Euro Crisis

[Beorn]

edited because of source uncertainty

[BSZ]

The crisis is getting clearer: Germany is planning to issue 2-year bonds at 0% interest. The Danish 2year bond interest is also hitting a low at 0,07% yearly, while its 10 year bonds have been issued at as low as 1,31%. I assume other Scandinavian and Swiss bonds to be in the same area. Investors are increasingly happy just keeping their money now, and Northern Europe seems like a safe harbor.

[magpie]

I suspect they hope to cash in on all the people who are withdrawing what money they have from eurozone countries in trouble.

Someday they will have sucked up all the cash, Now if the Greeks and Spanish, Portuguese and Irish behave themselves and obey order,s they might be lent some money.
Of course it will not be at 0% interest rates.

[alhoon]

Actually 0% for 2 years seems good at the time.

[Condottiere 40K]

I think Swiss bonds are on negative interest: you lose money on maturation.

[alhoon]

http://news.yahoo.com/euro-crisis-wh...082511184.html

And here is some "light" news. Perhaps doomsaying but perhaps the article is right. Time will tell

[magpie]

Oh well. The euro is nose diving in value, Give it another week and we eurozone countries will be super competitive on export prices.
The Greeks won,t even have to change to the dracma to get a low value currency.
Of course all our imports will rocket in price, But what the hell the euro citizens are getting used to hardship.

[Vítor Gaspar]

One of the countries more exposed to Greek debt is, ironically, Portugal, and Portugal doesn't have the leverage to "mitigate" the effect of a Greek default on its economy. Per capita, the country the Greek banks owe more is Portugal (that is, outside the IMF deal, but that's with the government).

That's actually one of the things both Greek, Portuguese and other European media (except BBC) have been ignoring.

And one of the countries most (a lot, a huge lot) exposed to Portugal is Spain. And Italy and France are exposed, on the same level, to Spain.

[check the attached jpgs]

Spoiler for Pics: 

If Greece exits the Eurozone and Portugal ends up burning because of the BCP (the major Portuguese bank in Greece) deals in Greece, Portugal goes down the toilet and Spain follows us. Then Italy will come. Inevitably, France.

Greece can't exit the Eurozone, for the best of all of us. Not for now, at least. But I'm fairly confident something is going on in Brussels about it.

I just can't help but think more and more (and sorry Thorn) that Germany is leading everyone down a suicidal path. Short-term gains never compensate long-term losses. And that's what Germany's been doing.

Germany's economy boomed with the growth of Southern Europe and Ireland, they made dozens of billions out of it. And that was at the expense of irregular, non-calibrated economies popping up in Europe, and there was no problem having those here in the continent, because that was better for Germany: as long as they had a huge new-found market to export to, it was fine. Same goes for France, only slightly less.

So they don't want to issue Eurobonds, because German lobbies don't find it cool, as the Bundesrepublik will have to pay more interest for funding and so will German businesses. Well, tell you what, because of that Southern Europe MAY FALL and then there will be a huge boost on Germany's economy, as they will have lost a market where they exported much of their production.

The only way that won't happen is if you find a place where to export the stuff you used to export here. And that will be China, Russia and Brazil. But it will take some time to readjust the German economy, to find new trading partners that replace the Southern European consumers. And, in the meanwhile, the Germans will suffer.

I'm talking of a 10/20 year timeline here, because that will also be the time needed for Brazil, China and Russia to develop a consuming population as strong as you have down in Southern Europe, from Portugal to Greece. Italy and Spain, together, make a Brazil and a half, if I'm not mistaken, GDP-wise. Not to mention that if we scrap the GDP and only take care of the exports of Germany, Spain and Italy, alone, I don't know, probably make 6 or 7 "Brazils".

My point is, Germany, on a short-term, finds Southern Europe to be a nuisance: they forget their prosperity is, in great part, because of us. And that is because the high finance lobbies heavily in that country, Frankfurt is a suits' nest.

So, Thorn, please, if you're reading this (I actually wrote most of this with you in mind), comprehend that most of us (at least the Portuguese and the Spanish I know) do understand that it seems unfair, for German taxpayers, that you guys have to pay for what happened in here, because you, the average German, didn't get much in return from our growth.

But believe me, your corporations, your businesses did, and they're the ones profiting from this. They're the ones that made this happen. And they're the ones that should be taxed the most, not the average German taxpayer, that is as equal as a Portuguese or a Spanish, they're all suffering with the current events.

I write you this because I feel we share a lot of ideas and have common believes regarding some aspects of the current world crisis. You and I are Social Democrats, I think, or at least you're a Democratic Christian. As I told you, it could be useful for you to understand what's going on from the perspective of a Southern European that is "living" through this situation. Nothing is so simple. And because I think when you wrote stuff like "you people make me sick" you were just angry at the moment, and there was some misinformation on that side, you really aren't like that, I decided that I really had to write this.

Take care everyone!

[Thorn777]

Germany's economy boomed with the growth of Southern Europe and Ireland

No it didnt. The very contrary, as proven many times by me in this thread. But go ahead, keep believing in the German profiting from me story, thats just whats intended. Rest of your story is also fabricated nonsense and easily refutable....

get it at "the bbc"...

[Vítor Gaspar]

No it didnt. The very contrary, as proven many times by me in this thread.

Where exactly? I'd like to be proven wrong.

Besides, the average German is not the same as the "haute société" ruling your country's economy. Those profited from it.

But go ahead, keep believing in the German profiting from me story, thats just whats intended.

You could use some less hatred. I'm the first one to admit we jumped 50 years of development in only 20 years because of Germany and France's aid. But I'm also to first one to point out that NOBODY ever lends money without getting something in return.

Even if you gave money "for free" your companies loved the new market they could explore, without tariffs and all that nonsense.

And unless your knowledge of economics is rudimentary, there's no way to refute that.

Rest of your story is also fabricated nonsense and easily refutable....

Is it? Go ahead.

get it at "the bbc"...

Sorry?

[Thorn777]

You where right in the middle when I posted the links, maybe I'll do another round when feeling like repeating myself.

In short Made in Germany and all the rest was there long before there was a Euro or a GIPS boom. Despite the GIPS sucking so hard and not importing allot, there is record export numbers in Germany. So no dependency there.

No, since the Euro creation Germany faced the same problem as the GIPS do now: massive capital flight(guess where) and stagnation and austerity from it.

Mitterand called it even "Versailles without war"...at least one of his former aides quoted him that way...was also never a German project, it was French and part of the reunification deal.

And yeah, the Bundesbank conspiracy theory, well what about all that printing they do to save you from your capital flight going on ATM. 400 billion of German debts as we speak. No thx?...evil germans? On to something?

I heard no one complaining of you back then.

Goes on etc, but that should tell you enough really...

[Nikitn]

I'm sorry zipo, but I got bored after the first paragraph.

1) The ECB is backing Portugal up. Besides, Greece has already defaulted on ~ 75% of its old debt.
2) Deep structural reforms are needed. People in countries like Greece and Portugal simply cannot continue to live like kings while not producing anything valuable. Ie, they need to stop being lazy. Wages and living standards need to fall drastically, incentives to work need to be increased, the unions need to be curbstomped and the regulations concerning hiring/firing should decrease.

But don't take me for one of those liberalist idiots - the financial sectors world over should at the same time also be beaten down with regulations. Though that isn't easy because the US presidents are bought and paid for by finance-tycoons.

While using Keynesian politics at this stage might be tempting, I don't think it's for the best. The leaders in Germany recognize the politicians in Portugal and Greece as corrupt idiots who would crap on reforms if their countries were flooded with cheap money. Everything would go back to the state it was before 2008. So in reality Keynesian politics would be a short sighted success due to the masses in southern countries not being able to elect honest politicians who have no objections about throwing money at any1 to get re-elected.

[Vítor Gaspar]

You where right in the middle when I posted the links, maybe I'll do another round when feeling like repeating myself.

If I was there, I probably left for some reason. I never read any links from you on that.

In short Made in Germany and all the rest was there long before there was a Euro or a GIPS boom. Despite the GIPS sucking so hard and not importing allot, there is record export numbers in Germany. So no dependency there.

1. France ... US$99 billion (10.2% of total German exports)
2. U.S. ... $85.5 billion (8.8%)
3. U.K. ... $76.7 billion (7.9%)
4. Italy ... $67 billion (6.9%)
5. Netherlands ... $59.2 billion (6.1%)
6. Belgium ... $54.4 billion (5.6%)
7. Austria ... $52.4 billion (5.4%)
8. Spain ... $49.5 billion (5.1%)
9. Switzerland ... $36.9 billion (3.8%)
10. China ... $31.1 billion (3.2%)
11. Poland ... $25.3 billion (2.6%)
12. Czech Republic ... $23.3 billion (2.4%)
13. Sweden ... $21.4 billion (2.2%)
14. Russia ... $19.4 billion (2.0%)
15. Japan ... $16.5 billion (1.7%)

Not counting with Portugal and Greece. Losing those trade partners would damage your economy heavily. It's more than 10% of your exports. And keep in mind that it would take some time to find more exports to export to. So far, the Big Three (China, Brazil and Russia) aren't large enough to "swallow" Southern Europe's imports.

No, since the Euro creation Germany faced the same problem as the GIPS do now: massive capital flight(guess where) and stagnation and austerity from it.

Guess who profited from it? The Germany high-finance and large companies. Those are the ones to blame, the ones who profited from it. It seems you didn't read a single thing of what I wrote.

And yeah, the Bundesbank conspiracy theory, well what about all that printing they do to save you from your capital flight going on ATM. 400 billion of German debts as we speak. No thx?...evil germans? On to something?

Considering what you get in return from having the slow, fat and greasy Southern Europeans buying stuff from you, that's actually reasonable.

Not to mention that if they didn't print, Southern Europe would have been gone. And it would be even worse, because of all the things I've mentioned above.

[magpie]

Nice post, Ze do Pipo and I tend to agree with it.

The German worker,s will wake up one day and wonder why they kill themselves for poor wages and high taxes.
Their elite have enjoyed a great boom and accumalation in wealth, However thats what elites in society tend to do, grab all and lecture the masses on their unruly lifestyles.

That latest issue of 0% interest bonds is a real con job. Anyone who invested yesterday has already lost money and will continue to lose it rapidly as the euro tanks.

Its time the eurozone leader,s either put up or shut up. We either unite as a federation with a proper central bank or we go our seperate ways.

[Nikitn]

Zipo, just stop defending yourself and attempt to shift the blame. Obviously Germany doesn't want the PIGS to go bankrupt and everyone, but this is irrelevant. See my previous post for a bit of education.

I'm sorry zipo, but I got bored after the first paragraph.

1) The ECB is backing Portugal up. Besides, Greece has already defaulted on ~ 75% of its old debt.
2) Deep structural reforms are needed. People in countries like Greece and Portugal simply cannot continue to live like kings while not producing anything valuable. Ie, they need to stop being lazy. Wages and living standards need to fall drastically, incentives to work need to be increased, the unions need to be curbstomped and the regulations concerning hiring/firing should decrease.

But don't take me for one of those liberalist idiots - the financial sectors world over should at the same time also be beaten down with regulations. Though that isn't easy because the US presidents are bought and paid for by finance-tycoons.

While using Keynesian politics at this stage might be tempting, I don't think it's for the best. The leaders in Germany recognize the politicians in Portugal and Greece as corrupt idiots who would crap on reforms if their countries were flooded with cheap money. Everything would go back to the state it was before 2008. So in reality Keynesian politics would be a short sighted success due to the masses in southern countries not being able to elect honest politicians who have no objections at throwing money at any1, just so they can be elected

[Vítor Gaspar]

1) The ECB is backing Portugal up. Besides, Greece has already defaulted on ~ 75% of its old debt.

Nobody said it wasn't; and I am aware of that. I'm not saying nothing is being done.

2) Deep structural reforms are needed. People in countries like Greece and Portugal simply cannot continue to live like kings while not producing anything valuable.

Amen to that.

Ie, they need to stop being lazy

And you need to stop falling into stereotypes.

Wages and living standards need to fall drastically

But wait, don't...

incentives to work need to be increased

? Cutting wages will only make things worse because, GUESS WHAT, our low wages are nothing compared to what's going on in China, and, in fact, our production is on par to that of China, technologically. And to change that (we're like that for a number of reasons, and sorry, but American intervention in Southern Europe against the Red Scare had a lot to do with that, among other things we're responsible for) we need investment, investment which won't exist without easing on the austerity.

Lowering wages and cutting living standards is a ridiculous solution, these countries aren't China, we can't expect to beat the Chinese at their own game. If anything, living standards will have to fall temporarily, while we try to develop a high technology industry, something we lack, and something we need Europe's help on.

the unions need to be curbstomped and the regulations concerning hiring/firing should decrease.

Agreed.

But don't take me for one of those liberalist idiots - the financial sectors world over should at the same time also be beaten down with regulations. Though that isn't easy because the US presidents are bought and paid for by finance-tycoons.

Absolutely

P.S - Nikitin, wait for a bit next time before acting all about it. It seems it's you who need some education on how a lazy Portuguese can't type down as efficiently as a German.

While using Keynesian politics at this stage might be tempting, I don't think it's for the best. The leaders in Germany recognize the politicians in Portugal and Greece as corrupt idiots who would crap on reforms if their countries were flooded with cheap money. Everything would go back to the state it was before 2008. So in reality Keynesian politics would be a short sighted success due to the masses in southern countries not being able to elect honest politicians who have no objections about throwing money at any1 to get re-elected.

And we need honest help on that, honest help I'm not expecting, because unfortunately inside the EU everyone worries about their own bellies, not about the EU as a whole.

We're not the United States or Brazil. A Californian considers a New Yorker to be a fellow American, and will willingly help the federation to solve something in New York, and a Paulista won't have that many problems helping a fellow Brazilian from Bahia with his tax-money. We lack the heart of a Federation. We're an economical union, and now this is more obvious than never.

Southern Europe needs to get rid of its "clientèle politique", of its corrupt politicians, which have a promiscuous relationship with the powers that be inside their own countries. We really have a problem with that. More in some countries than others (more in Greece and Italy than Portugal and Spain), but, nevertheless, it is a problem.

But for that to change, we need help. Really, it's one of those things we won't be able to solve ourselves. We've been struggling for centuries. We need foreign help, but we need uninterested, foreign help. We'll willingly "lend over" our sovereignty if we know we aren't just being exploited, and right now there are more than evidences that "uninterested help" is something we aren't having.

Hence, a Federation, a true one, but judging by some people in here, you know the feeling of "I'm German and they money is supposed to stay at home, and only at home!" isn't dying quickly. And it isn't. We need an Europe for the People, not for the Finance.

[Thorn777]

^Social dem? ugh...you have no idea what job security means for economy and society.

Nice post, Ze do Pipo and I tend to agree with it.

The German worker,s will wake up one day and wonder why they kill themselves for poor wages and high taxes.
Their elite have enjoyed a great boom and accumalation in wealth, However thats what elites in society tend to do, grab all and lecture the masses on their unruly lifestyles.

That latest issue of 0% interest bonds is a real con job. Anyone who invested yesterday has already lost money and will continue to lose it rapidly as the euro tanks.

Its time the eurozone leader,s either put up or shut up. We either unite as a federation with a proper central bank or we go our seperate ways.

The "German Worker" actually suffered so much because our banks, insurance-funds, pension-funds etc went on propping up Irish mailbox companies, building infra-structure in Spain, or buying Greek bonds, instead of relying on a strong domestic market and building schools etc. As we did before this nonsense...I guess the German govt turned the blind eye, to do this European Project.

It utterly affected our domestic economy and standard of living, having no real-wage increase since the ECU was announced and things started moving already like cheaper Greek debts etc. On top due to this we had zero growth, schools falling apart and we ended among the last places concerning OECD education stats, had massive unemployment, massive austerity etc. Contrary to the GIPS...who now feel like its a big bad world, well it is, but look again...guess why all this "injustice" is going on? Because it never was your money, and the German cant be arsed more than he already gotten, while you profited for the time being. It was the neo-liberal age, with neo-liberal trust, but neo liberalism is over, accountability is here.

@ze de pipo

Italy always was a big economic partner and didnt just rely on German cash to buy our stuff. It was a big economic partner well before the Euro. I worked for Bosch Power Tools, we make all our accesoires like sand-paper and stuff in Italy, etc, while Bosch hates outsourcing.

[Nikitn]

a) A decrease in wages and living standards lead to:
1) Less imports
2) A higher degree of competitiveness.

Both of which are good things, and will help set the stage for later growth.Obviously everything isn't dependant on wages, though. If that was the case then Europe would be manufacturing nothing.

b) Maybe the lazyness stereotype is nothing but a stereotype, but fact remains that Portugal, Spain, Greece and Italy all have inefficient labour sectors.

Thorn: Job security is good until it starts encouraging people to stop working. Which is the case in a few countries.

[magpie]

Well Thorn, It would seem your elites screwed the German worker,s over, Banks, insurance funds, Pension funds and your complicit politicians all jumped on what they thought was a quick buck.

When it all turned to ashes they suddenly got a road to damascus conversion and started with the lectures on austerity. When your elite helped to fuel a bubble it cost the German workers and many other euro citizens dearly.

[Nikitn]

magpie, you realize that austerity is BAD for business? Nobody is profiting from this so stop with the conspiracy nonsense.