View Poll Results: Does the Greek Bailout Mean an End to the Federal Model of the EU ?

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  • Yes

    98 72.06%
  • No

    29 21.32%
  • It will have no long term effect

    9 6.62%
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Thread: Domino Effect at Work with Euro - Last Days of the Eurozone ? - UPDATE: S & P put EU on Negative Watch

  1. #1771
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    Default Re: Domino Effect at Work with Euro - Last Days of the Eurozone ? - UPDATE: S & P put EU on Negative Watch

    KRUGMAN: The euro's fate doesn't look bright. "Suddenly, it has become easy to see how the euro -- that grand, flawed experiment in monetary union without political union -- could come apart at the seams. We’re not talking about a distant prospect, either. Things could fall apart with stunning speed, in a matter of months, not years. And the costs -- both economic and, arguably even more important, political -- could be huge. This doesn’t have to happen; the euro (or at least most of it) could still be saved. But this will require that European leaders, especially in Germany and at the European Central Bank, start acting very differently from the way they’ve acted these past few years. They need to stop moralizing and deal with reality; they need to stop temporizing and, for once, get ahead of the curve. I wish I could say that I was optimistic...All of us, then, have a big stake in European success -- yet it’s up to the Europeans themselves to deliver that success. The whole world is waiting to see whether they’re up to the task." Paul Krugman in The New York Times.

    The euro zone may be ready for a Greek exit. "It is increasingly conceivable that Greece may leave the euro zone, not just because of its own political dysfunction but also because the consequences of such an exit for the rest of the Europe and the global economy no longer seem quite so scary. The foot-dragging and brinkmanship of the last few years have won the other members of the currency union valuable time to prepare for life without Greece. Banks have recorded losses on Greek investments, companies are making contingency plans and Europe has bolstered rescue funds for other vulnerable nations like Portugal, Ireland and Spain. Those measures also have reduced the risks for the United States, making it less likely that a 'Lehman moment' will spread panic through global financial markets. American investment funds and banks have also sharply reduced their investments in Europe." Binyamin Appelbaum in The New York Times.

    3) WOLF: If Greece leaves the eurozone the results would be devastating. "The irritation of the eurozone with Greece is at extreme levels. After all, 80 per cent of Greeks say they are in favour of staying in the euro, but then they fail to elect politicians prepared to implement the agreed programme. This drives creditors crazy. Increasingly, the latter are inclined to accept Greek exit, even welcome it. But they should be careful what they wish for. A departure would create severe dangers. The danger of contagion is obvious. The long-run danger is more subtle. But the eurozone either is an irrevocable currency union or it is not. If countries in difficulty leave, it is not. It is then an exceptionally rigid fixed-currency system. That would have two dire results: people would not trust in its survival and the economic benefits of the single currency would largely disappear. These perils are not of concern to the eurozone alone...The risk that a bigger eurozone upheaval would cause a global crisis is real." Martin Wolf in The Financial Times.
    As a general rule the most successful man in life is the man who has the best information.

  2. #1772
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    Default Maidir Le: Domino Effect at Work with Euro - Last Days of the Eurozone ? - UPDATE: S & P put EU on Negative Watch


  3. #1773
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    Default Re: Domino Effect at Work with Euro - Last Days of the Eurozone ? - UPDATE: S & P put EU on Negative Watch

    Quote Originally Posted by Count Bobulescu View Post
    KRUGMAN: The euro's fate doesn't look bright. "Suddenly, it has become easy to see how the euro -- that grand, flawed experiment in monetary union without political union -- could come apart at the seams. We’re not talking about a distant prospect, either. Things could fall apart with stunning speed, in a matter of months, not years. And the costs -- both economic and, arguably even more important, political -- could be huge. This doesn’t have to happen; the euro (or at least most of it) could still be saved. But this will require that European leaders, especially in Germany and at the European Central Bank, start acting very differently from the way they’ve acted these past few years. They need to stop moralizing and deal with reality; they need to stop temporizing and, for once, get ahead of the curve. I wish I could say that I was optimistic...All of us, then, have a big stake in European success -- yet it’s up to the Europeans themselves to deliver that success. The whole world is waiting to see whether they’re up to the task." Paul Krugman in The New York Times.

    The euro zone may be ready for a Greek exit. "It is increasingly conceivable that Greece may leave the euro zone, not just because of its own political dysfunction but also because the consequences of such an exit for the rest of the Europe and the global economy no longer seem quite so scary. The foot-dragging and brinkmanship of the last few years have won the other members of the currency union valuable time to prepare for life without Greece. Banks have recorded losses on Greek investments, companies are making contingency plans and Europe has bolstered rescue funds for other vulnerable nations like Portugal, Ireland and Spain. Those measures also have reduced the risks for the United States, making it less likely that a 'Lehman moment' will spread panic through global financial markets. American investment funds and banks have also sharply reduced their investments in Europe." Binyamin Appelbaum in The New York Times.

    3) WOLF: If Greece leaves the eurozone the results would be devastating. "The irritation of the eurozone with Greece is at extreme levels. After all, 80 per cent of Greeks say they are in favour of staying in the euro, but then they fail to elect politicians prepared to implement the agreed programme. This drives creditors crazy. Increasingly, the latter are inclined to accept Greek exit, even welcome it. But they should be careful what they wish for. A departure would create severe dangers. The danger of contagion is obvious. The long-run danger is more subtle. But the eurozone either is an irrevocable currency union or it is not. If countries in difficulty leave, it is not. It is then an exceptionally rigid fixed-currency system. That would have two dire results: people would not trust in its survival and the economic benefits of the single currency would largely disappear. These perils are not of concern to the eurozone alone...The risk that a bigger eurozone upheaval would cause a global crisis is real." Martin Wolf in The Financial Times.
    These last two commentators could just as well be viewing Greece from the moon down the wrong end of a telescope, for all they have grasped of what is going on.

  4. #1774
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    Default Re: Domino Effect at Work with Euro - Last Days of the Eurozone ? - UPDATE: S & P put EU on Negative Watch

    Quote Originally Posted by C. Flower View Post
    These last two commentators could just as well be viewing Greece from the moon down the wrong end of a telescope, for all they have grasped of what is going on.
    I can’t figure out how you arrive at that conclusion. My interpretation is that Krugman and Applebaum the liberals are saying the same thing, while Wolf the conservative is saying almost the opposite. It’s worth remembering that they are writing for different prime audiences with different expectations.
    As a general rule the most successful man in life is the man who has the best information.

  5. #1775
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    Default Re: Domino Effect at Work with Euro - Last Days of the Eurozone ? - UPDATE: S & P put EU on Negative Watch

    A little off topic but what the.....

    Click for more.
    http://www.nytimes.com/2012/05/18/op...=1&ref=opinion

    The people who pioneered democracy in Europe and the United States had a low but pretty accurate view of human nature. They knew that if we get the chance, most of us will try to get something for nothing. They knew that people generally prize short-term goodies over long-term prosperity. So, in centuries past, the democratic pioneers built a series of checks to make sure their nations wouldn’t be ruined by their own frailties.

    The American founders did this by decentralizing power. They built checks and balances to frustrate and detain the popular will. They also dispersed power to encourage active citizenship, hoping that as people became more involved in local government, they would develop a sense of restraint and responsibility.

    In Europe, by contrast, authority was centralized. Power was held by small coteries of administrators and statesmen, many of whom had attended the same elite academies where they were supposed to learn the art and responsibilities of stewardship. Under the parliamentary system, voters didn’t even get to elect their leaders directly. They voted for parties, and party elders selected the ones who would actually form the government, often through secret means.
    As a general rule the most successful man in life is the man who has the best information.

  6. #1776
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    Default Maidir Le: Domino Effect at Work with Euro - Last Days of the Eurozone ? - UPDATE: S & P put EU on Negative Watch

    Two comments here caught my eye.

    Why doesn't GERMANY leave the Euro?

    It is after all Germany that has the abnormally overproductive economy, with all its trade surpluses and suppressed wage costs. Virtually every other European economy, including France, has deindustrialised and become services based. What the Euro does is "average out" the weak currency of these countries, with the strong currency of Germany. So instead of Germany suffering a loss in competitiveness as would be natural for a country with such large trade surpluses, the rest of the Eurozone bears the cost by becoming even less competitive.

    When you hear the awful propaganda in the German press of the feckless Greeks, it just makes you angry at the ridiculous double standards. Germany is the country that has benefited most from the Euro, avoiding the investment and genuine structural reforms that its economy needed in the 80s, let alone today: green energy, infrastructure upgradation and improving the lot of their workers rather than suppressing the wages even further, to shift to a more balanced economy.

    It's high time that the Germans face up to their responsibilities to the rest of the continent. It is high time the Euro gravy train stops lavishing the richest European country with more and more. Justice for the Greeks!
    the oft misunderstood point about the services economy: yes, the services economy is obviously much worse than an industrial one. The point is that, because it is worse, the currency value of said economies will be usually lower. Britain was an exception because it let its banks splurge debt and so artificially create demand - the actual value of the pound is roughly the same as that of the Euro, when you don't take into account the City of London, which parasitically sucks wealth from most of the world, like it has done since the days of Empire. This services based economy, and hence lower currency value, means that, when compared to the Deutschland, the rest of Europe is effectively paying continuous transfer payments to Germany. In the 60s and 70s when Germany compensated through agricultural subsidies to France, and the free trade zone was limited to the Benelux countries and France and Germany, this was roughly balanced.

    The first rule of economics is that a trade surplus (or deficit) is, in the long term, unsustainable. If a country exports more than it consumes for a long time, its living standards, wages and costs of production increase. Its competitiveness falls, and hence its ability to export. For Germany to maintain a trade surplus for half a century shows MASSIVE transfer payments from Europe (and the rest of the world that has a trade deficit with the FRG). This is hugely egregious today when these transfer payments are coming from the rest of Europe, rather than just France. These European countries get nothing or very little back from Germany. Their ability to borrow more cheaply is massively outweighed by the big drop in competitiveness their economies suffer.

    It's interesting to note that before Greece joined the European Free Market and then the Euro it was the fastest growing economy in Europe. They could sustain good pensions and public services in the 1970s when their economy was much smaller and less advanced than it is now. And today they supposedly cannot. What is the independent variable?

  7. #1777
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    Default Re: Maidir Le: Domino Effect at Work with Euro - Last Days of the Eurozone ? - UPDATE: S & P put EU on Negative Watch

    Quote Originally Posted by Dr. FIVE View Post
    Two comments here caught my eye.
    'Gerexit' might be just as much an option as "Grexit".
    You can forget about "Ireexit"
    Unpronouncable

  8. #1778
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    Default Re: Domino Effect at Work with Euro - Last Days of the Eurozone ? - UPDATE: S & P put EU on Negative Watch

    Quote Originally Posted by Count Bobulescu View Post
    A little off topic but what the.....

    Click for more.
    http://www.nytimes.com/2012/05/18/op...=1&ref=opinion
    Typically superficial US view of Europe - but -

    "The European ruling classes once had their power checked through daily contact with the tumble of national politics. But now those ruling classes have built a technocratic apparatus, the European Union, operating far above popular scrutiny. Decisions that reshape the destinies of families and nations are being made at some mysterious, transnational level. Few Europeans can tell who is making decisions or who is to blame if they go wrong, so, of course, they feel powerless and distrustful."

    Would you disagree??

    The EU has become unmanaged, in the sense that the EC is the only organisation which is in continuous contact with the problems and is continually in contact with their opposite numbers in the Member States, who then 'brief' Ministers - with the line supplied by Brussels.

  9. #1779
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    Default Re: Maidir Le: Domino Effect at Work with Euro - Last Days of the Eurozone ? - UPDATE: S & P put EU on Negative Watch

    Quote Originally Posted by Dr. FIVE View Post
    Two comments here caught my eye.
    Best article I've read on the European economy in a good while.

    These imbalances between Germany and the periphery are now even further destablised by the shift of manufacturing and wealth to the East, China and India particularly, and the worldwide crisis of overproduction, that has driven average profit levels down.

    http://www.guardian.co.uk/world/2012...-germany-euro?

    The so-called sherpas, appointed by national leaders to draft summit communiqués, were at work until 4am on Saturday trying to forge a common position that said something specific about the euro crisis. It was being suggested that the Germans, partly due to their isolation at the summit, were pressing for specifics to be deferred to an informal EU council later this week, arguing it was not the business of the G8, including Canada, Russia, Japan and the US, to tell the EU states how to handle their economy. Cameron's aides took the view that it would look distinctly odd if the communiqué did not highlight solutions.
    Following a heated two-hour discussion, the final communiqué does refer to the crisis, saying "a strong and cohesive eurozone is important for global stability", and adds "Greece should remain in the eurozone". British sources were saying it was absurd that Merkel had tried to keep any reference of the euro crisis out of the communiqué and that the two-hour discussion had underlined to her the need for urgency.
    Who should decide what is done in Europe? The G8 ? Certainly not. Most of them don't live here, and are direct competitors with the EU economy.

    Merkel ? Certainly not.

    I think at this stage it will be the Greeks, and that they can propose a new model for a social Europe, prioritising the well-being of people, with separately valued currencies, or versions of the euro, for those who need them.

    We had a thread here about why Germany should leave the eurozone a year or so ago.

  10. #1780
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    Default Re: Domino Effect at Work with Euro - Last Days of the Eurozone ? - UPDATE: S & P put EU on Negative Watch

    Quote Originally Posted by barrym View Post
    Typically superficial US view of Europe - but -

    "The European ruling classes once had their power checked through daily contact with the tumble of national politics. But now those ruling classes have built a technocratic apparatus, the European Union, operating far above popular scrutiny. Decisions that reshape the destinies of families and nations are being made at some mysterious, transnational level. Few Europeans can tell who is making decisions or who is to blame if they go wrong, so, of course, they feel powerless and distrustful."

    Would you disagree??

    The EU has become unmanaged, in the sense that the EC is the only organisation which is in continuous contact with the problems and is continually in contact with their opposite numbers in the Member States, who then 'brief' Ministers - with the line supplied by Brussels.
    I never disagree with superficial views of Europe. It’s not like there is any shortage of superficial European views of the US, particularly on PW.
    As a general rule the most successful man in life is the man who has the best information.

  11. #1781
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    Default Re: Maidir Le: Domino Effect at Work with Euro - Last Days of the Eurozone ? - UPDATE: S & P put EU on Negative Watch

    Quote Originally Posted by Dr. FIVE View Post
    Two comments here caught my eye.
    I’m sure China would object to Germany leaving the EZ. FRG is one of the few countries with which China runs a trade deficit. All those luxury cars would suddenly get more expensive. Germany would likely have to be forced out unless their voters can be fooled into believing that it is in their best interests, which I very much doubt, speaking superficially that is.
    As a general rule the most successful man in life is the man who has the best information.

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    Default Maidir Le: Domino Effect at Work with Euro - Last Days of the Eurozone ? - UPDATE: S & P put EU on Negative Watch


  13. #1783
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    Default Maidir Le: Domino Effect at Work with Euro - Last Days of the Eurozone ? - UPDATE: S & P put EU on Negative Watch

    It's interesting now Merkel is recieving the same treatment she and others have to given Greece. There is a certain get your house in order in the air. Concern about European instability on their own interests rather then any major disagreement with her policies of course but do we think the momentum will keep going?

    The markets could get rid of her next

  14. #1784
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    Default Re: Domino Effect at Work with Euro - Last Days of the Eurozone ? - UPDATE: S & P put EU on Negative Watch

    The markets seem to be trying. However, I don't know if the Germans are likely to be queuing up to vote to pay out their (borrowed) money to bail out the periphery, and they are possibly not fully enlightened as to the role their banks have had in creating today's mess...

    This ain't going away with the replacement of one or two bodies at the top....

  15. #1785
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    Default Maidir Le: Domino Effect at Work with Euro - Last Days of the Eurozone ? - UPDATE: S & P put EU on Negative Watch

    hasn't worked so far anyway

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