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Old 11-15-2011, 12:19 PM   #31
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Austria Goes for Debt Brake as Spreads Over Bunds Hit Record

After Greece, Ireland, Portugal, Italy, Spain, Slovenia, France and Belgium [and I've heard about Cyprus too], now, the God called "Market" has a new victim: Austria.

It's getting closer and closer and closer to the "hot spot" of Europe.

Meanwhile we have a completely undaunted and serene ECB commanded by one or two economies scared to death by the ghost of the 1920's inflation. Awesome!
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Old 11-15-2011, 09:22 PM   #32
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Old 11-16-2011, 06:28 AM   #33
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Originally Posted by financeguy View Post
An exchange rate is merely the price of one country's currency expressed in the denomination of another.

Talk of houses of cards collapsing, and severe poverty for years, TBH, in my opinion, is scaremongering bullshit. If anything, countries that leave will enrich themselves, in the medium term, as their exports of course become much cheaper practically overnight. If fhe current exchange rate is set inappropriately for some countries in the eurozone - as indeed it very obviously is - for various reasons, for countries such as Ireland, Portugal and Greece, then they should leave the eurozone. Simples!
yeah, i think a lot of it is scaremongering and the big-wigs protecting their own interests...

didn't Argentina survive a similar situation?? i think it worked out well when it was able to sort out its own currency... that's the example i keep hearing about lately anyway...
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Old 11-16-2011, 07:37 AM   #34
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it's not like countries like Greece, Portugal, Ireland etc have that much produce they can export to other countries (esp compared to the amount they need to import)
so, at the moment, the increase in export will be limited
however, the major consequence a devaluation of their currencies will have is that it will become even harder for them to pay of their debts and more expensive to import
as a result, unless they are willing to go bankrupt (which would probably result in a situation where it will become impossible for them to borrow any money again the next decade or so at least), it would do infinitely more harm than good

Italy might benefit in export because of a devalued currency
but as their debt is already enormous, they will really be in trouble

the only country that might benefit is Spain
but only if they would be able to transform their massive unemployment rate into a productive workforce

I think the Euro will survive because no one has a clue what the consequences will be of any of the alternatives
at the same time, no amount of budget cuts will transform the performances of Greece etc into good performing economies unless they are able to increase their income through increased productivity somehow

I hope this will finally result in unified fiscal and economic European approach
perhaps some good might come of it then in the long run
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Old 11-16-2011, 07:48 AM   #35
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i guess Greece and Portugal would absolutely rake in tourism though, in that case, which is a massive part of their economy, no?
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Old 11-16-2011, 08:00 AM   #36
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their tourist sector will probably pick up as a result after a couple of years
(I expect a short term decrease in tourism from Euro countries to new non-Euro countries)

but I very much doubt this increased income will even remotely make up for exploding debts
besides, I always thought the tourist industry served as a very nice bit of extra income
not as the main driver of your economy
(which is why esp Greece already is in the state it is in right now)
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Old 11-16-2011, 10:27 AM   #37
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Originally Posted by Salome View Post
it's not like countries like Greece, Portugal, Ireland etc have that much produce they can export to other countries (esp compared to the amount they need to import)
so, at the moment, the increase in export will be limited
however, the major consequence a devaluation of their currencies will have is that it will become even harder for them to pay of their debts and more expensive to import
as a result, unless they are willing to go bankrupt (which would probably result in a situation where it will become impossible for them to borrow any money again the next decade or so at least), it would do infinitely more harm than good

Italy might benefit in export because of a devalued currency
but as their debt is already enormous, they will really be in trouble

the only country that might benefit is Spain
but only if they would be able to transform their massive unemployment rate into a productive workforce

I think the Euro will survive because no one has a clue what the consequences will be of any of the alternatives
at the same time, no amount of budget cuts will transform the performances of Greece etc into good performing economies unless they are able to increase their income through increased productivity somehow

I hope this will finally result in unified fiscal and economic European approach
perhaps some good might come of it then in the long run
I don't think it's fair to put Ireland in the same bag of Greece and Portugal. Ireland has a way different economical structure, it has a very different taxes policy and a very different way to treat companies and enterprises. IMO, that's the main reason why I think Ireland was the so-called miracle and why it's gonna recover much faster than other countries.

The problem with Spain is definitely that. Spain did one thing well: Spain said "screw you" to the Common Agriculturak and Industrial Policy that benefited other countries (that had been literally paying to other economies to shut their productive sectors down). I think Spain has a huge unemployment rate because of bizarre labourist policies such as the wage and the complex hiring policies.

In fact, all these countries have very different problems: Greece had budget deficit that evolved in a debt and structurak problem; Italy has mainly a public debt problem; Portugal has mainly a problem of competitiveness and economical sustainability; France has a welfare state which is beyond huge; etc. But together all these problems evolve into a stuctrural problem for every country.

Devaluation of the currency would be good for countries like Greece and Portugal. The problem is that the public and private debt (Greece has a "tolerable" private debt, but Portugal has a private debt which is the double of the public) would "cost" the double/triple/whatever.
Then, to increase exports and decrease the external dependancy... Since the european common market is now so dependant from each other and since most export markets of european countries are... other european markets... Would european countries allow the other to raise protectionist policies? Of course not.

There's no f***ing way countries like Greece and Portugal will rise up and transform their economies unless they're allowed to. No developped economy, specially in the european context, can survive with an agriculture that represents 2% of the economy and an industry that represents only 22% of the economy, because they were being payed for decades to shut it down. That does not exist, it's an utopia.

I try to read international european press and the stigma that some create about the "bad pupils of the south" (as mere example) is so dangerous, that it seems that Europe constantly forgets about its own history.

Unless that changes and unless Europe changes its leaders by someone with a vision, with the notion that we've been living in peace for 60 years but our "genesis", the national identities and the call for the abyss was never over, it only has been numb for 60 years and we have to put it numb again.

Unless it happens, I think that Europe is playing a very dangerous game again.
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Old 11-16-2011, 07:00 PM   #38
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Quote:
Originally Posted by Salome View Post
it's not like countries like Greece, Portugal, Ireland etc have that much produce they can export to other countries (esp compared to the amount they need to import)
so, at the moment, the increase in export will be limited
however, the major consequence a devaluation of their currencies will have is that it will become even harder for them to pay of their debts and more expensive to import
as a result, unless they are willing to go bankrupt (which would probably result in a situation where it will become impossible for them to borrow any money again the next decade or so at least), it would do infinitely more harm than good
Obviously, in the event of default, these countries would not have to repay private bank debts. For Ireland at least, bank debt is an extremely significant part of the total debt, not sure about the others.

Quote:
Originally Posted by Salome View Post
I hope this will finally result in unified fiscal and economic European approach
perhaps some good might come of it then in the long run

When are you Eurofederalists going to learn that you cannot buck the market?
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Old 11-17-2011, 05:29 AM   #39
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When are you Eurofederalists going to learn that you cannot buck the market?
It's not about bucking the market, it's about getting balanced national budgets in the eurozone countries. You cannot magically increase a country's export, but with a tighter economic and fiscal integration you can pressure its government to take other steps (i.e. austerity measures) to ensure its public debt stays within limits. Right now, the EU does not have power over the national budgets of its member countries. If it had, the crises in Greece, Ireland and Portugal may have been averted. The reality at the moment, however, is that the EU only gets (indirect) influence on a country's national budget when it's already to late and budgetary measures are set as preconditions for a EU bailout.
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Old 11-18-2011, 10:28 AM   #40
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It's not about bucking the market, it's about getting balanced national budgets in the eurozone countries. You cannot magically increase a country's export, but with a tighter economic and fiscal integration you can pressure its government to take other steps (i.e. austerity measures) to ensure its public debt stays within limits. Right now, the EU does not have power over the national budgets of its member countries. If it had, the crises in Greece, Ireland and Portugal may have been averted. The reality at the moment, however, is that the EU only gets (indirect) influence on a country's national budget when it's already to late and budgetary measures are set as preconditions for a EU bailout.
The budgets crossed limits because the EU told the countries to do so. And it's not only in the PIIGS countries. I remember that when Lehman & Bros went bankrupt, and when it started to be clear that a crisis was coming, the first measure that the ECB and the European Comission shouted to the european leaders was: «Run into debt! Spend what you have and what you don't have, have big deficits and big debts that we [ECB] will take care of that later». That means that the ECB gave hope to the countries that it would behave as a "normal" central bank and then would hekp the countries. It's clearly not what has been happening.
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Old 11-18-2011, 05:04 PM   #41
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Washington Post, Nov. 18
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As the Daily Mirror reported, Irish parliamentarians are livid over the news that German lawmakers got to pore over Ireland’s new budget before they did. But that was all part of the deal to bail out Ireland earlier this year: “Germany now has the right to be fully informed about bailout countries’ progress before new tranches of funds are paid out.” Or, as the Daily Mirror’s headline screams, “GERMANY IS OUR NEW MASTER.”

And yet, Germany doesn’t exactly seem thrilled at the prospect of further bailouts and expanded schoolmarm duties. German Chancellor Angela Merkel is still refusing to allow the European Central Bank to act aggressively to calm the debt crisis in Italy and Spain. That, in turn, has market analysts freaked. Deutsche Bank’s Jim Reid noted today that it’s impossible to tell whether Merkel is bluffing—to induce reforms in Spain and Italy—or not. (Hey, isn’t that the point of a good bluff?) “If you don’t think Merkel’s tone will change,” writes Reid, “then our investment advice is to dig a hole in the ground and hide.”
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Newly appointed European Central Bank president Mario Draghi also declared today that he doesn’t want the central bank to do what economists want him to do and unconditionally guarantee the debts of countries like Italy and Spain...“Credibility implies that our monetary policy is successful in anchoring inflation expectations,” Draghi said. “This is the major contribution we can make. ...Gaining credibility is a long and laborious process. ...Losing credibility can happen quickly—and history shows that regaining it has huge economic and social costs.”

Now, there are two possible responses to Draghi’s speech today. First, what good is the ECB’s credibility on inflation expectations if the euro zone gets utterly destroyed? After all, as Deutsche Bank’s Reid says, “It’s difficult to see any other scenario than widescale sovereign defaults without an aggressive ECB.” The other counterpoint to Draghi’s is that the ECB has already been intervening, in dribs and drabs, in the sovereign bond market. Gary Jenkins at Evolution Securities estimates that the bank is already sitting on 100 billion euros of Italian debt alone. These sporadic interventions haven’t been nearly enough to allay investor fears that Italy might not be able to repay its debt (as Reid says, only an unconditional ECB guarantee will quell the bond markets), but those little purchases are adding up to real money.

So if the ECB is worried about violating Article 123 of the EU treaty, well, as Richard Portes told me earlier this week, they’ve long since crossed that bridge.
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Old 11-18-2011, 08:37 PM   #42
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What does Mario Monti [new italian Prime-Minister of the new government of national union/salvation, not subjected to elections], Lucas Papademos [new greek Prime-Minister of the new government of national union/salvation, not subjected to elections] and Mario Draghi [new president of the ECB], all vested these last weeks, have in common?
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Old 11-18-2011, 09:10 PM   #43
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All former Goldmann Sachs employees/advisors. You would think it was a joke if it wasn't incredibly sad. Would you get an arsonist to put out a fire? The Independent has a good article on it, even if I do believe on their map they get some of the Eurozone countries wrong.

http://www.independent.co.uk/news/bu...e-6264091.html
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Old 11-18-2011, 10:28 PM   #44
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Interesting article from the Independent.
Today someone posted on a portuguese site the front page of an edition of the Irish Daily Mirror and it said the Irish budget is being sent to Berlin previously for approval before being "approved" in Ireland. Is that true?

I read too a quote from Mendès France said in 1957. He's french and I read a translation for portuguese. I can't find the original in french, so I'm gonna translate it directly from the portuguese translation to english:

The abdication of a democracy can take two forms: either uses an internal dictatorship, submitting all the powers to a providential man, either delegate its powers to an external authority which in the name of the technique will exercise the political power, because in the name of cleaning up the economy, it easily gets to dictate monetary, budgetary, social policies and finally political in a broader sense, national and international.

And just another update to this vision of what's really happening here:
Nigel Farage - «What give you the right to dictate to the Greek and Italian people?
Nigel Farage - "Barroso in the bunker"
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Old 11-18-2011, 10:45 PM   #45
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My understanding is that it's been passed to every finance minister in the EU, and was only leaked from the Bundestag.

I find the idea of nationality and all that it entails to be a set of ideas outmoded in this modern world. I like being Irish but don't subscribe to the beating the chest rhetoric, so you could kinda say I'd be for a federal Europe, but i'm never sure bigger is better, as it just seems to me that it leads to reduced accountability and a reduction in actual democracy which people can participate in.
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