Idiots guide to the Eurozone Crisis

Paddy Samurai

Yeah I know ,we are all fed up hearing about it,but this BBC explains it simply.If your still confused this is well worth checking out for 5 mins.

http://www.bbc.co.uk/news/business-16290598

It was the germins plan to take over:D

But actually Germany - along with Italy - was the first big country to break the 3% rule

There was a big build-up of debts in Spain and Italy before 2008, but it had nothing to do with governments. Instead it was the private sector - companies and mortgage borrowers

That meant Germany was earning a lot of surplus cash on its exports. And guess what - most of that cash ended up being lent to southern Europe.

During the boom years, wages rose and rose in the south (and in France). But German unions agreed to hold their wages steady.

Where To

Is there an idiot's guide to the idiot's guide?

davet82

so basicly your saying it was the chinese all along?

Colmustard

Absolute rubbish.

When Germany reunified, France under Mitterrand start to get paranoid about their neighbours being the most populas and potentially the most powerful in Europe. So France pushed for greater European integration and a single currency.

The problem the Euro has it is a common currency across the Eurozone but the Eurozone has no political union. We do not want this currency to fail, it would be a disaster for Ireland. Germany would not even notice, they have massive gold reserves and export might to restart the Deuchmark, but we don't have what it would take to restore the Punt and we would be fkuced.

Germany are keeping the show on the road, we should be grateful to them. But it is not the under performing nations like Ireland Spain Italy ect who are a threat to the Euro, it is the performing ones. Finland and Holland want shot of the thing. When they do decide to leave the Euro, its curtains for the Euro and assured poverty for us.

later12

Colmustard wrote: »

The problem the Euro has it is a common currency across the Eurozone but the Eurozone has no political union. We do not want this currency to fail, it would be a disaster for Ireland. Germany would not even notice, they have massive gold reserves and export might to restart the Deuchmark, but we don't have what it would take to restore the Punt and we would be fkuced.

I don't think you've thought this through. You're right, the DMark would go back to being one of the most stable currencies in the world.

And how do you think that would affect german exports in an environment of European competitive devaluations?

Not talking directly about you Colmustard, but we need to put an end to these 'idiots guides' and interpretations. All we need are calm, verifiable facts; which if you have access to the internet, or a newspaper, are perfectly easy to access & understand without un-necessary dumbing down.

Colmustard

later12 wrote: »

I don't think you've thought this through. You're right, the DMark would go back to being one of the most stable currencies in the world.

And how do you think that would affect german exports in an environment of European competitive devaluations?

Not talking directly about you Colmustard, but we need to put an end to these 'idiots guides' and interpretations. All we need are calm, verifiable facts; which if you have access to the internet, or a newspaper, are perfectly easy to access & understand without un-necessary dumbing down.

They would have control over their currency and devalue it as much as they want.

Right now the german people want out of the Euro and now that it is becoming inflationary watch those cribs get even louder.

I think the only reason Merkel is supporting the currency is, if it fails or at this stage when it fails there would have to be a debt write down and that would initialise a banking crisis, again Germany could support their own banks, but the rest of Europe would be fukced.

later12

Colmustard wrote: »

They would have control over their currency and devalue it as much as they want.

You don't understand; that would be futile in an environment of competitive devaluations across Europe.

Ultimately the German currency is going to be the most attractive in Europe, the very idea of a weak DMark and a strong German exports amid plummeting aggregate supply and demand across the other member states is beyond absurd, especially considering that 60% of German exports depend on other EU states.

The idea that "Germany would not even notice" or would escape unscathed is absolutely incredible.

Colmustard

later12 wrote: »

You don't understand; that would be futile in an environment of competitive devaluations across Europe.

Ultimately the German currency is going to be the most attractive in Europe, the very idea of a weak DMark and a strong German exports amid plummeting aggregate supply and demand across the other member states is beyond absurd, especially considering that 60% of German exports depend on other EU states.

The idea that "Germany would not even notice" or would escape unscathed is absolutely incredible.

They wouldn't be unscathed but they wont be devastated like the rest of Europe.

But nobody will be left unscathed by a Euro collapse, if you think the banking crisis and this depression is bad, that would be a new level of depression.

later12

Colmustard wrote: »

They wouldn't be unscathed but they wont be devastated like the rest of Europe.

Okay, the goalposts appear to be shifting here.

Anyway, it's clearly not currently in Germany's interests to abandon the Euro. They'd do major damage to their economy.

Just because Ireland and Italy would be doing worse, wouldn't make Germany feel any better. No country satisfies itself by saying "well it could be worse, at least we're not Albania". Especially when "being Albania" was never on the cards for Germany to begin with.

golden lane

pay yourself more than you earn........that is the problem.....

germany are not likely to keep doing that.......

any country that is going to keep doing that... is in trouble....

it is not rocket science mathametics...

Colmustard

later12 wrote: »

Okay, the goalposts appear to be shifting here.

Anyway, it's clearly not currently in Germany's interests to abandon the Euro. They'd do major damage to their economy.

Just because Ireland and Italy would be doing worse, wouldn't make Germany feel any better. No country satisfies itself by saying "well it could be worse, at least we're not Albania". Especially when "being Albania" was never on the cards for Germany to begin with.

You're assuming it will be their choice, it may not be. I think the currency is doomed but not because of germany or the Pigs. I think it will be the other well performing Eurozone economies. Finland are probably the most vocal about getting out of the Euro.

Petrol will be dearest we have ever paid next week due to the deflating value of the Euro. People in the performing economies will get pissed off with soaring inflation pretty quickly. The Germans get very nervous when it comes to inflation due to their history and the hyperinflation of the Weimer republic.

A little off topic, Ireland can now borrow at 6% and we will not need a second bail-out. This is probably the best government the country ever had. They are managing the crisis admirably.

later12

Colmustard wrote: »

I think the currency is doomed but not because of germany or the Pigs. I think it will be the other well performing Eurozone economies.

Right, well at the moment, that's not really anything more than opinion. The export data currently doesn't support it as reliable.

http://3.bp.blogspot.com/-XcZzeaSW2Cg/TgzcsjFj6SI/AAAAAAAAABs/NYL5gFpgUHQ/s1600/rev2.bmp

http://4.bp.blogspot.com/-tlqX-P5Q-fk/TgzcnzKBrgI/AAAAAAAAABo/qwM4-30dvlE/s1600/rev1.bmp

Ireland can now borrow at 6%

No that's only a notional cost of borrowing. Notional costs based on current yield in the secondary market do not directly translate into the cost of borrowing on new debt issuance.

Colmustard

later12 wrote: »

Right, well at the moment, that's not really anything more than opinion. The export data currently doesn't support it as reliable.

http://3.bp.blogspot.com/-XcZzeaSW2Cg/TgzcsjFj6SI/AAAAAAAAABs/NYL5gFpgUHQ/s1600/rev2.bmp

http://4.bp.blogspot.com/-tlqX-P5Q-fk/TgzcnzKBrgI/AAAAAAAAABo/qwM4-30dvlE/s1600/rev1.bmp


No that's only a notional cost of borrowing. Notional costs based on current yield in the secondary market do not directly translate into the cost of borrowing on new debt issuance.

Your argument is only opinion as well. This simple question should settle the faith people have in the Euro.

You there, if you won last weeks Euro millions or the lottery for that matter. Would you lodge it in the Eurozone???

I just heard that 6% figure on the George Hook show, are you certain.

later12

Colmustard wrote: »

Your argument is only opinion as well. This simple question should settle the faith people have in the Euro.

You there, if you won last weeks Euro millions or the lottery for that matter. Would you lodge it in the Eurozone???

Personally? I wouldn't lodge it; that's not really what you 'do' with €100m. Regardless of the economic climate.

My argument is based on the export data from the core to the periphery. It doesn't make sense for the core to shoot themselves in the foot by equipping importers of their good with their own respective currencies with which to devalue, while the core is forced to relatively appreciate its currencies.

At the moment, all that's coming out of the core with respect to exiting the Euro is right wing bluster.

I just heard that 6% figure on the George Hook show, are you certain.

Yes; this has been widely reported. This is only a notional cost of borrowing based on secondary market activity; we haven't issued any new debt recently, apart from short term T bills last July.

Colmustard

later12 wrote: »

Personally? I wouldn't lodge it; that's not really what you 'do' with €100m. Regardless of the economic climate.

Yes; this has been widely reported. This is only a notional cost of borrowing based on secondary market activity; we haven't issued any new debt recently, apart from short term T bills last July.

Nor would I, Switzerland, America, Australia but no-where near the Eurozone and I wouldn't advise anyone else to either. Most people with money have moved their saving, when enough do so, BYe Bye Euro.

So am I right in thinking, if we issued some debt NOW we could sell it at 6%.

Either way our government is doing a good job.

later12

Colmustard wrote: »

So am I right in thinking, if we issued some debt NOW we could sell it at 6%.

It's impossible to say. We can already access funding at more favourable rates, and choosing not to might concern investors. And every new debt issuance deteriorates the current stock's sustainability, therefore loading up the risk.

The secondary yields are just a blunt indicator of market sentiment, they don't necessarily translate into the same yields for new debt.