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

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

    Quote Originally Posted by PeteEU View Post
    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.



    So you have no clue about economics.. good to know.
    I do have a clue, you and I disagree on the actions and results. Note I never attacked your intelligence for having a differing opinion, however you are forced to resort to attacking mine; ergo your position is weak and you cannot support it.
    Last edited by Renae; 11-29-11 at 03:13 PM.
    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 Rhapsody1447 View Post
    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.
    And? Germany would LOVE a devalued Euro lol.. it is an export country! And you dont inflate the Greek debt.. you make it poof. As for the Italian debt, it is not a problem and never has been. The Italian economy is huge and even with a small growth in the economy then the debt ratio would fall.

    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?
    That has to be addressed on an individual basis of course. Each country has specific problems, and it aint overspending per say or the welfare state system. Spain it is outdated labour laws.. the structural unemployment in Spain is 9+%... and that is a lot. Get rid of that and suddenly your unemployment is down to 13%.. still high but considerably better. Italy it is the closed professions that are the problem. Portugal it is red tape on pretty much everything. Greece as we all know it is the tax collecting system. The list goes on and differs from country to country.

    If you want to think of the EU economy as a whole you would have to ignore sovereignty.
    Careful there... there is a difference between the EU and Eurozone. Yes in the Eurozone there would need to be put in place checks and balances so you cant go and have a 6% deficit and that would requiring ceding sovereignty, but that is the price to pay for having the Euro. But saying that, when there is a recession, then that rule has to be laxed... since cutting deep in a recession to keep within deficit targets is idiotic and counter productive as we basically see now in the Eurozone where growth has all but gone because of the idiotic idea of austerity because the markets are freaked over debt ratio numbers. The rules should promote surpluses or very small deficits during boom times and allow for larger deficits during recessions... that is how an economy should work.

    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
    And the 2011 numbers on debt wont change that much where as the deficits have come down across the board.

    Newest updated numbers for 2010 are here.

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

    Point is, with all the austerity in Europe these days the deficits will be going closer and closer to the neg 3% that is agreed on, with some countries already having primary surpluses and next year real surpluses (including Italy), DESPITE there being an economic cluster**** going on.

    Also I dispute highly the Irish numbers... they guaranteed the debt in Irish banks.. which means all Irish banks debt need to be added to that number... taking them way past Greeces numbers.

    Of course this was before the chaos in the markets this year.
    LOL the crisis in Europe is not something that poped up this year.. it started already in early 2010. This mostly made up crisis has been bleeding for almost 2 years now just because the politicians cant get their act together and the markets wanting instant results.

    Why should the German people suffer inflation because Greece spent and borrowed like Paris Hilton on a bender?
    Unless that inflation tops 10+%.. hell even 15+%, then a little inflation is not a problem and no one is suffering. In fact inflation can be good too..
    PeteEU

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

    Quote Originally Posted by MrVicchio View Post
    I do have a clue, you and I disagree on the actions and results. Note I never attacked your intelligence for having a differing opinion, however you are forced to result to attacking mine; ergo your position is weak and you cannot support it.
    LOL you did not provide any explanation to your opposition. The fact is the actions of the Fed saved your pathetic banking system from utter collapse (and brining the rest of the planet down with it) and has continued to do so as the banking sector has de leveraged over the last almost 4 years. Had the ECB done exactly the same back in the day, then we would not have this problem now.

    And my position is based on fact and historical evidence. What I suspect you are still pissy over is your federal debt load and lack of action to curb your deficit, but that has nothing to do with the banking situation or the European situation or how to solve it. When push comes to shove and the US congress finally gets its act together to deal with the deficit, then there is no doubt that the US and others will use this method to slowly but surely lower the over all US debt load.

    So what do you base your position on? Some text book theories that have never been carried out in reality?
    PeteEU

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

    Quote Originally Posted by Rhapsody1447 View Post
    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.
    Every european I speak to...hates the euro and believe it has hurt their quality of life and it made inflation soar.
    The last person I spoke to about the euro is a german american...born in germany with all her family there now a citizen..she goes to germany bi annually every year...she says the working class in europe wants the euro to fail....is that true...I cant swear to it

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

    Quote Originally Posted by PeteEU View Post
    Yes it does... Europe can solve its so called problems very easily, but Germany is against the method because of their historical issues with the method.
    The method means that Germany is going to have front all the money. I don't blame them for opposing it.

    Greece et. al. have been irresponsible with their own money; how can we expect them to responsible with someone else's money?
    Quote Originally Posted by Top Cat View Post
    At least Bill saved his transgressions for grown women. Not suggesting what he did was OK. But he didn't chase 14 year olds.

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

    Quote Originally Posted by BmanMcfly View Post
    No, because those that CAUSED the problems are still in control over the economy, and those money junkies won't be happy until they've got ALL the money.



    Austerity CANNOT work. It's not meant to work.

    Oh, and it's only a matter of time before they start talking about American austerity.
    By this definition,

    In economics, austerity is a policy of deficit-cutting, lower spending, and a reduction in the amount of benefits and public services provided.
    austerity is the only way to go. Over-spending is what got them where they are.
    Quote Originally Posted by Top Cat View Post
    At least Bill saved his transgressions for grown women. Not suggesting what he did was OK. But he didn't chase 14 year olds.

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

    Quote Originally Posted by Rhapsody1447 View Post
    I would say, if anything, this is proof that an international fiat currency WOULDN'T work. The lesson learned from the EU failure is that you can't tie different countries with different cultures and economies into one monetary union. You will always end up having the rich countries bail out the poor ones and with relatively overpriced and under priced currencies.
    Wasn't that the entire reason for the Euro? Oh, you just mean that it's a bad idea. Yeah, I agree.

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

    And the 2011 numbers on debt wont change that much where as the deficits have come down across the board.

    Newest updated numbers for 2010 are here.

    http://epp.eurostat.ec.europa.eu/cac...2011-AP-EN.PDF
    Thanks I didn't realize my numbers were out of date. Hopefully there was no major discrepancies.

    And? Germany would LOVE a devalued Euro lol.. it is an export country! And you dont inflate the Greek debt.. you make it poof. As for the Italian debt, it is not a problem and never has been. The Italian economy is huge and even with a small growth in the economy then the debt ratio would fall.
    I know you are making the Greek debt go poof but the issue we are discussing is printing by the ECB. The ECB buying bonds is different than wiping them out. The inflation comes as a result of pumping newly printed money into the system to buy toxic debt. This worked in our country by preventing the banking system from collapsing, but the subsequent recovery has been dismal despite additional stimulus to the tune of $1 trillion. The Germans' fear is that if you start printing now to monetize the debt you set a precedent for future action by the ECB. That is why it was so important to prevent it when it was first formed. Reference my earlier post on necessary size of a EU bailout (of the banking system) to understand the massive size the bailout would need to be in order to be effective (2.1tn). I think you are deluding yourself about Italy. Economists forecast a recession in 2012 and the markets definitely disagree with you about Italian debt being a problem.

    I think we should let the German people decide whether they want a devalued Euro or not. I'm no expert on European economics but aren't a majority of their exports to other EU countries? Wouldn't this negate the positive effect of a weakened Euro?

    That has to be addressed on an individual basis of course. Each country has specific problems, and it aint overspending per say or the welfare state system. Spain it is outdated labour laws.. the structural unemployment in Spain is 9+%... and that is a lot. Get rid of that and suddenly your unemployment is down to 13%.. still high but considerably better. Italy it is the closed professions that are the problem. Portugal it is red tape on pretty much everything. Greece as we all know it is the tax collecting system. The list goes on and differs from country to country.
    It sounds like the only way to have a sound monetary union between countries with such of a diverse range of problems would be to bring them under one European government. You can't leave the system unchanged and just expect the weaker countries to fix their issues at the expense of the stronger countries.

    Careful there... there is a difference between the EU and Eurozone. Yes in the Eurozone there would need to be put in place checks and balances so you cant go and have a 6% deficit and that would requiring ceding sovereignty, but that is the price to pay for having the Euro. But saying that, when there is a recession, then that rule has to be laxed... since cutting deep in a recession to keep within deficit targets is idiotic and counter productive as we basically see now in the Eurozone where growth has all but gone because of the idiotic idea of austerity because the markets are freaked over debt ratio numbers. The rules should promote surpluses or very small deficits during boom times and allow for larger deficits during recessions... that is how an economy should work.
    So you would be in favor of expelling countries that run a deficit above a certain level? I can support that. But wait, you later say that the targets have to move depending on economic conditions. Do you realize the difficulty in regulating this and enforcing it? I absolutely agree that economies should work by having deficits in a recession and surpluses in a boom. The problem is that rarely happens once the presses start running. Just look at my country to see an example of this.

    Point is, with all the austerity in Europe these days the deficits will be going closer and closer to the neg 3% that is agreed on, with some countries already having primary surpluses and next year real surpluses (including Italy), DESPITE there being an economic cluster**** going on.

    Also I dispute highly the Irish numbers... they guaranteed the debt in Irish banks.. which means all Irish banks debt need to be added to that number... taking them way past Greeces numbers.
    I don't understand your position. On one hand you say austerity is idiotic and you can't cut spending in a recession, on the other you claim Europe is in a recession and the solution is to cut spending. You seem to put waaay too much faith in the promises of surpluses. All predictions point to a recession in Italy in 2012. Are they still going to run a surplus with record bond yields and falling tax revenues? I won't even touch the idea of a Greece surplus. They already got a 50% bond haircut which will probably be revised higher.

    Also if you dispute the Irish numbers there is no way you can accept the Greek numbers with a straight face. Read this article if you want to understand the rampant fraud in Greece's financial accounting.

    When Papaconstantinou arrived here, last October, the Greek government had estimated its 2009 budget deficit at 3.7 percent. Two weeks later that number was revised upward to 12.5 percent and actually turned out to be nearly 14 percent. He was the man whose job it had been to figure out and explain to the world why. “The second day on the job I had to call a meeting to look at the budget,” he says. “I gathered everyone from the general accounting office, and we started this, like, discovery process.” Each day they discovered some incredible omission. A pension debt of a billion dollars every year somehow remained off the government’s books, where everyone pretended it did not exist, even though the government paid it; the hole in the pension plan for the self-employed was not the 300 million they had assumed but 1.1 billion euros; and so on. “At the end of each day I would say, ‘O.K., guys, is this all?’ And they would say ‘Yeah.’ The next morning there would be this little hand rising in the back of the room: ‘Actually, Minister, there’s this other 100-to-200-million-euro gap.’ ”

    This went on for a week. Among other things turned up were a great number of off-the-books phony job-creation programs. “The Ministry of Agriculture had created an off-the-books unit employing 270 people to digitize the photographs of Greek public lands,” the finance minister tells me. “The trouble was that none of the 270 people had any experience with digital photography. The actual professions of these people were, like, hairdressers.”

    By the final day of discovery, after the last little hand had gone up in the back of the room, a projected deficit of roughly 7 billion euros was actually more than 30 billion. The natural question—How is this possible?—is easily answered: until that moment, no one had bothered to count it all up. “We had no Congressional Budget Office,” explains the finance minister. “There was no independent statistical service.” The party in power simply gins up whatever numbers it likes, for its own purposes.
    Beware of Greeks Bearing Bonds | Business | Vanity Fair

    LOL the crisis in Europe is not something that poped up this year.. it started already in early 2010. This mostly made up crisis has been bleeding for almost 2 years now just because the politicians cant get their act together and the markets wanting instant results
    I know that the European crisis didn't pop up this year. However, the Greek haircut did, the European bond yields skyrocketed, renewed fears of recession in Italy did, and new political failures in Greece did. I agree that it has been bleeding for 2 years due to incompetent politicians but your fantasy that the crisis is "mostly made up" is absurd. I could post a full page of just links to articles about the severity of the crisis in Europe. I'm sure that wouldn't matter though.

    Unless that inflation tops 10+%.. hell even 15+%, then a little inflation is not a problem and no one is suffering. In fact inflation can be good too..
    In my world 15% inflation would be considered a problem. I'm not one of those conservatives who believe all printing is evil and that inflation is the devil rearing it's head but it's a tricky beast. I think the German people have every right to vote against it if they want. It's time for the unelected thugs in the EU to cede some of their power back to the people who pay their salaries.

    "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’

    Got to love this " let the euro sort out its own mess" attidue people have. Lets hope the Chinese people are in a more giving mood when the US economy needs to be bailed out.

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

    Quote Originally Posted by Higgins86 View Post
    Got to love this " let the euro sort out its own mess" attidue people have. Lets hope the Chinese people are in a more giving mood when the US economy needs to be bailed out.
    We already are helping them. We are providing record levels of currency swaps to the ECB. The fact that you would want to involve our budgetary process in the EU mess when we are running record spending levels, deficits, and unemployment rates is what is sad. And LOL, you seriously think the Chinese people would bailout the American taxpayer? They only buy our debt because we buy their goods. If you think China is even capable of, let alone willing to bail out the United States then you have lost it, mon.

    EDIT: http://online.wsj.com/article/BT-CO-...25-708949.html
    Last edited by Rhapsody1447; 11-29-11 at 06:25 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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