I guess the Germans are afraid of giving out blank cheques to encourage poor budget discipline hence their requirement for deeper political union to try and control that side - you can understand it I guess
I wonder if some of the experts on here can tell me does this now open the door to the Greeks Irish and others to ask for this kind of financing too?
What bothers me is that we are all obsessing about The Euro states and the state of the Euro whilst the gigormous Chinese civilisation marches onward toward world domination and quite possibly into war with the USA. That's without the conflagration in the Middle East erupting. It's as though we're sleep walking into disaster.
Chinas economy is slowing down, also the risk of war is very much with the Philippines at the moment, many Chinese are calling for their govt to attack ASAP over a south china sea argument
Chinas economy is slowing down, also the risk of war is very much with the Philippines at the moment, many Chinese are calling for their govt to attack ASAP over a south china sea argument
As if Goliath crushing David would solve the problem.
The China problem is scary but can you imagine them wanting an all out trade war with the USA / Europe which is probably what would happen, let alone a shooting war - and no market for their manufacturing etc?
Why would China want an all out trade war with the US? They hold something like 8% of US debt and over the last couple of decades the West has outsourced production to China. Someone at Siemens came up with an interesting quote - something to the effect that they would build the first few hundred kilometres of rail tracks for China, but the chinese would build the rest. Besides going to war has never really been China's way - they are using their muscle far more intelligently. Across Africa and Latin America Chinese companies are buying up mines and exporting whatever is being dug out of the ground back to China and then selling it back to us as mobile phones, PCs or whatever. They are even buying farms next to or near to the mines so that they have a source of food for their mineworkers just in case the locals stop selling to them once they cotton how much of a bad deal they are getting.
indeed which makes Chinese naval projection a necessity for them I guess, still very worrying as all this will be on hand if things do get drastically worse with the global economy, and natural resources are fought over
indeed which makes Chinese naval projection a necessity for them I guess, still very worrying as all this will be on hand if things do get drastically worse with the global economy, and natural resources are fought over
Wars are already being fought over resources - Iraq notably and if you trace Israel's land grab on the West Bank they are making sure that the wells and water supplies fall on their side of the wall.
Wait, isn't Santander a Spanish bank, and haven't they been buying up lots of stricken banks in the UK in the past couple of years? How does that work?
Exactly and not to mention airports, utility and transport companies. Supra national organisations are at work here, organisations which are beyond the control of mere national governments.
I would pin the blame even further on Germany in that they had a practical experience of the creation of a single currency when re-unification took place and they took on the economic basket case which was East Germany.
Actually I blame the French...
Germany wanted a small Euro - Germany, France, Benelux, the UK - ie those countries with similar economies and then allow other European nations to join when they were capable economically of being a member and having their monetary polcy dictated to by the ECB. France though thought that Germany would dominate this small Euro and argued for more nations joining it, hence they turned an economic decision into a political one.
To join the Euro the applicant nations had to go through a series of convergence tests. I forget the exact criteria but debt had to be at a certain level and there had to be sufficient reserves of gold and/or currency etc in the bank. In the case of Italy they didn't have enough gold reserves so they blatantly inflated the value of what they had to meet the criteria.
We can trade these issues until the cows come home. The facts on the ground are that Germany (and one or two smaller states) have benefited from the Euro and many other countries have been found wanting either by fudging the entry/convergence criteria or by using the availability of German level interest rates to rack up speculative debt both sovereign and private.
Europe always was a political union. Those who claim it wasn't, in my opinion are living in a parallel universe. It is convenient for those on the anti EU side to claim we have all been duped. Defacto there had to be a political dimension both to the Treaty of Rome and then to subsequent treaties. There has been a democratic deficit at the heart of decision making because national governments have cleaved to them as much power as they can and then negotiated a pooling of sovereignty at inter-governmental level. The lack of accountability despite a European parliament is the fundamental flaw, not the political nature of the union.
What worries me is the lack of accountability above all else. I support a federal EU where decisions that affect us all are taken at the most appropriate level, with street lighting and dog shit patrols being at a macro local level and decision about pollution, and overall economic framework being taken at a pan-European level. Taxation being a mix of local, national and pan-national contributions. Sadly the kind of local accountability for much of the affairs that govern us is drowned out by those who claim that somehow a federal European super-state is somehow wrong in principle. Well yes when it is described in terms of the undemocratic monolith that seems to be the current structure but not in the sort of world that those who support true federalism wish to see.
Well the bbc has just called it 'a 4th bailout', and Robert Peston called it a large 'sticking plaster' albeit a big 'sticking plaster'. It adds to the debt, and puts more pressure on the spanish goverment. But Spain is stuck in a vicious cycle, and not the solution either for Spain or the Euro...... on the 1pm bbc news. Now I am not going to say he is right, but he has proved a bloody sight more reliable than so called treasury spokesman of either political party in power.
There has been a democratic deficit at the heart of decision making because national governments have cleaved to them as much power as they can and then negotiated a pooling of sovereignty at inter-governmental level. The lack of accountability despite a European parliament is the fundamental flaw, not the political nature of the union.
To be fair the Lisbon Treaty has attempted to reduce the democratic deficit, the European Parliament has considerable say in legislative matters and can veto legislation (under the Ordinary Legislative Process) and there is a requirement for all prospective legislation to be sent first from the Commission to the member state parliaments for debate and discussion before it enters the legislative process. Even then (at least in the case of directives) there is some scope for the member states on how they interpret and apply legislation allowing them some leeway.
We had all this fuss when we "contributed" to the Irish "bailout". In fact the Irish haven't used the line of credit so, we haven't had to contribute anything.
BFR...these were the original convergence criteria for countries wishing to join...
1. Stable prices: Inflation must not be more than 1.5 percentage points higher than the average in the three member countries with best price stability, i.e. lowest inflation.
2. Stable exchange rate: The national currency must have been stable relative to other EU currencies for a period of two years prior to entry into the monetary union (ERMII entry).
3.Sound government finances: Gross government debt must not exceed 60 per cent of GDP. The annual government budget deficit must not be greater than 3 per cent of GDP.
4. Low interest rates: The 5-year government bond rate must not be more than 2 percentage points higher than in the three member countries where inflation is lowest.
Sanstander's been making plenty of money in South America. Spain's succesfull banks have done the same, generatin most of their profit abroad. Not to say that they don't hold significant bad debt too.
For our benefit we need to leave the EU, all other European countries need to get back to their own currencies and we can all get along as good next door neighbours.
In the seventies, the voters voted for a common market and not a political union as it was today.
In a World Economy that is in piecies, guess what Country in Europe has the strongest ecomony? Switzerland, the Country that is not involed with any European polticial union and the Swiss Franc is very strong compared to the Euro and even the Pound. The problem the Swiss have is because the currency is so strong, they had to downgrade the currency so they could trade outside of Switzerland. Now if Switzerland's economy is the strongest this obviously tells the EU is not the answer. The EU was not launched for economic reasons, it was launched for polticial reasons so this provided no benefits to anyone apart from those who want a United States of Europe.
In a World Economy that is in piecies, guess what Country in Europe has the strongest ecomony? Switzerland
Take away banking, pharmaceuticals and dodgy company laws and they'd be in the same mess as the rest of Europe. Switzerland is little more than a banana republic.
In a World Economy that is in piecies, guess what Country in Europe has the strongest ecomony? Switzerland
Take away banking, pharmaceuticals and dodgy company laws and they'd be in the same mess as the rest of Europe. Switzerland is little more than a banana republic.
If Germany had not had restrictions on military they would have been with the rest of us pouring good money after bad on pointless wars and would be in a much worse place today.
If Germany had not had restrictions on military they would have been with the rest of us pouring good money after bad on pointless wars and would be in a much worse place today.
Not sure what point you are making, there were German soldiers among the first wave into Afghanistan ten years ago (a friend of mine served there in the German paras) and they have served as peace keeping forces in Bosnia.
Bush, Rumsfeld etc also made strenuous efforts to persuade them to join the "coalition of the willing" in their little adventure in Iraq even to extent of deriding them as "Old Europeans" when they refused to have anything to do with Operation Iraqi Oil.
They at the time had a Chancellor who was prepared to say no to Bush while our Prime Minister caved in.
Front page of the FT gives you the numbers ... Greece is only 2% of the euro economy but is scaring the markets about everywhere else because the various players have taken two years to do very little... to me, the challenge from the Germans (and the markets) to the south is that it's their job to make themselves more competitive and / or make the most of local advantages such as tourism... The Spanish numbers are only 10% of their economy...
On a different note people (including Paxman) talk about Greece and it's 10M people leaving / being thrown out of the euro in a fairly glib way... Ask yourself if you and the Euro authorities have any appetite for a 20-50% cut in GDP with resulting social impact?
In a World Economy that is in piecies, guess what Country in Europe has the strongest ecomony? Switzerland
Take away banking, pharmaceuticals and dodgy company laws and they'd be in the same mess as the rest of Europe. Switzerland is little more than a banana republic.
No doubt banking, pharmaceuticals and dodgy company laws are a part of the Swiss economy also add a fine tradition of precision engineering (watch /clockmaking, machine tool manufacturing, bio equipment etc) and Toblerone Cant see them planting bananas anytime soon.
In my ignorance I find all of this quite baffling. Apparently endless hundreds of billions are poured into the living-dead banks that have poisoned the world economy, to do what? Pay bonuses? Use taxpayers' money to buy government bonds? Disappear up its own fundament?
Why don't governments guarantee the utility functions of banks -- customer deposits etc. -- if necessary by nationalising them, and impose a "reset" on the rest of the banking system, nullifying all of the toxic derivatives that remain in the system and forbidding the creation of any more?
In my ignorance I find all of this quite baffling. Apparently endless hundreds of billions are poured into the living-dead banks that have poisoned the world economy, to do what? Pay bonuses? Use taxpayers' money to buy government bonds? Disappear up its own fundament?
Why don't governments guarantee the utility functions of banks -- customer deposits etc. -- if necessary by nationalising them, and impose a "reset" on the rest of the banking system, nullifying all of the toxic derivatives that remain in the system and forbidding the creation of any more?
Maybe the €urozone needs a guarantee for the first €25-50k deposits to kill the worry and stop capital flight... derivatives cool as long as peolle can prove they understand the downside B-)
Great thread with some fascinating insight. As I see it, the Fractional reserve banking system has created huge amounts of debt, such that there is nowhere near enough physical money in the system to repay it all. This debt is being passed around like a grenade without it's pin, nobody wants it. The only way to get rid of the debt is to either growth, print more money or default. Growth is not possible with austerity. At the moment it's like squeezing a balloon, get rid of the air in one area, but it will pop up in another, it won't go away until the balloon goes BANG. Rather than continuing to bail out banks, the money should be given directly to citizens to decrease their mortgages. This would increase spending and spur the economy back into growth. As has previously been said, this situation has resulted from poor Banking regulation, greed and also a lack of productivity in the western world.
Help please. As I understand it, basically there is an economic black hole into which the smaller members of the Euro club, who should never have been allowed to join the club in the first place, are being sucked. Spain thought it had found a way to circumnavigate the black hole, but is finding that the pull of the said hole is too strong. The price for remaining outside the black hole is effectively to hand over governance of your country to outside forces. So who exactly now governs these countries and what or who holds the reins of power and for how long?
Comments
I wonder if some of the experts on here can tell me does this now open the door to the Greeks Irish and others to ask for this kind of financing too?
Just creates a myriad of new problems.
Man never seems to learn.
Europe always was a political union. Those who claim it wasn't, in my opinion are living in a parallel universe. It is convenient for those on the anti EU side to claim we have all been duped. Defacto there had to be a political dimension both to the Treaty of Rome and then to subsequent treaties. There has been a democratic deficit at the heart of decision making because national governments have cleaved to them as much power as they can and then negotiated a pooling of sovereignty at inter-governmental level. The lack of accountability despite a European parliament is the fundamental flaw, not the political nature of the union.
What worries me is the lack of accountability above all else. I support a federal EU where decisions that affect us all are taken at the most appropriate level, with street lighting and dog shit patrols being at a macro local level and decision about pollution, and overall economic framework being taken at a pan-European level. Taxation being a mix of local, national and pan-national contributions. Sadly the kind of local accountability for much of the affairs that govern us is drowned out by those who claim that somehow a federal European super-state is somehow wrong in principle. Well yes when it is described in terms of the undemocratic monolith that seems to be the current structure but not in the sort of world that those who support true federalism wish to see.
It adds to the debt, and puts more pressure on the spanish goverment. But Spain is stuck in a vicious cycle, and not the solution either for Spain or the Euro...... on the 1pm bbc news. Now I am not going to say he is right, but he has proved a bloody sight more reliable than so called treasury spokesman of either political party in power.
To be fair the Lisbon Treaty has attempted to reduce the democratic deficit, the European Parliament has considerable say in legislative matters and can veto legislation (under the Ordinary Legislative Process) and there is a requirement for all prospective legislation to be sent first from the Commission to the member state parliaments for debate and discussion before it enters the legislative process. Even then (at least in the case of directives) there is some scope for the member states on how they interpret and apply legislation allowing them some leeway.
We had all this fuss when we "contributed" to the Irish "bailout". In fact the Irish haven't used the line of credit so, we haven't had to contribute anything.
1. Stable prices: Inflation must not be more than 1.5 percentage points higher than the average in the three member countries with best price stability, i.e. lowest inflation.
2. Stable exchange rate: The national currency must have been stable relative to other EU currencies for a period of two years prior to entry into the monetary union (ERMII entry).
3.Sound government finances: Gross government debt must not exceed 60 per cent of GDP.
The annual government budget deficit must not be greater than 3 per cent of GDP.
4. Low interest rates: The 5-year government bond rate must not be more than 2 percentage points higher than in the three member countries where inflation is lowest.
It'll be interesting to see how many nations with the Euro still pass these tests, even with considerable fudging I doubt more than a few.
In the seventies, the voters voted for a common market and not a political union as it was today.
In a World Economy that is in piecies, guess what Country in Europe has the strongest ecomony? Switzerland, the Country that is not involed with any European polticial union and the Swiss Franc is very strong compared to the Euro and even the Pound. The problem the Swiss have is because the currency is so strong, they had to downgrade the currency so they could trade outside of Switzerland. Now if Switzerland's economy is the strongest this obviously tells the EU is not the answer. The EU was not launched for economic reasons, it was launched for polticial reasons so this provided no benefits to anyone apart from those who want a United States of Europe.
Take away banking, pharmaceuticals and dodgy company laws and they'd be in the same mess as the rest of Europe. Switzerland is little more than a banana republic.
Not sure what point you are making, there were German soldiers among the first wave into Afghanistan ten years ago (a friend of mine served there in the German paras) and they have served as peace keeping forces in Bosnia.
Bush, Rumsfeld etc also made strenuous efforts to persuade them to join the "coalition of the willing" in their little adventure in Iraq even to extent of deriding them as "Old Europeans" when they refused to have anything to do with Operation Iraqi Oil.
They at the time had a Chancellor who was prepared to say no to Bush while our Prime Minister caved in.
On a different note people (including Paxman) talk about Greece and it's 10M people leaving / being thrown out of the euro in a fairly glib way... Ask yourself if you and the Euro authorities have any appetite for a 20-50% cut in GDP with resulting social impact?
Cant see them planting bananas anytime soon.
Why don't governments guarantee the utility functions of banks -- customer deposits etc. -- if necessary by nationalising them, and impose a "reset" on the rest of the banking system, nullifying all of the toxic derivatives that remain in the system and forbidding the creation of any more?
I'm amazed no one has thought of it before.
:-)
As I understand it, basically there is an economic black hole into which the smaller members of the Euro club, who should never have been allowed to join the club in the first place, are being sucked. Spain thought it had found a way to circumnavigate the black hole, but is finding that the pull of the said hole is too strong. The price for remaining outside the black hole is effectively to hand over governance of your country to outside forces. So who exactly now governs these countries and what or who holds the reins of power and for how long?