, 2015, 02:36:20 AMIn fact, if you listen to an average Flemish nationalist, the Waloons are lazy and stupid just as the Greeks are.
Why would you listen to a nationalist? They are far more likely to be the ones who are lazy and stupid.
Quote from: Valmy on July 01, 2015, 08:41:27 AM
Quote from: Martinus on July 01, 2015, 08:39:51 AM
I guess that's like being grateful to mafia loan sharks. :P
Do mafia loan sharks usually loan well below market rates? :hmm:
I mean less than 3% is so low that inflation will likely mean the lenders will lose value on this deal.
Which inflation? We're the eurozone, we're terrified of it and would rather prefer the threat of deflation that even considering priting a bit more money. :contract:
Quote from: Martinus on July 01, 2015, 11:09:37 AM
I think noone is questioning that Greeks have lived above their station for the last two decades or so. This is beyond dispute. The dispute is that (1) can they get out of the fiscal trap they ended up in without a serious debt principal reduction (my answer is no) and (2) can they be expected to behave once they get out of it, so they do not repeat their earlier mistakes (my answer is maybe, and probably they have a better chance of that under Syriza than under Pasok).
Why should we care if they behave or not after they default?
Quote from: Admiral Yi on July 01, 2015, 10:40:16 AM
Two points, or rather questions, about the self-serving nature of the bailouts. Did the creditors come out ahead (as a nation) by cycling the money through Greece rather than giving it directly to their banks? Did all countries who participated in the bailout have banks with exposure to Greece?
I don't know you'd have to check the numbers. I think everyone has at least some exposure.
There were reasons to bail out the private creditors other than to protect ones own nationals though. I assume the bailouts were done to stabilize the markets and halt contagion and were not self-serving in the narrow sense.
Quote from: Martinus on July 01, 2015, 10:45:10 AM
For example, if the EU Commission started to allow bailing out of French and German banks en bloc by their governments, Poland would get pissy about not being to do the same about our coal mines and shipyards, for example.
Didn't governments across the Eurozone bail out their banks in 2009? :huh:
Germany also had coal subsidies for decades without running afoul of EU regulations apparently.
Quote from: Martinus on July 01, 2015, 10:49:16 AM
And to add to my point there, there was also a risk of contagion and German and other banks were exposed to Italian, Spanish or Portuguese bonds as well (and in fact, if contagion spread, there was even a risk that France - now a Greece's creditor - would itself be in trouble). So if the creditor governments just bailed out their own banks and let Greece fall, there was a substantial risk that they will have to do this again very shortly with Italy, Spain and Portugal etc. and eventually run out of bail out money.
That's the definition of contagion, but which of your points does it add to? :huh:
Quote from: Admiral Yi on July 01, 2015, 10:42:09 AM
Quote from: Zanza on July 01, 2015, 10:25:48 AM
I think you can make a good argument that they did charge below market rates and still broke Greece's knees.
The only way you can sustain that argument is if you equate not paying someone's credit card bill for an extended period with breaking their knees.
I think austerity in some ways was inevitable. The Greek government had too many civil servants for example. That said, it would have worked better, if the EU had invested into the Greek economy at the same time to make up for the shortfall.
Quote from: Zanza on July 01, 2015, 02:06:04 PM
That said, it would have worked better, if the EU had invested into the Greek economy at the same time to make up for the shortfall.
I don't know what this means.
Quote from: Martinus on July 01, 2015, 11:11:55 AM
Incidentally - and this is the point against my position, mind you - in addition to the "Rich North vs. Poor South" there is also another argument coming from the "Poor East" - people in countries like Poland, Romania and Bulgaria are looking at Greece and asking why Greece should be bailed out, if the minimum and average wage are still 2-3 times higher than those in Poland - why shouldn't Greeks be forced down to the same standard of living as, say, Romanians and Poles have - who have been subject to much harder austerity measures in the 90s and worked much harder to get where they are today. I admit that this argument is much harder to counter than the ones coming from Germans or Finns.
Finnland had a terrible banking crisis in the early 1990s with a massive recession as their debt-fueled growth of the 1980s collapsed. They climbed out of that to where they are now - which is by the way in recession and with rising unemployment. Why are their arguments any less valid than those of Poles or Greeks? :rolleyes:
Quote from: Admiral Yi on July 01, 2015, 02:10:19 PM
Quote from: Zanza on July 01, 2015, 02:06:04 PM
That said, it would have worked better, if the EU had invested into the Greek economy at the same time to make up for the shortfall.
I don't know what this means.
Which part?
Quote from: Zanza on July 01, 2015, 02:12:50 PM
Which part?
"Invested into the Greek economy." Do you mean something like EU financed public works projects? Or the EU paying for public employees so they don't have to be laid off?
Quote from: Admiral Yi on July 01, 2015, 02:14:57 PM
Quote from: Zanza on July 01, 2015, 02:12:50 PM
Which part?
"Invested into the Greek economy." Do you mean something like EU financed public works projects? Or the EU paying for public employees so they don't have to be laid off?
No. Investing into the private Greek economy. Give loans to start ups, export insurance for new exporters, help new businesses to access EU funds, invest into Greek education programs, etc.
Stuff that governments can do to support the economy but obviously can't be done by a government undergoing austerity.
Quote from: Zanza on July 01, 2015, 02:26:25 PM
No. Investing into the private Greek economy. Give loans to start ups, export insurance for new exporters, help new businesses to access EU funds, invest into Greek education programs, etc.
Stuff that governments can do to support the economy but obviously can't be done by a government undergoing austerity.
If they could find a way to make that happen, they'd be golden. But seriously, all the foreign money ran away as soon as Syriza was elected.
Quote from: MadImmortalMan on July 01, 2015, 02:59:36 PM
If they could find a way to make that happen, they'd be golden. But seriously, all the foreign money ran away as soon as Syriza was elected.
They should have done that during the Samaras years. And the EU can invest without caring whether foreign money runs away or not. I bet it wouldn't have run away nearly as fast if there had been such a program to accompany the austerity and reformation of Greek state.
So, the referendum.
Syriza sympathizers have attacked people lobbying for Greeks to vote "yes" on the austerity measures. Meanwhile, Syriza members advertising a "no" have likewise been attacked.
People have voiced concerns that the short timelines don't allow for the voters to come to a fully informed opinion. Also, the phrasing of the question seems to be somewhat ambiguous. Additionally, there's grumblings that the "No" options will be listed above "Yes," allegedly to bias voters to vote "No."
Finally, the constitutional court will rule probably on Friday whether the referendum can go ahead, because while the Greek constitution allows for plebiscites, budgetary questions are explicitly ruled out.
The "yes" / "no" order is a bit of a bullshit point, as, whilst "yes" usually comes before "no", there is nothing preventing the government from structuring the question in a way where the "yes" answer means actually "no" (e.g. "do you want the government to reject the Troika proposal?").
Not surprised about the constitutional point - a similar provision exists in Polish constitution. Though I guess the government will argue that this is not a purely budgetary question but is more structural/fundamental.
Incidentally, I would be interested in seeing political party support polls - if Syriza loses the referendum and new elections are called, I wonder who stands the chance to win. Hopefully it is not Golden Dawn (I hope also someone sues Golden Dawn or at least curses them for stealing the name from one of the most prominent occult organisations of the last two centuries).
http://www.bbc.com/news/world-europe-33311422
QuoteThe Greek referendum question makes (almost) no sense
The wording of the Greek debt referendum has been released, and it's a bit of a puzzler.
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For those who can't read Greek, here's a translation.
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For those who can't read Greekdebtspeak, well, you're on your own.
The two appendix documents - "Reforms for the completion of the current programme and beyond" and "Preliminary debt sustainability analysis" - don't sound much more easily digestible than the ballot.
There is still a question over when and how voters will be presented with those documents, and whether world-class economists will be on hand at polling stations to explain them.
(https://languish.org/forums/proxy.php?request=http%3A%2F%2Fichef.bbci.co.uk%2Fnews%2F624%2Fcpsprodpb%2F18405%2Fproduction%2F_83933399_83925674.jpg&hash=c8614b6726a81bb67905e2e21617fd576a34913f)
Canada actually introduced an act of parliament to avoid exactly these kinds of questions being put to the public. After two long and convoluted referendum ballots on Quebec independence in 1980 and 1995, the "Clarity Act" stipulated that an independence referendum must be essentially: "Do you want independence, yes or no?"
No or yes?
As well as being a little bit dense, the Greek ballot also controversially puts the "No" option - favoured by the Greek government - above the yes option, leading some to accuse it of bias.
It is an "unusual" format, said Katie Ghose, Chief Executive of the UK Electoral Reform Society.
In the case of the Greek ballot, the no-before-yes format may be offset by the question reading: "Should the [agreement] be accepted" instead of "accepted or rejected", Ms Ghose said.
Yes or no?
The Greek ballot wouldn't be the first accused of being not quite up to scratch on the no-bias front, and there are arguably worse examples in history.
In 1978, after being accused of human rights violations by the UN, Chile's General Pinochet held a referendum to ask the people whether they supported his policies. The "Yes" box was a Chilean flag, the "No" box - ever so slightly lower - was a solid black rectangle.
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Pinochet won by a cool 78.6%.
And back in 1938, Adolf Hitler balloted the German people to ask: "Do you approve of the reunification of Austria with the German Reich accomplished on 13 March 1938 and do you vote for the list of our Fuehrer, Adolf Hitler?"
The ballot paper had a subtly leading format.
(https://languish.org/forums/proxy.php?request=http%3A%2F%2Fichef.bbci.co.uk%2Fnews%2F624%2Fcpsprodpb%2F17E84%2Fproduction%2F_83942979_hitlerref.png&hash=512c792320ca5817d16b7c6da26e1d350c1bb1d6)
Hitler won with an even cooler 99.7%.
No waffling, please
When the UK government prepares a referendum question, the Electoral Commission takes 12 weeks to test the question on focus groups to eliminate any bias or confusion.
A draft of the referendum on whether the UK should leave the EU was rewritten because it confused a significant minority of people who didn't know the UK was already a member.
As well as bias, the question is tested for clarity, said the Electoral Commission's Rosie Davenport.
"We look at length of the question. There is a guideline for the number of words," she said.
"The aim is to make the question as as clear and concise as possible, so you're not presenting people with a lot of waffly information before they vote."
'The real choice will be known'
Which brings us back to Greece. Athens did not have the luxury of a 12-week testing period - it has to organise a national referendum at breathtaking speed - but it might be accused of waffle.
"This referendum's emergency nature gives little time to prepare the arguments for either side, and the question is enormously detailed, essentially asking Greeks if they will accept the specific document-based proposals from the IMF, ECB and European Commission," said Ms Ghose.
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With such a short time for the people of Greece to make up their minds, what they are being told by politicians will have more of an effect than usual, Ms Ghose said.
"Given the short time span with this referendum, party cues may matter even more than usual; millions will be listening to what party leaders have to say and informing their decisions based on that.
"At the core of this, however, the Greek people will understand the implications for voting yes or no - even with little time to campaign. The UK's 1998 Good Friday Agreement referendum question was notoriously complex, but people knew the underlying choice," she added.
So while the question is long and detailed - that may be out of necessity, and the real choice will be known by Greeks."
Well so long as it is better than Pinochet and Hitler...
QuoteA draft of the referendum on whether the UK should leave the EU was rewritten because it confused a significant minority of people who didn't know the UK was already a member.
Perhaps Greeks are less of idiots than Brits? :huh:
I read the translation of the referendum question prepared by our firm's information department (it was an update for clients, as the possibility of a Grexit is, unsurprisingly, quite of interest to them) and it made more sense than the attempt by BBC above. Perhaps BBC has shitty Greek translators.
So, essentially BBC's "analysis" consists of a couple of dumb tweets, a mistranslation and comparisons to Hitler and Pinochet. This must be that sterling British journalism I have heard so much about. :lol:
Greeks are doing fine. In the Swedish 1980 nuclear power referendum there were 3 No options and no Yes option.
Quote from: Admiral Yi on June 30, 2015, 07:44:41 PM
Quote from: Razgovory on June 30, 2015, 07:41:57 PM
Character assassination is odd thing to say when I point out Belgium doesn't pay it's share of defense spending. And morality is an odd way of looking at things when Greece's chief crime was being in to small a boat to survive the wave.
Greece's chief crime was borrowing more money than they could repay. Or were willing to pay.
If that is a crime then every nation that has debt is guilty of it.
Quote from: crazy canuck on July 02, 2015, 12:25:50 PM
If that is a crime then every nation that has debt is guilty of it.
Thanks Ron Paul. I look forward to the melt down of the entire world economy. We should have rejected fiat money :weep:
Anyway, going back to bashing Crazy Ivan - I was viewing the debt to GDP ratio for different countries, and it appears in Europe Belgium has one of the highest.
It's:
Greece: 177%
Italy: 132%
Portugal: 130%
Ireland: 110%
Cyprus 107%
and then Belgium: 106%
And it has actually increased from the previous year.
So it's a bit of the pot calling the kettle black.
Source: http://www.tradingeconomics.com/country-list/government-debt-to-gdp
Quote from: Martinus on July 03, 2015, 01:17:26 AM
Anyway, going back to bashing Crazy Ivan - I was viewing the debt to GDP ratio for different countries, and it appears in Europe Belgium has one of the highest.
It's:
Greece: 177%
Italy: 132%
Portugal: 130%
Ireland: 110%
Cyprus 107%
and then Belgium: 106%
And it has actually increased from the previous year.
So it's a bit of the pot calling the kettle black.
Source: http://www.tradingeconomics.com/country-list/government-debt-to-gdp
106% is obviously a lot lower than 177%, so I am not sure what your point is.
Edit: besides, even if Belgium's debt level is just as bad, doesn't stop anybody from pointing out what's wrong with Greece.
Debt vs. GDP is an indicator, but it's useless without context, e.g. a country's ability to refinance its debt (i.e. paying off existing loans/interest and taking on new ones).
The table lists Hong Kong as having a debt to GDP ratio of 30-something per cent. It is a little odd because the HK government is a creditor and has a large cash reserve that is sufficient for like two years of expenditure. It issues debt mainly to provide a benchmark for the bond market. There are also retail i-bonds that are issued not because they need the money, but as an excuse to give some pork to us residents.
The point that I want to make is, not all debt is equal.
Uganda, Moldova, Congo, and Macedonia must be in the clear, for their debt rate is under 40%. :)
Quote from: Syt on July 03, 2015, 01:38:35 AM
Uganda, Moldova, Congo, and Macedonia must be in the clear, for their debt rate is under 40%. :)
40% must be some kind of magic number for shithole debtors. Venezuela's around 40 well IIRC.
Shitholes like Norway, Finland or Denmark. :P
There is one more aspect to the Greek crisis that is rarely spoken of - the first bailout essentially socialised the losses while privatised the profits for German, French etc. banks, by having tax payer institutions (such as governments etc.) take over the bad debt from private banks. If German voters should be mad at anyone, it shouldn't be the Greeks, but their government complicit with bailing out German banksters.
Quote from: Martinus on July 03, 2015, 03:31:01 AM
There is one more aspect to the Greek crisis that is rarely spoken of - the first bailout essentially socialised the losses while privatised the profits for German, French etc. banks, by having tax payer institutions (such as governments etc.) take over the bad debt from private banks. If German voters should be mad at anyone, it shouldn't be the Greeks, but their government complicit with bailing out German banksters.
Say, there is a great blunder. Both A and B are responsible. When people point out that B's previous and current actions are causing the problem, it doesn't help their case to say "hey, A is also responsible." I don't think a lot of people are saying that the banks are saints. But that doesn't excuse Greece from the whole situation. There is no doubt that Greece is causing a lot of trouble for themselves and for others. Rather than pointing fingers at the banks, they should fix their own problems first. The banks should be dealt with separately.
Fuck, I wrote a long post summarising an essey by an economist (unfortunately I read it in Polish only) concerning the Greek situation, which I thought was very insightful, and then got the "connection lost" message when I tried to post it.
Fuck this fucking board's servers.
Quote from: Martinus on July 03, 2015, 03:31:01 AM
There is one more aspect to the Greek crisis that is rarely spoken of - the first bailout essentially socialised the losses while privatised the profits for German, French etc. banks, by having tax payer institutions (such as governments etc.) take over the bad debt from private banks. If German voters should be mad at anyone, it shouldn't be the Greeks, but their government complicit with bailing out German banksters.
"That is rarely spoken of"? Really? You present this as if it was a new talking point when it was talked about ad infinitum when the actual bailout and haircut happened. By the way, the by far biggest exposure to Greek government debt was always Greek banks and pension funds. Those were bailed out as well.
Quote from: Zanza on July 03, 2015, 10:32:36 AM
Quote from: Martinus on July 03, 2015, 03:31:01 AM
There is one more aspect to the Greek crisis that is rarely spoken of - the first bailout essentially socialised the losses while privatised the profits for German, French etc. banks, by having tax payer institutions (such as governments etc.) take over the bad debt from private banks. If German voters should be mad at anyone, it shouldn't be the Greeks, but their government complicit with bailing out German banksters.
"That is rarely spoken of"? Really? You present this as if it was a new talking point when it was talked about ad infinitum when the actual bailout and haircut happened. By the way, the by far biggest exposure to Greek government debt was always Greek banks and pension funds. Those were bailed out as well.
:yes:
It would be interesting to take a look at the discussion here in the runup to the bailout. My recollection was that the line being peddled at the time by the Greek supporters then was that Germany et al had an obligation to bailout Greece, out of solidarity and because of its responsibility to maintain the eurozone. No one seems to remember that Germany had to be dragged kicking and screaming into this mess. Now of course we find that the Greek's were pressured to accept a bailout against their wishes and against their interests.
Which of course is consistent with the observation that it is much more fun to spend borrowed money than it is to repay it. And the observation that lenders are evil when they don't want to lend and they are evil again when they ask for repayment.
Quote from: Admiral Yi on July 03, 2015, 11:23:18 AM
It would be interesting to take a look at the discussion here in the runup to the bailout. My recollection was that the line being peddled at the time by the Greek supporters then was that Germany et al had an obligation to bailout Greece, out of solidarity and because of its responsibility to maintain the eurozone. No one seems to remember that Germany had to be dragged kicking and screaming into this mess. Now of course we find that the Greek's were pressured to accept a bailout against their wishes and against their interests.
Which of course is consistent with the observation that it is much more fun to spend borrowed money than it is to repay it. And the observation that lenders are evil when they don't want to lend and they are evil again when they ask for repayment.
I distinctly recall Minsky being critical then of how the bail out was structured. I don't see any inconsistency in his position now.
As for me, I just enjoy following the discussion between you and Minsky
http://www.theguardian.com/world/2015/aug/20/greek-bailout-alexis-tsipras-call-snap-elections
QuoteGreek bailout: Alexis Tsipras to 'step down and call snap elections'
Prime minister set to make imminent announcement, with 20 September predicted as most likely date for a poll
The Greek prime minister, Alexis Tsipras, has decided to step down and call snap elections for 20 September, government officials said.
As the debt-crippled country received the first tranche of its new €86bn (£61bn) bailout, Tsipras was set to make the formal announcement later on Thursday, government sources told Reuters..
Once he submits his resignation the prime minister would be replaced by the president of Greece's supreme court, Vassiliki Thanou-Christophilou – a vocal bailout opponent – who would oversee the elections as the head of a transitional government.
Tsipras won parliamentary backing for the tough bailout programme last week by a comfortable margin despite a large-scale rebellion among members of his ruling leftwing Syriza party, nearly one-third of whose 149 MPs either voted against the deal or abstained. Syriza governs in a coalition with the rightwing, anti-austerity party Independent Greeks (Anel).
The revolt by hardliners angry at what they view as a betrayal of the party's pledge to fight austerity left Tsipras short of the 120 votes he would need – two-fifths of the 300-seat assembly – to survive a censure motion and he was widely expected to call a confidence vote this week or next.
He has now decided to skip that step, deciding instead to go straight to the country in an attempt to silence rebels and shore up public support for the draconian three-year bailout programme, which entails a radical overhaul of the Greek economy including further tax hikes, spending cuts and major reforms of health, welfare, pensions and taxation.
Tsipras appears to have calculated that it was better to call the elections early, before the effects of the new bailout measures – including further pension cuts, VAT increases and a "solidarity" tax on incomes – started to make themselves felt.
Some analysts had suggested he might wait until early October, by which time Greece's creditors would have carried out their first review of the country's progress in meeting the bailout conditions and perhaps come to a decision about debt relief – potentially a major electoral asset for the prime minister.
Under Greece's complex constitutional laws, President Prokopis Pavlopoulos cannot immediately call an election if Tsipras resigns, but must first consult the other major parties to see if they could form a government – a near impossibility given the current parliamentary arithmetic.
At the end of a bruising seven months of negotiations with Greece's international creditors, the prime minister eventually signed up to a deal that many in his party view as a U-turn on the anti-austerity platform that swept it to power in elections last January.
Tsipras has insisted that accepting creditor demands for further tough reforms was the only way to ensure his country remains in the eurozone, which is a key demand among the electorate according to opinion polls.
Syriza is now thought likely to formally split. The leader of its dissident Left Platform, the former energy minister Panagiotis Lafazanis, announced last week he intended to form a new anti-bailout movement, accusing the government of capitulating to the "dictatorship of the eurozone".
The prime minister's closest aides had said on Thursday that the divisions within Syriza had to be dealt with one way or another. The energy minister, Panos Skourletis, told state broadcaster ERT: "The political landscape must clear up. We need to know whether the government has or does not have a majority."
The party is now thought likely to call an extraordinary congress in September to resolve its internal differences.
Recent opinion polls have put support for Syriza at around 33-34%, making it by far the country's most popular party – but not popular enough to govern without a coalition partner. No polls have been published since then, but Syriza insiders remain optimistic.
Dimitris Papadimoulis, a Syriza MEP, told Mega TV: "These elections, whenever they are announced by the government, will provide a stable governing solution. My feeling is that Syriza will have an absolute majority."
The political uncertainty was taking its toll on markets, with the Athens Stock Exchange down 2.8% in afternoon trading.
Analyst Evangelos Sioutis, who is the head of equities at Guardian Trust Securities, said: "The Greek stock market is coming into a new circle of uncertainty while we are waiting for new elections to be announced. For the stock markets, it is a factor of uncertainty."