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Old 2015-02-18, 14:06   Link #35841
SaintessHeart
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Join Date: Nov 2007
Age: 29
Quote:
Originally Posted by KiraYamatoFan View Post
They should count themselves lucky that the "execute ISIS members and sympathizers on sight" order has not been issued at all.

Meanwhile, I think governments should make "ISIS hunters" something as big of a vocation as the Nazi hunters of old.
Not as bad as the Commie hunters during the Korean War in the Korean penisula. They kill entire families for that.
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Old 2015-02-18, 14:56   Link #35842
monster
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Join Date: Dec 2005
Quote:
Originally Posted by Domonkazu View Post
I guess you never heard about "Sharia Police" in Wuppertal, Germany.
http://www.zeit.de/gesellschaft/zeit...tal-salafisten
No, I have not. If they violate some laws, then legal action should be taken. Otherwise, as long as they don't do anything serious to prevent others from doing something legal, then they should be allowed to express their belief.
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Old 2015-02-18, 15:07   Link #35843
AmeNoJaku
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Join Date: Apr 2012
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Quote:
Originally Posted by Xellos-_^ View Post
didn't the lenders already took a haircut which amount to about 50% in 2012/2013?
After forcing the cost of failed bank investments in idebting poor countries to taxpayers, we had the even more destructive PSI.

At the time, private lenders were were forcefully domestic banks and pension funds, and optionally any other. And after ruining those, a new round of austerity measures were requested to increase unemployment and lower wages, so that another loan could be obtain by the Greek taxpayers to refund those private banks, that guess what... increased the debt too. That's the program, Greece has to successfully complete in order to enter the next one.

The only thing Germany's austerity has succeeded in is increase debts, shrink GDPs, increase unemployment, lower wages, and increase taxes. Greece is just the worst example, since Germany supported those corrupt governments, while now attacks in every way possible one that tries to fight it.
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Old 2015-02-18, 15:48   Link #35844
Dextro
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Join Date: Feb 2008
Location: The land of tempura
Quote:
Originally Posted by Mentar View Post
Or maybe it only works for "strong" countries? Let's have a look then. Spain is currently experiencing growth comparable to Germany. Portugal just recently asked to repay their loans _faster_ to save on interest payments. Or look at the Baltics, who had to go through the same ordeal to be able to enter the Eurozone. Yes, there is still way too high unemployment in southern Europe, but _now_, with spending back in a controlled corridor, there is _sustainable_ growth that they can actually pay for.
Let me just point out that here in Portugal we are NOT growing, he haven't reduced ANY government spending whatsoever and the only thing that austerity has managed to do is kill internal consumption, stagnate the market and had virtually no effect in exports (the exports weight the same or less of the GDP today then they did at the beginning of the Troika austerity programme).

I do believe that austerity and reducing government waste helped in countries like Germany and Sweden but I'm pretty sure that it was only one of several measures to increase competitiveness. While governments from countries like my own and Greece continue failing to effectively reduce useless government spending, tax evasion and welfare abuse the only solution they have is to increase taxes on the dwindling middle class which is a zero sum game in the long run because it breeds poverty which in turn increases government spending in welfare and law enforcing due to growing unrest.

I'm not arguing that debtors should stop trying to collect, far from it, I'm actually arguing that while we southern Europeans continue to show this much incompetence in governing ourselves we shouldn't expect for economy growth to just magically appear aside from finding some hidden oil deposits that suddenly flood the country with easy money (and even that would probably only breed more corruption knowing our rotten culture).

Meanwhile people like the Portuguese Prime Minister tell us young folks to emigrate like it's a good thing. Immigration is at the lowest point in 50 years, emigration levels are the highest levels since the 1960s when we were under a harsh dictatorship and 50 years behind the rest of Western Europe and the birth rate is, as with most European countries, at alarmingly low levels while life expectancy is at an all time high. Our social security can't hope to cope with these factors and the solution keeps ending up being raising taxes and lowering salaries.

We do have wine though. It's excellent and surprisingly cheaper by the day. I wonder if that has anything to do with lowering salaries and employee protection. Did you know I'm mandated by law to give up to 2 extra hours a day to my company if they so choose with an upper limit of a 50 hour work week with a limit of 150 total hours a year? Do I get compensated for it? Yes. The company then has to pay me a 25% (taxed) bonus over my base salary which, given that average salaries for a young employee are around 800€ before taxes, means about an extra 200€... a year. Or just over 1,30€ per hour of work (before taxes. Should work out to 1€ per hour afterwards.)

No wonder our own Prime Minister tells young folks to leave the country...
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Old 2015-02-18, 19:43   Link #35845
Mentar
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Quote:
Originally Posted by kyp275 View Post
Technically, it would depend on what the money is being spent on. Deficit spending isn't inherently wasteful, and as long as the money spent is able to increase growth at a sufficient rate, it is actually a good thing.
Sure. Gambling in a casino isn't inherently wasteful either, as long as you are winning. Once you find out the trick to ensure that, you're golden. Likewise, come back when you found a way to spend money to increase growth at a sufficient rate.

Quote:
Originally Posted by monsta666 View Post
In the vast majority of cases austerity does not help. And besides the postwar era was marked with rapid economic growth in all developed countries. We live an era of low economic growth and inflation are at low levels also so Greece will not have inflation or high growth rates to fall back on like the Germans did. To escape the level of debts Greece had historically you needed rapid economic growth AND inflation. That is not going to happen.
The successful austerity examples I gave were _all_ in an era of low economic growth. What Greece needs is to plug the holes in their pot. I do recognize that Syriza is at least trying to mend SOME of them. The main task will be to transform Greece's inhabitants into citizens. The Greek government has 79 billion Euro of outstanding taxes from their upstanding proud "citizens".

Quote:
It has been five years now and there is little sign of a end point in this. The best option is for Greece to default. They are bankrupt and must start afresh. The bankers who lent the Greeks money must take a haircut and admit they made a mistake giving Greece money in the first place.
Heh. If Greece defaults, they don't need a haircut anymore. Then, the hair is gone.

So I guess that the EU/IMF gave Greece a bailout was a mistake in the first place, then? They should have let Greece go bankrupt instead, while the official Greek government was _pleading_ for help? I'm pretty sure that doing so would have led the same people to break into violent tirades against Europe for being completely irresponsible and lacking solidarity. Just like they do today. Damned if you do, damned if you don't.

Quote:
Greece have had a history of defaults so ignorance on their part cannot be made. More bailouts is just a case of privatising the profits and socialising the costs. Banks must stand by the decisions they make; they are private companies not public institutions so taxpayers should not foot the bill for their mistakes.
During the first crisis which led to the bailout programme, there was a real, tangible risk of contagion. Even if we put aside that the EU could hardly deny Greece's call for help back then, it's populistic and very shortsighted to put all the blame that's NOT Germany's on the banks.

At this very moment, the vast majority of privately held Greek debt is by Greek banks. You want to wipe them out? Really?

Quote:
Originally Posted by Bri View Post
This improved competitiveness of Germany was in relation to it's neighbors who are also Germany's primary export destination. That created a first mover advantage.
No, that's wrong. Germany's main growth areas have been on the world market. Yes, they also gained against other EZ countries, but this was only caused by the _general_ improvements of competitiveness. Check some statistics.

Quote:
Europe as a whole is a fairly closed economy. Such a program would not have had the same effect now when everyone is doing the same.
Not true either. The EU market isn't "closed". All members trade worldwide and vice versa. It is no realistic approach trying to "tune" competitiveness merely within the EU and ignore the world.

That's the problem with the idea that the world market doesn't matter. And merely demanding that Germany does huge wage increases to "adjust" their competitiveness (how should that be done? Wages are negotiated by the employers on the free market, not the government) can only fail, because even if we were so stupid to do so, it wouldn't make Greek products one bit more competitive on the world market.

Quote:
Currently most countries in Europe are attempting some form of austerity and the result is a race to the bottom in terms of breaking down the welfare state. Slow private and public sector demand has resulted in a jobless recovery and increased inequality.
So where is the money for your anti-austerity going to come from? The tooth fairy? Or should you rather continue to go into debt, so that interest payments remove your ability to support RATIONAL programmes completely?

*shrug*

I point out that those nations who were in trouble and went for reasonable reforms (austerity) are looking markedly better nowadays. The Germany/Austria/Netherlands block, the scandinavians and England. And that those countries who refuse to do so or at least drag their heels are underperforming (France and Italy).

Quote:
Originally Posted by monsta666 View Post
That's true, I missed that one. Still I get the feeling the way things are there will be more haircuts. This situation of low growth and high debt to GDP ratios does not seem sustainable. As things currently stand Greece has 174% of GDP worth of debts. I fail to see how they get out of this. More bailouts just means more loans.
The rise in the debt/GDP ratio is a normal and natural result of austerity. Once you don't blow billions of euros anymore in waste and corruption, this naturally directly leads to a GDP loss, and consequently to a rise in the debt/GDP ratio. What people fail to realize however is that Greece is _shielded_ from debt amortization until 2022, way enough time to get their sh*t together. Guess how much interest they have to service the EU-held 220 billions of debt per year.

Spoiler for Answer can be found here:


This is one more reason why defaulting on the debt won't help Syriza much. They still won't have the money for their programs. There is no significant debt service to "free" money from.

Quote:
Originally Posted by AmeNoJaku View Post
After forcing the cost of failed bank investments in idebting poor countries to taxpayers, we had the even more destructive PSI.

At the time, private lenders were were forcefully domestic banks and pension funds, and optionally any other.
Strange. In my world, subscribing to the PSI was not forced and could not be forced. In fact, many creditors refused (around 15%).

Quote:
And after ruining those, a new round of austerity measures were requested to increase unemployment and lower wages, so that another loan could be obtain by the Greek taxpayers to refund those private banks, [...]
"Ruining" what? The banks received fresh money from EU/IMF and were bailed out. Yes, the haircut hurt them, but at least it didn't lead to a default, which would have been a total loss. So what should have been the right course of action in your opinion? Recapitalizing the banks DIRECTLY would have been the much less costly operation.

What you write about "New round of austerity" is naturally wrong, as per usual. This was the first time that Greece got money in return for binding reform promises.

And you seriously allege that increasing unemployment was a goal? To "force a loan" on the Greek taxpayer? A loan which has absurdly low interest and a repayment schedule of no sooner than 2022, to be ended after 2050? For this, the other European nations scratched together 240 billion Euro. You don't think that these could be used for a more productive and profitable thing than tossing it into the bottomless Greek hole??? With the sole thanks being ridiculous conspiracy theories from moonbats?

Gawd, what I would give just to know that none of my money is spent on your behest. Please do a Grexit soon, that you may finally have to take responsibility for your actions.

Quote:
Originally Posted by SaintessHeart View Post
Greece exports processed hydrocarbons if I am not wrong. With the prices of oil at a bottom, they can easily pull more in to process.
The problem is that oil is paid in dollars, and the Drachma will inflate through the bottom. They simply will lack a hard currency to purchase enough oil with. The oil market won't take Drachmas.

Quote:
Originally Posted by Dextro View Post
Let me just point out that here in Portugal we are NOT growing,
Hmm? Q4 had Portugal with +0.5% up. You sure?

Quote:
...he haven't reduced ANY government spending whatsoever and the only thing that austerity has managed to do is kill internal consumption, stagnate the market and had virtually no effect in exports (the exports weight the same or less of the GDP today then they did at the beginning of the Troika austerity programme).
So what would be the alternative? Continue to spend into debt? At the very least, you ARE returning to growth again, and you are able to place long-year bonds on the market for very low interest rates. While at the beginning of the austerity, you were effectively shut off.

Quote:
I do believe that austerity and reducing government waste helped in countries like Germany and Sweden but I'm pretty sure that it was only one of several measures to increase competitiveness.
This is true. Our austerity wasn't merely lawnmower style, we also had elements to encourage growth. You could too, by the way. We'll soon find out anyway, now that the ECB has started a major QE programme, and Juncker is cooking up some spending programmes, too.

What was necessary back then was to maintain the integrity of the currency and restore the market's trust. As you may recall, back then, all the pulitzer prize professors were repeating that the Euro would die within 1-2 weeks. The same pulitzer prize professors which are now railing against austerity.

Quote:
While governments from countries like my own and Greece continue failing to effectively reduce useless government spending, tax evasion and welfare abuse the only solution they have is to increase taxes on the dwindling middle class which is a zero sum game in the long run because it breeds poverty which in turn increases government spending in welfare and law enforcing due to growing unrest.
But this should be YOUR responsibility to change, to make your politicians change it, or to change the politicians, right? I doubt that you want Berlin to tell you what to do.

Again, austerity does not mean "squeeze the weakest for their last penny" (we didn't do that in Germany either), it means "adjusting income and expenditure so that they remain in a closer corridor". HOW you do that is entirely up to you.

Quote:
I'm not arguing that debtors should stop trying to collect, far from it, I'm actually arguing that while we southern Europeans continue to show this much incompetence in governing ourselves we shouldn't expect for economy growth to just magically appear aside from finding some hidden oil deposits that suddenly flood the country with easy money (and even that would probably only breed more corruption knowing our rotten culture).
So where is the money for non-austerity coming from? Either debt (I see a problem here) or from the outside (I see an even bigger problem there).

Something has to give. Nothing else is sustainable IMHO.
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Old 2015-02-18, 23:07   Link #35846
AnimeFan188
Senior Member
 
Join Date: Jan 2008
Get ready for $10 oil:

"At about $50 a barrel, crude oil prices are down by more than half from their June
2014 peak of $107. They may fall more, perhaps even as low as $10 to $20. Here’s
why."

See:

http://finance.yahoo.com/news/ready-...230002605.html
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Old 2015-02-19, 00:07   Link #35847
Shyni
Senior Member
 
 
Join Date: Jan 2013
Location: nowhere
Oklahoma votes to ban Advanced Placement U.S. History.

Apparently they don't like students learning how Americans doing bad things was bad. Because presenting your country as having been anything but the best is unpatriotic.
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Old 2015-02-19, 03:06   Link #35848
Anh_Minh
I disagree with you all.
 
 
Join Date: Dec 2005
Quote:
Originally Posted by Mentar View Post
So I guess that the EU/IMF gave Greece a bailout was a mistake in the first place, then? They should have let Greece go bankrupt instead, while the official Greek government was _pleading_ for help? I'm pretty sure that doing so would have led the same people to break into violent tirades against Europe for being completely irresponsible and lacking solidarity. Just like they do today. Damned if you do, damned if you don't.
... Is this how Americans feel when there's war in the Middle East?
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Old 2015-02-19, 03:38   Link #35849
Mentar
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Location: Hamburg
Age: 49
Good comparison - pretty much.

The funny thing is that the average German couldn't care less about Germany being a/the leader of Europe or whereever. Essentially we want to be left alone, earn our living, trade with the world and THAT'S IT. I have developed a better understanding of Americans lately.
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Old 2015-02-19, 03:57   Link #35850
maplehurry
Senior Member
 
Join Date: Oct 2007
Quote:
Originally Posted by Shyni View Post
Oklahoma votes to ban Advanced Placement U.S. History.

Apparently they don't like students learning how Americans doing bad things was bad. Because presenting your country as having been anything but the best is unpatriotic.
Heh, one can still be patriotic without being naive... just take a look at World History, for starter, but that's too much work, the more sheepish the populace, the easier it is to rule them.
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Old 2015-02-19, 04:08   Link #35851
DevilHighDxD
Zero Two Best waifu 2018
 
 
Join Date: Jan 2012
Location: Living the NEET dream
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Quote:
Originally Posted by Shyni View Post
Oklahoma votes to ban Advanced Placement U.S. History.

Apparently they don't like students learning how Americans doing bad things was bad. Because presenting your country as having been anything but the best is unpatriotic.
GG easy college credits, beside slavery and some genocides on the native peoples here. We honestly aren't that much of a-hole compared to other Western countries.
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Old 2015-02-19, 09:01   Link #35852
SaintessHeart
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Age: 29
While people are whining about the Equation Group.....

Lenovo Caught Shipping Adware On New Computers
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When three puppygirls named after pastries are on top of each other, it is called Eclair a'la menthe et Biscotti aux fraises avec beaucoup de Ricotta sur le dessus.
Most of all, you have to be disciplined and you have to save, even if you hate our current financial system. Because if you don't save, then you're guaranteed to end up with nothing.
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Old 2015-02-19, 10:07   Link #35853
ganbaru
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Join Date: Dec 2007
Location: Betweem wisdom and insanity
More than 100 possibly exposed to 'superbug' within UCLA Health System
http://www.reuters.com/article/2015/...0LN0ZS20150219

Pressure mounts on shippers, union to settle U.S. West Coast ports dispute
http://www.reuters.com/article/2015/...0LM1SJ20150219

Netanyahu on collision course with White House over Iran
http://www.reuters.com/article/2015/...0LN1EC20150219
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Old 2015-02-19, 15:16   Link #35854
AmeNoJaku
Franco's Phalanx is next!
 
 
Join Date: Apr 2012
Location: Little England, Europe and Asia
Schäuble should join Farage in dissolving the EU... and I am very kind with this personal observation, since this kind of attitude is viewed far worse by the PIIGS his fiscal policies imposed upon a whole continent have created.

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Old 2015-02-19, 15:45   Link #35855
Dextro
He Without a Title
 
 
Join Date: Feb 2008
Location: The land of tempura
Quote:
Originally Posted by Mentar View Post
So where is the money for non-austerity coming from? Either debt (I see a problem here) or from the outside (I see an even bigger problem there).

Something has to give. Nothing else is sustainable IMHO.
Traditionally countries would be able to print currency therefore deflating it and increasing competitiveness in exports but alas those instruments have been shut off from southern Europeans. Joining the Euro is something that ideologically I want to see as a positive (and it was for a while) but the amount of sovereignty all us Europeans had to give up was substantial and I keep feeling like smaller countries like my own had to give up far more of it than larger economies.

You're also too quick to jump to the conclusion that I'm advocating that Germans should dictate what us southern Europeans do when I said nothing of the sort. I admit our failings and that austerity has a role to play however the amount of support from the rest of the Eurogroup has appeared lacking to us who feel almost robbed of future prospects. The impression we get is that our "partners" mostly acted like loan sharks waiting to collect instead of being an equal helping another recover from a disease. Quantitive Easing worked wonderfully for the US apparently and I thanked the gods when the ECB finally got around to doing it on this side of the Atlantic at long last. I hope that now, at long last, we'll see some actual recovery in all of Europe.

As for the 0.5% growth I find it far too close to a statistical anomaly to be considered sustainable growth but I admit that I may be too close to the issue at hand to actually see any improvement happening. I know that the amount of poverty I see around me isn't decreasing in the least, quite the opposite in fact which makes it hard to get any glimpse of light at the end of the tunnel. I love my country and have a rather stable job in a field where qualified manpower is lacking and even I find myself thinking time and time again that I would be better off leaving my family behind and moving to a different, northerner, European country (I would say friends but most of them have already left).

Bottom line I don't want anyone's pity, I just want people to understand that at most the rest of the Eurogroup has tried to stop the bleeding from the wound of us Southern European countries. The solution hasn't been reached yet.
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Old 2015-02-19, 17:01   Link #35856
Bri
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Quote:
Originally Posted by Mentar View Post
No, that's wrong. Germany's main growth areas have been on the world market. Yes, they also gained against other EZ countries, but this was only caused by the _general_ improvements of competitiveness. Check some statistics.
Incorrect. Over two third of Germany's export is to other European countries. Where do you think the demand for those less expensive German goods and services came from when wage moderation reduced domestic demand?

Quote:
Originally Posted by Mentar View Post
Not true either. The EU market isn't "closed". All members trade worldwide and vice versa. It is no realistic approach trying to "tune" competitiveness merely within the EU and ignore the world.

That's the problem with the idea that the world market doesn't matter. And merely demanding that Germany does huge wage increases to "adjust" their competitiveness (how should that be done? Wages are negotiated by the employers on the free market, not the government) can only fail, because even if we were so stupid to do so, it wouldn't make Greek products one bit more competitive on the world market.
No, that is not what I am saying. The trade volumes with the rest of the world are trivial in comparison with those on the domestic European market. There for the continental economy behaves as a closed system. Germany's improvement in competitiveness was based around labor market reforms. That is a temporary advantage in relation to other countries, the long term driver of economic growth is (technical) innovation, which is the real strength of the German economy.

Quote:
Originally Posted by Mentar View Post
So where is the money for your anti-austerity going to come from? The tooth fairy? Or should you rather continue to go into debt, so that interest payments remove your ability to support RATIONAL programmes completely?
The 2008 recession was the result of a demand collapse as governments stopped spending and financial institutions were restricted in lending. It wasn't a normal crash from an overheated economy. In this context Keynesian stimuli will work, either from borrowing or monetary expansion. To waylay your worries, the EU should reinforce the stability pact rules when the economy is in the upswing again.

Quote:
Originally Posted by Mentar View Post
I point out that those nations who were in trouble and went for reasonable reforms (austerity) are looking markedly better nowadays. The Germany/Austria/Netherlands block, the scandinavians and England. And that those countries who refuse to do so or at least drag their heels are underperforming (France and Italy).
The UK is not the best example as they ran massive deficits during the recession. Unlike Southern Europe the UK did not rattle the markets as they have both a reliable tax revenue system and a nuclear option in the form of discretionary monetary expansion.

Here in the Netherlands austerity has been disastrous. We had similar labor market reforms during the late 90s/early 2000s. A new labor-libertarian coalition made a deal with the unions and employers to reduce employment protection and privatized public utilities and health insurance. Currently we now have a 'temp' based economy and older (40+)workers are shed, only to be rehired as self employed. Investment firms bought and ran down the utilities while profits were siphoned off and costs for the consumer increased while service declined. Health insurance cost has exploded and coverage declined, far more than can be explained by an aging population. It's next to impossible to loan money for start ups or mortgages (I had to buy my house cash), the economy is slowly recovering but unemployment is not decreasing. Education is increasingly inaccessible for lower income students and general inequality is on the rise. Essentially we're trading away our long term economic vitality to comply with the SGP criteria. Forgive my cynicism, I hope Germany made better agreements then we did, but I'm afraid you haven't seen the full social cost yet of these reforms.
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Old 2015-02-19, 17:29   Link #35857
Mentar
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Age: 49
Quote:
Originally Posted by Dextro View Post
Traditionally countries would be able to print currency therefore deflating it and increasing competitiveness in exports but alas those instruments have been shut off from southern Europeans.
Money printing means you advocate debt. Okay, fair enough. I'm sure you are aware of the downsides.

Quote:
Joining the Euro is something that ideologically I want to see as a positive (and it was for a while) but the amount of sovereignty all us Europeans had to give up was substantial and I keep feeling like smaller countries like my own had to give up far more of it than larger economies.
At the same time, you gained a hard currency with all its advantages, like tremendous gain of asset value (overnight modest houses skyrocketed in value), availability of cheap loans to be used for economic programmes... the main problem was that the latter was used for consumption instead of investment. Governments were elected that promised their clientele the most lavish boons.

I do understand your position though. I'd say that the chances of the Euro were squandered because the elites ignored that the old methods of dealing with problems (debt and inflating) wouldn't work anymore.

Quote:
You're also too quick to jump to the conclusion that I'm advocating that Germans should dictate what us southern Europeans do when I said nothing of the sort. I admit our failings and that austerity has a role to play however the amount of support from the rest of the Eurogroup has appeared lacking to us who feel almost robbed of future prospects.
This is a fair criticism, and like I said before - I am not opposed to reasonable and measured programmes to fight unemployment and encourage growth. As long as they are jointly agreed and properly financed.

I do see a very substantial difference between Portugal and Greece, for example. Portugal made serious efforts to consolidate (successfully on the numbers, albeit at the cost of massive unemployment), and they have always sought joint agreement with European partners. They _deserve_ support in return. And I think that Juncker is already cooking up something along these lines. Greece: Not so much. I'll leave it at that.

Quote:
The impression we get is that our "partners" mostly acted like loan sharks waiting to collect instead of being an equal helping another recover from a disease. Quantitive Easing worked wonderfully for the US apparently and I thanked the gods when the ECB finally got around to doing it on this side of the Atlantic at long last. I hope that now, at long last, we'll see some actual recovery in all of Europe.
The US QE came at a massive price though - public debt rocketed from 64.8% in 2008 to 101.5% in 2014. And those economies which would require growth the most not only have much less competitive market situations compared to the US, they also start from a much higher debt base. I genuinely doubt that QE would have worked well without consolidating the budgets first.

Competitiveness does _not_ rise by going QE, just the opposite. But this is what the countries in trouble need every bit as much as they need a solution for the unemployment.

Quote:
As for the 0.5% growth I find it far too close to a statistical anomaly to be considered sustainable growth but I admit that I may be too close to the issue at hand to actually see any improvement happening.
I'd expect that with the massively dropping oil price, the QE and the upcoming Juncker programme, we should see some improvement soon.

Quote:
Bottom line I don't want anyone's pity, I just want people to understand that at most the rest of the Eurogroup has tried to stop the bleeding from the wound of us Southern European countries. The solution hasn't been reached yet.
Fair enough. For what little it's worth, personally I'm convinced that I'm not the only German/"Northern European" who would have no problem to finance programmes to address the issues. My problem is the _how_. And I feel that being called a Nazi from people who for some absurd reason feel entitled that the rest of Europe bends over backwards to finance their election promises does not motivate me to do that. (And just to be clear here: Portugal genuinely impressed me so far)
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Old 2015-02-19, 17:52   Link #35858
Mentar
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Age: 49
Quote:
Originally Posted by Bri View Post
Quote:
Germany's main growth areas have been on the world market. Yes, they also gained against other EZ countries, but this was only caused by the _general_ improvements of competitiveness. Check some statistics.
Incorrect. Over two third of Germany's export is to other European countries. Where do you think the demand for those less expensive German goods and services came from when wage moderation reduced domestic demand?
I think you misread. _Growth_ areas. Yes, by grand total, the EU market is our most important one, but the non-EU trade grew and continues to grow _much_ faster. I point this out because one of the more famous conspiracy theories is that Germany is somehow sucking the EU dry by pernicious means. If that was true, we'd see a more significant growth in the EU trade compared to the world trade. The opposite is true.

Quote:
No, that is not what I am saying. The trade volumes with the rest of the world are trivial in comparison with those on the domestic European market.
For who? For Germany, this is incorrect. For other countries, I have to admit that I'd have to look into it first, I don't know this offhand. However, I don't see the point you are making. Are you saying that addressing the world market is wrong/too hard, and to concentrate on the EU market is going to be sufficient? I feel that I am missing your point... please elaborate.

Quote:
There for the continental economy behaves as a closed system. Germany's improvement in competitiveness was based around labor market reforms. That is a temporary advantage in relation to other countries, the long term driver of economic growth is (technical) innovation, which is the real strength of the German economy.
The world market NEEDS to be addressed if you want to live in an affluent western country. You can't just try to go in lockstep within the EU trading bloc and seriously think that this is going to be sufficient. Or do you really think so? If we're relaxing in the EU hammock and give each other sweet wage increases, in the end, the free market will buy chinese/indian/US products, if they run away with productivity.

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The 2008 recession was the result of a demand collapse as governments stopped spending and financial institutions were restricted in lending. It wasn't a normal crash from an overheated economy. In this context Keynesian stimuli will work, either from borrowing or monetary expansion. To waylay your worries, the EU should reinforce the stability pact rules when the economy is in the upswing again.
Do you see this happening?

I am seriously puzzled by the utter confidence of the people who advocate debt-financed spending programs. We recently had a very nice experiment of exactly that in Japan. You are aware of the outcome, right?

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The UK is not the best example as they ran massive deficits during the recession. Unlike Southern Europe the UK did not rattle the markets as they have both a reliable tax revenue system and a nuclear option in the form of discretionary monetary expansion.
You are aware that the UK ran massive austerity programs, though? This is exactly what the Guardian was raging against for a long time. And they have been successful.

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Here in the Netherlands austerity has been disastrous. We had similar labor market reforms during the late 90s/early 2000s. A new labor-libertarian coalition made a deal with the unions and employers to reduce employment protection and privatized public utilities and health insurance.
Just to be clear here: I'm not advocating privatization of public utilities in general. This is only the better solution if the state is incompetent/unable to run them in a financially stable way and has to constantly inject fresh money to keep them afloat.

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Currently we now have a 'temp' based economy and older (40+)workers are shed, only to be rehired as self employed. Investment firms bought and ran down the utilities while profits were siphoned off and costs for the consumer increased while service declined.
Hence stuff like that should only be considered in clearly regulated areas. Again, I'm NOT for wanton privatization.

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Health insurance cost has exploded and coverage declined, far more than can be explained by an aging population. It's next to impossible to loan money for start ups or mortgages (I had to buy my house cash),
Just to make sure I'm not misunderstood: I do believe you. But it still feels totally ridiculous to me. In Germany, Banks are willing to chase you down to loan money to you if you have financial credibility, because interest rates are totally in the cellar.

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the economy is slowly recovering but unemployment is not decreasing. Education is increasingly inaccessible for lower income students and general inequality is on the rise. Essentially we're trading away our long term economic vitality to comply with the SGP criteria. Forgive my cynicism, I hope Germany made better agreements then we did, but I'm afraid you haven't seen the full social cost yet of these reforms.
I'm not too worried there - we made our reforms between 2003 and 2010. Ever since, Merkel/Schäuble have steered a cautious "don't rock the boat" approach, and the traditionally cooperative relationship between employers and unions have kept wage increases close to the inflation rate. Only now, when (mostly due to cheap oil), inflation is zero or even negative, wages get a _significant_ hike.

Hm.

So what exactly are you proposing to do?
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Old 2015-02-19, 20:10   Link #35859
Bri
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Join Date: Jan 2009
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Originally Posted by Mentar View Post
I think you misread. _Growth_ areas. Yes, by grand total, the EU market is our most important one, but the non-EU trade grew and continues to grow _much_ faster. I point this out because one of the more famous conspiracy theories is that Germany is somehow sucking the EU dry by pernicious means. If that was true, we'd see a more significant growth in the EU trade compared to the world trade. The opposite is true.

For who? For Germany, this is incorrect. For other countries, I have to admit that I'd have to look into it first, I don't know this offhand. However, I don't see the point you are making. Are you saying that addressing the world market is wrong/too hard, and to concentrate on the EU market is going to be sufficient? I feel that I am missing your point... please elaborate.
I want to be clear here: I am not accusing Germany of parasitic behavior, merely emphasizing how much European economies are interconnected.

What I do suggest is that the German austerity program, as implemented during the 2000s, was made possible through circumstances, the nature of the German economy and the timing. It's not a one-fit-for-all solution. Italy and France could benefit from a similar labor market restructuring program when the European economy has recovered. What I feel you forget is that demand all across Europe is down now (unlike in the mid 2000s) because of the recession and austerity programs. Even if export driven economies currently would implement an austerity program, there is not enough demand in other European countries to offset the drop in domestic demand. The result is a low/negative growth economy stuck in a fiscal straightjacket.

Quote:
Originally Posted by Mentar View Post
The world market NEEDS to be addressed if you want to live in an affluent western country. You can't just try to go in lockstep within the EU trading bloc and seriously think that this is going to be sufficient. Or do you really think so? If we're relaxing in the EU hammock and give each other sweet wage increases, in the end, the free market will buy chinese/indian/US products, if they run away with productivity.
I'm not sure if you fully grasp the nature of productivity. In the short term wages moderation can give a country a temporary competitive advantage by reducing the cost of goods and services, but in the long term productivity is driven by technology only. You don't want to compete on wages with developing nations, you want more efficient and high value capital goods (factories, machines, production lines, etc.) and more valuable services which you develop by innovation and education. Local services which are not open to global competition (from hairdressers to lawyers) benefit from being in a high productivity zone and can charge higher wages than their counterparts in developing nations.


Quote:
Originally Posted by Mentar View Post
I am seriously puzzled by the utter confidence of the people who advocate debt-financed spending programs. We recently had a very nice experiment of exactly that in Japan. You are aware of the outcome, right?
Why do you think Bernanke flooded the US economy with liquidity? It was based on the lessons learned in Japan. Even the more careful ECB is now following in his footsteps.

I don't advocate Japanese style infrastructure spending or their interpretation of QE. Governments needs to keep up the purchasing power of the population during a recession caused by a financial crisis, this is the opposite solution from what is needed after a crash at the end of a boom-bust cycle. Wage moderation and lower public sector employment are not the answer in this scenario. A temporary deficit and increased debt are a far lesser evil than a stagnant jobless recovery.

Quote:
Originally Posted by Mentar View Post
So what exactly are you proposing to do?
Currently? There is a savings glut and a demand shortfall so EU government should focus on increasing the purchasing power of lower and middle incomes with tax breaks and expand public sector employment. Apply measures to prevent this extra private sector income to be converted in to savings. On a country by country basis we need to check for the need of housing market reforms and financial sector restructuring.
Bri is offline  
Old 2015-02-19, 20:15   Link #35860
sneaker
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Join Date: Dec 2008
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Originally Posted by Bri View Post
Incorrect. Over two third of Germany's export is to other European countries. Where do you think the demand for those less expensive German goods and services came from when wage moderation reduced domestic demand?
Define "European countries"? In the context of this discussion I have to assume you either mean EU countries or Euro countries and that would be wrong on both accounts.

Percentage of export to EU of total exports: 57%
Percentage of export to Euro countries of total exports: 36.9%

https://www.destatis.de/DE/ZahlenFak...len/09_AH.html

As you can see the trend of both numbers is to go down since the start of the statistic in 1991.
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