Even Germans are afraid of a United States of Europe

28-10-2011 09:58PM

andrew wrote: »

Economic growth is not a zero sum game. You're operating under incorrect knowledge with regard to how the banking system works (gathered from the money as debt videos, I think), which heavily simplifies and distorts aspects of the money creation process, and how it actually operates in the economy. If you PM me, I can send you some economics textbooks which explain how the macroeconomic system works.

I'm not an economist, but even I can see that a system based on infinite growth cannot work indefinitely in a finite world.

4leto wrote: »

But the temptation will always be there for government to borrow money to appease their electorate, Ireland even borrowed during the boom.

No the only way out of this mess long term is a disintegration, recognise the Euro zone as a set of unique sovereign economic zones that cannot be harmonised.

So stabilise the currency for no and slowly return to the way it was before the Euro.

Money should be considered as a proxy for energy*, the more energy that is available to operate the economy the more money can be created to make things run smoothly.

Creating more money while the available energy is is static or declining leads to an increase of debt under the current system as the cost of this energy rises at at rate that is out of sync with the cost of labour. Well the results of this imbalance are clearly on view for all to see.

*Energy in the form of fossil fuels & renewable sources such as wind solar etc.

ed2hands · 28-10-2011 09:59PM

Andrew what did you think of Alan Greenspans boast that the US can never "go broke" for the simple reason that all the Fed has to do is simply print more money (aka quantatative easing)?

https://www.youtube.com/watch?v=q6vi528gseA

Andrew are you also agog at this confession like the guy sitting beside Greenspan?

Solnskaya · 28-10-2011 10:17PM

andrew wrote: »

Actually, I'm (just) a fourth year economics student

And I think I've clarified why I think it's silly in my post previous to this one; I accept that it would've made more sense to do this in my original post.

Sorry, but enough said. I love hearing students and graduates spouting their new found "knowledge", but the real world is a harder place, with far more experienced, hard bitten and machieavellian minds at work. The beneficiaries of these measures will be the mandarins all right, but they will be financial mandarins, the bond-holders and capital funds. Europe is now like a family with a huge mortgage who suddenly cannot afford the repayments but have a rich but cruel aunt willing to fund future repayments in return for their first borns kidneys.
Poland is the latest victim of this cruel aunt. They are falling for the same sh1te Ireland and Greece swallowed- accepting "development" funds to fuel a building boom and infrastructure modernisation. When the Poles have done with their spending spree and are indebted up to their necks, the vultures of big capital will swoop in and buy up their state assets- just like in Ireland. It's clever, but it's sh1tty.

andrew · 28-10-2011 10:26PM

Solnskaya wrote: »

Sorry, but enough said. I love hearing students and graduates spouting their new found "knowledge", but the real world is a harder place, with far more experienced, hard bitten and machieavellian minds at work. The beneficiaries of these measures will be the mandarins all right, but they will be financial mandarins, the bond-holders and capital funds. Europe is now like a family with a huge mortgage who suddenly cannot afford the repayments but have a rich but cruel aunt willing to fund future repayments in return for their first borns kidneys.
Poland is the latest victim of this cruel aunt. They are falling for the same sh1te Ireland and Greece swallowed- accepting "development" funds to fuel a building boom and infrastructure modernisation. When the Poles have done with their spending spree and are indebted up to their necks, the vultures of big capital will swoop in and buy up their state assets- just like in Ireland. It's clever, but it's sh1tty.

I've never claimed to be an expert, or infallible. I'm studying and have an interest in economics, and so I think my posts are more informative than people who don't, when talking about economics subjects. In the same way that I'd find someone studying biology to be able to inform me about the workings of a cell. If you're going to discount my opinions just because I'm a student, I think that's silly. Being a student doesn't automatically make me wrong. If you think I'm wrong, then say why, rather than resorting to the whole 'but I've live in the real world' meme; I live there too you know.

Solnskaya · 28-10-2011 10:33PM

andrew wrote: »

I've never claimed to be an expert, or infallible. I'm studying and have an interest in economics, and so I think my posts are more informative than people who don't, when talking about economics subjects. In the same way that I'd find someone studying biology to be able to inform me about the workings of a cell. If you're going to discount my opinions just because I'm a student, I think that's silly. Being a student doesn't automatically make me wrong. If you think I'm wrong, then say why, rather than resorting to the whole 'but I've live in the real world' meme; I live there too you know.

No you don't. You're a student. And I don't mean that as an insult, it's just the way it is. You will need to come back to me in 20 years and we can discuss over a pint just what I am on about. I'm not trying to be smart or belittling, but the block is long, and it takes a while to go around it.

IcedOut · 28-10-2011 10:34PM

Michael D Higgins for president of United States of Europe :L

Solnskaya · 28-10-2011 10:41PM

ed2hands wrote: »

Andrew what did you think of Alan Greenspans boast that the US can never "go broke" for the simple reason that all the Fed has to do is simply print more money (aka quantatative easing)?

https://www.youtube.com/watch?v=q6vi528gseA

Andrew are you also agog at this confession like the guy sitting beside Greenspan?

Correct answer from Greenspan. If you produce that which everyone seeks, you will never go hungry. We all seek money, and last time I checked, that was made in a mint. Who owns the mint-the state(and Polo, for the AH crew). All that changes is the amount of "stuff" you get in exchange for a particular design of piece of paper. What is screwing the EMU, is that we no longer print our own money, we have to buy it from europe. We are no longer a producer, we are now just another "consumer",and best of all, most will struggle to define just who this "europe" who controlls the supply of money(elaboratly printed paper) is. Andrew, as an avowed economics student, could you please explain to me(and everyone else) where exactly the vast capital sums involved in the bailouts comes from? The beauty of modern capital is that you no longer have to faff about printing it, you can just type it onto a computer screen. How many zeros you use just depends on how big your balls are and how hard your neck is.

28-10-2011 10:57PM

Solnskaya wrote: »

Correct answer from Greenspan. If you produce that which everyone seeks, you will never go hungry. We all seek money, and last time I checked, that was made in a mint. Who owns the mint-the state(and Polo, for the AH crew). All that changes is the amount of "stuff" you get in exchange for a particular design of piece of paper. What is screwing the EMU, is that we no longer print our own money, we have to buy it from europe. We are no longer a producer, we are now just another "consumer",

For the system to function correctly, money really needs to circulate within the economy plus some growth to enable the interest to be repaid, but currently it appears to all be going "East" and not coming back! This imbalance means that we are slowly becoming poorer as time goes by.

The problem is much bigger than just the Euro debt.

Solnskaya · 28-10-2011 11:03PM

Ireland is a consumer state, as is most of Europe, barring perhaps Germany and the Czech republic(not an EU member). we specialised in re-packaging, finishing and warehousing. There are exceptions, noble ones, but we as a continent need to stop consuming more than we produce. We need to lose the "The only way is Essex" mentality and adopt the "American Chopper" mentality. Produce, work and export. All the rest is just fluff.

Killer Pigeon · 28-10-2011 11:17PM

andrew wrote: »

Actually, I'm (just) a fourth year economics student

So does that mean you've been indoctrinated by Keynes' ideology?

Baked.noodle · 29-10-2011 02:51AM

The deregulation of the financial world has totally undermined the global economy. There is no political will to deal with this issue as the political system has become hopelessly intertwined with corporate financiers. Wall street and Washington are one and the same. For social and economic stability China must support the worlds sick consumer markets, absurd as it is. The racket has infected most of the world, and the really is no sign of changing as America could lumber on for years, backed up by warmongering and the petro dollar. Things will change eventually, so I hope the people making decisions in America and elsewhere (and I'm not referring to the tiresome public relations executives) anticipate change proactively and fix this mess sooner rather than later.

K-9 · 29-10-2011 03:06AM

I don't blame them, they've far more to fear from forgiving Greek, Irish and Portuguese profligacy than we've of them.

Yeah Germany would get hit if the weaker countries left, but they'd get over it and just get on with it.

andrew · 29-10-2011 04:28AM

ed2hands wrote: »

Andrew what did you think of Alan Greenspans boast that the US can never "go broke" for the simple reason that all the Fed has to do is simply print more money (aka quantatative easing)?

https://www.youtube.com/watch?v=q6vi528gseA

Andrew are you also agog at this confession like the guy sitting beside Greenspan?

In a nominal sense, Greenspan is right. The USA can print as much money as it likes, in order to pay most of it's debts (apart from the inflation indexed ones). Doing so would might just inflate the debt away, which is a bad thing, but he's still right.

Solnskaya wrote: »

No you don't. You're a student. And I don't mean that as an insult, it's just the way it is. You will need to come back to me in 20 years and we can discuss over a pint just what I am on about. I'm not trying to be smart or belittling, but the block is long, and it takes a while to go around it.

I can see where you're coming from, and I accept that you've more personal experience of what it means to experience macroeconomic fluctuations. But I reject the idea that I'm some sort of naive student who thinks that the world behaves like some sort of economic model (I believe you have this impression anyway); nobody thinks that it does. If I post, it's to clarify an issue of economics which people, through lack of education in this area, don't understand. If someone disagrees, simply because they think they know the answer because they're older, or have more experience than me, or something; I think they'll need a better reply than that.

Solnskaya wrote: »

Andrew, as an avowed economics student, could you please explain to me(and everyone else) where exactly the vast capital sums involved in the bailouts comes from? The beauty of modern capital is that you no longer have to faff about printing it, you can just type it onto a computer screen. How many zeros you use just depends on how big your balls are and how hard your neck is.

Avowed economics student; what does that mean? The money which is produced in terms of bailouts is given in exchange for assets from banks. Thats it. Where does it come from? It's backed by Euro member states, and the money which they're able to generate through taxation.

Killer Pigeon wrote: »

So does that mean you've been indoctrinated by Keynes' ideology?

No, in fact, many of my lecturers have been rather right wing. It's quite a mix.

Gummy Panda · 29-10-2011 11:41AM

Solnskaya wrote: »

Ireland is a consumer state, as is most of Europe, barring perhaps Germany and the Czech republic(not an EU member).

Czech Republic is an EU member

4leto · 29-10-2011 12:30PM

Deleted User wrote: »

I'm not an economist, but even I can see that a system based on infinite growth cannot work indefinitely in a finite world.

Money should be considered as a proxy for energy*, the more energy that is available to operate the economy the more money can be created to make things run smoothly.

Creating more money while the available energy is is static or declining leads to an increase of debt under the current system as the cost of this energy rises at at rate that is out of sync with the cost of labour. Well the results of this imbalance are clearly on view for all to see.

*Energy in the form of fossil fuels & renewable sources such as wind solar etc.

How about the economies that have no energy or means of producing it?.

A unit of currency can be loosely defined as a unit of work or productivity. That is what money is. The more I have the more work I can get done or the more proceeds from work I can buy.

So a currency has to reflect the overall currencies area of productivity, which is what is wrong with the current conditions of the Euro. You can't have a single currency in an area which is not unified economically.

Take the US and the dollar, they have many areas of different economic performance, but they have 1 fed, and one economic zone. So if one area is doing badly money flows from other zones. You can't have that in Europe, although technically with the cheap loans we have that now, but the Germans do not want to pay for our public services and why should they.

So what we have is the Euro is being propped up by the efficient engine house economies of the north, subsidising the under performing economies of the med and Ireland (although Ireland is a little better off) without a single European economic policy.

So something has to give, I don't think the recent deal is enough.

4leto · 29-10-2011 12:37PM

andrew wrote: »

In a nominal sense, Greenspan is right. The USA can print as much money as it likes, in order to pay most of it's debts (apart from the inflation indexed ones). Doing so would might just inflate the debt away, which is a bad thing, but he's still right.

No they can't, not with their current paymasters. If they print to much money their bonds increase in price, last year they were rated double AA by one agency and the current holders of the most US bonds which is China can threaten to dump them if they keep decreasing in value. Now it is not likely China will do that, they are dependent on a stable dollar to. But if America keep printing money deflating the value of Chinese held American bonds they will leave them with no choice.

America like Europe have to cut their budgets and regain a fiscal balance.

noodler · 29-10-2011 12:41PM

Solnskaya wrote: »

Sorry, but enough said. I love hearing students and graduates spouting their new found "knowledge", but the real world is a harder place, with far more experienced, hard bitten and machieavellian minds at work. The beneficiaries of these measures will be the mandarins all right, but they will be financial mandarins, the bond-holders and capital funds. Europe is now like a family with a huge mortgage who suddenly cannot afford the repayments but have a rich but cruel aunt willing to fund future repayments in return for their first borns kidneys.
Poland is the latest victim of this cruel aunt. They are falling for the same sh1te Ireland and Greece swallowed- accepting "development" funds to fuel a building boom and infrastructure modernisation. When the Poles have done with their spending spree and are indebted up to their necks, the vultures of big capital will swoop in and buy up their state assets- just like in Ireland. It's clever, but it's sh1tty.

Pathetic.

Solnskaya · 29-10-2011 02:45PM

Gummy Panda wrote: »

Czech Republic is an EU member

Correct-I meant to say they have not adopted the Euro as a currency, my bad. I was over there a while ago, and for a small, relativly rural country, they have some serious industry, you cannot drive for more than a few minutes without passing a modern factory manufacturing goods. To the lad who just said "pathetic", whatever, water, back, ducks, etc. Care to tell me which bit you found pathetic? When the ESB, phones and water have been snapped up by outside investors, come back with more smart comments.:)

EI_Flyboy · 29-10-2011 03:26PM

noodler wrote: »

Pathetic.

He's right, it is pathetic. It's essentially a tax on stupidity. The rich, who believe they're more entitled than the rest of us because they think they're smarter than everyone else, taxing the poor because they're stupid. It's actually quite transparent, more and more people are beginning to see through it and how pathetic it really is.

parrai · 29-10-2011 04:09PM

This was posted in another thread on AH, think it has relevance here too though

http://www.xtranormal.com/watch/12611732/the-european-bailout-explained

Baked.noodle · 29-10-2011 04:13PM

EI_Flyboy wrote: »

noodler wrote: »

Pathetic.

He's right, it is pathetic. It's essentially a tax on stupidity. The rich, who believe they're more entitled than the rest of us because they think they're smarter than everyone else, taxing the poor because they're stupid. It's actually quite transparent, more and more people are beginning to see through it and how pathetic it really is.

It's extraordinary unjust and destructive. However, it has little to do with intelligence and everything to do with opportunity. The top one percent of the top one percent manipulate politics and finance to protect their interests. They have to brake the rules because other competitors in the game are doing the same thing. It's a global hierarchy and everybody is trapped in the same system, regardless of their place in the system. Marx noted "Financialization is the end-stage of capitalism", and foresaw a dictatorship of the proletariat, followed by communist utopia. This may not come to pass, but history will show what disenfranchised people will undertake to even the score. It is in the interest of the rich to stabilise the system as much as possible, to ensure they remain on top of the heap, so hopefully we can avoid much of the massive upheaval we experienced during the twentieth century. I would be all for utopia, if only it where someplace.

29-10-2011 04:35PM

parrai wrote: »

This was posted in another thread on AH, think it has relevance here too though

http://www.xtranormal.com/watch/12611732/the-european-bailout-explained

The video at the start of this thread was linked to this one originally via the comments in a newspaper article.

orourkeda · 29-10-2011 04:37PM

The germans should be afraid.

They're paying for it to a large degree

EI_Flyboy · 29-10-2011 07:02PM

Baked.noodle wrote: »

It's extraordinary unjust and destructive. However, it has little to do with intelligence and everything to do with opportunity. The top one percent of the top one percent manipulate politics and finance to protect their interests. They have to brake the rules because other competitors in the game are doing the same thing. It's a global hierarchy and everybody is trapped in the same system, regardless of their place in the system. Marx noted "Financialization is the end-stage of capitalism", and foresaw a dictatorship of the proletariat, followed by communist utopia. This may not come to pass, but history will show what disenfranchised people will undertake to even the score. It is in the interest of the rich to stabilise the system as much as possible, to ensure they remain on top of the heap, so hopefully we can avoid much of the massive upheaval we experienced during the twentieth century. I would be all for utopia, if only it where someplace.

Spotting the opportunity has everything to do with intelligence, you need it to connect the dots to see the opportunity in the first place. Also, the fact that they've spotted the opportunity and no one else has makes them believe that they're superior and this superiority justifies their behaviour to themselves. They feel they're above the rest of us in an evolutionary sense and that the rest of us are here merely to serve them. Unfortunately intelligence doesn't always equate to smart and can lead to some very complex justifications for doing something very stupid indeed.

Baked.noodle · 29-10-2011 07:17PM

EI_Flyboy wrote: »

Spotting the opportunity has everything to do with intelligence, you need it to connect the dots to see the opportunity in the first place. Also, the fact that they've spotted the opportunity and no one else has makes them believe that they're superior and this superiority justifies their behaviour to themselves. They feel they're above the rest of us in an evolutionary sense and that the rest of us are here merely to serve them. Unfortunately intelligence doesn't always equate to smart and can lead to some very complex justifications for doing something very stupid indeed.

I don't disagree with you really, but I believe most people are intelligent. I think you are underestimating the significance of inheritance.

EI_Flyboy · 29-10-2011 07:30PM

Baked.noodle wrote: »

I don't disagree with you really, but I believe most people are intelligent. I think you are underestimating the significance of inheritance.

I know what you mean and inheritance only makes it worse, it ensures the legacy is passed along plus I'd imagine psychopathy is just as inheritable as intelligence. The average IQ is only 100, someone who's at 140 is going to spot patterns and opportunities a lot quicker than the average Joe. Couple that with a lack of conscience and you have someone completely capable and willing to screw everyone else over for their own gain.

Baked.noodle · 29-10-2011 07:54PM

EI_Flyboy wrote: »

Baked.noodle wrote: »

I don't disagree with you really, but I believe most people are intelligent. I think you are underestimating the significance of inheritance.

I know what you mean and inheritance only makes it worse, it ensures the legacy is passed along plus I'd imagine psychopathy is just as inheritable as intelligence. The average IQ is only 100, someone who's at 140 is going to spot patterns and opportunities a lot quicker than the average Joe. Couple that with a lack of conscience and you have someone completely capable and willing to screw everyone else over for their own gain.

In my opinion inheritance is the significant factor. Many rag to riches opportunists wouldn't necessarily be candidates for Mensa. Most of the super rich are playing an old game their ancestors refined long ago. Your education and capital, your class so to speak, provide the scope of opportunities. Poor people are some of the most creative opportunists, they have to be.

andrew · 29-10-2011 08:39PM

ed2hands wrote: »

C'mon Andrew. Hit me! I need to be educated..

Sincere apologies about biting your head off on the basis of my presumptions.

So there's a soverign debt crisis. Countries have more debt than they can repay, given current and anticipated growth levels. Some countries, like Greece, are in debt because joining the Euro meant they could get cheap loans, so they did. Others, like Ireland, are in debt because we had to buy the debt of the banking system in order to prevent its collapse. The former is mostly the case as far as I know; Portugal, Italy, Spain, have just borrowed too much money, given their current levels of growth.

This crisis is bad because, if countries don't pay bank their debts, it's bad for everyone. Literally everyone. While it'd be nice to say to the banks and funds who lended this money 'tough luck, we can't repay,' the reality is that doing so would impost heavy costs not just on banks, but on everyone, including us. So when people say 'no bailouts,' they're engaging in some wishful thinking. No government (including the EU) wants to impose costs on their taxpayers, but the fact is that the alternative is much worse.

So, the ESM. It's designed in order to help solve the aforementioned debt crisis. So calling it a 'treaty of debt' isn't actually incorrect, but it kinda implies that it's some evil alternative to a treaty of no debt, which doesn't exist. Watching the video again, I think the logic behind some of the articles is fairly simple.

Article 8 and 10 are just about the size of the fund. Who decided the figure? Well to an extent it's somewhat arbitrary. It needs to be large enough to ensure confidence that the fund will be big enough to tackle the problems it's meant to solve. The idea of confidence is fundamental here by the way; uncertainty is bad. Economies can't grow out of this problem as long as there's uncertainty. Why would you invest money in a business, if you're not sure about the kind of return it's going to get? So the idea of uncertainty is quite prevalent here...

Article 9 then, is another way by which certainty is ensured. Nobody's going to think that the ESM will work, if a member state (or states) can on a whim decide that it can't do what it's designed to do. That's why, apart from actually signing the treaty, member states don't get a say in it's operation. If I'm an investor who's buying bonds, and I don't think that the ESM is going to work, because politicians could arbitrarily try to block it; well, then it may as well not exist at all.

Article 27, well, you'll need to ask a lawyer for that one. There's a general theme throughout though; each article aims to make the ESM independent, in order to ensure it's credibility in the event of countries needing it, and to reduce uncertainty.

The last line though 'a Europe devoid of sovereign democracies' well, that's just scaremongering crap. This doesn't effect sovereignty. Countries are no less sovereign after this treaty then they were before. They havn't handed over any new competencies to the EU or anything.

What I've said, by the way, is supported by the EU statement on what they decided on the 26th October:

the objective is to support market access for euro area Member States faced with market pressures and to ensure the proper functioning of the euro area sovereign debt market, while fully preserving the high credit standing of the EFSF. These measures are needed to ensure financial stability and provide sufficient ringfencing to fight contagion

(emphasis mine).

Also, as a last note; AFAIK, China is not 'buying' Europe. Foreign investors won't have a huge stake in the fund, (again, AFAIK).

This was probably too much effort for an AH post, but meh, it proved to be useful procrastination.

parrai · 29-10-2011 08:50PM

andrew wrote: »

Also, as a last note; AFAIK, China is not 'buying' Europe. Foreign investors won't have a huge stake in the fund, (again, AFAIK).

Fair enough, but why do you think this is:-

http://www.rte.ie/aertel/131-01.html

andrew · 29-10-2011 09:01PM

parrai wrote: »

Fair enough, but why do you think this is:-

http://www.rte.ie/aertel/131-01.html

Because member states have already committed 700 billion, so the max China would be involved could be 300 billion. And I doubt they'd invest that much, given other countries have been asked too.

Even Germans are afraid of a United States of Europe

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