Ze Germans are plotting to establish the 4th Reich. Don't be fooled Euros!
http://www.guardian.co.uk/business/2011/aug/16/sarkozy-merkel-economic-government-eurozone
QuoteSarkozy and Merkel call for 'true economic government' to save eurozone
Plan for European economic government with single leader, drawn up after mini-summit, cautiously welcomed by UK
* Polly Curtis, Whitehall correspondent
* guardian.co.uk, Tuesday 16 August 2011 20.55 BST
France and Germany have set out plans to create the first "true European economic government" headed by a single appointed leader, as part of major moves to synchronise tax and spending to save the failing eurozone.
The French president, Nicolas Sarkozy, and German chancellor, Angela Merkel, announced the dramatic proposals after a two-hour mini-summit. They also called for the imposition of tighter restrictions on member country's deficits and announced a synchronising of the tax policies of their own two countries. Sarkozy has also secured the support of Merkel for a Tobin tax – a financial tax on all international transactions – to raise funds to ease the crisis engulfing the European economy.
The establishment of an economic government for the eurozone will be regarded by eurosceptics as a political power grab for Europe.
On Tuesday night, the British government gave a cautious welcome to the move, saying they would adopt a "watch and see" policy. A treasury source said: "This looks like the right direction but we need to see how it pans out. We will continue to advance UK interests at every opportunity." The government has no formal position on the Tobin tax, but has stressed that any such tax would need to be truly international to be successful and not disadvantage participating countries.
The proposals, on the day of dire growth figures for Germany, normally considered one of Europe's safest economies disappointed the markets.
Sarkozy said the most important element was the plan "to create a real economic government for the eurozone".
Merkel said "there has to be a stronger coordination of financial and economic policy" to protect the euro, adding: "We will regain the lost confidence. That is why we go into a phase with a new quality of cooperation within the eurozone."
The European Council president, Herman van Rompuy, will be asked to head the new economic government, and will set and enforce a deadline for all 17 eurozone members to reduce their deficits, putting pressure on countries such as Greece and Portugal to shore up public spending.
Merkel said they had rejected for now the idea of euro bonds, which would have pooled the members states' governments' debts to reduce the overall risk of the eurozone,but neither leader ruled their use out in the future. George Osborne has raised euro bonds as a possible mechanism for shoring up the eurozone, but the idea was politically unpalatable in the German coalition. There was also no movement on the expansion of the zone's €440 billion rescue fund, the European financial stability facility, seen by some as crucial to the future of the zone.
Merkel said all countries in the eurozone should enshrine balanced budgets in their constitutions. "I do not really think we can solve problems with stop-gap solutions," she said.
"We are looking at real, realistic step-by-step measures that we can use to gain back the trust that has been lost, and I do not think that euro bonds would help us in this.
"It's quite right that 17 countries need to make a step-by-step progress."
QuoteFrance and Germany have set out plans to create the first "true European economic government" headed by a single appointed leader, as part of major moves to synchronise tax and spending to save the failing eurozone.
France will be Germany's puppet. Are they the only two countries eligable for the #1 spot. I call BULLSHIT.
QuoteThe eurozone currently consists of Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Malta, the Netherlands, Portugal, Slovakia, Slovenia, and Spain.
I say give the #1 slot to Malta.
QuoteSarkozy and Merkel
S&M. Nothing good can come of that.
Silly idea.
Quote from: Admiral Yi on August 17, 2011, 01:07:47 AM
Silly idea.
Uhm, that's the only way having a common currency makes sense.
Quote from: 11B4V on August 17, 2011, 12:45:01 AM
QuoteSarkozy and Merkel
S&M. Nothing good can come of that.
:yeahright:
Adding another institution to decide on Eurozone matters just serves to exclude some of the more economically liberal EU countries like UK, Sweden or Poland from the decision making so that the French dirigiste point of view has more supporters.
Merkel is an idiot to agree to this.
And it doesn't really address any of the problems of the Eurozone.
Quote from: Martinus on August 17, 2011, 01:25:58 AM
Uhm, that's the only way having a common currency makes sense.
There's no way the member states are going to give up their sovereignty on taxation and spending. You would end up with another useless title holder in Brussels giving speeches that no one listens to.
Europe has two problems. A number of countries with unsustainable debt levels and various countries that are at different stages of the business cycle. Centralized budgeting doesn't fix the second problem and it's about 10 years too late for it too fix the first problem. The only helpful thing they could do is compel Germany to run large deficits to crank up demand, but then you end up destroying the fiscal position of essentially the last major solvent country in Europe.
Quote from: Admiral Yi on August 17, 2011, 02:30:40 AMThe only helpful thing they could do is compel Germany to run large deficits to crank up demand, but then you end up destroying the fiscal position of essentially the last major solvent country in Europe.
If Germany went on a deficit spending spree now, it would just add to the angst of its citizens and reduce their consumption even more. So it would probably have an adverse overall effect on the economy. Citizens aren't stupid, they know that they have to pay for deficits in the end. That's something politicians promoting stimulus spending seem to ignore. The only way to increase consumption is to take away the fear of the future. There are two major components to this: job security (which is elusive for most of the middle and low wage earners) and a well-financed state that can be relied upon.
Quote from: jimmy olsen on August 17, 2011, 12:31:29 AM
Ze Germans are plotting to establish the 4th Reich. Don't be fooled Euros!
(https://languish.org/forums/proxy.php?request=http%3A%2F%2Fdeutschelobby.files.wordpress.com%2F2011%2F07%2Fangela-merkel-heil.jpeg%3Fw%3D259%26amp%3Bh%3D194&hash=c2f3546261629a4cdcd491522959cf6b1afd6ed9)
I remember losing a lot of hope a few weeks ago, when Germany outlined a "plan" to "save teh economy". It was basically, to have all member states follow the German tax rules. Which of course would be awesome for Germany since there would be no competition for them via lower taxes elsewhere.
That quite clearly showed that still, at the edge of the cliff, member states are trying to run totally selfish "solutions". We will tank.
Never heard of that "plan". Any details? Who promoted it?
Quote from: Zanza on August 17, 2011, 03:24:01 AM
Never heard of that "plan". Any details? Who promoted it?
Not sure, it appeared as a news item, a call for a common tax policy or something like that.
Was it in the "Gypsy Beet Gazette"?
No, I think it was in Goat Breeder's Monthly :hmm:
:rolleyes:
Quote from: Tamas on August 17, 2011, 03:30:01 AMNot sure, it appeared as a news item, a call for a common tax policy or something like that.
If that's the whole level of detail you can remember, there is not much to discuss.
Quote from: Zanza on August 17, 2011, 03:49:18 AM
Quote from: Tamas on August 17, 2011, 03:30:01 AMNot sure, it appeared as a news item, a call for a common tax policy or something like that.
If that's the whole level of detail you can remember, there is not much to discuss.
I concur.
Let's get back on topic: what's next? Greek default at the end of this month? Or another bailout? And if any, then what?
And Italy... already a shitton of money was spent on buying Italian bonds off the stockmarket, it can't go on forever. And if there will be Italian austerity, Benito's err I mean Silvio's opposition cannot campaign with "we will take even more stuff away!", when the rioting starts there.
http://www.youtube.com/watch?v=LyePCRkq620&feature=feedf
Quote from: Admiral Yi on August 17, 2011, 02:30:40 AMThe only helpful thing they could do is compel Germany to run large deficits to crank up demand, but then you end up destroying the fiscal position of essentially the last major solvent country in Europe.
The UK is insolvent? :huh:
Quote from: Martinus on August 17, 2011, 06:54:27 AMThe UK is insolvent? :huh:
France, Italy and Spain aren't insolvent either. All of them should be able to stabilize and reduce their debt given enough political will to do so.
Quote from: Zanza on August 17, 2011, 07:18:09 AM
Quote from: Martinus on August 17, 2011, 06:54:27 AMThe UK is insolvent? :huh:
France, Italy and Spain aren't insolvent either. All of them should be able to stabilize and reduce their debt given enough political will to do so.
Why would they do that though? Eventually, they will get their Eurobonds, and when that happens, they can simply have Germany pay their bills.
Quote from: Zanza on August 17, 2011, 07:18:09 AM
France, Italy and Spain aren't insolvent either. All of them should be able to stabilize and reduce their debt given enough political will to do so.
Yeah? That is good news because from where I sit a meltdown in any one of those countries would bring down the Euro zone.
Quote from: Zanza on August 17, 2011, 02:55:58 AM
Quote from: jimmy olsen on August 17, 2011, 12:31:29 AM
Ze Germans are plotting to establish the 4th Reich. Don't be fooled Euros!
(https://languish.org/forums/proxy.php?request=http%3A%2F%2Fdeutschelobby.files.wordpress.com%2F2011%2F07%2Fangela-merkel-heil.jpeg%3Fw%3D259%26amp%3Bh%3D194&hash=c2f3546261629a4cdcd491522959cf6b1afd6ed9)
The Axis of Austerity Measures
It seems they want a Tobin tax, to be imposed on all EU members, not just Eurozone members.
http://www.reuters.com/article/2011/08/17/eurozone-germany-idUSLDE77G08820110817
Can someone define a "financial transaction" for me in this context so I know what it is they are going to tax?
Hmmm......checking up it seems that a Tobin tax is only on transactions involving currency exchange, I thought the defintion was looser than that, so have used the term incorrectly above.
Quote from: Zanza on August 17, 2011, 07:18:09 AM
Quote from: Martinus on August 17, 2011, 06:54:27 AMThe UK is insolvent? :huh:
France, Italy and Spain aren't insolvent either. All of them should be able to stabilize and reduce their debt given enough political will to do so.
Completely true. Curiously enough, every politician in Europe is actually trying their very best to make them insolvent. And that goes for our dear Chancellor in Berlin, as well. I wonder if the Führer of the Axis of Austerity is only now realizing what happens when her most important trade partners cut investments to nothing and stop buying stuff.
The government sector isn't the only one that buys stuff.
Quote from: Iormlund on August 17, 2011, 11:24:55 AMCompletely true. Curiously enough, every politician in Europe is actually trying their very best to make them insolvent. And that goes for our dear Chancellor in Berlin, as well. I wonder if the Führer of the Axis of Austerity is only now realizing what happens when her most important trade partners cut investments to nothing and stop buying stuff.
She is way too preoccupied with domestic politics to really care. Germans can (and it looks like they will) vote her out of office. Spaniards can't. It doesn't matter to her if hundreds of thousands protest on the big squares in Spain.
Quote from: MadImmortalMan on August 17, 2011, 11:36:04 AM
The government sector isn't the only one that buys stuff.
All the others stopped buying stuff 3 years ago, when the money supply vanished.
Quote from: Zanza on August 17, 2011, 11:38:39 AM
Quote from: Iormlund on August 17, 2011, 11:24:55 AMCompletely true. Curiously enough, every politician in Europe is actually trying their very best to make them insolvent. And that goes for our dear Chancellor in Berlin, as well. I wonder if the Führer of the Axis of Austerity is only now realizing what happens when her most important trade partners cut investments to nothing and stop buying stuff.
She is way too preoccupied with domestic politics to really care. Germans can (and it looks like they will) vote her out of office. Spaniards can't. It doesn't matter to her if hundreds of thousands protest on the big squares in Spain.
Oh I know what she thinks she is doing. I'm just shocked she doesn't realize Germany won't survive the Eurozone meltdown she seems so intent on bringing into existence.
My employer is a small business, around 25 employees total. We bought millions in German high tech equipment every year before the crisis. After the crisis started, we survived mostly with infrastructure projects. And now come the cuts ...
Quote from: Martinus on August 17, 2011, 06:54:27 AM
The UK is insolvent? :huh:
I exaggerated for the sake of effect.
The UK recently went through a round of austerity out of fears that the bond market would punish it if it didn't. Spain is a peculiar case: relatively low debt/GDP, but investors don't seem to have confidence in their ability to sustain belt-tightening, and I think there are worries about government exposure to the regional banks. That leaves France and Germany. How much leeway does France have? France's banks have a lot of exposure to Greek debt and there was talk of a French downgrade during Scary Week.
That leaves Germany.
Quote from: Admiral Yi on August 17, 2011, 02:30:40 AM
Quote from: Martinus on August 17, 2011, 01:25:58 AM
Uhm, that's the only way having a common currency makes sense.
There's no way the member states are going to give up their sovereignty on taxation and spending. You would end up with another useless title holder in Brussels giving speeches that no one listens to.
Europe has two problems. A number of countries with unsustainable debt levels and various countries that are at different stages of the business cycle. Centralized budgeting doesn't fix the second problem and it's about 10 years too late for it too fix the first problem. The only helpful thing they could do is compel Germany to run large deficits to crank up demand, but then you end up destroying the fiscal position of essentially the last major solvent country in Europe.
I agree with this. As can be seen with Canada on a smaller scale, a large country with economice differences between member states is very hard to govern efficiently. That's why large empires eventually crumble on their own weight.
Quote from: viper37 on August 17, 2011, 12:35:48 PM
I agree with this. As can be seen with Canada on a smaller scale, a large country with economice differences between member states is very hard to govern efficiently. That's why large empires eventually crumble on their own weight.
I am not sure what you are getting at here. I have a hard time imagining a political entity of any significant size in the US which does not have significant economic differences between different areas. Are you implying Missouri is hard to govern efficiently and if it were to split up so each of its counties were independent nations it would operate at peak efficiency? Of course even then I have a hard time imagining a community where everybody's economic interests are the same.
The Economist had an interesting article about where federal taxes are raised and spent in the USA a few weeks back :
http://www.economist.com/blogs/dailychart/2011/08/americas-fiscal-union
As one can see there are huge imbalances, as one would expect in a continent-sized country. It works because being an American is so much more important than being from NM or NY.
In the Eurozone though it is the other way around, Germany and Greece (etc etc) are much more important to people than the eurozone. No way would the Germans or Dutch tolerate the sort of fiscal flows that are routine in the US.
Quote from: Iormlund on August 17, 2011, 11:53:41 AMOh I know what she thinks she is doing. I'm just shocked she doesn't realize Germany won't survive the Eurozone meltdown she seems so intent on bringing into existence.
Why would she want an Eurozone meltdown? I mean, I can get those conspiracy theories that suggest all this is a plan to establish German hegemony over Europe, but what interest would Germany have in crashing the Euro?
QuoteMy employer is a small business, around 25 employees total. We bought millions in German high tech equipment every year before the crisis. After the crisis started, we survived mostly with infrastructure projects. And now come the cuts ...
I agree, but the situation doesn't look that dire from this side. Most of our EU trading partners are close to or back at the level of pre-crisis exports, Spain is rather the exception there. Of course, Spain's dimishing relevance as an export market is overcompensated by the BRICs stellar growth.
Quote from: Richard Hakluyt on August 17, 2011, 12:56:31 PM
In the Eurozone though it is the other way around, Germany and Greece (etc etc) are much more important to people than the eurozone. No way would the Germans or Dutch tolerate the sort of fiscal flows that are routine in the US.
Germany has a system like that too to transfer money from the richer to the poorer states to guarantee a similar level of government services everywhere. What we learned in the last fifty years or so is that it does not create an incentive to change for the recipients. And it's not particularly successful in leveling the differences either. Most states have been either recipients or donors for the entire duration of the Federal Republic. The other big transfer happened after reunification when the Western states transferred something like 1.5 trillion Euro (much more than is currently spent on the bailouts!) to East Germany, which is roughly the size of Greece and Ireland combined. The result was mixed, there was success in raising East German living standards, but they still rely on these transfer payments twenty years later. The tentative end date for these payments is now being pushed to 2019.
Quote from: Zanza on August 17, 2011, 02:20:16 PM
Quote from: Iormlund on August 17, 2011, 11:53:41 AMOh I know what she thinks she is doing. I'm just shocked she doesn't realize Germany won't survive the Eurozone meltdown she seems so intent on bringing into existence.
Why would she want an Eurozone meltdown? I mean, I can get those conspiracy theories that suggest all this is a plan to establish German hegemony over Europe, but what interest would Germany have in crashing the Euro?
She might not want it, but her less than stellar approach to this crisis only contributes to the sense of insecurity.
Quote
QuoteMy employer is a small business, around 25 employees total. We bought millions in German high tech equipment every year before the crisis. After the crisis started, we survived mostly with infrastructure projects. And now come the cuts ...
I agree, but the situation doesn't look that dire from this side. Most of our EU trading partners are close to or back at the level of pre-crisis exports, Spain is rather the exception there. Of course, Spain's dimishing relevance as an export market is overcompensated by the BRICs stellar growth.
It's not just Spain. The whole Eurozone grew at a whopping 0.2% this last trimester. With the US and UK on austerity programs that only leaves the BRICs. That's what, 15-20% tops?
Quote from: Zanza on August 17, 2011, 02:25:11 PM
Quote from: Richard Hakluyt on August 17, 2011, 12:56:31 PM
In the Eurozone though it is the other way around, Germany and Greece (etc etc) are much more important to people than the eurozone. No way would the Germans or Dutch tolerate the sort of fiscal flows that are routine in the US.
Germany has a system like that too to transfer money from the richer to the poorer states to guarantee a similar level of government services everywhere. What we learned in the last fifty years or so is that it does not create an incentive to change for the recipients. And it's not particularly successful in leveling the differences either. Most states have been either recipients or donors for the entire duration of the Federal Republic. The other big transfer happened after reunification when the Western states transferred something like 1.5 trillion Euro (much more than is currently spent on the bailouts!) to East Germany, which is roughly the size of Greece and Ireland combined. The result was mixed, there was success in raising East German living standards, but they still rely on these transfer payments twenty years later. The tentative end date for these payments is now being pushed to 2019.
Yes, I think such payments soften the pain of change but also reduce the speed of transition. Here in the UK we have a more or less national pay scale for public sector jobs, this makes such jobs very desirable in depressed areas. So the depressed areas remain depressed as all the more skilled people go into public service there. Ok, it is much more complicated than that :lol: , but the very existence of such regional aid helps to perpetuate the problem.
Quote from: Zanza on August 17, 2011, 02:25:11 PM
Quote from: Richard Hakluyt on August 17, 2011, 12:56:31 PM
In the Eurozone though it is the other way around, Germany and Greece (etc etc) are much more important to people than the eurozone. No way would the Germans or Dutch tolerate the sort of fiscal flows that are routine in the US.
Germany has a system like that too to transfer money from the richer to the poorer states to guarantee a similar level of government services everywhere. What we learned in the last fifty years or so is that it does not create an incentive to change for the recipients. And it's not particularly successful in leveling the differences either. Most states have been either recipients or donors for the entire duration of the Federal Republic. The other big transfer happened after reunification when the Western states transferred something like 1.5 trillion Euro (much more than is currently spent on the bailouts!) to East Germany, which is roughly the size of Greece and Ireland combined. The result was mixed, there was success in raising East German living standards, but they still rely on these transfer payments twenty years later. The tentative end date for these payments is now being pushed to 2019.
Could you ask the german goverment to spell that shit out to our francophone "countrymen"! We're tired of paying between 6 and 12 billion euro's per annum with nothing to show for it except disdain -of not pure racism-, attemtps of territorial annexations and a constitution that is nothing but apartheid disguised as democracy.
Quote from: Valmy on August 17, 2011, 12:45:12 PM
Quote from: viper37 on August 17, 2011, 12:35:48 PM
I agree with this. As can be seen with Canada on a smaller scale, a large country with economice differences between member states is very hard to govern efficiently. That's why large empires eventually crumble on their own weight.
I am not sure what you are getting at here. I have a hard time imagining a political entity of any significant size in the US which does not have significant economic differences between different areas. Are you implying Missouri is hard to govern efficiently and if it were to split up so each of its counties were independent nations it would operate at peak efficiency? Of course even then I have a hard time imagining a community where everybody's economic interests are the same.
Well, I don't know much about US internal governance, but I seem to recall some differences, like, well, helping GM&Chrysler to save some States while being detrimental to others. I can also point to the American Civil War given that the interest of the North and South were conflicting due to difference in economies.
But in the case of Canada, essentially, you will see stuff like the monetary policiy and the interest rate policy affecting different regions of Canada positively or negatively.
A strong dollar will be detrimental to Ontario and Quebec because our economy is mostly based on industries, not natural resources. Alberta has no problem exporting oil, and it's even more beneficial for them, because for Canadian companies, importing the tech they need to drill for oil&gaz will cost less.
However, with economic growth comes inflation. The western part of the country has been hit hard inflation over the last few years (less so with the recession, but still) and Alberta and BC would have needed an increase in the interest rates to reduce the pressure on their commodities prices, in particular on the real estate sector.
Raising interest rates was impossible, since doing so would have screwed Ontario, Quebec and the Maritimes wich did not have inflation problem like the west. A Canadian government may screw with any given province to preserve that "canadian integrity", but they will never screw with Ontario.
More recently, the creation of a centralized financial authority in Canada is beneficial to Ontario but detrimental to other provinces. Quebec and Alberta will see their financial sector shrinking over times, good jobs move to Toronto because of this policy.
These are just minor examples. In Canada, only Alberta is without debt, so it's not as bad as Europe where many states are nearing bankrupt and require different economic remedies than countries like France or Germany.
It's possible we see a situation where Germany is in economic growth and Poland in recession. What will the central authority do? Raise interest rates to avoid inflation in Germany and screw Poland's chance of recovery?
I just don't see how they will work this out.
They were supposed to enforce a 3% GDP deficit rule, wich they never did, and we see the result of overspending today. How will that change with a new central authority? Who will tell Germany what to do if they don't behave 20 years from now?
If you have equalization payments between countries, and systematically one state keeps receiving the money while one other keeps giving the money, this will generate serious tension, especially among different ethnic groups.
Quote from: Zanza on August 17, 2011, 02:25:11 PMThe other big transfer happened after reunification when the Western states transferred something like 1.5 trillion Euro (much more than is currently spent on the bailouts!) to East Germany, which is roughly the size of Greece and Ireland combined. The result was mixed, there was success in raising East German living standards, but they still rely on these transfer payments twenty years later. The tentative end date for these payments is now being pushed to 2019.
I had no idea that was still going on. :huh:
Quote from: viper37 on August 17, 2011, 03:36:33 PM
It's possible we see a situation where Germany is in economic growth and Poland in recession. What will the central authority do? Raise interest rates to avoid inflation in Germany and screw Poland's chance of recovery?
You don't have to wonder about that question. We already know the answer.
What the ECB did when France and Germany were showing anemic growth was to keep interest rates low while others like Ireland and Spain massively overheated, feeding the current crisis.
Quote from: MadImmortalMan on August 17, 2011, 04:07:14 PM
Quote from: Zanza on August 17, 2011, 02:25:11 PMThe other big transfer happened after reunification when the Western states transferred something like 1.5 trillion Euro (much more than is currently spent on the bailouts!) to East Germany, which is roughly the size of Greece and Ireland combined. The result was mixed, there was success in raising East German living standards, but they still rely on these transfer payments twenty years later. The tentative end date for these payments is now being pushed to 2019.
I had no idea that was still going on. :huh:
You want to be the politician who takes away free money?
Quote from: Richard Hakluyt on August 17, 2011, 12:56:31 PM
The Economist had an interesting article about where federal taxes are raised and spent in the USA a few weeks back :
http://www.economist.com/blogs/dailychart/2011/08/americas-fiscal-union
As one can see there are huge imbalances, as one would expect in a continent-sized country. It works because being an American is so much more important than being from NM or NY.
In the Eurozone though it is the other way around, Germany and Greece (etc etc) are much more important to people than the eurozone. No way would the Germans or Dutch tolerate the sort of fiscal flows that are routine in the US.
It isn't a very interesting article and chart because all it tells us is where federal facilities make up a relatively large part of a state's economy. Mississippi gains little from having the US government pay all the sailors on ships in the yards there - those sailors pay no taxes and spend their money on-base.
If the chart showed the same thing without including defense spending, I think it would be meaningful.
Also, The Economist knows better than to lump D.C. in with a state.
They have hookers on base now?
Quote from: Zanza on August 17, 2011, 02:05:48 AM
Adding another institution to decide on Eurozone matters just serves to exclude some of the more economically liberal EU countries like UK, Sweden or Poland from the decision making so that the French dirigiste point of view has more supporters.
Merkel is an idiot to agree to this.
And it doesn't really address any of the problems of the Eurozone.
It actually starts to address the main one, which is that we need a common economic goverment to go with a single currency. Which is also the way to go to form an united Europe. Which happens to be our main goal in all of this.
That said, trust me Zanza: this is very much Berlin's idea. It actually took awhile to get the French to agree. Sarkozy will be allowed to peacock it as if he is leading the show, but that is intentional.
Don't bother to pin any guilt on Merkel. This is a group move. And the SPD can be voted into office anytime you want - privately, they're very much in support of this.
I admit there are quite a few people in Berlin who have a boner about the move (seeing as it is a bit of a correction of the 1945 debacle), but nobody has any illusions that this is a risk that can misfire. Still, it has to be tried if Europe is to have a chance.
Also, that is why Germany insists so much in the austerity measures - while it is in fact true that they are quite recessive and will temporarily hurt Europe's economy, in the long run this is the only way to get rid of the 'always getting into more debt' cycle that characterizes the economies that are too close to the american economical sphere of influence.
If we get to pull this one off, we'll have the true foundations for a strong Europe ready in about a decade. Which will leave us only with the question on how to get enough resources to actually pull the full might of the continents' economic strength to bear, since Europe has little oil and rare earths deposits, and our foreign sources of those can be severely hampered by the US, Russia or China*.
(*: and we don't have enough variable food, but we've been making great strides in the relations with the Ukraine and belive that particular issue can be overcome with proper exploitation of the Ukranian arable land)
Few people in Berlin had actually thought about that little detail before I raised it, but while we were looking rather dispiritedly at a map of the Caucasus, the guys at DIW suggested that our superior creativity can eventually develop alternatives that we can produce and make us self-sufficient in those areas in the coming decades. The Bundesministerium für Wirtschaft und Technologie chimed in to say that they are swamped with patents that the country can't even develop all on its own, so they see it as a possible solution (though it might be better to get the FDP out of that ministerium, as they are preferring to let most of the patents go to private firms, even if that means foreign companies, while I'm defending that the State needs to create an institute to develop the patents that would otherwise leave Germany and go abroad. The FDP says it doesn't trust government bureaucrats to do such a job, but I think I know a few who can).
All this said, the Bundesministerium der Finanzen has already warned everybody repeatedly that "it [the Economy] can all collapse at any time" if nothing is done, so advancing with a common economic government is the best way to go.
It's risky, but if successful we can reap massive dividends. Since by risking nothing, we'd have a guaranteed collapse, we're damn well moving in with this.
The key issue is to avoid the issuance of Eurobonds until such a thing as the common economic government is in place - otherwise, since the largest economies bar Germany are in doldrums and the smaller ones who are healthy are too tiny, we'd just be shifting the burden of the debt of others directly onto the German taxpayer, which should be protected as much as possible as it is the backbone of the European economy (this is why people got so upset when Merkel agreed to let the ECB buy Spanish and Italian debt. The chancellor knows very well the dangers of this move, so everybody wanted conferences so that she could tell others what was that she was told to agree to such a thing - in fact, Spain and Italy were hanging by a fingernail, with Zapatero and Tremonti making frantic calls for an intervention to Paris, Berlin and Brussels).
But now things have calmed a bit, and we managed to get the French on board with the plans that have been laid out years ago. The fact that that the yields on French bonds rose quite a bit after the announcement of the purchases immensely helped the negotiations, as that move made Paris much more agreeable to the original proposals and allowed the issue of the Eurobonds to be buried for now.
:tinfoil:
I wonder how widespread MS's beliefs are in the PIIGs.
Quote
the largest economies bar Germany are in doldrums
Bar Germany? Yeah, Germany's going gangbusters. ;)
Martim, what is your job?
Quotethat characterizes the economies that are too close to the american economical sphere of influence
:huh:
Quote from: Tamas on August 18, 2011, 12:25:12 AM
Quotethat characterizes the economies that are too close to the american economical sphere of influence
:huh:
In Martim's world, if it's bad, it's American.
Quote from: citizen k on August 18, 2011, 12:57:31 AM
Quote from: Tamas on August 18, 2011, 12:25:12 AM
Quotethat characterizes the economies that are too close to the american economical sphere of influence
:huh:
In Martim's world, if it's bad, it's American.
Ironically, the problem he talks about there is caused by being less "American". AKA, the USA is not as far down that road to hell as the uber-debtors of Europe.
Quote from: MadImmortalMan on August 17, 2011, 04:07:14 PM
Quote from: Zanza on August 17, 2011, 02:25:11 PMThe other big transfer happened after reunification when the Western states transferred something like 1.5 trillion Euro (much more than is currently spent on the bailouts!) to East Germany, which is roughly the size of Greece and Ireland combined. The result was mixed, there was success in raising East German living standards, but they still rely on these transfer payments twenty years later. The tentative end date for these payments is now being pushed to 2019.
I had no idea that was still going on. :huh:
There is even an extra tax for it. It's 5.5% on top of the amount you pay in income tax. They now consider to keep it even after 2019, but not for the eastern regions exclusively, but to support economically weak regions in the whole country.
Do Ossis have to pay the Ossi tax too?
Yes.
@Martim: Few people in Berlin had realized that we have very little oil in Europe before you told them? Wow.
I thought they had learned that in 1941. :P
Quote from: Zanza on August 18, 2011, 02:08:01 AM
@Martim: Few people in Berlin had realized that we have very little oil in Europe before you told them? Wow.
I thought they had learned that in 1941. :P
Yeah it kind of hit them in the face in the 40s :D
Quote from: MadImmortalMan
Ironically, the problem he talks about there is caused by being less "American". AKA, the USA is not as far down that road to hell as the uber-debtors of Europe.
The US benefits from a number of advantages euro countries do not have, in particular the ability to print its own currency, buy its own debt and the fact that, being the de facto financial center of the world, it debt is seen as the ultimate safe haven (which means America can borrow at a very low rate). In pure financial terms, the US is actually just as bad as the worst of the PIIGS and would have had its credit rating slashed to levels very close to "junk" if it wasn't the world top superpower.
(not to mention its ability to strike back at the ratings agencies, as you can see by the investigation that Washington started on S&P about their role evaluating assets during the housing bubble)
Although part of this advantages backfire on America (it also means it has trouble inflating its debt and is stuck on a liquidity trap), the fact is that Europe never really had all these advantages to beguin with. Britain is currently creating money to try and inflate its debt away, but the country is far more vulnerable than the US is.
That said, the American way is hardly a desireable example to follow - Americans have few vacations, work long hours [mostly spent talking around the water/coffee machines] and are the western nation with the lowest level of social mobility. Also, the anglo-saxon model of student loans means they get out of the university saddled with a huge debt - not something we want to emulate in Europe.
Quote from: Zanza
Few people in Berlin had realized that we have very little oil in Europe before you told them? Wow.
I thought they had learned that in 1941. :P
In the last decades, most of the effort was concentrated in integrating Europe, and it was assumed that, once united, the Continent would be a massive superpower, right on par with the US.
It was not really understood that, taken as a whole, Europe's natural resources are very scarce for its needs, and that what we do get to keep things working arrives to us via imports, either overland or overseas, sources that can be stopped by the political will of those who would be our major competitors.
Like it or not, what to do AFTER Europe was unified was not thought about.
These kinds of oversights are actually somewhat of a problem in Germany. The recent mess in Libya was also started by the French, who decided to lead the way without consulting anyone previously. Which sucked, because Germany had agreed with Turkey to let them lead and handle all affairs related with the Arab Spring (Gaddafi had made a 180º turn and promised the Turks everything if they did not support the rebels). But nobody at the AA actually remembered to tell the French what had been agreed, and as a result we now have a huge mess in the area that results from Paris' Imperial delusions.
(The Italians are fuming even more, as they had a good gig going with Gaddafi).
Quote from: Martim Silva on August 18, 2011, 06:39:47 AMIt was not really understood that, taken as a whole, Europe's natural resources are very scarce for its needs, and that what we do get to keep things working arrives to us via imports, either overland or overseas, sources that can be stopped by the political will of those who would be our major competitors.
Eh? It was always well understood that Europe doesn't have very many raw materials. That's hardly a new and groundbreaking observation, especially not in Germany which suffered from it during both world wars. Japan even entered the war because of this.
QuoteWhich sucked, because Germany had agreed with Turkey to let them lead and handle all affairs related with the Arab Spring
:hmm: Can you link something about that?
The Eurozone "government" idea seems to be exactly as things are now, albeit with a new (no doubt pricey) figurehead. Personally I think the inevitable conclusion of all of this is to have a common Eurobond. Debt limits would have to be set by this new "government" (or another legislative body).
Quote from: Martim Silva on August 18, 2011, 06:39:47 AMAmericans have few vacations, work long hours [mostly spent talking around the water/coffee machines]
:rolleyes:
Quote from: grumbler on August 17, 2011, 04:48:59 PM
Mississippi gains little from having the US government pay all the sailors on ships in the yards there - those sailors pay no taxes and spend their money on-base.
If the chart showed the same thing without including defense spending, I think it would be meaningful.
It's a pretty well-known fact that communities around defense bases often depend on spending from those stationed there to maintain their economies. To suggest that the communites don't benefit from the presense of a base is just silly.
:tinfoil:
Quote from: Barrister on August 18, 2011, 10:48:56 AM
:tinfoil:
That communities benefit from military bases?
Quote from: Valmy on August 18, 2011, 10:51:47 AM
Quote from: Barrister on August 18, 2011, 10:48:56 AM
:tinfoil:
That communities benefit from military bases?
To Martim's post in general.
I mean - what else can you say?
Quote from: dps on August 18, 2011, 09:26:06 AM
Quote from: grumbler on August 17, 2011, 04:48:59 PM
Mississippi gains little from having the US government pay all the sailors on ships in the yards there - those sailors pay no taxes and spend their money on-base.
If the chart showed the same thing without including defense spending, I think it would be meaningful.
It's a pretty well-known fact that communities around defense bases often depend on spending from those stationed there to maintain their economies. To suggest that the communites don't benefit from the presense of a base is just silly.
Maybe he means in the instant of Mississippi. Cause if it is implied as a general statement it is wrong.
Quote from: 11B4V on August 18, 2011, 11:06:17 AM
Maybe he means in the instant of Mississippi. Cause if it is implied as a general statement it is wrong.
Even so it would seem awefully harsh that the people serving on that base are restricted to the base so that they can only spend their money on the base.
Even then the local economy would benefit since the base itself has to supply itself from somewhere and presumably at least some of that can be sourced locally.
If Grumbler is right I am wondering why was closing bases a few years back was such a big issue for politicians in districts where the bases were located?
Quote
Even so it would seem awefully harsh that the people serving on that base are restricted to the base so that they can only spend their money on the base.
They are not restricted.
Quote
Even then the local economy would benefit since the base itself has to supply itself from somewhere and presumably at least some of that can be sourced locally.
Very true. I could even image the impact on Kitsap, Mason, and Jefferson Counties, if NB Kitsap and PSNS shut down.
Quote
If Grumbler is right I am wondering why was closing bases a few years back was such a big issue for politicians in districts where the bases were located?
Loss of jobs usually doesnt sit well with voters.
Quote from: 11B4V on August 18, 2011, 11:25:14 AM
Loss of jobs usually doesnt sit well with voters.
Exactly, which is why I suspect Grumbler was overstating the case.
Is the US really the finical center of the world? I thought it was London.
Quote from: Razgovory on August 18, 2011, 12:05:53 PM
Is the US really the finical center of the world? I thought it was London.
Commerce is largely denominated in US dollars not Pounds.
Quote from: Razgovory on August 18, 2011, 12:05:53 PM
Is the US really the finical center of the world? I thought it was London.
New York and London are, I believe, the cities with the largest financial sectors.
Quote from: citizen k on August 18, 2011, 12:57:31 AM
Quote from: Tamas on August 18, 2011, 12:25:12 AM
Quotethat characterizes the economies that are too close to the american economical sphere of influence
:huh:
In Martim's world, if it's bad, it's American.
The USSR... Filled to the brim with Americans! Probably ambassadors.
Quote from: Razgovory on August 18, 2011, 12:05:53 PM
Is the US really the finical center of the world? I thought it was London.
They are on a par, with London maybe having the edge in the past decade or so. Perhaps more importantly the UK economy is only a sixth the size of the US economy, so while the financial services are still a big deal in NY and the USA they are completely central to the current UK economy.
Quote from: Richard Hakluyt on August 18, 2011, 02:54:03 PM
Quote from: Razgovory on August 18, 2011, 12:05:53 PM
Is the US really the finical center of the world? I thought it was London.
They are on a par, with London maybe having the edge in the past decade or so. Perhaps more importantly the UK economy is only a sixth the size of the US economy, so while the financial services are still a big deal in NY and the USA they are completely central to the current UK economy.
I guess London is preferred to NY by the RIC out of BRIC and Middle Eastern finance.