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Thread: Obama: Solving Euro Crisis of ‘Huge Importance’

  1. #41
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    Re: Obama: Solving Euro Crisis of ‘Huge Importance’

    Quote Originally Posted by PeteEU View Post
    Printing Euros and buying up countries debt from the banks with these Euros ... up to a point.

    The big secret is that the EU economy is 15 trillion euros, but our overall debt is only 9 trillion. Even the Eurozone generates more GDP than it has in debt.. so the idea to fix the whole thing would be too pool resources and have the ECB assume the debt as a real national bank and relive the debt via the printing presses. Now that would of course cause inflation but considering the inflation rate in most Eurozone countries is low, then most economists state that the inflation created via the printing presses would not be a problem.

    Now the problem is that the ECB is not allowed atm to assume "national bank" like powers according to the treaty, so it would take a treaty change. But there is a legal way of doing it, but it would require the involvement of the IMF and that is not a road that people want to go down just yet.
    Makes sense. There is no arguing that if the ECB decided to print it would helped tremendously. The question is, how do you further integrate the EU while still retaining the national sovereignty of it's countries? If you inflate Greek/Italian debt you devalue the currency of Germany and France. How do you address this issue going forward when welfare states with lower productivity overspend the same currency of fiscally sound states with higher productivity? If you want to think of the EU economy as a whole you would have to ignore sovereignty.

    In 2010 (before the chaos of 2011), the EU27 GDP was €12.28 trillion and government debt was €9.82 trillion:

    Debt/GDP of the more prominent countries were:

    Greece: 143% with deficits of 10.5%
    Italy: 119% with deficits of 4.6%
    Belgium: 97% with deficits of 4.1%
    Ireland: 96% with deficits of 32.4%
    Portugal: 93% with deficits of 9.1%
    Germany 83% with deficits of 3.3%
    France: 82% with deficits of 7%
    Spain: 60% with deficits of 9.2%

    http://epp.eurostat.ec.europa.eu/cac...2011-AP-EN.PDF

    Of course this was before the chaos in the markets this year. Why should the German people suffer inflation because Greece spent and borrowed like Paris Hilton on a bender?
    "There is an excellent correlation between giving society what it wants and making money, and almost no correlation between the desire to make money and how much money one makes." ~Dalio

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    Re: Obama: Solving Euro Crisis of ‘Huge Importance’

    Quote Originally Posted by PeteEU View Post
    LOL what the **** do you think the US and UK have been doing since 2008? Ever heard of Quantitative easing?
    Yes, it's not working out too well. What's your point?
    Quote Originally Posted by PeteEU View Post
    Difference with the US and UK situation and an eventual European one, is that the Eurozone is already cutting big time in their budgets, where as the US and UK are doing jack****. It would most likely work in Europe simply because the issue in Europe according to the markets and so called experts is the banks and the supposed toxic government assets and if you take that equation out of the whole problem then suddenly things change rather dramatically.
    Not really.
    Climate, changes. It takes a particularly uneducated population to buy into the idea that it's their fault climate is changing and further political solutions can fix it.



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    Re: Obama: Solving Euro Crisis of ‘Huge Importance’

    Quote Originally Posted by PeteEU View Post
    LOL what the **** do you think the US and UK have been doing since 2008? Ever heard of Quantitative easing?

    Difference with the US and UK situation and an eventual European one, is that the Eurozone is already cutting big time in their budgets, where as the US and UK are doing jack****. It would most likely work in Europe simply because the issue in Europe according to the markets and so called experts is the banks and the supposed toxic government assets and if you take that equation out of the whole problem then suddenly things change rather dramatically.
    But you can't exactly take banks out of the equation. The extent to which you would have to bailout the governments in order to save the banks would be tremendous. And I don't buy the budget cutting. If there is anything I have learned from the US it's that any talks about cutting government spending is all smoke and mirrors. Greece can't even implement the spending cuts necessary to receive the next tranche of their bailout. I do believe that the governments need to cut their spending but wouldn't this destroy the economy in the time of recession? The Left here in America's favorite argument is that you can't cut anything from the federal budget without risking an economic collapse. How are these "cuts" going to help the EU out of recession?

    Sarkozy estimates that to bailout the banks you would need around 2.5 trillion euros:

    http://video.cnbc.com/gallery/?video=3000058810

    The ECB can inject the needed €3-5 trillion, but after that concerns about localized episodes of (hyper)inflation, especially now that Kocherlakota has confirmed that the transmission mechanism between bank reserves and inflation may be broken, will be all too justified. In the meantime, Sarkozy on Europe math fail: "The math i'm working with is very simple. In the US banking sector, we had 3 trillion of wholesale funding that needed to be stabilized, got stabilized by the implementation of TARP which saw the US treasury buy $212 billion worth of preferred in the banking sector to stabilize that $3 trillion, give our banks the time to work through hair problem their problem assets. In Europe, that $3 trillion is $30 trillion. so if you multiply the $212 by 10, you get the $2.12 trillion. In my view, the issues on the European banks are bigger than the issues on the books of the US Banks. So if you want to stabilize that $30 trillion and in my view it's not that you want to, it's that you have to, you do not have a choice, you're going to have to be at least at 2.1 trillion and i suspect it may need to be more." Q.E.D. - there, the math wasn't that difficult, was it?
    Sarkozy: Europe's "Liquidity Run" Has Begun Because There Is An Unsolvable $30 Trillion Problem | ZeroHedge
    Last edited by Rhapsody1447; 11-29-11 at 02:45 PM.
    "There is an excellent correlation between giving society what it wants and making money, and almost no correlation between the desire to make money and how much money one makes." ~Dalio

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    Re: Obama: Solving Euro Crisis of ‘Huge Importance’

    Quote Originally Posted by cpwill View Post
    i'm certainly a fan of their decision to balance their budget, limiting deficits to less than a single percentage point of GDP.
    I guess it goes to show that you can be a fiscally responsible capitalist nation and still have national health care, incredibly strong unions, generous uneployment benefits and paternity leave, etc. ... if your'e willing to pay for it.

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    Re: Obama: Solving Euro Crisis of ‘Huge Importance’

    Quote Originally Posted by AdamT View Post
    I guess it goes to show that you can be a fiscally responsible capitalist nation and still have national health care, incredibly strong unions, generous uneployment benefits and paternity leave, etc. ... if your'e willing to work for it.
    FTFY.

    And what the hell is paternity leave?
    "There is an excellent correlation between giving society what it wants and making money, and almost no correlation between the desire to make money and how much money one makes." ~Dalio

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    Re: Obama: Solving Euro Crisis of ‘Huge Importance’

    Quote Originally Posted by MrVicchio View Post
    Yes, it's not working out too well. What's your point?
    LOL do you even understand what is going on?

    The US Federal Reserve has been buying up assets from financial institutions and banks, many of them toxic, so that your banks could become some what healthy. On top of that Fannie and Freddie have been buying up toxic loans from banks further re-leaving them from bad debt (BOA just sold 76 billion dollars worth of toxic assets to Fannie for 500 million). Most of this did not add to the US debt, since the toxic **** the Feds were buying up from newly printed money was bad loans made to the people.

    In the European equivalent, the ECB would be buying up state debt and writing it off basically. Not only would the banking sector get much needed cash infusion but also their balance sheets would loose the supposed bad debt. This means not only would the banks become healthy again but the national debt of countries would fall. The drawback is of course inflation, but considering that Eurozone inflation is 2 to 3% then adding a few more % is nothing and can be tackled later on when the markets are more rational plus of course it would give more time for the individual countries to fix their structural problems and get some growth into the economies.

    Not really.
    So you have no clue about economics.. good to know.
    PeteEU

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    Re: Obama: Solving Euro Crisis of ‘Huge Importance’

    "I guess it goes to show that you can be a fiscally responsible capitalist nation and still have national health care, incredibly strong unions, generous uneployment benefits and paternity leave, etc. ... if your'e willing to pay for it."

    Quote Originally Posted by Rhapsody1447 View Post
    FTFY.
    Fixed it back for you.

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    Re: Obama: Solving Euro Crisis of ‘Huge Importance’

    Alot of good points in this thread have been made...but you have to admit its kind of tacky for us to tell europe to straighten up when our own congress cant agree on which bathroom they are supposed to pee in.

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    Re: Obama: Solving Euro Crisis of ‘Huge Importance’

    Quote Originally Posted by AdamT View Post
    "I guess it goes to show that you can be a fiscally responsible capitalist nation and still have national health care, incredibly strong unions, generous uneployment benefits and paternity leave, etc. ... if you're willing to pay for it."
    Fixed it back for you again.
    "There is an excellent correlation between giving society what it wants and making money, and almost no correlation between the desire to make money and how much money one makes." ~Dalio

  10. #50
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    Re: Obama: Solving Euro Crisis of ‘Huge Importance’

    Quote Originally Posted by lpast View Post
    Alot of good points in this thread have been made...but you have to admit its kind of tacky for us to tell europe to straighten up when our own congress cant agree on which bathroom they are supposed to pee in.
    Agreed. Our Fed has already opened up swap lines with the ECB to assist with liquidity. Let the EU tackle the problem of printing and deficits, there is no reason at all to involve our budgetary process when it is already such a mess.
    "There is an excellent correlation between giving society what it wants and making money, and almost no correlation between the desire to make money and how much money one makes." ~Dalio

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