2013-03-24, 21:44 | Link #62 | |
Senior Member
Join Date: Nov 2003
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Well looks like some kind of deal has been reached.
Cyprus bailout: Deal reached in Eurogroup talks Quote:
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2013-03-25, 08:56 | Link #63 | |
Komrades of Kitamura Kou
Join Date: Jul 2004
Age: 39
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2013-03-25, 09:08 | Link #64 | |
NYAAAAHAAANNNNN~
Join Date: Nov 2007
Age: 35
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Though I have no idea what is going to happen to the poor depositors from the 2nd largest bank who have no other sources of income : namely the retirees. It is like a clusterbomb just got shoved up their wrinkled asses.
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2013-03-25, 09:42 | Link #65 |
Komrades of Kitamura Kou
Join Date: Jul 2004
Age: 39
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Well for one the IMF gets a lot of flack in many developing nations for the steep requirements they place to start handing out monetary assistance (Philippines for one). There are those who see it as offering sovereignty to the altar of money. I'm sure some Cypriots might see the IMFs demand of bypassing parliament similarly.
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2013-03-25, 10:16 | Link #66 | |
Logician and Romantic
Join Date: Nov 2004
Location: Within my mind
Age: 43
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You can smack all you want, but push far enough and there would be revolution. Push even further, and there would be war. And you know that's true.
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2013-03-25, 10:33 | Link #67 | |
Franco's Phalanx is next!
Join Date: Apr 2012
Location: Little England, Europe and Asia
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@SaintessHeart: The problem is that the one who is smacked are the people and small buisness, politicians and major investors will take advantage of the temporary nature of the capital restrictions to move their money in Malta, Latvia, and Luxembourg.
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Anyway, that "compromise" basically will bankrupt the state along with its banks and explode their external debt. Dunno, it would be better for them to exit now and clean up their financial sector without the involvement of IMF, which has destroyed every country it tried to help. But should they be allowed to do that, euro will be in even greater trouble.
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2013-03-25, 10:41 | Link #68 | |
Komrades of Kitamura Kou
Join Date: Jul 2004
Age: 39
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2013-03-25, 10:56 | Link #69 | |
Franco's Phalanx is next!
Join Date: Apr 2012
Location: Little England, Europe and Asia
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Anyway, I read an interesting article about the bleak future of eurozone that Schäuble envisions in Financial Times. And one of their columnist's reply that sums up my criticism.
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2013-03-25, 10:56 | Link #70 | |
Nyaaan~~
Join Date: Feb 2006
Age: 40
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So let's rephrase, the IMF, in your opinion makes the situation worse (?) -- for countries that have already destroyed themselves before the IMF ever got involved.
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2013-03-25, 11:13 | Link #72 | |
Franco's Phalanx is next!
Join Date: Apr 2012
Location: Little England, Europe and Asia
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As for IMF, you are forgetting that in return for their help, they bloat the debt, shrink economies, increase unemployment, slash wages and sell out all natural resources. IMF started helping a Greece with $340 billion and in three years plunged it to $290 billion, debt/GDP from 115% to 175%, official unemployment from 8% to 24%... instead of requiring the government to fight against tax evasion and corruption, they ignore it and press only for more levies and taxes to loan more money and increase their debt... great help indeed.
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2013-03-25, 11:14 | Link #73 | |
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Join Date: Jan 2012
Location: London, England
Age: 37
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When it comes to deficits and recessions it can be a bit of chicken and egg scenario. What came first the deficit or the recession? In some cases such as Greece the cuts back from excess spending caused a recession whereas in other cases the recession caused a reduction in tax revenues and a increase in government spending (due to rising unemployment) which creates the deficit. Further austerity can in some cases paradoxically increase the deficit as more austerity can mean declines in government revenues exceed the lower costs in government spending. This has been the case in Greece and even in England where the austerity measures have done nothing to reduce the deficit as all gains made in savings where offset by declines in government revenues. Austerity and saving may sound good on paper as we tend to think of a countries budget plan like that of a personal budget. If we reduce costs and pay of our debts we can strengthen our financial position and have a better future. Whilst this is certainly true on a micro level if taken on a macro level all we are doing is reducing gross spending which acts as a drag on economic growth. If the drag is big enough it can actually make the deficit worse. That is why a robust plan for growth must be brought in place in conjunction with an austerity plan. Blind austerity measures with no accompanying plans for economic expansion is just a recipe for a disaster (and this is what the IMF has largely been promoting). In any case, the important point to grasp is optimal decisions made by individual people may not lead to optimal scenarios on a macro level for society in general. This issue is kind of related to the tragedy of the commons dilemma although it is not quite the same so I hesitate to bring it. The same sort of dynamics are displayed though. |
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2013-03-25, 11:20 | Link #74 | |
Nyaaan~~
Join Date: Feb 2006
Age: 40
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Y'know what's the coldest and hardest move they could have done? Automatic ejection from the eurozone upon defaults. Instead of money going to prop up Greece and all of these other countries? Provide a one time recovery fund for domestic investors and let everyone else flounder. Why was that not done? Fear of contagion. Fear of moral hazard. But y'know what, Germans, Britons, French, the public in all those countries would have loved it. Then what would have happened to Greece? If you think 24% unemployment is high, think about what it would have been if the country literally went bankrupt and all international markets immediately froze them out?
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2013-03-25, 11:55 | Link #75 | |
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Join Date: Jan 2012
Location: London, England
Age: 37
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As for the whole bailout thing. You are right if we had let the banks fail the situation would have certainly been worse. Unemployment would be even higher and even this does not get to the end of it as you omitted one BIG detail in this story that assures more bailouts will be tried despite the obvious blowbacks. That is globalisation and world trade in general is heavily dependent on banks and if the banks go bust then countries will loss access to vital goods such as food, clothes, other basic goods and other vital resources such as oil, gas or coal. It is this dependence on the global economy to meet each individual countries basics needs that make them beholden to any bailout package no matter how terrible the medicine is. The other possible monkey wrench in this spiel is that due to the sheer scale and complexity of various debt obligations not to mention the level interconnectedness of countries economies means nobody really knows who owes what. The so called contagion effect is quite likely to cause cascading failures around the block that will not just effect the Euro zone but also the US and Asian markets. Nobody wants to open that can of worms so the package is passed around as the contents in the core become increasingly rotten until the stench can no longer be ignored or denied. Indeed it is quite likely an implosion of the Euro zone will be the Lehman Brothers Mach 2.0. To me it is a question of when rather than if. I will say that there will be some black swan event that tips this unsteady equilibrium we see today into full on failure mode. Coming to a theatre near you! |
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2013-03-25, 12:01 | Link #76 |
Nyaaan~~
Join Date: Feb 2006
Age: 40
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Agree. Vehemently. I think I'm going to go back and re-point at a comment that I made about people's observations a while ago: Basically, we as human beings, can we really collectively be trusted with a fractional reverse banking system and fiat currencies? We're pretty irresponsible ..
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2013-03-25, 12:20 | Link #77 | |||||
Franco's Phalanx is next!
Join Date: Apr 2012
Location: Little England, Europe and Asia
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Anyway, better read the article I linked earlier for criticism from someone belonging to your sector who starts from a different basis, but draws the same conclusions on how destructive the current euro policy is both financially and politically.
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2013-03-25, 12:20 | Link #78 | |
Logician and Romantic
Join Date: Nov 2004
Location: Within my mind
Age: 43
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In short, everyone lied. And now everyone just wants to duct-tape the EU together and hoping it holds.
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2013-03-25, 12:40 | Link #79 |
Franco's Phalanx is next!
Join Date: Apr 2012
Location: Little England, Europe and Asia
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@VCV: True, let me remind everyone also that the main argument against Cyprus banking system is money laundering, but comes from countries which banks are more guilty. So should we levy the deposits in Greece, Luxembourg, Germany, Austria, Slovakia, Italy, Spain and the Netherlands because there are more illegal capitals there then Cyprus? Hypocrisy has some limits I think.
It would be great if there were any sane non-populist politicians left in EU to rewind all the policies and treaties before Maastricht, and work them out correctly this time.
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2013-03-25, 12:52 | Link #80 |
Nyaaan~~
Join Date: Feb 2006
Age: 40
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Okay, guys, I'm not talking about false statistics. Who here has taken advanced macreconomics courses? Basic macro? How do we measure GDP?
GDP (Y) is a sum of Consumption (C), Investment (I), Government Spending (G) and Net Exports (X – M). Y = C + I + G + (X − M) So when a government overspends by borrowing money, even at unsustainable levels, that spending is accounted for in GDP. I'm not saying that Greece's GDP was uniquely inflated. I'm saying the last decade of buoyant global economic growth was overstated. I've made this argument before whenever Bill Clinton talked about presiding over the longest period of economic growth in US History. THE GROWTH WAS NOT REAL. IT WAS NOT REAL HERE EITHER.
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