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Europe is in big trouble

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Al Jassas View Drop Down
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    Posted: 28 Jun 2012 at 21:26
Hello to you all
 
Interesting events over the past few weeks. After 2 Greek elections the pro-austerity parties are back with a new mandate to cut even more deeply than before.
 
Cyprus also asked for a bailout which was also not a surprise.
 
But the more interesting and dangerous situation is developing in Spain and to a lesser extent Italy.
 
After bank failures in Spain 10 year bond yields jumped to the 7% threshold which the Spanish PM announced that his country simply cannot afford such high rates. This put europe into panic mode and a +100 billion euros in bailouts were handed. After a drop in the rates they stabilised at 6.8 which is still too high.
 
In Italy the situation was not better. The rates crossed the 6% line and are gradually increasing.
 
Europe is now meeting to discuss the future and what to do in order to save the euro. Germany refused the sensible thing by pooling all debt across the euro zone but supported a stimulous package worth 130 billion euros which I think is too low:
 
 
What is really interest is that no one is seriously thinking of following a policy of quantitative easing in europe or advocating an even stronger role for the ECB. One of the reasons why Banks in the US survived was the active interference of the Fed by engaging in quantitative easing and lending massive sums of money (nearly 8 trillion) at zero% rates to banks so that they could meet their short and medium term obligations.
 
As I see it this crisis is primarily a money supply crisis that exists because large scale corporate and individual debt rather than government debt (Spain's public debt for example is only 69% of its GDP but its private debt is over 300% of the GDP). Such policies although will lead to higher rates of inflation will eventually float the banks enough until growth takes over. Remember that in all those countries unemployment is over 15% and are in deep depression that is actually getting worse rather than better.
 
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Post Options Post Options   Thanks (0) Thanks(0)   Quote gcle2003 Quote  Post ReplyReply Direct Link To This Post Posted: 29 Jun 2012 at 14:46
I'm not sure about quantitative easing necessarily being an answer. It only helps if it reduces debt levels (i.e. if the new money goes to debtors who can pay off their debts with it; if it goes to creditors as in the US recently and is not used to write down assets, it just vanishes from the money equation. 

I also don't think that whether the debt is public or private makes too much difference (other than perhaps morally or ethically).

The central essence of the problem is that banks and other investors have for years been profiting from making unsustainable loans, now carried on their balance sheets at more than their actual worth. The situation can only be resolved by writing off those loans, or at least writing them down, This of course will only make the creditors involved scream except insofar as they can get recompensed by governments or direct from the ECB if the ECB is given sufficient power..
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Post Options Post Options   Thanks (0) Thanks(0)   Quote Buckskins Quote  Post ReplyReply Direct Link To This Post Posted: 29 Jun 2012 at 18:14
I see the UK is back into recession. Something didn't work.
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Post Options Post Options   Thanks (0) Thanks(0)   Quote Captain Vancouver Quote  Post ReplyReply Direct Link To This Post Posted: 29 Jun 2012 at 19:24
It seems to me that there is no small degree of hypocracy on the part of the German government, as it is the big banks of Europe that have been in the forefront of creating such huge debt, including German ones. The agony over taking definitive action appears closely related to the fact that today investors are referred to in the same hushed and respectful tones previously reserved for the clergy.
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Post Options Post Options   Thanks (0) Thanks(0)   Quote gcle2003 Quote  Post ReplyReply Direct Link To This Post Posted: 29 Jun 2012 at 20:30
Originally posted by Buckskins Buckskins wrote:

I see the UK is back into recession. Something didn't work.

Cameron started copying the US. 
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Post Options Post Options   Thanks (0) Thanks(0)   Quote Al Jassas Quote  Post ReplyReply Direct Link To This Post Posted: 29 Jun 2012 at 21:00
Originally posted by gcle2003 gcle2003 wrote:

I'm not sure about quantitative easing necessarily being an answer. It only helps if it reduces debt levels (i.e. if the new money goes to debtors who can pay off their debts with it; if it goes to creditors as in the US recently and is not used to write down assets, it just vanishes from the money equation. 
 
Which helps in avoiding high inflation rates in a stagnant economy. Plus it will help the banks by easing the pressure on them and help them reorganise as American banks did.

Originally posted by gcle2003 gcle2003 wrote:

I also don't think that whether the debt is public or private makes too much difference (other than perhaps morally or ethically).
 
It makes alot of difference when it comes to fiscal policy. Remember the book I recommended to you back in the Spring. Most countries that default have low public debt but high levels of private debt that because of economic collapse becomes irrecoverable.
 

Originally posted by gcle2003 gcle2003 wrote:

The central essence of the problem is that banks and other investors have for years been profiting from making unsustainable loans, now carried on their balance sheets at more than their actual worth. The situation can only be resolved by writing off those loans, or at least writing them down, This of course will only make the creditors involved scream except insofar as they can get recompensed by governments or direct from the ECB if the ECB is given sufficient power..
 
I agree with you on the principal cause. However writing these debts off will basically bankrupt the entire system since its a cascading situation where the large banks have no direct connection with the irrecoverable private debt that was issued by the local bank.
 
Expansionary monetary policies including QE will not only spurr growth but also reduce rates on countries and more importantly help banks meet their short and medium term obligations giving them time to renegotiate the debts.
 
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Post Options Post Options   Thanks (0) Thanks(0)   Quote Al Jassas Quote  Post ReplyReply Direct Link To This Post Posted: 29 Jun 2012 at 21:14
Originally posted by Captain Vancouver Captain Vancouver wrote:

It seems to me that there is no small degree of hypocracy on the part of the German government, as it is the big banks of Europe that have been in the forefront of creating such huge debt, including German ones. The agony over taking definitive action appears closely related to the fact that today investors are referred to in the same hushed and respectful tones previously reserved for the clergy.
 
I disagree with you on that.
 
Yes Germany is at fault but for weakening ECB controls over the euro. However blaming banks for private sector mistakes is wrong.
 
With record low interest rates private debt rose through the roof. People and businesses borrowed without question or plan and the end result was collapse. Greece also racked in public debt both on the central government and the local level which exacerbated the problem.
 
It is this reckless borrowing taking advantage of low rates intended to boost the export capacity of the eurozone that caused the problem. Banks, large banks that is, never engaged directly in this sort of lending, locally. Instead they gave money to other banks and then securitised it (As happened in the housing crisis in America) spreading risk all over the eurozone and the world.
 
If anything is to blame it is the weakening of centralised control over the euro through the ECB which would have raised rates long before when borrowing reached unthinkable levels in 2006-07.
 
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Post Options Post Options   Thanks (0) Thanks(0)   Quote gcle2003 Quote  Post ReplyReply Direct Link To This Post Posted: 30 Jun 2012 at 17:11
Originally posted by Al Jassas Al Jassas wrote:

Originally posted by gcle2003 gcle2003 wrote:

I'm not sure about quantitative easing necessarily being an answer. It only helps if it reduces debt levels (i.e. if the new money goes to debtors who can pay off their debts with it; if it goes to creditors as in the US recently and is not used to write down assets, it just vanishes from the money equation. 
 
Which helps in avoiding high inflation rates in a stagnant economy. Plus it will help the banks by easing the pressure on them and help them reorganise as American banks did.
In theory, yes, and possibly in practice. The point I was making is that if it is simply handed to the banks, which do then not reorganise, the whole thing becomes pointless. W hich is what actually happened in the US: the money was not used to write off overvalued assets, but taken pretty well directly to the profit and loss acount.
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Originally posted by gcle2003 gcle2003 wrote:

I also don't think that whether the debt is public or private makes too much difference (other than perhaps morally or ethically).
 
It makes alot of difference when it comes to fiscal policy. Remember the book I recommended to you back in the Spring. Most countries that default have low public debt but high levels of private debt that because of economic collapse becomes irrecoverable.
I meant it makes little difference to the utility of quantitative easing. Yes, whether the burdensome debt is public or private makes a difference tactically. If private debt is high and public reasonably low, cutting back government spending is definitely not the way to go. The other way around there may be a case for it. The big dilemma comes when, like the US, both public AND private debt are at high levels.
 
I also agee with you about the ECB and the lack of controls - basically the failure to recognise that in a currency zone the members cannot be treated as sovereign debtors. 


Edited by gcle2003 - 30 Jun 2012 at 17:13
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Post Options Post Options   Thanks (0) Thanks(0)   Quote Al Jassas Quote  Post ReplyReply Direct Link To This Post Posted: 30 Jun 2012 at 18:29
Actually the US has one of the lowest combined debts in the developed world, 296% of GDP as of 2009. Europe which has low levels of public debts in general than the US have higher levels of total debt. The UK for example has its level at 466% if not higher although this is slanted because the City's role as an international banking center.
 
 
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Post Options Post Options   Thanks (0) Thanks(0)   Quote gcle2003 Quote  Post ReplyReply Direct Link To This Post Posted: 30 Jun 2012 at 20:35
My reference to the US was as an example where government debt and private debt are about equal, in which case opposed tactics are called for to tackle the two problems, assuming they are seen as problems. From the data you quote it's not easy to work out a table. 

(Incidentally, is 'government debt' in the US - or the other countries - only central government debt?)

For any deeper analysis, you don't only need data on who owes the money, but also on who it is owed to. Included in that ought to be how much Eurozone (or even EU) countries owe to other Eurozone (or EU) countries. 

For instance Japan's total government debt, most of which is owed domestically, could be reduced pretty well immediately through taxation. 

I've given my views on using GDP for sensible comparisons before. 

Incidentally, wrt the ECB, Juncker seems to be ready to get tough.
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Post Options Post Options   Thanks (0) Thanks(0)   Quote Captain Vancouver Quote  Post ReplyReply Direct Link To This Post Posted: 01 Jul 2012 at 01:08
Originally posted by Al Jassas Al Jassas wrote:

Originally posted by Captain Vancouver Captain Vancouver wrote:

It seems to me that there is no small degree of hypocracy on the part of the German government, as it is the big banks of Europe that have been in the forefront of creating such huge debt, including German ones. The agony over taking definitive action appears closely related to the fact that today investors are referred to in the same hushed and respectful tones previously reserved for the clergy.
 
I disagree with you on that.
 
Yes Germany is at fault but for weakening ECB controls over the euro. However blaming banks for private sector mistakes is wrong.
 
With record low interest rates private debt rose through the roof. People and businesses borrowed without question or plan and the end result was collapse. Greece also racked in public debt both on the central government and the local level which exacerbated the problem.
 
It is this reckless borrowing taking advantage of low rates intended to boost the export capacity of the eurozone that caused the problem. Banks, large banks that is, never engaged directly in this sort of lending, locally. Instead they gave money to other banks and then securitised it (As happened in the housing crisis in America) spreading risk all over the eurozone and the world.
 
If anything is to blame it is the weakening of centralised control over the euro through the ECB which would have raised rates long before when borrowing reached unthinkable levels in 2006-07.
 
Al-Jassas 
 
But how to aportion blame here AJ? In theory, low rates encourage more spending and investment. The big picture is more complex however. For those in the lower ranks, often their options are narrow. They must spend their money on needed things, no matter the economic manipulations. Much of this spending is not reckless at all, but the stuff of day to day life. For many in the financial stratosphere, rates are of secondary interest.  There is a game afoot, and money to be made in any sort of environment, short of total meltdown, and even in that case the larger entities can simply shout: To big to fail! And have a taxpayer welfare installment.
 
Even if, as you say, the larger financial institutions weren't directly lending to business and consumers, it makes little difference. It is a requirement of their profession to research and secure their loans and investments, even if they are to other institutions. Further, this is how they make their money, meaning that the temptation is there to push the envelope, and make riskier decisions when big money (and bonuses, which now drive a lot of executive actions) is at stake, much more so than say, a consumer contemplating a home purchase. This is what they do every day, and the knowledge is there that the right bit of fiddling here or there can mean big bucks, particularly in today's less regulated environment.
 
CEO's in the financial sector, loans officers, day traders, real estate flippers, and others were in the forefront of debt production. It is now many of these same that are referred to as Investors, in such hushed and reverential tones, and on whose wise verdict we are supposed to await.
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Post Options Post Options   Thanks (0) Thanks(0)   Quote Al Jassas Quote  Post ReplyReply Direct Link To This Post Posted: 01 Jul 2012 at 18:22
While much of what you say is correct, still personal responsibility for one's decisions should always be upheld.
 
People who can't borrow should not and people who already had mortgages on their houses should never take a second one for the entertainment center and the kitchen remodelling.
 
Yes banks had a responsibility to check before lending but it is easy to forget that the collapse started far away from the banks when their third hand loans reached the underegulated credit unions and mortgage brokers who went on a lending spree giving 2nd, 3rd and even 4th mortgages at insane rates for the purpose of forclosing and cashing in on the hot real estate market.
 
 
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Post Options Post Options   Thanks (0) Thanks(0)   Quote gcle2003 Quote  Post ReplyReply Direct Link To This Post Posted: 02 Jul 2012 at 14:27
The trouble with bringing in ethical and moral considerations of who ought to have done what is that it leads away from establishing the economic actions that need to be taken. Throughout most of history excessive (including 'irresponsible') debt creation leads to crises where debt has to be expunged to start the cycle again.

It's a little like musical chairs. If the music stops and there's no chair for you then you're out. No use complaining other people were moving around too fast, or too slowly. In musical chairs though there's a strict rule about who loses out. In the debt cycle it ends up as a political choice. (In the middle ages in Europe of course it was usually the Jews, though a little later the Lombards had to take it.)
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Post Options Post Options   Thanks (0) Thanks(0)   Quote Buckskins Quote  Post ReplyReply Direct Link To This Post Posted: 02 Jul 2012 at 20:03
Originally posted by gcle2003 gcle2003 wrote:

Originally posted by Buckskins Buckskins wrote:

I see the UK is back into recession. Something didn't work.

Cameron started copying the US. 

No Graham, he wishes he had copied the US, with that Socialist death grip having hold of his throat it was of course destined to failure as usual.
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Post Options Post Options   Thanks (0) Thanks(0)   Quote Al Jassas Quote  Post ReplyReply Direct Link To This Post Posted: 02 Jul 2012 at 21:08
Originally posted by Buckskins Buckskins wrote:

Originally posted by gcle2003 gcle2003 wrote:

Originally posted by Buckskins Buckskins wrote:

I see the UK is back into recession. Something didn't work.

Cameron started copying the US. 

No Graham, he wishes he had copied the US, with that Socialist death grip having hold of his throat it was of course destined to failure as usual.
 
The only socialist thing about the UK is its NHS, other than that its actually more capitalist than the US according to the libertarian Fraser institute.
 
In fact, he is trying to copy Germany introducing several German programs like apprenticeships hoping to restore Britain's old industrial glory.
 
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Post Options Post Options   Thanks (0) Thanks(0)   Quote gcle2003 Quote  Post ReplyReply Direct Link To This Post Posted: 02 Jul 2012 at 21:21
Buckskins' intervention is as usual meaningless. 

However, responding to al Jassas, I was referring to Cameron's introduction of more and more cost-cutting measures into government, administrative and law enforcement bodies when I said copying the uS. 

I'm not sure whether the UK training to copy Germany in rebuilding large scale manufacturing industry is that good an idea, though worth a try. (However if you look back at the Industrial Training Act of c. 1968 you'll find that the UK was in the forefront or organising national training programs some while ago). After all Britain has never really been as good as Germany at large-scale assembly-line or rigidly organised manufacturing.
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Post Options Post Options   Thanks (0) Thanks(0)   Quote Captain Vancouver Quote  Post ReplyReply Direct Link To This Post Posted: 02 Jul 2012 at 23:04
Originally posted by Al Jassas Al Jassas wrote:

While much of what you say is correct, still personal responsibility for one's decisions should always be upheld.
 
People who can't borrow should not and people who already had mortgages on their houses should never take a second one for the entertainment center and the kitchen remodelling.
 
Yes banks had a responsibility to check before lending but it is easy to forget that the collapse started far away from the banks when their third hand loans reached the underegulated credit unions and mortgage brokers who went on a lending spree giving 2nd, 3rd and even 4th mortgages at insane rates for the purpose of forclosing and cashing in on the hot real estate market.
 
 
Al-Jassas
Weary though they may be, consumers are forced to keep dancing until the music stops. Much of the modern economy consists of rather peripheral strategies to keep money in motion, one reason that marketing is so prominent today.
 
Real estate is somewhat of an abstraction, a market place with similarities to the stock and bond markets that most (perhaps more so in North America than Europe) are pushed towards by economic policy. As with the latter, some make money, some loose it, many would probably be content to just have a non-speculative life. Those that make money in the system have an inherent motivation to keep the wheel spinning, those in the financial and real estate sectors especially.
 
Sure, there is greed and foolishness on the part of consumers, but for the most part, once in the system, there is little choice but to play the game. If one has invested $500k in a home, selling it for less than the principle and accumulated servicing costs could be disasterous. Opting out is not in the cards for most, certainly not those with young families, as they just loose out being renters, in most circumstances. The wheel keeps spinning, and bankers and others make their fees and bonuses.
 
The root of the crash was really in the unregulated financial system, that created ever more devious and dishonest financial products in the rush for profit, until the whole system was so skewed that even the scammers couldn't figure out who had been scammed, and what, if any, products were left that were safe. This behavior went from the very top, the huge investment banks on Wall Street, down to the small town real estate entrepreneur. The bottom line is that unless there are rules in the jungle, the tigers will end up roughousing the smaller animals.
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Post Options Post Options   Thanks (0) Thanks(0)   Quote Al Jassas Quote  Post ReplyReply Direct Link To This Post Posted: 25 Jul 2012 at 23:38
Hello to you all
 
More bad news for europe. UK's austerity is biting hard. The recession has depened so much I think it is the time to call it what it is, a depression. Despite that the government has no intent to stop the madness especially that it is now official that these are the worst 4 years in British economic history, worse than the great depression even:
 
 
Another piece of bad news. Spain's borrowing costs reached 7.6%. Theoretically this has no economic basis whatsoever but markets do what markets want and they see a killing and will jump at it. This was so bad that Moody's threatened to reduce Germany's rating further escalating the situation knowing full well that Germany can't let Spain take the plunge:
 
 
With this piece of news it is now all but certain that Greece will be thrown overboard in order to save Spain and the shock resulting from this move will probably send the entire world into depressn again.
 
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Post Options Post Options   Thanks (0) Thanks(0)   Quote gcle2003 Quote  Post ReplyReply Direct Link To This Post Posted: 26 Jul 2012 at 20:16
Moody's finagling is just a way of increasing interest rates for lenders. What does anyone think lenders are going to do when prices get too high for anyone to borrow? If apple growers set apple prices too high, they end up with a whole pile of rotting fruit. 
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Post Options Post Options   Thanks (0) Thanks(0)   Quote Al Jassas Quote  Post ReplyReply Direct Link To This Post Posted: 26 Jul 2012 at 20:25
Well, investors will buy bonds regardless of what Moody's think. The problem is Moody's is relevant when it comes to small countries which because of their connection with large ones through currency union will kick the problem up the chain.
 
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Post Options Post Options   Thanks (0) Thanks(0)   Quote gcle2003 Quote  Post ReplyReply Direct Link To This Post Posted: 26 Jul 2012 at 20:33
My question was whether people would sell bonds whatever the interest rates are. Of course if bond rates go up people with buy them. 
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Post Options Post Options   Thanks (0) Thanks(0)   Quote Buckskins Quote  Post ReplyReply Direct Link To This Post Posted: 11 Aug 2012 at 22:42
Get it in GOLD, or land that can produce. Europe is in collapse and this will have a massive effect on world wide finance. The Greeks have no intention of paying their debts, and never did. If they can get away with it, why not the rest of them? The Greeks lied to get into Europe. They lied about their finances to get the loans, and they are lying now. Germany cannot and should not carry the destitute. The average German has had about enough of watching their government pour their money down a rat hole.
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Post Options Post Options   Thanks (0) Thanks(0)   Quote Akolouthos Quote  Post ReplyReply Direct Link To This Post Posted: 12 Aug 2012 at 01:17
Hey Buck,
 
I have to agree with you on the Greeks and Europe. I thought you might be interested in the following link to a speech Daniel Hannan gave on the issue. I particularly enjoy the joke at the five minute mark, myself. LOL
http://www.youtube.com/watch?v=o2j4oCDBbts
 
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Post Options Post Options   Thanks (0) Thanks(0)   Quote gcle2003 Quote  Post ReplyReply Direct Link To This Post Posted: 12 Aug 2012 at 11:43
Why is it you never see anything but new cars on the roads here? Why is it that people actually sitting in Europe aren't worrying about depression? 
I think Ashe disposes of the nationalist bombast of Ako's link pretty well http://www.youtube.com/watch?v=6v4MIJUHUnI&feature=relmfu

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Post Options Post Options   Thanks (0) Thanks(0)   Quote Buckskins Quote  Post ReplyReply Direct Link To This Post Posted: 12 Aug 2012 at 23:32
Originally posted by Akolouthos Akolouthos wrote:

Hey Buck,
 
I have to agree with you on the Greeks and Europe. I thought you might be interested in the following link to a speech Daniel Hannan gave on the issue. I particularly enjoy the joke at the five minute mark, myself. LOL
http://www.youtube.com/watch?v=o2j4oCDBbts
 
-Akolouthos

Hi Akolouthos, I really enjoyed that link, thanks for posting it. I think what he was saying is what most Germans are thinking. He wasn't beating on a drum, but simply vocalizing common sense and the obvious. An excellent link indeed, thanks again.

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Post Options Post Options   Thanks (0) Thanks(0)   Quote Captain Vancouver Quote  Post ReplyReply Direct Link To This Post Posted: 13 Aug 2012 at 08:06
Originally posted by Akolouthos Akolouthos wrote:

Hey Buck,
 
I have to agree with you on the Greeks and Europe. I thought you might be interested in the following link to a speech Daniel Hannan gave on the issue. I particularly enjoy the joke at the five minute mark, myself. LOL
http://www.youtube.com/watch?v=o2j4oCDBbts
 
-Akolouthos
 
What a load of bunk! I think Mr Hannan has been watching too much CNN, and reading too little history.
 
One of the main reasons Some Asian countries have been pulling ahead economically is precisely because they are "centralized", meaning that they have large populations that are tightly organized by a sense of community, and a partnership between business and government, in the case of places like Japan and South Korea, and certainly a top down "centralized" authority in China.
 
He is simply parroting the currently fashionable line that competition makes all things right. But in Asia it is pretty much the opposite- it is cooperation and consensus that is in vogue.
 
And for that matter "competition" didn't do much for Europe historically. It led to no end of bloodshed and mayhem. The last half century or so since WW2 has been one of the best times for Europe- and also the most cooperative one.
 
A primary reason Europe has got into the trouble it has is because of allowing itself to slide towards the laissez faire style of governing that has been the trend lately, one in which German bankers and economists have figured prominently.
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Post Options Post Options   Thanks (0) Thanks(0)   Quote gcle2003 Quote  Post ReplyReply Direct Link To This Post Posted: 13 Aug 2012 at 11:42
I love the way people who hardly ever talk to a German, and probably don't even speak it, consider themselves entitled to tell the world what Germans think.

The German electorate itself has shown what it thinks of Merkel's current policies with her crushing defeat in North Rhine Westphalia http://www.reuters.com/article/2012/05/13/us-germany-election-nrw-result-idUSBRE84C09G20120513

For a serious analysis of German attitudes towards bailouts there's a paper   at http://www.columbia.edu/~ym2297/Sharing%20the%20Pain.pdf  that shows how social factors rather than economic ones affect preferences. How uncertain the balance is is shown by the result that in an online sample the researchers found a majority against more bailouts whereas a simultaneous telephone sample showed a minority against.

As Ashe points out the German economy is sufficiently interlocked with that of the EU to make it dependent upon it. Most of Germany's exports go to other EU countries: one can imagine the joy in the eyes of Fiat, Citroën and Volvo at the thought of tariff barriers going up against Mercedes, BMW and Volkswagen. And German industry being forced to pay German wages instead of offloading its labour costs to Poland and the east.  


Edited by gcle2003 - 13 Aug 2012 at 11:45
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Post Options Post Options   Thanks (0) Thanks(0)   Quote Buckskins Quote  Post ReplyReply Direct Link To This Post Posted: 13 Aug 2012 at 22:56
Quote I love the way people who hardly ever talk to a German, and probably don't even speak it, consider themselves entitled to tell the world what Germans think.

That's right Graham. We should all be fluent in every language we care to comment on.

Quote
The German electorate itself has shown what it thinks of Merkel's current policies with her crushing defeat in North Rhine Westphalia http://www.reuters.com/article/2012/05/13/us-germany-election-nrw-result-idUSBRE84C09G20120513

Thank you for that unsolicited corroboration of my post. The German electorate voiced their thoughts with the vote. No more German tax revenue to be poured down debtor's throats.

Quote
For a serious analysis of German attitudes towards bailouts there's a paper   at http://www.columbia.edu/~ym2297/Sharing%20the%20Pain.pdf  that shows how social factors rather than economic ones affect preferences. How uncertain the balance is is shown by the result that in an online sample the researchers found a majority against more bailouts whereas a simultaneous telephone sample showed a minority against.

As Ashe points out the German economy is sufficiently interlocked with that of the EU to make it dependent upon it. Most of Germany's exports go to other EU countries: one can imagine the joy in the eyes of Fiat, Citroën and Volvo at the thought of tariff barriers going up against Mercedes, BMW and Volkswagen. And German industry being forced to pay German wages instead of offloading its labour costs to Poland and the east.  

Is it in German? 
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Post Options Post Options   Thanks (0) Thanks(0)   Quote gcle2003 Quote  Post ReplyReply Direct Link To This Post Posted: 14 Aug 2012 at 11:28
Originally posted by Buckskins Buckskins wrote:

 
Quote
The German electorate itself has shown what it thinks of Merkel's current policies with her crushing defeat in North Rhine Westphalia http://www.reuters.com/article/2012/05/13/us-germany-election-nrw-result-idUSBRE84C09G20120513

Thank you for that unsolicited corroboration of my post. The German electorate voiced their thoughts with the vote. No more German tax revenue to be poured down debtor's throats.
What the electorate was chiefly doing was firmly rejecting Merkel's austerity program and the political attitude it represents. That masks to some extent the attitude to bailouts which is why I posted the Columbia study.

Incidentally, if you'd bothered to check instead of playing games you'd have discovered that of the three authors one is a Swiss from Zürich, one German with his first degree from Tübingen, and the third an Israeli from Tel Aviv who graduated from the Hebrew university, and at a bet is fairly familiar with at least Yiddish. 

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Post Options Post Options   Thanks (0) Thanks(0)   Quote Al Jassas Quote  Post ReplyReply Direct Link To This Post Posted: 14 Aug 2012 at 20:09
Well, 2nd quarter numbers are out and they are dismal. France's spending programs haven't kicked yet (Holland took power in June) so we need to see what happens.
 
Austerity as expected killed growth in the rest of the EU with Greece going down at -6.2, Italy at -0.7 and Spain at -0.4. Despite that euro politicians still insist on following policies that have been failing for a year. My guess if the French economy picks up pace in the 3rd and 4th quarters we might see a dramatic change in the approach to the current crisis.
 
 
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