Sarkozy and Merkel call for 'true economic government' to save eurozone

[Tamas]

@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.

Yeah it kind of hit them in the face in the 40s 

[Martim Silva]

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.

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. 

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).

[Zanza]

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.

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.

Which sucked, because Germany had agreed with Turkey to let them lead and handle all affairs related with the Arab Spring

Can you link something about that?

[Palisadoes]

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).

[jimmy olsen]

Americans have few vacations, work long hours [mostly spent talking around the water/coffee machines]

[dps]

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.   

[Barrister]

[Valmy]

That communities benefit from military bases?

[Barrister]

That communities benefit from military bases?

To Martim's post in general.

I mean - what else can you say?

[11B4V]

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.

[crazy canuck]

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?

[11B4V]

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.

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.

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.

[crazy canuck]

Loss of jobs usually doesnt sit well with voters.

Exactly, which is why I suspect Grumbler was overstating the case.

[Razgovory]

Is the US really the finical center of the world?  I thought it was London.

[crazy canuck]

Is the US really the finical center of the world?  I thought it was London.

Commerce is largely denominated in US dollars not Pounds.