Euro Governments

Trampas

Why can't governments across the eurozone not make the right decision for the countries instead of for their votes.

They all seem to be making the hole bigger instead of filling it in but to busy worrying about not been re-elected.

Scofflaw

Trampas wrote: »

Why can't governments across the eurozone not make the right decision for the countries instead of for their votes.

They all seem to be making the hole bigger instead of filling it in but to busy worrying about not been re-elected.

Because that's the way the system is geared? Bit too brief an OP, though - could you expand on what the difference is?

cordially,
Scofflaw

Dob74

Trampas wrote: »

Why can't governments across the eurozone not make the right decision for the countries instead of for their votes.

They all seem to be making the hole bigger instead of filling it in but to busy worrying about not been re-elected.

And what are the right decisions?
Every european leader is voted to represent there own country interests not there fellow european interests.
I hope Enda Kenny is looking out for Ireland's interests first before anything else. I think you would agree

beeftotheheels

Scofflaw wrote: »

Because that's the way the system is geared? Bit too brief an OP, though - could you expand on what the difference is?

cordially,
Scofflaw

I have a great plan. Next general election we exclude the largest party and all poll topping members of other parties, from the government formation. Second placers only in the government.

That way we achieve two things.

The first is no one will run a campaign based on offering us the world, too risky in case you get #1

The second is that ministers or whoever, once in power will be disincentivized from engaging in parish pump politics lest they top the poll next time. Being a minister would already give them too much profile and risk poll topping, they'd nearly have to go out of their way to p!$$ off their local electorate to have any shot at keeping their job.

Should make for a nice orderly boring government which just about keeps the place ticking over.

ixtlan

Dob74 wrote: »

And what are the right decisions?
Every european leader is voted to represent there own country interests not there fellow european interests.
I hope Enda Kenny is looking out for Ireland's interests first before anything else. I think you would agree

And this is the problem....

We say the Germans need to pay more... or allow printing of Euros (so in effect they pay by getting poorer). They don't want to because it's not in their interest if a solution of allowing the periphery to get poorer works without collapsing the Euro.

And the Germans/French might say Ireland should raise corporation tax. But we don't want to because it's not in our interest if we can get the Germans/French to pay to solve the problem before the Euro collapses.

So everyone wants to let the problem get down to the wire, before conceeding anything substantial.

I would rather the EU leaders started looking at the big picture, and that applies to Ireland as much as anyone.

Ix.

beeftotheheels

ixtlan wrote: »

And this is the problem....

We say the Germans need to pay more... or allow printing of Euros (so in effect they pay by getting poorer). They don't want to because it's not in their interest if a solution of allowing the periphery to get poorer works without collapsing the Euro.

And the Germans/French might say Ireland should raise corporation tax. But we don't want to because it's not in our interest if we can get the Germans/French to pay to solve the problem before the Euro collapses.

So everyone wants to let the problem get down to the wire, before conceeding anything substantial.

I would rather the EU leaders started looking at the big picture, and that applies to Ireland as much as anyone.

Ix.

If I may, I think your last sentence sums up the problem and your previous sentences summarize the issue.

Electorates look to short term (nationally blinkered) answers not long term ones. So the Germans like the short term (German) answer of blaming the PIIGS and not the longer term one of helping the PIIGS get out of the mess they are in, not the longer term impact of the euro on Germany.

But then to confound matters, some jurisdictions such as Ireland (more by force than by choice I would think) take the long term extraterritorial position of backstopping our banks while the short term nationalist position is taken elsewhere. Which in the longer term leaves us taking a hit, while not receiving any of the expected benefits of taking that hit because while we did the right thing, Merkel and Sarkozy continued to do the wrong thing. We listened to the ECB (because we had no choice) while Merkozy continued to play games appealing to their national electorates and fly in the face of the ECB and trigger every consequence that the ECB warned of.

"And - which is more - you'll be a man my son" doesn't really make it feel better, does it?

ixtlan

Yes, I think that's right.

I assume that the current government is following the current policy in the hope of a longer term benefit. Whether that happens I don't know. I guess I can see the logic. You can always default on the debt (bank first, and in the event of a disaster, sovereign) later, but if done sooner, you can never undefault. So we do what we are demanded of, while waiting for a better option. In fact Pat Rabbitte pretty much said as much. Pay the bonds now, expect the ECB to pick up the tab later. That's clearly the hope.

However, if in the future that is offered, it likely will come with strings attached like control of tax policy. I see that as not necessarily a bad thing, but I expect that as a nation we would reject it. We have an unhealthy obsession with corporate tax rates.

ix.

Dob74

ixtlan wrote: »

And this is the problem....

We say the Germans need to pay more... or allow printing of Euros (so in effect they pay by getting poorer). They don't want to because it's not in their interest if a solution of allowing the periphery to get poorer works without collapsing the Euro.

And the Germans/French might say Ireland should raise corporation tax. But we don't want to because it's not in our interest if we can get the Germans/French to pay to solve the problem before the Euro collapses.

So everyone wants to let the problem get down to the wire, before conceeding anything substantial.

I would rather the EU leaders started looking at the big picture, and that applies to Ireland as much as anyone.

Ix.

If you want to look at the big picture the PIIGS should be thrown out of the Euro. They are holding the more reliable euro countries back.
As for us we acted disgracefully during the boom(borrow)
Acting for the good of all wouldnt be in our best interests.

Sticky_Fingers

ixtlan wrote: »

However, if in the future that is offered, it likely will come with strings attached like control of tax policy. I see that as not necessarily a bad thing, but I expect that as a nation we would reject it. We have an unhealthy obsession with corporate tax rates.

we are obsessed with our Crop Tax rate because frankly it is the only thing that keeps the multinationals here, we lose/give it up and they are gone and we are totally screwed. I'd reject any idea of handing over more control of our tax affairs to Europe, if the last 3 years have taught us anything it is that Europe does not have this countries best interests at heart.

Dob74 wrote: »

If you want to look at the big picture the PIIGS should be thrown out of the Euro. They are holding the more reliable euro countries back.
As for us we acted disgracefully during the boom(borrow)
Acting for the good of all wouldnt be in our best interests.

Throw the PIIGS out and you have a Euro that will surge in value, crippling the exports of the larger countries such as Germany. You'd also have the very real possibility of a complete breakup of the EU and all out economic war between the member states which will damage everyones economy even further.

kennyb3

Sticky_Fingers wrote: »

Throw the PIIGS out and you have a Euro that will surge in value, crippling the exports of the larger countries such as Germany. You'd also have the very real possibility of a complete breakup of the EU and all out economic war between the member states which will damage everyones economy even further.

As summed up well in an article i was reading yesterday - its a choice between the plague and cholera really. An appreciating currency eroding competitiveness or erode the wealth of german savers who are your electorate.

beeftotheheels

kennyb3 wrote: »

As summed up well in an article i was reading yesterday - its a choice between the plague and cholera really. An appreciating currency eroding competitiveness or erode the wealth of german savers who are your electorate.

What a lovely description. However I think it could do with being tweaked, we need two diseases the cure for one will make the other worse, and then to continue applying in various amounts both cures, but not in sufficient quantities to actually cure either ailment. Until we get to the point that we have both ailments.

At this stage we'll only know which disease was actually fatal at autopsy, when in fact had we gone down the road of just one treatment we might have made it through.

ECB there must be faith in governments, governments must back stop their banks. This line might have worked, it was working for us.

Merkel there must be private sector involvement. Bondholders must be burnt, the German electorate demand it. This line drove us into the arms of the IMF, and just did the same for Italy.

But with the Greek PSI the bondholders who must be burned cannot include the ECB (which is against any burning) which means any haircut, if it is to be remotely meaningful in reducing Greece's debt must be higher since it can be applied to only a small proportion of Greek debt being that held by foreign banks. Ditto Italy, and Spain (and us and Portugal).

So now we have no faith in the banks, no faith in the sovereigns, the worst of all possible worlds.

Debtocracy

European leaders can only modify somewhat the timeline of the financial crash, they cannot prevent the crash from occurring. Debt saturation has left the Eurozone with a terminal illness. I am always amused when I hear commentators suggesting that various economic regions will fall into recession without strong and decisive leadership. Leadership cannot reduce the debt to money ratio which is the cancer in the system. No matter what short-term strategies are implemented to kick the can down the road, the long-term direction towards Lehman’s 2.0 stays constant.

Spanish 10 Year:
http://www.bloomberg.com/apps/quote?ticker=GSPG10YR:IND

Italian 10 Year:
http://www.bloomberg.com/apps/quote?ticker=GBTPGR10:IND

kennyb3

Debtocracy wrote: »

European leaders can only modify somewhat the timeline of the financial crash, they cannot prevent the crash from occurring. Debt saturation has left the Eurozone with a terminal illness. I am always amused when I hear commentators suggesting that various economic regions will fall into recession without strong and decisive leadership. Leadership cannot reduce the debt to money ratio which is the cancer in the system. No matter what short-term strategies are implemented to kick the can down the road, the long-term direction towards Lehman’s 2.0 stays constant.

Spanish 10 Year:
http://www.bloomberg.com/apps/quote?ticker=GSPG10YR:IND

Italian 10 Year:
http://www.bloomberg.com/apps/quote?ticker=GBTPGR10:IND

Spain couldn't get all bonds sold today due to poor demand