market seems to think it may! reckoning drawing ever closer…
United we stand…seperately we fall. Today Germany said they’d back the German banks in the event of a Greek default. But what about the others that aren’t as financially sound? The German push for each country to protect its own banks was a bad idea.
^ Very true. “We must hang together or we will most assuredly hang separately.” - Ben Franklin, July 4 1776 (when the declaration of independence was signed)
The fact that Greece has already come out and denied it leads me to think that they will, since that has been their MO since 2009 when s–t started to hit the fan.
I lived in Greece most of my adult years. Recently I left the country afraid of the crisis and the social consequences despite the fact I had a good job in a large multinational (of German interests). Right now in Greece and other European countries (I am Italian) what’s happening is WWIII, just that there are no bombs but only heavy cuts in government spending, causing major social unrest (after all you can’t change overnight years and years of widespread corruption). I believe these rumours of Greek default are only games of some privileged groups (banks?) in order to persuade people that their governments MUST pass heavier taxation, shrinking of government spending etc. etc. Yes, maybe in the next three months Greece will default but do not ever think it was only Greece’s fault. Years and years - of mainly German driven companies - had corrupted the public institutions in seek of increasing their own profits and share prices. If it wasn’t for countries in south Europe, I am curious to whom Germans would be selling their exports. And don’t misunderstand me, i am not accusing Germany, everybody have their own share in this mess. But right now everybody wants a piece of Greece for free (and Greece has many natural resources waiting to be extracted). Remember, historically, Europe was never united, and personally i believe it will never unite. It’s just too many different nations with different mentalities and different priorities. Thank you for your time and good luck to your exams. I am planning L1 for June 2012.
I think there’s a bigger difference, politically speaking, between Texas and California or New York, than there is between any two European states.
I sympathize with Greece and the other mediterranean countries in this. Germany wants contradictory things: 1) to be the export powerhouse of Europe and 2) for the other countries to run balanced budgets. These goals are necessarily incompatible as trade surpluses in Germany must be offset by deficits in other countries, which mathematically end up as either private or public sector debt. Germany has freaked out over the reality of a simple balance of payments model in a fixed currency union and is making things worse. Pro-cyclical policy (austerity in a recession) just doesn’t work, but the idea perpetuates itself because voters tend to erroneously generalize their experience to the aggregate, i.e. “times are tight and I have to cut my budget, so the government should have to cut its budget too”. Common sense leads to some pretty terrible economic intuition. It is interesting to note that Germans have more vacation days than any other country in the European Union.
LBriscoe Wrote: ------------------------------------------------------- > I think there’s a bigger difference, politically > speaking, between Texas and California or New > York, than there is between any two European > states. Hahahahahaha. Have you ever been to Europe?
Yes. I’m not saying these contries all get along, but how far apart are they on the major politicle issues e.g. role of gov’t, intl affairs, privacy/property rights, etc.
LBriscoe Wrote: ------------------------------------------------------- > I think there’s a bigger difference, politically > speaking, between Texas and California or New > York, than there is between any two European > states. My friend, don’t forget 1945 is not very far away. Up to then and maybe even after that, European countries were divided. And the generations of that era are still alive. So a 70 year old Greek will always hate the Germans and the same goes for a French or Polish.
sapiec Wrote: ------------------------------------------------------- > > My friend, don’t forget 1945 is not very far away. > Up to then and maybe even after that, European > countries were divided. And the generations of > that era are still alive. > So a 70 year old Greek will always hate the > Germans and the same goes for a French or Polish. It’s true that the people >70 hate one another but don’t forget everyone else: BabyBoomers have massive social liabilities that need to be paid for by the younger generation. Any European under the age of 40 is unemployed, only wants to listen to techno music and go on vacation all summer. Oh and they are not having any kids. So basically the only people left working in Europe are immigrants from the worst parts of Northern Africa and the Caucuses. Guess what, those guys don’t pay taxes for their “under the table” and black market labor.
ChickenTikka Wrote: > Any European under the age of 40 is unemployed, > only wants to listen to techno music and go on > vacation all summer. Oh and they are not having > any kids. > > So basically the only people left working in > Europe are immigrants from the worst parts of > Northern Africa and the Caucuses. Guess what, > those guys don’t pay taxes for their “under the > table” and black market labor. I agree that many young Europeans are lazy and spoiled, but you’re exaggerating. Furthermore, the jobless rate for immigrants is higher than for natives.
Yeah, that doesn’t make the situation any better.
@Dwight, Balance of payments and national budget deficits are two separate distinct items. A great example of this are the individuals states in the U.S… Each state has to run a balanced budget (there are 1 or 2 exceptions), yet trade between the states is obviously not balanced. So it is not true that Germany can not be a export powerhouse and also expect fiscal responsibility from it’s neighbors. You said: ------->I sympathize with Greece and the other mediterranean countries in this. Germany wants contradictory things: 1) to be the export powerhouse of Europe and 2) for the other countries to run balanced budgets. These goals are necessarily incompatible as trade surpluses in Germany must be offset by deficits in other countries, which mathematically end up as either private or public sector debt. Germany has freaked out over the reality of a simple balance of payments model in a fixed currency union and is making things worse.
@Zesty Sure it’s true. Where do you think Germany’s surpluses and high savings rates come from? The magic surplus fairy? (I kid, I kid) The reason it is called BALANCE of payments is because the accounts must balance. If a country runs up large surpluses, another country necessarily OWES that same amount in deficits/debts. Do you think it is a pure coincidence that Germany and China are global export powerhouses with very high savings rates, while the PIIGS and the US have large accumulated debts? These issues (creditors vs debtors) are two sides of the same coin. Germany wants everyone else to be Germany without realizing that other countries cannot be Germany for the very same reasons that they enable Germany to be Germany.
States must accumulate or borrow the money that the federal government issues. By contrast, the federal government spends first and then implements monetary policy in an effort to manipulate savings/investment incentives to smooth the business cycle. The two are fundamentally different entities. Comparing the federal budget to a household, state, or company budget is an ineffective way to think about the situation for a variety of reasons. For one thing, states and businesses can capitalize projects to spread expenses over large periods of time while the federal government must recognize it in the budget straight away. In practice this leads to a great deal of manipulation of numbers to make state budgets appear balanced.
sapiec Wrote: ------------------------------------------------------- > > > Right now in Greece and other European countries > (I am Italian) what’s happening is WWIII, just > that there are no bombs but only heavy cuts in > government spending, causing major social unrest > (after all you can’t change overnight years and > years of widespread corruption). > > So when do you think Italy will default ?
I don’t know when, but I know that if Italy defaults then it’s arrivederci eurozone and soon after that European Union (at least with today’s set-up). Don’t forget Italy is part of the G7…so the consequences will be huge…a domino effect will start with unprecedent results.
No news so far this weekend. Boo. Just rumors about another downgrade.
Just because I am still following Greek news, let me tell you what i read. The rumour of a possible GReek default during this weekend was spread by Bloomberg (some e-mail was sent to someone…). Bloomberg as you know is owned by N.Y. Mayor, right? So Bloomberg is very very closely associated (in business interests) with Germany!!! Need I say more, given what was said earlier in this thread about German economic policy?