Eurozone will collapse...

Originally Posted by nomadking

How did the Germans get the Greeks to go on a spending spree, hide excessive government spending, not pay taxes and, pay certain groups(eg railway workers) excessive wages? How did they get the Irish and the Spanish to overdo building projects? That would be a good trick. Nobody forced them into borrowing too much.

They did it by pressuring the ECB to run monetary policy to suit the German economy rather than the Eurozone as a whole. Places like Greece, Portugal and Ireland have never had access to credit at the sort of rates that entailed - cheap credit leads to a credit boom as surely as day follows night, especially when that cheap credit is cheaper than anything you have had before.

The calamity in these countries may well be a by-product of German demands rather than the intent, but they share a heavy chunk of culpability.

[nomadking]

If monetary policy had been based on the Eurozone as a whole, it still wouldn't have been set for the worst countries, but more of an average. If it had been set for the worst, why should everybody else suffer because of the worst offenders. Eg Why should people or businesses pay a lot more for mortgages or loans, just because certain other people default on their loans?

It's doesn't matter how cheap or expensive the credit was, they never really considered paying it back. How does cheaper credit stop people paying their taxes?

[Ignitionnet]

Originally Posted by nomadking

The Greeks have already received the money in the form of the original loans. Why should they receive the money again? Everybody would like that sort of loan. Receive the loan money, fritter it away and then get more money on top of the original borrowing.

Per my post they aren't getting more money on top of the original borrowing, it's going to the German, French and other banks who made the bad loans to begin with.

---------- Post added at 22:37 ---------- Previous post was at 22:34 ----------

Originally Posted by nomadking

It's doesn't matter how cheap or expensive the credit was, they never really considered paying it back.

Well that applies to pretty much every state in the EU. No reason to single the Greeks out in this regard, purely a matter of scale.

If governments were serious about paying debts back they wouldn't have been increasing them during the 'boom' part of the economic cycle.

[nomadking]

Originally Posted by Ignitionnet

Per my post they aren't getting more money on top of the original borrowing, it's going to the German, French and other banks who made the bad loans to begin with.

Exactly, you're saying that it should go to the Greeks instead. Where else were you saying it should go?

---------- Post added at 22:41 ---------- Previous post was at 22:37 ----------

Originally Posted by Ignitionnet

Per my post they aren't getting more money on top of the original borrowing, it's going to the German, French and other banks who made the bad loans to begin with.

---------- Post added at 22:37 ---------- Previous post was at 22:34 ----------



Well that applies to pretty much every state in the EU. No reason to single the Greeks out in this regard, purely a matter of scale.

If governments were serious about paying debts back they wouldn't have been increasing them during the 'boom' part of the economic cycle.

Somebody forgot to tell that to Blair and Brown.

Even if Greece hadn't taken out all of the loans to fund the Socialist polices, they could never pay back even limited borrowing in their 'good times', because their 'good times' are not that special.

[Ignitionnet]

Originally Posted by nomadking

How did the Germans get the Greeks to go on a spending spree, hide excessive government spending, not pay taxes and, pay certain groups(eg railway workers) excessive wages? How did they get the Irish and the Spanish to overdo building projects? That would be a good trick. Nobody forced them into borrowing too much.

No-one forced it but the interest rates the Eurozone shared were not conducive to their economies. In the case of Ireland especially joining the Euro halved their interest rate overnight. When you have growth significantly higher than interest rates it makes debt an extremely good way to go as the debt is outgrown.

The problem is of course when the growth stops.

Again, though, it's all well and good preaching that, doesn't change that there's a very clear balancing act between interest rates and economic growth and interest rates set to help the Germans increase their exports were completely inappropriate for Ireland et al and incentivised getting into serious amounts of debt to fuel further economic growth.

The Euro appears to exist as a political project and, from the economic point of view, a great way to keep German exports cheap. Rather than having the strong deutschmark that their economy merits and under normal circumstances would most definitely receive, strong countries have strong currencies due to demand for them, they get to dilute their currency with the rest of the Eurozone producing a weaker currency and making their exports cheaper.

The Euro broke many standard stability mechanisms for economies and we're now enjoying the end result, just as the Bank of England with that moron Mervyn King broke standard stability mechanisms by running laughably low interest rates during the noughties when a massive asset bubble was building.

---------- Post added at 22:49 ---------- Previous post was at 22:43 ----------

Originally Posted by nomadking

Exactly, you're saying that it should go to the Greeks instead. Where else were you saying it should go?

Nope I didn't say anything about where it would be going. They shouldn't be getting a bailout at all, they should be defaulting and the banks who were stupid enough to lend them the money should be having to reconcile it on their balance sheets.

That is, last time I checked, what capitalism is about, taking risks and them paying off or not. I'm unsure why risks taken on sovereign debt when they don't come off should end up getting repackaged and shoved onto taxpayers through other mechanisms.

Originally Posted by nomadking

Somebody forgot to tell that to Blair and Brown.

Even if Greece hadn't taken out all of the loans to fund the Socialist polices, they could never pay back even limited borrowing in their 'good times', because their 'good times' are not that special.

Listening to the coalition's ******** I see. Blair and Brown didn't overspend by nearly as much as the Tories would have people believe.

No-one is excusing Greece but, tell me, if it was so obvious that Greece were taking out loans to fund socialist policies which they didn't have a hope of paying back why were private banks continuing to advance this cash, and why shouldn't they see the full extent of the pain as a result of these stupid loans?

They took a risk, justified it with the higher interest rates, it's not come off. They should pay 100% of the price. That's capitalism, not the corporatism that's practised within Europe where private losses are socialised.

Greece aren't even the worst for this, Ireland's government of the time should've been lined up against a wall and shot for even contemplating taking billions of bad private loans onto the public accounts.

Iceland told the private creditors to deal with it and are growing strongly. Capitalism works, corporatism doesn't.

Originally Posted by Sirius

I bet the Germans have a MASTER plan so we need not worry

Don't they need a cunning plan instead?

[Sirius]

Originally Posted by Maggy J

Don't they need a cunning plan instead?

No way, You know the Germans don't understand humour.

Shares in Greek banks have fallen by as much as 7% in early morning trades after talks to form a emergency government in the debt-laden country stalled.

Stocks took fright after political parties in Athens failed to reach a coalition deal and a radical leftist leader spurned an invitation from the President for more talks.

http://news.sky.com/home/business/article/16227435


A tad worrying

[Osem]

The eurozone was "tearing itself apart" and the UK would not be "unscathed", said Bank governor Sir Mervyn King.

http://www.bbc.co.uk/news/business-18084700

Well clearly Merv isn't very impressed about all the EU meetings about meetings. Wonder if the Merkel and Hollande chat-show will move the Eurozone supertanker off its current collision course with the financial rocks.

http://www.bbc.co.uk/news/business-18037223

I wish this house of cards would just hurry up and collapse so we can get on with dealing with the fallout.

[Osem]

Just goes to show how fundamentally flawed the entire concept is when they can't even decide on what to do in a major crisis such as this. Meantime the blind Europhiles have gone rather quiet haven't they....

It shows how fundamentally political it was. If the project had been conceived for truly economic reasons it would have been designed very differently and would have had rather fewer members. The fact that the wheels are coming off now, for economic reasons, presents a problem that the politicos and idealists do not want to confront, because the reasons why they created the Euro are the same reasons they want to keep it at all costs (literally, it appears).

[Osem]

If we're not very careful I fear these people will create the very scenario they set out to avoid - conflict in Europe. The more people who blindly believe this can't happen, the more likely it is to happen IMHO.

[Hom3r]

I something thing we made a mistake in 1939, we should have just stayed at home and protetected out boarders

Protect our borders? We haven't been able to do that since about 1939