Could Greece laser the euro?
Greece has been told to pull its socks up and sort out its problems by one of the EU's longest-serving politicians, Luxembourg's Prime Minister and chairman of the eurozone's finance ministers, Jean-Claude Juncker. 
There's been lots of speculation about the eurozone flying apart, or at least the weaker members being forced out. I am pretty certain the eurozone countries would move heaven and earth to prevent what they would regard as a political disaster.
But the CER think-tank has come up with a fascinating report on how to create a new currency overnight, which apparently could include burning holes in euro banknotes with lasers, or stamping them to turn them into punts, drachmas, or whatever.
I’m Mark Mardell, the BBC's North America editor. These are my reflections on American politics, some thoughts on being a Brit living in the USA, and who knows what else? My 
~RS~q~RS~~RS~z~RS~37~RS~)
Comments
Sign in or register to comment.
Oh? Does this mean the Euro and the Eurozone are not as successful as has been portrayed by European politicians?
Weaker members? Apparently Greece falls into that category from what Mark writes. Punts get a mention so someone obviously think the Irish are to be considered "weaker" members. I wonder who else is going to be told their future is not within the Eurozone?
Enquiring minds and all that!
Complain about this comment
I'm confused
"which apparently could include burning holes in euro banknotes with lasers, or stamping them to turn them into punts, drachmas, or whatever."
Instead off or as well as using euro's. How would this help?
Complain about this comment
@WhiteEnglishProud - I think you've hit on the weak link in this idea: the Euro is being used as the "coin of reference". So, even though lasered, or whatever, people will still be thinking in euros. Maybe this idiot idea was included to show just how difficult it would be for a nation (ie it's people) to leave the euro.
Footnote: I wrote euros above, but I've learned that the plural aof euro is supposed to be "euro". No, I don't think it's a daft EU law - but it's daft anyway.
Complain about this comment
In the old days, the UK recycled US dollars (hence the expression "half a dollar" instead of "half a crown") which had arrived as reparations (I believe it was compensation for the war in 1812 when we landed and set their White House on fire for them). Apparently they drilled a hole into the coins before distributing them.
Perhaps, as part of the ceremony which will see Gordon Brown prostrating himself before Barack Obama and proffering his buttocks to be kicked, before the G20 beano, he will try and cadge a few greenbacks to recycle in Britain.
The British economy is estimated to experience deeper recession than anybody else, so any help should be gratefully received.
Complain about this comment
That CER crowd have an interesting blog. cheers for the link.
Simon Tilford from the same think tank wrote:
"The legal underpinnings of the single market appear robust. But there are real reasons for concern. The steady progress in reducing state-aid has been halted and is likely to be put into reverse. The partial renationalisation of bank lending is inimical to the emergence of a single capital market. And progress towards deepening the single market in services has ground to a halt. All this bodes ill for Europe’s growth prospects and the stability of the eurozone. All EU governments profess to be committed to upholding the single market. The next couple of years will determine the strength of that commitment. If member-states do not respect the Commission’s right to enforce those rules, the single market could indeed come under threat. "
Perhaps it is possible to theorize on a grand level, on suggest that ever closure union between neighbouring states is only possible during periods of sustained economic growth?
People talk about the crisis of trust in the market, and what they generally mean is that bankers no longer trust what other bankers say about their ability to repay bridging loans. But others take that sentiment of a lack of trust in the market to mean that investors and lenders do not trust companies to value their assets properly, and so refuse to invest or to lend to businesses.
I think this acute distrust in the private sector finds an echo in the public sector, by default. As banks and businesses within member states fail, they flee to their national government for help. Thus the national governments become swamped with national issues requiring national action, and they have less time available for grand pan european theory and economic plans.
And it seems that national action by national government implies spending, and propping up "crucial" companies and industries. Surely that is what "action" by government must mean? If national governments were not putting huge amounts of money into their national economies, you wouldn't describe what they doing as "action". It would be "talk", or "discussion".
It is not clear to me how governments can put huge amounts of money into the market, in order to support industry and business in their nation state, without breaching the spirit and letter of pan european competition and state aid provisions. Indeed, all "national action" by national governments could be reasonably described as axiomatically contrary to the core economic aims of the EU commission.
That is a curious conclusion to reach, because it implies that the aim of the Commission is to prevent national governments from assisting their national industries, and therefore to prevent national governments assisting the people who voted them into office.
This is the ultimate political act, yet the commission describes its role as purely economic. The entire EU structure is based on an economic union, not a political union.
I think people are going to have to decide whether the economic and the political worlds are two different things, or rather the very same thing with two names. If they are the same thing by different names, perhaps it is fair to say that the EU commission is on a mission to destroy parliamentary democracy throughout europe, in order to concentrate political power with the CDP and the SDP political parties from continental europe.
All the evidence, and the logic, suggests to me that it is madness or folly to imagine that economic power is a separate thing to political power. Therefore a bid for economic control is a bid for political takeover.
Complain about this comment
Having easy access to lots of cheap money which is guaranteed by the Central European Bank and de facto the Bundesbank means that some countries have been indulging themselves in spendthrift policies with no visible consequences - till now! At the end of the day however, the speculative bubbles the cheap credit provided in those profligate countries have burst. That is why sovereign euro denominated bonds in Greece, Ireland etc have to offer relatively high interest rates, at levels often higher than non-euro currency east European members such as the Czech Republic. Clear evidence that the latter are better managed by their administrations than the former. Ironic isn't it?
Complain about this comment
Mark:
Could Greece laser the euro? Yes...I think that Greek Authorities could laser the Euro (currency)....
~Dennis Junior~
Complain about this comment
Hi Mark, very unlikely that they will need to either burn holes or look under the matress for old notes. They were told they have to reduce their deficit to below 3% and were given a couple of years to do so. So other than as a hypothesis was the question based on something concrete?
Complain about this comment
I'm sure that the ancient and proud nation of Greece is delighted to be publicly admonished and lectured to by the prime-minister of that great nation - the Grand Duchy of Luxembourg - a pygmy country with a population roughly the same size as that of Manchester.
Interestingly, Luxembourg has the world's highest GDP (PPP) - yet is also receives the highest per capita EU subsidies and grants. No wonder that the jumped-up Juncker doesn't want the boat rocked in any way.
Complain about this comment
That should not be a UK concern, with its OPT-IN / OPT OUT European Constitution strategy, the British Lira (pound), its left foot in Washington, right foot in London, a british - non european passport, and full body weight on Cyprus, along with Turkey and Vardarska.
The fact of the matter is that parsley costed 100 drachmas before and 300 drachmas after the introduction of the Euro that so many EU countries struggle with today...And all that from the same salary that remained the same.
85% of Greeks owned a house before, 85% of Greeks owe to credit cards after...
What do you think?
Complain about this comment
Mark,
I just lost my job today, and many other co-workers too. I was working in private sector.
Now I am sad, but also happy, because I know that if we lost our jobs, it will not take much time before our friends in pro-EU payroll will join us too.
Anyway, Montenegro and Kosovo use the Euro, but they are not part of Eurozone, and till today i have never read that they think of getting their own currency. So, Greece or any other Eurozone country are being naive to think that it is because of Euro, they must work harder and clean the system from the top.
As i have pointed out, it is because of the lazy system that is created by the incompetent politicans, if people can change in one day and think for one second and step aside when everything is obvious the world would be a better place.
What we have it is not democracy, but a PONZI scheme, or a pyramid structure of the system. Where everyone tries to succeed to the next level of this pyramid, but which fails because of the intentionally made discriminatory corrupt regulations by the top level, or the elites for life. In this regulatory system the BAD can succeed but never the GOOD.
And as we see it with our own eyes today, Greed has succeeded, Corruption has succeeded, Incompetence has succeded, i dont know about Tax avoidance ;)
In this system, where the sincere is stupid, and the hard working cannot make a living.
if this system is not such, then let it be, because it takes time for everyone to understand this.
When Eastern Europe get out of the Soviet Depression or Repression, we called it transition to democracy, what we will call this now? bankruptocracy??
Complain about this comment
In reality the plan doesn't work because of the human factor...
Now if the Greek or any other Eurozone country was planning on moving back to their old currency, the whole project would have to be concluded 100% secretly.
If there would even a rumour that the change would happen, the effect would be a run-on-the-bank, every person would try to get their money from their bank accounts either by withdrawing it in money or sending it into another Eurozone bank. The same holds true to Greek companies, actually in the current situation major and especially international corporations already have moved their money into other other Eurozone banks.
Essentially the result of any change would lead into bank runs, into corporations holding their assets in other Eurozone countries. The direct result of this would be that individuals and companies that either didn't anticipate the move or were not quick enough, will either become poor or go into bankruptcy, either way the economic destruction of going back into a national currency will be huge.
There is also an additional thing to remember. Even if Greece or any other Eurozone country that has trouble on finding loans to cover its state budget will still have the same trouble. The only difference to past is that a country can then start to print money, but that too leads to destruction of the economy via super-inflation and fall of the value of the currency's external value.
I would also make note that the situation that the Eurozone is facing is not an unique. In the great depression, many of the states in the US went actually bankrupt and even that didn't brake up the USA nor brake up US dollar as an currency. If something is going to happen is that one or two Eurozone countries will make an sovereign default or make it in the form of restructuring the debt, that will lead into short term decrease of value of Euro and it will for short term close money lending to that country, but that again isn't the end of the world. In the end of 90s, Argentina restructured its debts, in another made an sovereign default, and again today it is loaned money.
Now while the Centre of European Reform maybe as its Wikipedia page says, a pro-European, I have the feeling that as it is London based think that, the people outside the Eurozone just don't seem to get that the Euro is here to stay. I would say that in the Eurozone there much less doubt about the future of Euro and Eurozone, the collapse and failure of the Euro has been screamed on from both London and New York since they of its birth.
Complain about this comment
http://news.bbc.co.uk/2/hi/business/7960109.stm
read the above and you will see why the EU system promotes incompetency.
Greece and other countries should have met the budget deficit years ago, or every year, and now comes EU playing 'tough' and say you have time till 2020... sorry it's end or start of 2010 for greece
Complain about this comment
The anti-europe and anti-euro people have been forecasting the doom of the euro since 1999, when it was created. I am not surprised that they forecast doom of the euro during this recession.
They just forgot one little detail that is going to ensure that euro is going to remain. Countries are going to so much worse off with there own currencies. Nobody wants to see a double number inflation (it's no fun, believe me) or double number interest rates (that is no fun either, believe me).
You can trust me on that one, because I live in a country with both of those in a double range.
The problems of the recession are going to get solved. It just takes time and it is going to be hard to solve those problems.
Regards from Iceland.
Complain about this comment
Much as I would like to see the balance between the Euro and Sterling put back into balance. I think it is wishful thinking that the Euro will be blown apart. The Euro is now the worlds second reserve currency after the US Dollar.
what a shame that Blair and Brown didn't have the guts to take us into the Euro at the very beginning...that was an opportunity sadly midssed that would have helped the UK enormously
Complain about this comment
As a Greek, I genuinely believe that Greece should not leave the Euro. Prices in Greece are now 3 and 4 times higher than they were before Greece joined the Euro however the Drachma was never a strong currency and subject to more intense international pressures. I must mention though that the rises in prices were not an inflationary issue....they were a profitability issue for major businesses and multinational corporations. Greeks are frustrated with the increase in the cost of living and this alone because of the euro.
As for the 3-4% that Greece has surpassed regarding its budgetary GDP constraints...well? whats new...? its always done and we always claw it back...nothing new especially when countries like the UK, France, Spain and Ireland are on a lot higher levels of borrowing. Should Ireland leave the euro? Should Spain or France?
Complain about this comment
And some idiot in the CER thinks that the resultant "instant" currency will be stronger or more stable than the Euro? I don't what he's on but I'd recommend reducing the dosage!
Complain about this comment
To greypolyglot (17):
The paranoid in me wonders is there an profit gain in writing and publishing these articles? No, I'm not laying finger on Mark and the BBC, I trust them. What I don't trust is the CER.
For example if I would write an email, make an warning about a stock and sent it to enough many people (in hundreds of thousands or millions), then the value of that stock would go down, and if would then be shorting that same stock, I would make a profit. However what I would be guilty is stock manipulation and I would soon find myself arguing about prison politics with Buba and Jimmy-Bob.
Now lets say you are a journalist, or a group of journalists, and you decide to start writing negative articles from some issue, you are essentially engaging to same as spamming. Now Euro as currency is probably too big to be influenced by these rumours of Eurozone splitting, but the target could be something else, maybe you are shorting companies that are Greek based and by creating uncertainty about the future of the Greece in Eurozone you are creating uncertainty about these companies thus making their stock go down and thus making a profit by shorting.
However that is just me being paranoid.
Complain about this comment
11. At 7:11pm on 23 Mar 2009, karolina001 wrote:
"I just lost my job today, and many other co-workers too. I was working in private sector.
...
What we have it is not democracy, but a PONZI scheme, or a pyramid structure of the system. Where everyone tries to succeed to the next level of this pyramid, but which fails because of the intentionally made discriminatory corrupt regulations by the top level, or the elites for life. In this regulatory system the BAD can succeed but never the GOOD.
And as we see it with our own eyes today, Greed has succeeded, Corruption has succeeded, Incompetence has succeded, i dont know about Tax avoidance ;)
In this system, where the sincere is stupid, and the hard working cannot make a living...."
Dear karolina001,
I am very sorry that you lost your job today. What you describe is very familiar to me. I used to work for a British FE College. The management would issue us with the new policy and immediately with the lie we were supposed to tell the students. I cannot live my life like that and I don't think that you can either. I am now self-employed. It has tremendous advantages.
All the best,
SB2
Complain about this comment
karolina, sorry to hear about your job.
greypolyglot, you make a strong case, as usual. And as usual, the strength is not supported by reasoning or evidence.
I think the scenario the CER are referring to is a scenario where the main economies in the Eurozone start going bust, and the small economies jump ship to take advantage of that. After all, the CER report was basing its report on what happened when the soviet union collapsed, and eastern european states got the hell out of the rouble zone as fast as they could.
I suppose it is hard to see the eurozone imploding, but then again it was hard to see the USA imploding. And the USA is imploding, make no mistake.
Obama was asked on 60 minutes what surprised him most about the downturn, and he gave a chilling answer. He said that the rate of job losses in the USA was unprecedented, in the hundreds of thousands per month. He seemed shocked at what he called the steepness of the decline.
Now if the USA market goes into freefall, and it seems it is doing so, that is the biggest consumer market in the world.
I guess we have to wait and see. I am not taking anything about the eurozone for granted, because I have absolutely ZERO faith that the european governments of france, italy and germany have come clean about their exposure to toxic debt. Maybe they have, maybe they haven't.
But even if they have, if the economic figures continue to slide down the graph at the current rate, I just do not see how national governments are going to be able to resist social welfare programs to deal with the unemployed. As the CER fellows point out, it is not just profits that are sliding down the charts. It is also, ipso facto, tax revenue. So huge social welfare programs combined with falling, nay, plummeting tax revenue?
Good luck keeping you eurozone budget deficits in order under those circumstances. And I mean Germany and France, not Latvia and Greece. And so what happens when budget deficits go mental across the eurozone?
Well that means everyone will need to borrow like mad. And from whom? China? I doubt it. I doubt they have anything to lend. And if they don't lend, governments must print money to keep the social welfare programs ticking over, and that will surely destroy any chance of the eurozone holding together.
Complain about this comment
Shame on you, Mark! You write "There's been lots of speculation about the eurozone flying apart, or at least the weaker members being forced out." giving a link to, of all things, The Bruges Group.
I'm sorry but the disintegration of the eurozone being on the "wish list" of The Bruges Group does not constitute "lots of speculation". You know better and you can do better than that.
Complain about this comment
CER -> Figments of the imagination?
Complain about this comment
Mark Mardell:
I am pretty certain the eurozone countries would move heaven and earth to prevent what they would regard as a political disaster.
I have to agreed with you, that the EuroZone countries will move the heaven and earth to protect the currency..
~Dennis Junior~
Complain about this comment
thanks for the support everyone, especially EUsceptics.
They (the EU elites) say that 'there is no silver bullet for solving this economic crisis' but they still keep shooting those bullets.
If they dont have the right 'silver bullet' then why they are shooting?
And if they are shooting, why no one can hear?
Can the 'gun' be empty?
Now, let me explain it better.
If the Gov. or the FED buys all toxic assets with printed money for the book value the banks want, then in a short time it sells these assets to other banks buying with printed money received from Gov. or the FED (when they sold their assets to FED) for a 'market' price, and after this the FED causes inflation because of printed money, only then those banks (80% Gov. owned) can sell the assets at higher price and match the book value for the banks and make a profit for themselves.
This is the Gov. buying from one hand selling to the other, inflation and buy them back again with the first hand and come clean. Banks are just proxies. In just three steps, or in just three days i will build the Temple said one guy.
But this is the theory, but whatever happens we are going to foot the bill because of inflation.
Is the Gov. engaged in fraudulent activity?
what about Global inflation, China, and other factors?
Complain about this comment
I am sorry I fail to understand why would Greece leave the Euro ? Going to what ? Drachma, a currency that (as quite rightly notis7 pinpointed) was historically extremely vulnerable to attacks from people like Soros, weak and the real "toilet" currency ? Greece needs a strong currency to pay off its debts not a feeble one. Anyone in Greece (bar the greek communists who believe that the Soviet era is the way forward) does not even think (let alone want) to leave the Euro a strong currency.
I am sorry for the UK eurosceptics but it will not happen so that they can say "I told you so". What will also not happen is for british sterling becoming a reserve currency as Euro is.
(A british expatriate)
Complain about this comment
I think that it is alittle rich that the EU members have picked on Greece and as other EU members have greater deficits than that of Greece. Going by your table in the article France is at 5.4%,Spain is at 6.2%, the UK at 8.8% and Ireland at 11%.
Lets not forget that Greece has a constant problem with 2 of its neighbours who do not recognise their borders or adhere to EU rules.
So I would think that this would be a small problem. Everything is not always black or white...
Complain about this comment
Dear Mark,
Working on EU affairs you should have added that CER is quite neo-liberal and close to the Conservatives (aka Eurosceptics) - the fact that you are not doing it and you also call their report 'fascinating' (!!!) makes me wonder whether you are ignorant or you just want to add to the English (i.e. not Scottish) emerging propaganda about the collapse of the Eurozone.
This is why I just want to outline some basic facts about the Euro and the UK-EUrozone relationship:
1. Can Ireland or Greece jeopardize (or laser as Mark puts it) the Euro? Of course not, as they constitute a small percentage of the whole Eurozone!
2. Which currency is more possible to collapse? The Euro - a currency of 16 relatively rich countries of approximately 350 million people or the British Pound - a currency of a country of 60 million which richest sector (banking) has gone bust?
3. Will France, Germany, Italy, and Spain (biggest 4 Eurozone members) ever going to choose breaking up the Eurozone? Probably not, as all four gain hugely (for different reasons of course, but they still win) from the EMU.
4. Will a small country like Greece, Ireland or Slovenia dare to ditch the Euro and be on its own? If you ask a citizen of these countries an 80% will say NO! If you asks the elites, 100% will say never!
5. If the Euro is so problematic why most new member states (after 2004) are doing whatever they can to join the Euro? Are they just europhiles (of course not) or they see a real benefit in entering the Eurozone?
Because I believe that the English public should be educated on the EURO and whether it is good or not I recommend the following publication written by key policy makers and LSE academics.
http://e4u.org.uk/?page_id=46
Enough with this ungrounded Euroscepticism! English public deserves better (education, information, public services, and journalism)!
Regards,
S.O.M.G.
Complain about this comment
Dennis Junior wrote:
Mark Mardell wrote:
"I am pretty certain the eurozone countries would move heaven and earth to prevent what they would regard as a political disaster. "
"I have to agreed with you, that the EuroZone countries will move the heaven and earth to protect the currency.."
But dennis Jr, have you considered the possibility that the Eurozone countries can't move numbers on a balance sheet so they tell the truth, let alone moving heaven and earth?
I can't speak about heaven, but the earth is exceedingly heavy. It is weighed down by debt, you see. Truly vast amounts of debt.
And underpinning that debt is failed economic policies. And so if the leaders of the eurozone manage to lift themselves back to where they were 3 years ago, which is their apparent aim, they will be resetting their controls to steer us all straight back into the abyss.
But your faith in political leadership is endearing. God save the queen, even if her bank has gone bust and is being propped up by our grandchildren's wages.
Tally ho!
Complain about this comment
EUROSOMG, please be aware that someone on this blog just lost her job due to the economic .... well, what shall I call it?
I don't want to spread propaganda. So we can't call it a crisis.
So what shall we call these current events?
a delightful endorsement of european economic policy, perhaps?
Complain about this comment
If it brings particularly /that/ fellow back, we are in deep trouble....
Complain about this comment
Mark Mardell day-dreaming...
Complain about this comment
What/Who is S.O.M.G.?
Same Old Message Generator?
Student On Ministry Grant?
Sensitive Old Male Goat?
Shake Out My Granny?
Shhhh... Oh My Gawd!
I think we should be told.
Complain about this comment
karolina001 - sorry to hear that you've lost you job.
You read like an industrious and enterprising person: I hope you succeed in securing a new job quickly.
Complain about this comment
#11 - karolina001
I second what MaxSceptic says above. We may not agree on some of our ideas but that does not mean I cannot sincerely wish you sympathy for your situation and every success in moving on.
Complain about this comment
There has to be a massive question mark hanging over the EU at present. Not only do they have to deal with the credit crunch but also try and manage the crumbling edifice that is the union. All was well during the boom times along with the growth of the membership. However now we see a Europe that has a number of members who are on the verge of defaulting and who will need to turn either to the ECB or the IMF to be bailed out. If it were only one or even possibly two then this would not be too big a problem. However we are looking at ever increasing numbers; we have Ireland, Spain and Greece who are from the more established member’s side and the bulk of the eastern countries from the new member’s side. Couple this with the fact that the stalwarts of the EU France and Germany are starting to pull up their drawbridges in the form of policies that are paramount to protectionism and we see the EU is teetering on the edge with only a slight wind change needed to push it over the edge. This must now be a possibility as there is betting now being taken on this issue and even which one will be the first to fall. So could Greece laser the Euro should not be the question rather which country will be the first to laser the Euro?
Complain about this comment
This comment was removed because the moderators found it broke the House Rules.
How many people would volunteer their savings to be lasered (and thus halfed in value)? How many banks would accept the new currency as payment of euro-denominated mortgage debt? If you went to the bank with lasered euro, would they accept them or would they say your debt is unlasered so you need twice as much lasered euro to pay it as before.
How about intra-eurozone debt. An Irish company is owed 10m euro by a German customer. Is that 10m euro or 10m lasered euro? If its unlasered, does the Irish company get to keep the real euro after the debt is paid, or does it get lasered automatically when it arrives on our shores? If so, how do Irish companies pay intra-euro debt? If not, how do you decide who's savings get lasered and who's stay at full value.
This is non sense and unworkable.
Complain about this comment
I think that you are all missing the point, be you pro European or a euro sceptic. This is a club and there are rules for all the members, you also have to pay your membership fees. The problem is that if there was only one or possibly two members who were having difficulties then the majority could wave the fees and even relax the rules for a while. But if a number of members are not able to pay their fees and are not following the rules what do you do. The club needs to fees and rules must be followed or the club folds. So rather than jumping it may be that the club may have to push a member or members out. Is it better that the club survives all be it smaller in numbers or should the membership be maintained at all costs as the consequence of the club not taking action could be devastating as the Euro needs stability if it is going to remain as a world currency. With the main members now suffering that stability is going to be harder to maintain. As previously posted;
Do not panic we can fiddle the numbers to ensure that one does not fall. But what about two or three or four. A lot of the issues we have already talked about in a number of the member states. Ireland and Greece to name a couple are by no means on their own. There are others who have the same underlying issues and could by in as bad a shape as both of these. May I suggest that if there were a panacea / solution just waiting in the wings it would have been wheeled out by now! The problem is that what they plan to do is nothing more than re arrange the deck chairs as the proverbial ship hits the ice berg. Drawbridges are already being drawn up all around the EU. Protectionism will be the vote winner over the next twelve to twenty four months and possibly beyond. It is only a matter of time before one member will be cast adrift. The big investors in the central and eastern European member states are now really starting to feel the pain. So which one will start calling in the loans first. Austria is my favourite as there are forces being felt across the border which is impacting on their economy. Once this starts there will be a rush as even the more stable of countries such as “my beloved Slovenia” will be affected as their economies are reliant, no underpinned by banks and financial institutions outside their borders. Hence they have little or no control over their credit source. The other main issue is who will pick up the tab for this, there is and will continue to grow a resentment for the need to support others while their own are suffering. I have heard recently a lot of discontent eliminating out of Germany with regards to the fact that they have not yet paid off the cost of unification and now they are being expected to support those others who are not as stable as themselves. And for what, they see their influence / control being challenges within the EU. There are also questions being raised in France as to what are the benefits of supporting what they see as their national manufacturing base which has been exported while the factories at home are being hit with job loses and shorter working hours. It will not be long before those in both of these countries hit the streets in protest. Then we shall see how strong the union will be when politicians will have to choose between the greater good and their own survival. Gordon Brown for all his rhetoric wants the best of both worlds. British jobs for British workers and yet still have no protectionism for others, hence allowing British goods to have open access to all other markets. Euroscepticism is not a creed it is a self fulfilling prophecy and until there is a United States of Europe so it will continue.
Complain about this comment
Mardel cites a CER author (Tomas Valasek) who in his turn cites another one (Simon Tilford) also coming from CER. Even Valasek claims “This does not make their exit from the eurozone inevitable there is a strong argument in favour of keeping the eurozone together” but despite this Mardel comes out with a story. In his mind “there are lots of speculation about the eurozone flying apart”. Please Mardel define me “lots”.
Now this is not the first time that Mardel is toxic on Greece. A few weeks ago he refered to my country as a PIGS state which I found distasteful some would say even offensive. Even before, he wrote about “the non so virgin Greek olive oil”, which was supposed to hint on the Greek abuse of EU agricultural subsidies, yet the title left the impression on the existence of quality issues in regard to the Greek olive oil, clearly a different topic.
Let me wonder please, is this man been paid for that he writes? And by whom?
And will this post be moderated, for “strong language” perhaps?
Complain about this comment
Well, Greece only made it into the Eurozone after fudging the books to make it appear that it was keeping financial matters in check. The EU never did punish Greece for this, but instead welcomed the country into the Eurozone with open arms. The EU only has itself to blame for this. And why should Greece do anything anyway? It has been able to get away with bad behaviour in the past without punishment and instead gets rewarded (such as with the Euro).
Complain about this comment
#39,
Are you saying that what Mark is not writing the reality in Greece?
Then why are those greek farmers still in the streets?
Greece is not Germany.
Therefore this simple fact is enough.
Every country should be an asset to other countries in the union, and not an increasing liability.
Complain about this comment
To karolina001 (41):
When you count average or medium number, you are always to have some under the average or middle point and some over it.
Today countries like Greece, Spain, Portugal or Ireland may be liabilities, but then again nobody knows what the tomorrow holds. Maybe tomorrow countries that are now better of financially and economically will fare less well, maybe countries like Germany, Finland and Netherlands will be liabilities tomorrow. What matters is that countries are committed to pull the common cause each at their turn, sticking together whether it is a bad or good time for them.
I also add one thing to this discussion. The problems in the economies and finances of many Eurozone countries serve also the interests of the countries that fare better. If there would be no problems at all, the external value of Euro would have increased and lead into massive economic problems in countries that currently fare better the economic crisis. When the exchange rate of Euro was 1,5USd to 1 Euro, it was poison to many Finnish companies.
Frankly I'm more or less sick and tired of the constant mumble about different countries and their economic difficulties and how they are going to either brake up or force to brake from the currency union is just total nonsense.
PS. I'm glad that Portugal, Ireland, Greece and Spain are members of the Eurozone. In this economic crisis its better to be in an bigger than an smaller group. Besides everybody knows that pigs are one of the smartest animals, they also taste good, thus having the P.I.G.S. countries in the Eurozone must be good thing! Flawless logic! Flawless victory!
Complain about this comment
I once read in a German newspaper that British people seem to gain happiness from seeing others fail, but I didn't really believe it. Yet it appears to be true, which is kinda sad.
#38.
I don’t know where you get your information from, but I would seriously check my sources. In fact we have paid all the costs for the reunification by now which allowed the “Bundesbank” to pay their benefits of 6bn Euros to the state as there was nothing else left to spend the money on.
I certainly won’t deny that there are instable countries within the Eurozone, but compared to other currencies we are not so bad off:
The FED just ruined the dollar by putting another trillion (a one with 12 zeros!!) into their economy – don’t tell me that this won’t have any long term effects like inflation please. Either way they are at least clever enough to hide the new depths behind complicated transactions so that American taxpayers will not immediately realize how much of their money was stolen and sent to banksters.
The UK makes more than 8% of their GDP as new depths which is almost as bad as Ireland and Greece. Just that Greece and Ireland are small countries, so that their GDP is by far smaller than the one from the UK, while Germany made 0,1% new depths last year and aims to make only about 3,1% this year. We may fail to reach the Maastricht agreements with this, but as most other economies are affected at least as much as we are.
From what I can see many countries would actually love to have the Euro in this situation as their currencies are fading away.
Complain about this comment
I am writing from the deep north east of Italy close to the Austria and Slovenia. Now that we have the same currency and the border doesn't exist anymore, I feel home in these countries more than to be in Rome or Naples, Italy also struggled the change of currency, but the Euro and Schengen were the most important political change of the EU. Going back would be anachronistic and leave the Euro will throw Europe to an Argentinian scenario...
Greeting from
Gorizia (Gorica, Goerz)
Complain about this comment
The Euro is a mystery to me. Some commentators say it is shakier than other currencies because of its diverse fiscal policies and business cycles, while others say that it is much stronger than other currencies because of a strict monetary discipline.
I think the Euro varies greatly depending on your vantage point-
In the benelux countries, the Euro has brought convenience in cross-border trade.
In Italy, it has required the state to search for new non-monetary measures to manage the economy.
In Ireland and Spain it has meant inappropriately low interest rates for the last decade which saw personal debt levels surge.
In Germany, it has meant the creation of a more prestigious currency to trade on international markets.
In france, it has meant exchange rate stability with their main trading partners.
To the CE it is (wrongly in my view) a safe harbour which is protecting its members from some of the worst effects of the current crisis.
So the Euro has had a smorgesbord of different effects in every single Euro-area member. I originally thought it would not work out, but by now I see that this really is too large and too complex for anyone to really understand. The monetary policy of 15 different sized countries have merged to create an economic pattern which is impossible to understand beneath the macro level.
My gut feeling is that it will not break up unless a large member state gets into trouble, which does not seem to be on the horizon. However, that does not mean that it is therefore vindicated. The Euro should not be judged on its ability to keep going but on the net good it delivers to its users. I don't believe anyone is qualified to quantify that.
Complain about this comment
At the moment, my main problem with the Euro is that I don't have enough of them in my pocket!
Complain about this comment
Seraphim85 wrote:
"I once read in a German newspaper that British people seem to gain happiness from seeing others fail, but I didn't really believe it. Yet it appears to be true, which is kinda sad."
Indeed it is true! The germans call it "schadenfreude". Now the english don't have a specific word for the cultural trait, but they many other good words. "Hypocracy", "ardent", "nationalism" and "ridiculous" are all fine words, in my view. Perhaps not as wonderful as "schadenfreude", but good and useful words, nonetheless.
Nicht whar?
Complain about this comment
I like spikslow's take on the euro. Well said.
But I don't think the Euro is accused of being a bad thing. Certainly not by me. In fact, perhaps the Euro is the best thing about the EU, and a source of unmitigated good.
But that won't save the euro if the political reality that exists behind the united market fractures and destroys the trust between member states.
And so the question that I think has been left behind is "can european member states recover their economies before they are forced to print money to survive?"
It seems clear to me that governments are on a course to increase spending so that they can get lending going again. It seems equally clear that governments risk ignoring the fundamental mistakes that lead to the collapse of their economies. They talk about a lack of regulation, but they do not talk about the utter folly of lending money into bad investment schemes and calling the result profitable.
And so if governments continue to throw money into failed schemes, sooner or later folks will not lend to them. If that happens, the governments must simply print money. They wont do it because it is a great idea, they will do it because they will have no choice.
The eurozone will not break apart because the euro is a bad idea. But it could break up because the political leadership of europe are unable to establish what went wrong, or why their economies were losing money when they claimed to be making it.
The soviet system was precisely the same. The party dithered and dathered, until their incompetence and failed business management brought the economy crashing down. There was nothing inherently bad about the rouble, until it became synonymous with poor economic policy, due to the people who had driven it into the ground.
Complain about this comment
Mark, several before me have said it, but linking to the Bruges Group is just wrong here. What I like about your posts or articles is how they provide some analysis and insight that regular articles in written (online) media do not provide. Importantly, you generally try to give all or major viewpoints a voice, showing their disagreement without choosing sides. Sometimes it's also the personal aspect, sometimes it's linking events and placing them against a background. However, what you posted above is falls into no category.
Into the matter of the 'Eurozone flying apart'. The Eurozone is no perfect monetary union according to economic theory, but if we look at the figures of the Eurozone economies since the introduction of the Euro, they actually become more alike. Empirical economic science can prove that the EMU has a huge impact and has brought European economies closer together like no other system has done so before.
This begs of course the question whether that is a good thing. The answer for that is found in the European economic data of the 1970s and early 1980s. Why was the EMU created in the first place in 1992? Because since its precedessor the EMS had been in place, Europe tended to be much more stable economically. Europe can today exist because its economies can easily export to each other. And for that to happen, they need exchange rate stability, the rationale behind the Euro.
Other systems with fixed-but-flexible exchange rates, like the EMS, are far inferior to the EMU, precisely for what we saw in the early 1990s when the Pound had to leave the EMS - speculation. Britain was forced to devaluate the Pound against the Deutschmark. Something similar we see with the Russion Rouble today - the coffers of the Russian central bank are emptying and it is quickly losing the unwinnable battle with international speculators, who have much more money at their disposal, and have bet for the Rouble to plunge.
And when we look at Eurozone economies that are very distinct from the backbone of the Eurozone, Germany, we see that these countries have actually out-performed the UK in the past 10 years. Italy is a nice example of this.
Today as well we can see how the Eurozone out-performs European countries that are not member of it. Sweden had the Krona pegged to the Euro, but was forced lo leave, because it could only sustain the peg with continuously raising interest rates to the point where they cripple economic activity. Since then the Krona was devalued, meaning that Sweden became poorer relative to the Eurozone.
Denmark is holding on, but increasingly under pressure. The Danes also have to raise interest rates at a time when most central banks lower them to stimulate investment. Denmark is at a recession actually discouraging investment, worsening the effects of the recession. But the alternative of unpegging its currency is even worse: Denmark will have more trouble to export its products to its main export partner, Germany, which would cause a loss of wealth and many job losses. Tough choice for Denmark.
And then the proud UK. The Brits think they are safe outide the Euro? Tell that to the factory workers who are going to be massively fired over the next months. Why? because the Pound lost about 26% of its value against the Euro. Britain has become 26% poorer relative to the Eurozone, because the British can buy 26% less with their money when importing products from the Eurozone. This happened over a period of one and a half year.
The same is true for the Pound-Dollar exchange rate: a decline of 25%, meaning that imports are 25% more expensive.
That is not all. Against the Japanese Yen, the Pound declined with about 40% in the last one and a half year.
Now what does this all imply? That to the extent that the UK is importing goods from Asia and exporting to the Eurozone and the US, it has to cope with decreased competitiveness. While British products would be 25% cheaper in the US and Eurozone due to a cheaper Pound, the higher rise in import costs means that the net effect is negative. This loss of competitiveness amounts to 15% of the price. That is a lot! The average import duty is 4%. A competitiveness loss of 15% is more than enough to put a British producer out of business. Add to this the fact that workers in the UK are expensive in comparison to certain Eurozone countries such as those in Southern Europe. So British industry heads towards bankrupcy and in an attempt to avoid this, workers are going to be mass-fired.
This is why Brown's VAT policy cannot work: in Britain, industry does not suffer from a lack of domestic demand, but of a lack of foreign demand for British products in Britain's most important export markets: the EU and the US. If Gordon Brown cannot dramatically increase British industrial competitiveness, Britain's economic furture will be a very uncertain one.
The Eurozone does not have a similar problem, because most of the trade of the Eurozone is internal European trade, which is not subject to exchange rates. Eurozone industry is suffering from exactly the opposite problem compared to the UK: a lack of domestic demand.
Unfortunately for the UK, the monetary instruments do not work: whether the exchange rate of the Pound is raised or lowered, as long as the rates of the Euro against the Yen and the Dollar against the Yen do not change, British competitiveness remains very poor. The best the UK could do is to stimulate the domestic consumption and investment. The Bank of England has done so by dramatically lowering interest rates, making borrowing much cheaper. However, with such poor competitiveness investors will continue to shy away, adding to the decline of the Pound. Moreover, in the unlikely event that the British monetary policy would result in an increase in domestic consumption, it won't be enough to comensate the loss of exports.
Now the Bank of England cannot lower interest rates further, its tools are mostly used up. As such, the power of the Bank of England is under the current economic circumstances in fact equal to that of any Eurozone national central bank: they cannot change monetary policy either. The difference is, however, that the Eurozone still has the ECB to stimulate its economy. The Bank of England is like the pheasant sitting on the road, waiting for the car to hit it, unable to move away.
So to all those who glorify British monatary independence: the price for being out of the Euro is paid by British factory workers. While the rich profit, the poor suffer. Do you call that social? Your Labour party orchestrated this for the UK.
Besides: don't delude yourself: if this crisis as per the explanation above shows anything, it is that the UK is heavily dependent on the Eurozone. The losses in relative wealth will even out over time, but the loss of competitiveness compared to the Eurozone and the US will have negative long-term effects in terms of employment, industrial production, economic growth and absolute per capita income.
The reality of today is that the British economy is completely grinded between the three most powerful economies at the present time: the US, the Eurozone and Japan.
So if anything is flying apart it's the export-economies outside the Eurozone.
Complain about this comment
Without wanting to defend a country which has very often, and in various instances, adopted an irresponsible stance (believe me there are plenty of people over here that wish things were different), I really believe that it is unfair to be so harsh towards Greece when recently the EU has, on its side, and without asking the opinion of its members, made choices we all know it regrets and that we all now 'pay' . And even worse, when the banking system of many of its strong members has almost collapsed due to bad calculations and, even worse, greed. Despite the scandals and mismanagement, Greece has also to face the aftermath of the Olympics. I am sure the British already regret having such a burden to bear right now, after the current crisis. As for going back to the drachme, this would have been great news at least to the country's poor whose income has terribly shrunk with the adoption of such a strong currency.
Complain about this comment
#43
The fact that Germany is still paying a tax for the unification was referred to by your esteemed Chancellor and indeed she has recently stated that it will remain in place for at least another 12 months.
I would also like to refute one other point, I myself do not take pleasure in others failure. In fact I along with many others have looked on, perhaps in envy, at Germanys manufacturing base. It is an element that has been allowed to be slowly eroded in the UK until we are only left with a fraction of what was once the bedrock of the UK’s economy. Unfortunately the UK, who had become so reliant on the financial industry, has suffered significantly due to the credit crunch.
Regrettably Germany has also seen a marked downturn in its manufacturing base which has impacted on its exports. If reports in the German and UK press are to be believed this is now going to result in a significant number of posts being lost over the next 6 to 9 months. The steel maker has announced 3000 job losses this week which is seen as the first of many and a break away from the truce/agreement between the government and industry. One of the economic advisors to the government has stated that around one million jobs are at stake.
#49
Once again I feel that you are taking this point almost personally – the point I was trying to make is that there are external pressures on the Euro zone and in particular the euro. You appear to have overlooked possibly the most important economy currently that of China. And this could be critical to the recovery of the euro zone out of the current recession. The new eastern block members which were supposed to be offering a low cost, developing economy which in turn was to drive the euro zone growth. These hopes have now been dashed as the new members in the main are experiencing significant financial difficulties. They are now also going to have to go head to head not only with China but also other member states who are now starting to become protectionist. We have seen the first of these moves with Renault and the French government and this is bound to be only the first of an increasing trend. Especially with elections just around the corner and the populous becoming more and more unsettled. Adversity tends to be a driver for nationalism and thus protectionism.
Generally I recall that when countries joined the euro the same issues were being raised about joining as are being made about leaving. As to the strength of the euro and the demise of the pound I fear that the opposite is actually happening, The UK is importing less and is now more competitive in exporting to both the euro zone and the US. You must remember that we are not talking just about physical products but also services which are a major part of the UK GDP.
Finally I would reiterate the points I put forward earlier. This is a club and all members have to pay their dues and adhere to the rules. While things were booming a blind eye could be used when looking at those who were not meeting either of these. Unfortunately as the economy within the euro zone worsens so will the adhere of the more stable members in ensuring that all are seen to be playing the game. The only way for nationalistic forces not being brought to bear is for the formation of the Federal States of Europe. This would deliver a single regime delivering tax and fiscal policies across all member states. The question is, will this be a step too far? I fear so but we can live in hope……..
Complain about this comment
#51 Maybe I misread you then. We might have a tax but we don’t have the debts anymore (well basically we still have 100% of them still as the state debts were never reduced since 1990 so they were more shifted into debts for other things than being paid off). Officially those debts are however paid and so the tax you are referring to will be used to pay back the money for the stimulus packages next. I don’t know if they will keep the tax for a longer time or just use revenues from the Bundesbank on the long term. In the end it doesn’t matter really as debts are debts and no matter where they come you have to pay for them :-(
The problem is that aside from cars (which plunge as well) our other main export good are investment goods and while the output all over the world decreases there is no real need for those goods – so in fact this industry is not much more healthy right now than the financial sector.
I don’t know if it works out to have a country as big as the UK completely relying on the exports of services – it’s not like we wouldn’t have some service companies ourselves and for services rather than for produced goods language might be a barrier.
As long as the case of Opel is in the media here, there are hardly any news about other companies unless they are already bankrupt.
Complain about this comment
#52
Just for your information, a couple of snipites from the press;
"This week’s revelation that steelmaker ThyssenKrupp was preparing to shed 3,000 jobs could mark a milestone in the country’s fall from economic grace, bringing the slump home to millions of workers and spelling the start of real trouble for its politicians."
“There is not a great deal of concern in the public so far,” says Manfred Güllner, head of the Forsa polling group. “Most people haven’t started to worry about their jobs quite yet.”
ThyssenKrupp’s move would make it the first large German industrial player to cut core staff in the downturn, breaking a tacit deal struck in January whereby the government agreed to support business against the latter’s pledge to renounce compulsory redundancies.
The government’s side of the deal was its second fiscal package. While the US and the UK have sought to encourage consumption, the German package, with its emphasis on public investments, access to credit and wage subsidies, aims to keep companies in business and employees in their jobs.
As a quid pro quo, Angela Merkel, the chancellor, obtained an informal promise from the heads of 30 blue-chip companies that they would retain their core staff. Although unemployment has risen since, job cuts have mainly targeted temporary workers.
Thousands of companies are also using a scheme, extended by the fiscal package, which allows them to send workers on holiday or put them on shorter working weeks, with the state footing part of their wages and payroll taxes for a maximum of 18 months.
With the ThyssenKrupp move, however, politicians now fear the fragile truce between state and business is coming to an end. Industry experts say the engineering sector alone could shed up to 1m jobs if the downturn extends beyond the summer, as it almost certainly will.
“The risk of a tidal wave of job cuts is increasing every day,” says Michael Fuchs, a Christian Democratic member of parliament and economic expert. “The downturn is turning out much worse than expected.”
Complain about this comment
There is a curious irony is this discussion of each state relative to each other, and that is that we continue to define the union by reference to the boundaries the union is supposed to diminish. We speak of "Germany" doing this, and "the UK" doing that. Meanwhile, "France" is doing something else. But all these states are part of the EU. And even more than that, they are all inexorably intertwined in the same global economy.
Now when we speak of the USA, we don't compare california to NYC, and then contrast NYC to the midwest. We speak of them all as one country, facing the same economic future.
I think the member states of the EU also share the same economic future, more or less. So the UK was the first to crash into the wall of failed economic policy, but this is probably because the UK is so dependent on the financial sector, not because the UK is somehow separate from Europe.
Germany has been humming along without too much alarm in the press, and there has been a good deal of Teutonic pride in the air as a result, but perhaps this is merely because Germany has its economic focus of activity further down the supply chain. The UK does finance, germany does building. So the finance collapses first, and then people can't buy the things that are built. And so people stop buying the things that are built, and then, after a period of time, people who build them lose their jobs.
So i waiting to see what happens with germany. There is a definite lag effect in the flow of misery. When people can't borrow, there is a lag before they go bust while they spend their cash assets and they struggle to find a way out. Then they fall. When they fall, the manufactures also spend their cash assets, looking for new customers and struggling to find a way out. Then they fall.
And last to fall.... the government. Governments rely on tax revenue, and tax revenue is based on last years profits. Therefore government is the very last entity in the economic chain. Curiously, this means they are the last to understand the reality of the situation.
I watch as European governments discuss what they are going to do about the financial crisis, and how they are going to increase spending, and I have a sense of disbelief when I see that they are calculating their position from last years tax revenue.
This is most especially true for France and Germany. Both these grand economies have huge taxes, and huge social welfare systems to complement their theoretically robust industries.
So what happens to Germany when the falling industrial output creates vast numbers of unemployed folks, and at the same time the government can no longer afford to employ even close to the same number they have been employing for the past 20 years?
The point I wish to make is that high tax regimes are very sensitive, and vulnerable, to global economic downturns. I will watch Germany and France with considerable interest over the next year, because this teutonic pride in "expert fiscal management" strikes me as impossibly short sighted.
What sort of stomach laughs at the hand that feeds it? If the bankers in London have gone down, so will the car makers of the Rhur. And so will the socialist experts in government, who feed and speak at the end of the chain.
Complain about this comment
Sorry I also wanted to include this snipit re the the new EU members from the East;
"The International Monetary Fund (IMF) and other lenders have agreed in principle to provide Romania 20bn euros (£18.4bn; $27bn) in aid.
The IMF will lend 12.95bn euros, the European Union will provide 5bn euros and the World Bank will lend 1bn euros.
The European Bank for Reconstruction and Development (EBRD) is to invest up to 1bn euros in Romania over two years.
Romania is the third EU nation to be given IMF aid recently, after loans were given to Latvia and Hungary."
Complain about this comment
Interesting article in Newsweek. It states:
This has led to speculation that some weaker nations might drop out of the euro, perhaps even solving funding problems the Zimbabwean way, by printing all the money the government wants in a new national currency. But Zimbabwe, which has taken this tactic to its extreme and is now reeling under hyperinflation and economic collapse, proves that this strategy doesn't work. Any country leaving the haven of the euro would risk devaluing its new national currency, and bond markets would demand very hefty risk premiums. These countries would thus find it much more expensive to borrow.
http://www.newsweek.com/id/189270
Complain about this comment
# 53. I heard about ThyssenKrupp as well, but as I said when they cut 3000 employees that is still less than a tenth of those people that would lose their job if our government decides to not bail Opel out (and I seriously hope that they won't because this sheme simply doesn't work - which makes it either let them die now or let them die in 2 years after having wasted a couple of billions of taxpayers money) On the other hand there is an election coming this years and so I am rather realisticly thinking they will buy votes by helping out :-(
# 54. Our welfare system is only able to handle unemployment up to a certain point. Though this point is by far not reached no, the question is if it will be with this crisis. Losing some temporary jobs is not a catastrophe as those jobs were designed for a situation like this.
The sad thing about all this is that many "building" industries suffer from what certain banksters did without it being anything close to their own fault. Some haven't made any losses for years, but still they are refused to lend badly needed money.
If this goes on any further I would say take all the taxpayer money back from the banks and let the rules of the free market apply again. Even if this leads to 90% of the banks becoming bankrupt - when they are not doing what they are paid for and only pursue their beloved bonus system even more they don't need to be kept alive.
# 56. I don't think the Zimbawean way is really a way... it is more a dead end.
Complain about this comment
Seraphim85 wrote::
"If this goes on any further I would say take all the taxpayer money back from the banks and let the rules of the free market apply again."
Your words strike fear, nay TERROR, into the hearts of the ruling class.
You are advocating that the government send the police into Buckiingham palace and evict the royal family. (they were bailed out as major shareholders of RBS)
You are advocating the impoverishment of the entire house of lords, and you are suggesting that the CEO's of every major company in the UK look for a job in the labour market like everybody else.
And yet, all you are suggesting is that the free market operate as a free market. We live in interesting times, that is for sure.
Complain about this comment
# 58. Sorry I should have mentioned being from Germany - we neither have a Queen nor a House of Lords.
However, I don't mind if some CEO who seriously sucks at what he is doing (losing a couple of billions a year simply can not be called "doing a good job") is to lose his job without any company paid retirement bonus.
Right now there are more or less 2 ways we could go from this point:
1. Stick to the free market which would cause immense loses of jobs and probably riots as many people who didn't do anything wrongly will have to fear if they'll have enough food in the future. Then however giving money for companies that fail to make profits can not be part of this way (even if it is a so called "system critical" bank).
2. The other way would be to move away from the free market into something more social. (Here I have to say that I really like the Swedish system!) This would require not only a minimum wage for all kinds of jobs but also a maximum wage which applies for everyone. Where this would be settled needs to be determined on the way though.
Since the first has some clear disadvantages for everyone and the second is obviously not so popular with the elites our politicians keep the old rotten system alive by more and more debts. Maybe we should all be a bit more like the French and demonstrate in a situation like this...
Complain about this comment
Seraphim85, you offer two fairly unappealing choices.
In the first case, huge numbers of folks are going to lose their pensions because the banking elite lied about what it was doing for many years, and the government never had the courage or the will to ask hard questions about what were being classified as "assets".
Never mind about losing their jobs, what is going to make people angrier than a sock full of wasps is losing their savings they have worked like dogs to scrape together over the past 30 years. If you lose your job, you can look for another. If some banker tells you they have lost your entire retirement savings scheme, they have stolen your economic life from you. That is like sentencing folks to salve labour, in retrospect. I mean, jesus, all those folks who did hard boring jobs to make those bankers super richer and the directors and CEO's sort of rich, they are being told they did all that work for nothing. They are being told they would have been better off staying on the dole and smoking reefer, for all the reward they get in old age. (I note Obama says NO to reefer. Dude is seriously harshing the buzz for a lot of the O crowd, nuh?)
And that is what has happened, not what might happen. To my understanding, pension schemes have already been wiped out. They have in the states, anyways. Europe is not saying very much about where it stands.
And this second choice is to create a social welfare state. OK. How?
You cite Sweden, but Sweden might have a terribly hard time keeping its social welfare state together in the near future.
See, it becomes problematic to create a social welfare state when you can't raise any tax revenue because your private sector has collapsed. the problem is that folks who are out of business can't pay high taxes. It is a hell of a thing.
The more commentary I read, the less I understand about the fundamentals of the economic world. Everyone keeps talking about how government is the saviour of the private sector. I always thought government got its money from the private sector. I guess I am confused.
No, it makes no sense. If government increases taxation to support public welfare they may as well take over the entire shooting party, and call it state communism. The bankers have not come clean about what they have taken from the economies, or how, and there is going to have to be a reckoning somewhere.
I think if people are mad now, they are going to get savage in the near future. Already the Directors of AIG are receiving death threats in the USA, and that clown from RBS has had his house attacked. What will happen when folks start to realize they have lost their pensions is a mystery. I suspect the popular uprising might try to take from the rich not only their bonus payments, but their assets. But we shall see. It may all come good.
Complain about this comment
I know that those 2 alternatives are only bad and worse but trying to revive that system we have now won't work out really as long as everyone is concerned about his own good as much as now.
To be completely honest I don't even feel any pity for those managers being assaulted and receiving death threats as they knew exactly that they were creating values that never existed and sold them to people who would lose everything once the bubble bursts. It wasn’t enough for them to already receive a far-above-average salary – no they were greedy enough to want more at the expense of other people who worked all their lives to just have some money after their retirement. Especially in a country like the US where guns are available to everyone this behaviour looks almost suicidal from an outward perspective.
The problem is that a single person like you and me can’t really do anything right now, but seeing what will happen and to live with the consequences of someone else’s acting.
Complain about this comment
Churchill said "Russia is a riddle wrapped in a mystery inside an enigma" but it could have as truthfully been said about how the EU is supposed to work. So the EU is caught on the horns of a dilemma. It's alternative is political disaster if it comes apart, economic disaster if it stays together. That's the price you pay for creating a political entity for the sole purpose of wielding power when it makes no sense for any other reason. It may have been the French and Germans who conceived and pushed for it but the others went along for the ride and seemed perfectly happy until it started hitting bumps and the wheels came flying off. Rube Goldberg had nothing on those who engineered the EU.
United States of Europe, what a joke.
Complain about this comment
jingo kulakas writes:
"That's the price you pay for creating a political entity for the sole purpose of wielding power when it makes no sense for any other reason."
jingo, do you ever read your own words and wonder "what if that were directed at my wonderful country? could it fly?"
Now don't take that the wrong way. I am in no way suggesting that the USA is not god's special project. I am fully aware that God settled in America and waves the flag harder than most folk, and goodness knows I am as thankful as he is for the freedom I enjoy today. I know full well that every american who ever died only did so just so as I could taste the cool air of freedom on my cheeks. I appreciate the suffering that american folks go to for the sake of other, lessor nations.
But, and with absolutely no intention of harshing your patriotic buzz, maybe the fine folks who created the glorious US of A did so because they were keen to build power for themselves?
Now hold your fire, marine, and dig on my logical groove: See, the way I am thinking, the folks who created America.... they couldn't have been American. Right? Before they went and done created perfection, I mean. It didn't exist before they created it, and therefore they couldn't have been American. Am I right?
And if they were not american when hey went and done created perfection..... they could might have been scumbags like all the other folks who ain't American!! In fact, not being born in the land of the free, they was most probably communists and terrorists!
I'm sure you'll agree, it is a hum doosy of sideburn scratcher. How it come to be that non americans could have done created the glory of heaven without being born American in the first place. Calculated to keep a person up at night, just trying to figure it.
Still, that is how it goes with gubment folks. Cain't trust em, specially when history is so filled up with lies, what with satan puttin fossils in the rocks to fool decent folks and so on. Cain't trust the gubment, jingo! That's why I keep one hand on my shotgun, and another one on the flag.
Complain about this comment
Since Europe has rarely ever seen peace for such a long time as it has since European countries have started thinking about working together instead of just preparing for the next war - I don't think the EU is such a bad idea after all.
And even though we might not have someone who is president for everyone like Mr Obama, it is still better to have no preisdent at all than to have 8 years of Bush (who literally ruins everything - economy + reputation) just to get 4 to 8 years of Obama afterwards.
If the president of a single european country was a total jerk like that, there would e enough others to limit his powers.
Complain about this comment
Thanks for the laughs Mark. In such hard times they're welcome. Thank you for pointing out the The Bruges Group. The good thing about a recession is that the comic show industry thrives. I quote from their website:
"The Bruges Group is an independent all-party think tank."
and five lines lower:
"Its inspiration was Margaret Thatcher's Bruges speech."
Complain about this comment
View these comments in RSS