Soros - Europe Faces 25-Year Slump Without Banking Overhaul

golfwallah

Here’s a link to an interesting interview with George Soros on Bloomberg TV, in which he says Europe faces 25 years of stagnation, unless politicians follow up on further integration of the Euro currency area and change policies to get banks lending again: http://www.bloomberg.com/news/2014-03-12/soros-says-europe-faces-25-years-of-stagnation-without-overhaul.html

It’s depressing to think that 2 more generations are likely to face 25 more years of recession, without more pro-active, long-term measures being developed and implemented by politicians. They seem to be paralysed into very slow progress in this area, not treating it as a priority or waiting for Germany to do something.

Surely, if this is such an important socio-economic, political issue, our politicians could get together and clearly elucidate the position and possible options more widely to the electorate.

Or then again, maybe it’s expecting too much of our political leaders to think and act long-term and beyond the timetable for the next election? Perhaps we have to wait for the next currency or international crisis for them to react. Where is the leadership and courage as displayed by historic figures like Lincoln, Churchill, Michael Collins or Daniel O’Connell? What a way to run a country, let alone the EU!

fly_agaric

golfwallah wrote: »

They seem to be paralysed into very slow progress in this area, not treating it as a priority or waiting for Germany to do something....Where is the leadership and courage as displayed by historic figures like Lincoln, Churchill, Michael Collins or Daniel O’Connell? What a way to run a country, let alone the EU!

God forgive me for sounding cynical & teenage but politicians (edit - & politics) in Europe are (is) mostly bought and paid for by large global corporations...such as the too-big-to-fail banks; the wealthiest citizens etc (e.g. likes of Mr. Soros!!).

Once enough of these companies are making large profits overall (check) and the rich get richer (also on track) all is good with the world and it does not really matter how many people are on the dole in Europe.

While that is the case no one with big (disruptive) ideas will be allowed within an asses-roar of power; certainly not via the existing political parties etc.
If a statesman type like those you mention somehow did get in by blind chance or unusual conjunction of circumstances (especially one with any socialist big ideas) they'll be quickly bought off somehow or destroyed by the media.

golfwallah

fly_agaric wrote: »

God forgive me for sounding cynical & teenage but politicians (edit - & politics) in Europe are (is) mostly bought and paid for by large global corporations...such as the too-big-to-fail banks; the wealthiest citizens etc (e.g. likes of Mr. Soros!!).

Once enough of these companies are making large profits overall (check) and the rich get richer (also on track) all is good with the world and it does not really matter how many people are on the dole in Europe.

While that is the case no one with big (disruptive) ideas will be allowed within an asses-roar of power; certainly not via the existing political parties etc.
If a statesman type like those you mention somehow did get in by blind chance or unusual conjunction of circumstances (especially one with any socialist big ideas) they'll be quickly bought off somehow or destroyed by the media.

Cynical & teenage indeed – you have aptly described it yourself. But conspiracy theories that democracy is dead and the world is dominated by a small number of wealthy, powerful individuals and organisations do have a certain appeal in confronting fear of the unknown. Just look at the many theories around, e.g. the Bilderberg Group, JFK, reverse vampires, George Soros, ancient aliens, the Birther conspiracy, etc.

Sure, there is so much that is not right or logical in the world that it may be comforting to explain away lack of progress in solving problems that impact on our everyday lives with conspiracy theories. But the truth, IMHO, is far more mundane.

Politicians rarely look at the long term and rarely ever act, unless it is in response to immediate crises or massive public pressure, i.e. they only do things when they have no other choice.

And to make European Financial Integration a reality requires a lot of hard work over the long-term - there are no instant short-term quick fixes. There’s lots of stuff, of the non-conspiracy theory variety, out there in the public domain on this subject, for example, ECB-CFS RESEARCH NETWORK ON “CAPITAL MARKETS AND FINANCIAL INTEGRATION IN EUROPE”: A ROAD MAP, which lists real world obstacles to EUROPEAN FINANCIAL INTEGRATION as:

- different legal and tax systems,
- heterogeneous regulatory approaches,
- incompatible industry standards (e.g. accounting and disclosure) and
- cultural and language barriers.

No it’s not as exciting as a conspiracy theory or the need for disruptive political ideas (particularly discredited socialist ones), but then, that’s real life, as opposed to wishful thinking!

fly_agaric

golfwallah wrote: »

Cynical & teenage indeed – you have aptly described it yourself. But conspiracy theories that democracy is dead and the world is dominated by a small number of wealthy, powerful individuals and organisations do have a certain appeal in confronting fear of the unknown. Just look at the many theories around, e.g. the Bilderberg Group, JFK, reverse vampires, George Soros, ancient aliens, the Birther conspiracy, etc.

Democracy is not "dead" but it is not in a healthy state imo. To believe that politicians in Europe are ultimately directed much more by various monied interests (large corps, wealthy individuals) than by what their electorates might want does not imply these interests all share identical goals (to extent of meeting [with or without cowls and pentagrams] to collectively decide a course for Europe etc)! I might have been feeling cynical & teenage but I don't think I was going that far into tinfoil-hat country.

Some of these interests may want more integration in Europe in general; others oppose it. I don't think people who make their money playing markets in general will be pleased to see a deeper financial integration across Europe (am I wrong?). Many large companies will not want tax & legal harmonisation because it reduces their abilities to play jurisdictions off against each other through tax competition etc. Some big companies that manufacture things and export across the various national borders in the EU might like to see far closer integration.

What the EU electorates might think has little bearing as do convictions of individual politicians. The interplay between the different wealthy interests in Europe (and technocrats in likes of the ECB) is much more important.

edit: I think deeper integration of financial systems of Euro-area countries qualifies as a big disruptive idea; as above whatever about electorates there will be much disagreement among the "small number of wealthy, powerful individuals and organisations" about it!

golfwallah

fly_agaric wrote: »

Democracy is not "dead" but it is not in a healthy state imo. To believe that politicians in Europe are ultimately directed much more by various monied interests (large corps, wealthy individuals) than by what their electorates might want does not imply these interests all share identical goals (to extent of meeting [with or without cowls and pentagrams] to collectively decide a course for Europe etc)! I might have been feeling cynical & teenage but I don't think I was going that far into tinfoil-hat country.

Some of these interests may want more integration in Europe in general; others oppose it. I don't think people who make their money playing markets in general will be pleased to see a deeper financial integration across Europe (am I wrong?). Many large companies will not want tax & legal harmonisation because it reduces their abilities to play jurisdictions off against each other through tax competition etc. Some big companies that manufacture things and export across the various national borders in the EU might like to see far closer integration.

What the EU electorates might think has little bearing as do convictions of individual politicians. The interplay between the different wealthy interests in Europe (and technocrats in likes of the ECB) is much more important.

edit: I think deeper integration of financial systems of Euro-area countries qualifies as a big disruptive idea; as above whatever about electorates there will be much disagreement among the "small number of wealthy, powerful individuals and organisations" about it!

I’m not sure what point you are trying to make. On the one hand, you’re saying that some powerful individuals and corporations want closer financial / banking integration in Europe, whereas others of the same ilk do not. You mention the interplay between the ECB and wealthy interests as having undue sway, go on to say that individual EU politicians hold different positions to their constituencies and conclude that this is unhealthy for democracy.

But, isn’t this just politics as usual in modern democratic society? Like any market or democratic situation, you have leaders, early adaptors, followers, etc. Real leadership is about communication, explaining situations to people and developing and presenting choices to them in a succinct manner that they can understand. What we have at the moment is some leaders wanting more financial integration, seeing the upside advantages but without necessarily being willing to take on the responsibilities attached, whereas Germany, being the most financially powerful, is not too keen on being “banker of last resort” in the role of having to backstop the whole show, should things go wrong.

Angela Merkel’s track record is one of having a good political feel for when a majority of her electorate are likely to go along with an idea. And political support for backing European Financial integration, backstopped by the German taxpayer, is not there right now, particularly when the less powerful EU states have a bad track record of being responsible players in the game so far.

The issue Soros has identified is the slow pace of progress in achieving financial integration, how this is placing a brake on lending to business and, thus, keeping Europe in recession. This is just one view, but shared by many and makes sense to me, whether I like what Soros does or not.

The real problem, IMHO, is not undue influence of powerful individuals and companies, but overcoming the barriers to changes, which are nuanced rather differently as between Germany and the other EU states.

dissed doc

golfwallah wrote: »

It’s depressing to think that 2 more generations are likely to face 25 more years of recession,

Soros: "I am unable to profit massively due to the ECB and Germany refusing to cause massive inflation....europe sucks and it is stagnating".

Stagnating from his perspective is entirely different to yours (probably) and mine. For him, stagnation = unable to profit from exploiting inflation and currencies being devalued using quantitative easing.

fly_agaric

golfwallah wrote: »

I’m not sure what point you are trying to make. On the one hand, you’re saying that some powerful individuals and corporations want closer financial / banking integration in Europe, whereas others of the same ilk do not. You mention the interplay between the ECB and wealthy interests as having undue sway, go on to say that individual EU politicians hold different positions to their constituencies and conclude that this is unhealthy for democracy. But, isn’t this just politics as usual in modern democratic society? Like any market or democratic situation, you have leaders, early adaptors, followers, etc.

Sorry if that was confusing/badly written...
I suppose the point was I don't think its possible for politicians to "lead" here. They will follow the wealthy interests and bureaucrats; influential minorities having too much sway over events is not democratic.

What electorates who go out to vote for the politicians think is not going to affect the outcome (deeper integration or not for the Eurozone) much imo.

This is bad for democracy. Sidelining electorates in this way is dangerous and can lead to a rise in extremism. We will probably see alot more anti-EU nationalistic odd-balls from all countries riding into the EU parliament after summer elections. That is an indication something is not right.

If these types start to colonise national parliaments off the back of frustrated [petulant!] electorates it'll be too late to do anything about it.

golfwallah

dissed doc wrote: »

Soros: "I am unable to profit massively due to the ECB and Germany refusing to cause massive inflation....europe sucks and it is stagnating".

Stagnating from his perspective is entirely different to yours (probably) and mine. For him, stagnation = unable to profit from exploiting inflation and currencies being devalued using quantitative easing.

That's one interpretation of what Soros said. But I read it that he is more talking about the pressing need to make much more significant progress with economic and banking integration within the Euro zone:

“You have to go further with the integration. You have to solve the banking problem, because Europe is lagging behind the rest of the world in sorting out its banks.”

Lack of progress with the major political issue of moving from a loose currency area to a more stable monetary union akin to the US Dollar is not only restricting the availability of credit needed to facilitate growth but also leaves the Euro at continued risk of collapse.

Certainly, people like Soros have a track record of being ahead of the market and the financial clout to enable them to profit from trading in an overvalued currency, like what happened to the Pound Sterling. But that's not really the point here. I don't read it that he is encouraging quantitative easing / inflation, which he can take advantage of, but that the Euro area will remain in recession unless significant progress is made toward real financial integration / monetary union (i.e. along the lines of centralised U.S. processes for bank supervision, handling bust banks and insuring bank deposits).