Austerity isn't really working is it?

Anynama141

KyussBishop wrote: »

Basically, it makes funding sustainable while EU-wide public debt vs GDP, is within sustainable figures.

The structural and cohesion funding doesn't seem to utilize bonds, though I am not familiar with that program in general; this would utilize bonds, going to the European Investment Fund, much as described in Yanis Varoufakis's Modest Proposal document.

The debt wouldn't need to be rolled over, but (just like any countries debt) there's no reason it couldn't be either; that's not something I present an opinion on, it would be something the EU have to collectively negotiate.

The EU would of course, want to keep it within sustainable debt to GDP levels, so it wouldn't be pushed to that point.


What I see in it for the EU as a whole, would be approaching full employment for all nations, and a buildup of needed infrastructure, plus the necessary money for provide adequate public services, and in general, a gradual and faster recovery and end to the economic crisis (minus the socially punitive aspects of austerity).

None of the eurobonds would be lumped onto any countries national debts; the debt servicing would be shared by the entire EU, by all member states.

The best way to look at that, is to just look at the US; as I repeated a few times: The US wouldn't avoid expanding their public debt to fund spending, because they think Wyoming or another state couldn't afford it (that would be a totally separate problem to deal with in its own right).


I haven't discarded money creation as a useful policy but focus primarily here on Eurobonds. If money creation were on the table, it would pretty much obsolete Eurobonds, and all the concerns surrounding it.

So basically you would like a United States of Europe (nothing wrong with that, per se), and you say that:

What I see in it for the EU as a whole, would be approaching full employment for all nations, and a buildup of needed infrastructure, plus the necessary money for provide adequate public services, and in general, a gradual and faster recovery and end to the economic crisis (minus the socially punitive aspects of austerity).

...which begs the question: why doesn't the US have that?

KyussBishop

Three Seasons wrote: »

You aren't getting the concept that if you are required to pay back money at a future date that means you have incurred debt.

No you just seem to be ignoring the difference between national debt, and EU-wide debt.

Eurobonds don't expand national debts in any way, and I have said many times that I know all EU countries are liable for all of the EU debt, with payments set by the negotiation of the EU budget.

What matters is the sustainability of the debts, and when they are centralized at an EU level, it is the debt vs GDP of Europe as a whole, that determines the rate of sustainable debt and investment, not of individual member states; this allows trillions of investments all over the EU, at current debt vs GDP rates.

Again, such a federal Europe is highly analogous to the US, and there sustainability is determined by the by the public debt, as it would be in Europe.

Anynama141

KyussBishop wrote: »

No you just seem to be ignoring the difference between national debt, and EU-wide debt.

Eurobonds don't expand national debts in any way, and I have said many times that I know all EU countries are liable for all of the EU debt, with payments set by the negotiation of the EU budget.

What matters is the sustainability of the debts, and when they are centralized at an EU level, it is the debt vs GDP of Europe as a whole, that determines the rate of sustainable debt and investment, not of individual member states; this allows trillions of investments all over the EU, at current debt vs GDP rates.

You realise that the debts have to be repaid out of the same various pots of national money as the national debts, right?

Surely you must see that if it looks too good to be true, it is?

Three Seasons

KyussBishop wrote: »

No you just seem to be ignoring the difference between national debt, and EU-wide debt.

Eurobonds don't expand national debts in any way, and I have said many times that I know all EU countries are liable for all of the EU debt, with payments set by the negotiation of the EU budget.

What matters is the sustainability of the debts, and when they are centralized at an EU level, it is the debt vs GDP of Europe as a whole, that determines the rate of sustainable debt and investment, not of individual member states; this allows trillions of investments all over the EU, at current debt vs GDP rates.

Again, such a federal Europe is highly analogous to the US, and there sustainability is determined by the by the public debt, as it would be in Europe.

Are you suggesting all of Ireland's debt is passed on to the EU as a whole along with the debt of every other EU nation?

If you are there is no way the financially prudent nations would agree to that.

If you aren't suggesting that then Ireland still increases its debt as it will owe money to the collective EU debt pool.

My name is URL

Vladimir Kurtains wrote: »

Exports are at a ten year high.

Depends on how you want to look at it. Compared to this time last year, and the year before that; exports are down.

http://www.rte.ie/news/business/2013/0314/376661-drop-in-drug-exports-hits-trade-figures/

Unemployment is also falling the past few months.

It's sharply increasing in key areas though

Irish economy starting to wilt again

TODAY’S PMI readings for Europe are showing the economic trainwreck on full display.

A PMI reading is a gauge of a country’s manufacturing sector. Anything below 50 is contraction.

For March, Ireland's PMI fell from 51.5 to 48.6, a sign of a severe quick downturn.

• New orders, output and employment all decline
• Fastest fall in new export business since August 2009
• Cost inflation slows

The weakness in new orders drove a disappointing outcome in the employment index. Manufacturers reported the sharpest fall in employment since October 2011, with March the second month since the start of the year to record a decline.

http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10915

KyussBishop

Anynama141 wrote: »

You realise that the debts have to be repaid out of the same various pots of national money as the national debts, right?

Surely you must see that if it looks too good to be true, it is?

You're ignoring directly what you have highlighted right in your previous post, that policies of the whole EU are not constrained based on individual states finances, and that it is the debt vs GDP of the whole EU that matters.

Not only that, but even the national debts can be promoted up to EU-level debt (but that debt being liable only to the original state, unless negotiated otherwise), which straight away gives a reduction in interest paid.

Plus, you have the investment funds creating jobs, closing the output gap, and thus helping significantly to close individual states fiscal gap, improving the ability to meet both national and EU debt sustainably.

KyussBishop

Three Seasons wrote: »

Are you suggesting all of Ireland's debt is passed on to the EU as a whole along with the debt of every other EU nation?

If you are there is no way the financially prudent nations would agree to that.

If you aren't suggesting that then Ireland still increases its debt as it will owe money to the collective EU debt pool.

No, all member states are liable for all EU debt created from eurobonds, not all of each other member states national debt.

Where countries can promote their national debts up to EU level debts, that would be solely for the purpose of getting better interest rates; the originating nation would still pay that debt, unless negotiated otherwise.

Anynama141

KyussBishop wrote: »

You're ignoring directly what you have highlighted right in your previous post, that policies of the whole EU are not constrained based on individual states finances, and that it is the debt vs GDP of the whole EU that matters.

Ok, you are confusing things again. I previously understood that the country who borrowed via these Eurobonds were responsible for repaying those bonds? Now it seems that Ireland or Greece borrow, and a well-run countries with more money repays them?

KyussBishop

Anynama141 wrote: »

Ok, you are confusing things again. I previously understood that the country who borrowed via these Eurobonds were responsible for repaying those bonds? Now it seems that Ireland or Greece borrow, and a well-run countries with more money repays them?

Countries do not borrow with Eurobonds, Europe does, and the European Investment Fund decides where the money is invested, and all of Europe pays back those bonds over time.

Three Seasons

KyussBishop wrote: »

Countries do not borrow with Eurobonds, Europe does, and the European Investment Fund decides where the money is invested, and all of Europe pays back those bonds over time.

And where does " all of Europe" get this money from?

Anynama141

KyussBishop wrote: »

Countries do not borrow with Eurobonds, Europe does, and the European Investment Fund decides where the money is invested, and all of Europe pays back those bonds over time.

So there is no democratic accountability for these loans, who gets them, and what they are used for?

And where does the EU money get the money to repay them, if not from member governments via a new tax?

KyussBishop

Three Seasons wrote: »

And where does " all if Europe" get this money from?

From all of the individual member states; all of them, collectively repay the EU-wide bonds, with this being negotiated as part of the EU budget.

Three Seasons

KyussBishop wrote: »

From all of the individual member states; all of them, collectively repay the EU-wide bonds, with this being negotiated as part of the EU budget.

Do you think it is a good idea to add to Ireland's debts*?

* money required to be paid back in the futures a debt.

Flex

Just on the whole Eurobond EU-wide replayment, etc. thing, may I ask something?

Going to keep this example simple, so will limit the countries in it. Ireland, Greece, Germany and Finland are the EU. They raise €100B in Eurobonds and its divided out as such

Ireland - €15B
Greece - €30B
Germany - €50B
Finland - €15B

Ireland and Greece get more because theyre broke. The repayment responsibility is divided based on population across the EU countries, so looks something like this


Ireland - 5%
Greece - 10%
Germany - 80%
Finland - 5%

So, Ireland is after receiving €15B in bonds, but paying back the equivalent interest of a loan of €5B (5% of the original €100B), Greece received €30B and is paying the equivalent interest of only €10B. Germany however received €50B but is paying back the equivalent of €80B.

Is that broadly the alternative people are suggesting is possible? Why would Germany not just decide to borrow by themselves and get the full return on the interest theyre going to have to pay? How would a Germand or Finnish politician sell the above arrangement to their electorates?

KyussBishop

Three Seasons wrote: »

Do you think it is a good idea to add to Ireland's debts*?

* money required to be paid back in the futures a debt.

Again, that is not a part of Ireland's national debts; what we pay back, and the level of investment we get, is determined by Europe as part of the EU budget, and (in the case of investments) by the EIF.

Ireland pays as much as it is sustainable for us to pay, until the investment program pumps up our economy and thus our tax intake, so we can meet our full payment load, in proportion to our size within the EU (or whatever proportion is agreed as part of the EU budgets).

Anynama141

KyussBishop wrote: »

Again, that is not a part of Ireland's national debts; what we pay back, and the level of investment we get, is determined by Europe as part of the EU budget, and (in the case of investments) by the EIF.

Ireland pays as much as it is sustainable for us to pay, until the investment program pumps up our economy and thus our tax intake, so we can meet our full payment load, in proportion to our size within the EU (or whatever proportion is agreed as part of the EU budgets).

Ok, so now you are proposing a system where:

1. There is no democratic accountability as to where the money is spent or what it is spent on.
2. There is no accountability for who repays, as they are done via 'negotiations'.

In other words you could find that, in addition to your national debt, you have to repay a large (or larger than expected) chunk of EU debt as well?

Does this sound workable to you?

You also keep dodging the fact that the EU debts still have to be paid out of member country budgets, because the members pay for the EU budget.

KyussBishop

Flex wrote: »

Just on the whole Eurobond EU-wide replayment, etc. thing, may I ask something?

Going to keep this example simple, so will limit the countries in it. Ireland, Greece, Germany and Finland are the EU. They raise €100B in Eurobonds and its divided out as such

Ireland - €15B
Greece - €30B
Germany - €50B
Finland - €15B

Ireland and Greece get more because theyre broke. The repayment responsibility is divided based on population across the EU countries, so looks something like this


Ireland - 5%
Greece - 10%
Germany - 80%
Finland - 5%

So, Ireland is after receiving €15B in bonds, but paying back the equivalent interest of a loan of €5B (5% of the original €100B), Greece received €30B and is paying the equivalent interest of only €10B. Germany however received €50B but is paying back the equivalent of €80B.

Is that broadly the alternative people are suggesting is possible? Why would Germany not just decide to borrow by themselves and get the full return on the interest theyre going to have to pay? How would a Germand or Finnish politician sell the above arrangement to their electorates?

It depends entirely upon the level of funds needed to get countries back on their feet; if the EU wanted to, it would be pretty easy to even out any imbalances in bond payments between countries, by having the countries that benefited from the bonds pay a higher proportion in the future when back on their feet.

This (if the EU decided to do it this way) can safely be spread out over a very very long time internally within the EU, such that it doesn't cause immediate sustainability problems, like individual countries would have if they were building up debt directly.

Anynama141

KyussBishop wrote: »

It depends entirely upon the level of funds needed to get countries back on their feet; if the EU wanted to, it would be pretty easy to even out any imbalances in bond payments between countries, by having the countries that benefited from the bonds pay a higher proportion in the future when back on their feet.

This (if the EU decided to do it this way) can safely be spread out over a very very long time internally within the EU, such that it doesn't cause immediate sustainability problems, like individual countries would have if they were building up debt directly.

I love the blithe suggestion that this could be done against the democratic wishes of the people who actually have to pay for it.

KyussBishop

Anynama141 wrote: »

Ok, so now you are proposing a system where:

1. There is no democratic accountability as to where the money is spent or what it is spent on.
2. There is no accountability for who repays, as they are done via 'negotiations'.

In other words you could find that, in addition to your national debt, you have to repay a large (or larger than expected) chunk of EU debt as well?

Does this sound workable to you?

You also keep dodging the fact that the EU debts still have to be paid out of member country budgets, because the members pay for the EU budget.

Eh, the European Investment Fund already exists and has already provided funding all over the EU; how is that democratically unaccountable?

You are basically saying Europe is democratically unaccountable here.


I have not dodged anything, I have explained repeatedly that all member states would be contributing to paying for these debts, and have gone into detail on this, particularly with my previous post.

Anynama141

KyussBishop wrote: »

Eh, the European Investment Fund already exists and has already provided funding all over the EU; how is that democratically unaccountable?

Is it issuing hundreds of billions in bonds in the name of the EU? No? Then it's not the same thing at all. I suggest you look into the EIF's funding model before you pretend it is anything like what you are talking about.

KyussBishop wrote: »

You are basically saying Europe is democratically unaccountable here.

A lot of people (not me) feel that the EU fundamentally undemocratic, and many people (including me) feel there is a democratic deficit.

KyussBishop wrote: »

I have not dodged anything, I have explained repeatedly that all member states would be contributing to paying for these debts, and have gone into detail on this, particularly with my previous post.

If all members are obliged to pay these debts, then it is just extra borrowing on top of their national debt, whatever way you want to spin it. More borrowing is not necessarily the cure for too much debt.

KyussBishop

Anynama141 wrote: »

Is it issuing hundreds of billions in bonds in the name of the EU? No? Then it's not the same thing at all. I suggest you look into the EIF's funding model before you pretend it is anything like what you are talking about.

A lot of people (not me) feel that the EU fundamentally undemocratic, and many people (including me) feel there is a democratic deficit.

In order to get the ability to issue bonds in the first place, the EU has to democratically be given a mandate to do so by the member states and their populations; if you don't think the EU as it is is outright undemocratic, then this hardly tips the boat, seeing as the EU already has control over all member states currency, and by extension has an element of restrictive control on fiscal policy and politics.

Anynama141 wrote: »

If all members are obliged to pay these debts, then it is just extra borrowing on top of their national debt, whatever way you want to spin it. More borrowing is not necessarily the cure for too much debt.

That representation is just willing ignorance at this stage, especially in light of my reply to Flex above, which explains in detail the differences of this.

Debt shared by the entire EU is not the same as national debt, and is not simply something that is piled on, on-top of countries national debt; straight away, the EU wide debt allows a reduction in states debt burdens through lowered interest, it allows temporarily reduced or suspended debt payments to keep a states finances sustainable, allowing other countries to pick up slack until the indebted state is back on its feet (and this would not affect the final balance of payments, just reorder debts internally within the EU), and the payment back of debts can be drawn out over a much longer period as well with the help of the EU.

None of that requires any debt to go unpaid, and it makes countries as flexible and sustainable as the EU as a whole.

Anynama141

KyussBishop wrote: »

In order to get the ability to issue bonds in the first place, the EU has to democratically be given a mandate to do so by the member states and their populations; if you don't think the EU as it is is outright undemocratic, then this hardly tips the boat, seeing as the EU already has control over all member states currency, and by extension has an element of restrictive control on fiscal policy and politics.

I think you are confusing the EU and the Eurozone. ECB control of the Euro is not a democratic issue: as I pointed out, many sovereign countries use currencies that are not their own.

Issuing debt that you have no control of or say where it goes - that does seem a bit undemocratic.

KyussBishop wrote: »

That representation is just willing ignorance at this stage, especially in light of my reply to Flex above, which explains in detail the differences of this.

It is willing ignorance, but on your part. How can (your own debt) + (some of the EU debt) = no extra debt? It's pure magic!! You can't spin out of this one my friend.

KyussBishop wrote: »

Debt shared by the entire EU is not the same as national debt, and is not simply something that is piled on, on-top of countries national debt; straight away, the EU wide debt allows a reduction in states debt burdens through lowered interest, it allows temporarily reduced or suspended debt payments to keep a states finances sustainable, allowing other countries to pick up slack until the indebted state is back on its feet (and this would not affect the final balance of payments, just reorder debts internally within the EU), and the payment back of debts can be drawn out over a much longer period as well with the help of the EU.

Of course, what you ignore for the umpteenth time is that for CREDITOR nations, they have to pay EXTRA for this debt as their good credit rating is diminished by association with the PIIGS.

You are going in circles trying to ignore points that kill your proposal. The holes have been pointed out over and over again, but you just swear that black is white (or debt is not debt) and carry on. We can all see it.

Three Seasons

KyussBishop wrote: »

In order to get the ability to issue bonds in the first place, the EU has to democratically be given a mandate to do so by the member states and their populations; if you don't think the EU as it is is outright undemocratic, then this hardly tips the boat, seeing as the EU already has control over all member states currency, and by extension has an element of restrictive control on fiscal policy and politics.


That representation is just willing ignorance at this stage, especially in light of my reply to Flex above, which explains in detail the differences of this.

Debt shared by the entire EU is not the same as national debt, and is not simply something that is piled on, on-top of countries national debt; straight away, the EU wide debt allows a reduction in states debt burdens through lowered interest, it allows temporarily reduced or suspended debt payments to keep a states finances sustainable, allowing other countries to pick up slack until the indebted state is back on its feet (and this would not affect the final balance of payments, just reorder debts internally within the EU), and the payment back of debts can be drawn out over a much longer period as well with the help of the EU.

None of that requires any debt to go unpaid, and it makes countries as flexible and sustainable as the EU as a whole.

This is ridiculous.

Your Eurobonds plan will result in more debt for the Irish government to pay back. It's that simple, it may be a different type of debt, but it is still basically money which has to be paid back in future with interest.

In summary: IT'S EXTRA DEBT.

KyussBishop

Anynama141 wrote: »

I think you are confusing the EU and the Eurozone. ECB control of the Euro is not a democratic issue: as I pointed out, many sovereign countries use currencies that are not their own.

Issuing debt that you have no control of or say where it goes - that does seem a bit undemocratic.

ECB control of the Euro is a democratic issue, as it directly affects monetary policy, and also affects fiscal policy, actually forcing countries into debt, when (given their own currencies) a lot of countries would have simply devalued by now.

So one causes countries to go into debt without any choice, because of lack of control over their own currency, and is democratic; the other shares that burden across the whole of the EU (allowing much more economic stability and a return to recovery in the process), and suddenly that is undemocratic.

Nevermind that the policies set in place will be democratically decidable by member states.

Anynama141 wrote: »

It is willing ignorance, but on your part. How can (your own debt) + (some of the EU debt) = no extra debt? It's pure magic!! You can't spin out of this one my friend.

No that's your deliberately oversimplified view of EU-wide debt; seriously you must be deliberately ignoring half my post at this stage, as I explained precisely what the differences are in my last post, and how the debt burdens can easily be shared in a much more sustainable manner, for all member states (even without affecting the final balance of payments).

Anynama141 wrote: »

KyussBishop wrote:

Debt shared by the entire EU is not the same as national debt, and is not simply something that is piled on, on-top of countries national debt; straight away, the EU wide debt allows a reduction in states debt burdens through lowered interest, it allows temporarily reduced or suspended debt payments to keep a states finances sustainable, allowing other countries to pick up slack until the indebted state is back on its feet (and this would not affect the final balance of payments, just reorder debts internally within the EU), and the payment back of debts can be drawn out over a much longer period as well with the help of the EU.

Of course, what you ignore for the umpteenth time is that for CREDITOR nations, they have to pay EXTRA for this debt as their good credit rating is diminished by association with the PIIGS.

You are going in circles trying to ignore points that kill your proposal. The holes have been pointed out over and over again, but you just swear that black is white (or debt is not debt) and carry on. We can all see it.

This is just a simple bait and switch to avoid addressing what you quoted, with the vague appeal to credit ratings (as if the EU's collective credit rating won't quickly improve, as economic security and recovery is set in place).

Bullseye1

You do realise even when we get our deficit down to 3% we will still be borrowing. I don't think there is a single country not running some level of deficit.

KyussBishop

Three Seasons wrote: »

This is ridiculous.

Your Eurobonds plan will result in more debt for the Irish government to pay back. It's that simple, it may be a different type of debt, but it is still basically money which has to be paid back in future with interest.

In summary: IT'S EXTRA DEBT.

I've explained in detail the sustainability of EU-wide debts, and how they are not simply like expanding our national debt.

Do you claim they are unsustainable? (don't bother if you're going to straw-man them as being precisely the same as national debt; I've explained the differences)

KyussBishop

Bullseye1 wrote: »

You do realise even when we get our deficit down to 3% we will still be borrowing. I don't think there is a single country not running some level of deficit.

Indeed, most EU countries will be running a deficit for some time anyway as things are, and the use of EU-wide bonds makes it inherently more sustainable for everyone, to point of allowing ample room for stimulus-based recovery policies.

Anynama141

Bullseye1 wrote: »

You do realise even when we get our deficit down to 3% we will still be borrowing. I don't think there is a single country not running some level of deficit.

Indeed. More debt again...

KyussBishop

Anynama141 wrote: »

Indeed. More debt again...

I could apply this post, and its question here as well:

KyussBishop wrote: »

I've explained in detail the sustainability of EU-wide debts, and how they are not simply like expanding our national debt.

Do you claim they are unsustainable? (don't bother if you're going to straw-man them as being precisely the same as national debt; I've explained the differences)

Anynama141

Ok Kyuss - to summarise your position:

1. There is an alternative to austerity - but it requires an organisation that doesn't exist and doesn't seem likely to exist any time soon.

2. Debt raised through this proposed USE club we would be members of is not debt that we have to repay - someone else will repay it for us.