Even Germans are afraid of a United States of Europe

parrai · 29-10-2011 09:03PM

andrew wrote: »

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.

But with America resorting to quantitive easing, the Chinese don't want all their eggs in one basket... And the other member states don't have the money... Isn't this why there is a haircut of up to approx 50%?

andrew · 29-10-2011 09:07PM

parrai wrote: »

But with America resorting to quantitive easing, the Chinese don't want all their eggs in one basket... And the other member states don't have the money... Isn't this why there is a haircut of up to approx 50%?

The quantitative easing isn't having that much of an effect on the value dollar; the Chinese aren't that averse to it. But a bit of diversification is always good. The fund is backed by every euro member state; the money's there. The 50% haircut was there in order to reduce the amount; why pay people back in full if you don't have to?

parrai · 29-10-2011 09:18PM

andrew wrote: »

The quantitative easing isn't having that much of an effect on the value dollar; the Chinese aren't that averse to it. But a bit of diversification is always good. The fund is backed by every euro member state; the money's there. The 50% haircut was there in order to reduce the amount; why pay people back in full if you don't have to?

Quantitive easing will eventually lead to inflation, at least it is one of the downsides of it. The 50% haircut is there because if they didn't make the provision for greece, the Euro would be in dire trouble... The banks are already accepting the fact they will default, and the writedown in the future, is a sign the banks are willing to accept 50% over nothing at all, that is my understanding of it... We need the Chinese more than they need us, this for them is an opportunity... From the article on RTE that I posted previously, they said " We need to wait for the technicalities to be clear and also to carry out serious studies..."

To my mind that would be to see the financial viability of giving such finance, and I wouldn't be surprised if they don't give it... It would be a real sign of how much trouble the Euro is in.

andrew · 29-10-2011 09:22PM

parrai wrote: »

Quantitive easing will eventually lead to inflation, at least it is one of the downsides of it. The 50% haircut is there because if they didn't make the provision for greece, the Euro would be in dire trouble... The banks are already accepting the fact they will default, and the writedown in the future, is a sign the banks are willing to accept 50% over nothing at all, that is my understanding of it... We need the Chinese more than they need us, this for them is an opportunity... From the article on RTE that I posted previously, they said " We need to wait for the technicalities to be clear and also to carry out serious studies..."

To my mind that would be to see the financial viability of giving such finance, and I wouldn't be surprised if they don't give it... It would be a real sign of how much trouble the Euro is in.

It's surprisingly hard to create a little inflation; so far, american quantitative easing hasn't done that. The worry is that too much easing would cause inflation, and that's why China expressed concerns. The haircut was there because there'd be serious moral hazard problems if banks didn't take a write down. Chinese participation isn't a significant factor; China has lots of money and needs somewhere to put it. If they're satisfied that financing the EFSF is in their interests, then they will. The relationship between China is a two way street; the Chinese economy needs a healthy rest of world, and vice versa.

parrai · 29-10-2011 09:28PM

andrew wrote: »

It's surprisingly hard to create a little inflation; so far, american quantitative easing hasn't done that. The worry is that too much easing would cause inflation, and that's why China expressed concerns. The haircut was there because there'd be serious moral hazard problems if banks didn't take a write down. Chinese participation isn't a significant factor; China has lots of money and needs somewhere to put it. If they're satisfied that financing the EFSF is in their interests, then they will. The relationship between China is a two way street; the Chinese economy needs a healthy rest of world, and vice versa.

Ok...

Can you see the problem with contagion? I mean, the Chinese say 'Ok let's give Europe X billion' They give this is dollars, whilst America (which already has had 2 bouts of quantitive easing in the last number of years) The dollar in the mean time is devaluing as a result of the quantitive easing... Dangerous times.

andrew · 29-10-2011 09:32PM

parrai wrote: »

Ok...

Can you see the problem with contagion? I mean, the Chinese say 'Ok let's give Europe X billion' They give this is dollars, whilst America (which already has had 2 bouts of quantitive easing in the last number of years) The dollar in the mean time is devaluing as a result of the quantitive easing... Dangerous times.

I'm not quite sure what you mean? Quantitative easing isn't a huge issue. It hasn't led to significant inflation. As the dollar yield curve shows, the market doesn't expect massive future inflation.

parrai · 29-10-2011 09:40PM

andrew wrote: »

I'm not quite sure what you mean? Quantitative easing isn't a huge issue. It hasn't led to significant inflation. As the dollar yield curve shows, the market doesn't expect massive future inflation.

Ok...

Printing money, really just paper, to pay of debts... How does that work? Is it not feasible that this would lead to devaluing of a currency... Now bearing in mind that this is on the cards...http://georgewashington2.blogspot.com/2011/07/quantitative-easing-rounds-1-and-2-hurt.html

Apologies for going way off topic.

andrew · 29-10-2011 09:42PM

parrai wrote: »

Ok...

Printing money, really just paper, to pay of debts... How does that work? Is it not feasible that this would lead to devaluing of a currency... Now bearing in mind that this is on the cards...http://georgewashington2.blogspot.com/2011/07/quantitative-easing-rounds-1-and-2-hurt.html

Yes, doing this in large (very large) amounts leads to inflation. So far it hasn't led to much dollar inflation. I don't see how this is relevant to the current discussion, except very tangentially.

parrai · 29-10-2011 09:48PM

My overall reason for going off topic was to illustrate the point that the germans and the rest of europe have every reason to be running scared, cause at this stage 10 years into the euro the have made a monumental mess of it.

andrew · 29-10-2011 09:50PM

parrai wrote: »

My overall reason for going off topic was to illustrate the point that the germans and the rest of europe have every reason to be running scared, cause at this stage 10 years into the euro the have made a monumental mess of it.

It's clear that the euro hasn't worked very well (as many expected), but how is this related to US quantitative easing, and why does this mean that people will run scared from the euro, rather than trying to fix it?

parrai · 29-10-2011 09:58PM

andrew wrote: »

It's clear that the euro hasn't worked very well (as many expected), but how is this related to US quantitative easing, and why does this mean that people will run scared from the euro, rather than trying to fix it?

Quantitive easing is not as simplistic as you are making it sound... America, when they print money are not just printing a few dollars, they are printing something in the region of 600 Billion dollars, now that is a lot of fake money!

When you consider the amount that Europe has put aside to be 440 Billion euros, which for arguments sake, is about 550 Billion dollars, now are you seriously trying to tell me, that printing that kind of money, Fake money at that, is not going to have a knock on effect to China, who are thinking about investing in Europe to the tune of, say what you have suggested, 300 Billion?

When you consider, if it is that difficult for inflation to rise, that inflation in Europe has risen by approx 1% in a couple of months without printing any money? Now baring all that in mind, I believe the UK are in the process of printing £200 Billion to put into their own market!!! Now tell me how that is not going to make inflation increase.

parrai · 29-10-2011 10:04PM

to answer the last part of your question, the Euro is ruined it cannot be fixed, this is a band aid for a ruptured vein.

andrew · 29-10-2011 10:07PM

parrai wrote: »

Quantitive easing is not as simplistic as you are making it sound... America, when they print money are not just printing a few dollars, they are printing something in the region of 600 Billion dollars, now that is a lot of fake money!

When you consider the amount that Europe has put aside to be 440 Billion euros, which for arguments sake, is about 550 Billion dollars, now are you seriously trying to tell me, that printing that kind of money, Fake money at that, is not going to have a knock on effect to China, who are thinking about investing in Europe to the tune of, say what you have suggested, 300 Billion?

When you consider, if it is that difficult for inflation to rise, that inflation in Europe has risen by approx 1% in a couple of months without printing any money? Now baring all that in mind, I believe the UK are in the process of printing £200 Billion to put into their own market!!! Now tell me how that is not going to make inflation increase.

The euro bailout isn't quantitative easing. The chinese will invest if they think that they should; inflation expectations at the moment are low, so that's not a problem. And inflation is difficult to induce; UK inflation is mainly due to their VAT reduction, nobody think's it's systematic inflation (Krugman had an article about this recently, but I can't find it). I just don't get the point you're trying to make here, or why you think the euro is doomed to fail.

parrai · 29-10-2011 10:15PM

andrew wrote: »

The euro bailout isn't quantitative easing. The chinese will invest if they think that they should; inflation expectations at the moment are low, so that's not a problem. And inflation is difficult to induce; UK inflation is mainly due to their VAT reduction, nobody think's it's systematic inflation (Krugman had an article about this recently, but I can't find it). I just don't get the point you're trying to make here, or why you think the euro is doomed to fail.

i know the Euro bailout is not about Q.E. Do you not think that the financial banks of the world are not linked? Americas' Lehmans was the beginning of the current crisis... Everything has stemmed from there. Do you think that this was the end of Americas involvement in the financial sectors failings?... Hence the Q.E. working its way into Europe via China... The Chinese know it. Just because it's not on the news doesn't mean it's not on the way...

The euro is doomed, simple as... Everyone knows it

Edit: Just found this dated today: http://www.theaustralian.com.au/business/markets/gold-higher-on-inflation-bet/story-e6frg91x-1226179025395

K-9 · 29-10-2011 11:17PM

Hard to know if relying on the Chinese is that wise with them having a huge property bubble ready to burst!

Baked.noodle · 30-10-2011 04:02AM

Baked.noodle wrote: »

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.

Though to be fair to you, wealth is not reflected accurately by the money in your pocket. Hell the rich wouldn't touch the stuff. Real wealth is an asset. For a person who lives as most of us do, an asset is something you use for a while and sell on, like a house or car. For the rich, an asset is something that makes money. It's a different mentality altogether. The pursuit of wealth requires one to accumulate wealth, and this is to deny others access to this wealth. While it's a dog eat dog world, with few of us who could claim to be saints, the psychology of people who make decisions for personal gain that effect lots of people day in day out is very different from the psychology of regular middle/working class people. So I understand where you are coming from. I don't believe all of them are psychopaths (some are socially conscious), but undoubtedly some of them are. I think they behave as they do because they are competing with us, and each other. An opportunity missed is one for my enemy.

I prefer the solidarity found in communities of people with shared interests.

Even Germans are afraid of a United States of Europe

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