Actual Wrestling Legend
Of course this is moot for those of us too poor to take a Greyhound to Atlantic City, much less immigrate. >_>
I'm a skeptical squirrel
So, how would this EU-lite / EU-elite division even work? I mean, if they would kick out everyone would themselves from the Eurozone, that would still be a disaster for the currency, and all he articles imply that this action would instead "save" the Euro as we know it. But how do you keep a shared currency between countries where the more succesful participants are about to get even better-coordinated, while the failing countries are separated from them and "abandoned" in the sense of not being further unified?
Though I don't really get any of the economicstalk, how Keynesian and austerity and whatever and how much all these economic methods suck according to someone else, so I'm just like "yay, more EU, at least for half of the continent".
Decemberist
- 2) it is not the "innocent victim of others' profligacy...You, who should have known better, have also broken the Growth and Stability Pact...your banks...recklessly bought risky bonds"
- 3) the crisis has lowered Germany's borrowing costs
- 4) if its neighbours' economies implode, it will suffer
- 5) the danger of collapse is greater than the danger of inflation
- 6) "your size and your history" mean a "special responsibility to preserve peace and democracy on the continent".
He also talks about how the German fixation avoiding inflation at all costs is going to be the worse thing for Europe.
Dutch Lesbian
Lost in Space
So, basically, he's sane. Good for him, not that it'll affect German policy at all.
"It's Occam's Shuriken! If the answer is elusive, never rule out ninjas!"
scratching at .8, just hopin'
Point 6 is unfair, points 1 through 5 are spot on.
Share it so that people can get into this conversation, 'cause we're not the only ones who think like this.
Prince of Dorne
Ah. Of course. Germany has a special obligation because of our history. That coming from the Polish government, what a surprise.
That's exactly what I meant, goddamnit. According to those people, not only do we have to give money, but with a smile and without grumbling too? To hell with them.
Yes, Germany has benefited from the Euro, but that is something every participant hoped from joining the zone. It worked out better for Germany, yes, but does that mean we should now be punished for our success?
Yes, Germany has also regularily broken the stability pact - but the difference is that, you know, Germany still is not shortly before a state bankruptcy, and with the exception of Spain still has a lower debt to GDP ratio than any "Club Med" country.
Yes, Germany will hurt either way, but from that does not follow that we have to sacrifice ourselves from the sake of others. We can as well cut our own losses as well as is possible.
Unbent, Unbowed, Unbroken. Unrelated ME1 Fanfic
Lost in Space
How easily the moral myopia sets in. Seems like their punishment isn't for being irresponsible, it's for being weaker than Germany and less able to dictate the terms of the fiscal union.
"It's Occam's Shuriken! If the answer is elusive, never rule out ninjas!"
Prince of Dorne
Of course there was a German dominance in negotiating the Eurozone. Nonetheless, nobody was forced to join. Even smaller states could comfortably remain outside - the Scandinavian states collectively went "no, thanks, but no". All members voluntarily joined, on the conditions laid out - which included no financial aid between members, by the way. They all accepted those rules!
Unbent, Unbowed, Unbroken. Unrelated ME1 Fanfic
Lost in Space
And then all broke them. At what point do you get off your moralistic high horse and save the union you created?
"It's Occam's Shuriken! If the answer is elusive, never rule out ninjas!"
Those Polish have some nerve!!! Germany should just invade them and show them whos the... Oh wait...
Germany... no one forced your banks to buy Greek debt... stop being bitches about it...
edited 1st Dec '11 1:01:08 PM by Baff
I will always cherish the chance of a new beggining.
Prince of Dorne
![[up]](https://static.tvtropes.org/pmwiki/pub/smiles/arrow_up.png "[up]"){kind=icon}
Sure, all broke them. But there is a difference between merely breaking the stability rules, and breaking them so goddamn recklessly that your country now is two steps before bankruptcy. Germany did the former. Greece did the latter. And then covered it all up with faked numbers, too.
That's the problem, all the money would end up with the banks who knew the risks of those bonds. It would be a second bank bailout, and look what the last one did - the banks shoved their losses to the people, and then simply went on making reckless risks again and being generally greedy again. It would be the same shit all over again!
*sigh* Why can't people just accept that Germany of today is not responsible for crimes of Nazu party? Heck, Germans themselves are already apogletic enough, no need for other to demand them to act certain because asshole went apeshit on Europe.
Also, true. Eurozone is voluntary. Nobody was forced and as far as I know, several states were refused at first because they lacked certain economic systems that were required. In Greece case, Greece lied and faked their finances untill it all fell apart. Stop trying to make Germany the bad guys here. Everybody hates bank bailouts, right now the main concern is keeping the Euro intact and alive, atleast untill we can solve the situation way it doesn't FUBAR everyone.
Decemberist
Germany are the bad guys for the simple reason they won't let the ECB be the lender of last resort, they won't allow a devaluation of the Euro and they are terrified of inflation.
Start with Greece. Let's say Greece were to default and the immediate collateral damage contained, which is theoretically possible to do. Greece would be left with a managable debt - but it would also still have a shrunken economy, no way using state spending for stimulus . . . and, it would still have its unsustainable 9% current account deficit. So the immediate problem is solved but the underlying problem remains. And within the Eurozone the only solution is massive deflation in Greece or inflation in the net exporting countries.
If the problem can't be contained within Greece, the problem takes on a different dimension. Italy alone has over Euro 2 trillion in debt and a default could wipe out banks all over Europe (French banks in particular are heavy investors). If things get tough, the Italians may decide they are better off exiting the Euro and paying off their debt in depreciated lira AND getting the side benefit of an export boom.
At this point an interesting game theory exercise plays out. Lets say you are an Italian or Spaniard with a nice fat bank account currently denominated in Euro. If you start to think (rightly or wrongly) that an exit from the Eurozone is a plausible outcome, you have a strong incentive to move that money to a "center" country like Germany, rather than risk possible forced conversion to new peseta or lira. Of course if such capital flight occurs, it deepens the hole by weakening domestic lenders and removing taxable funds from the country, thus increasingly the likelihood that a exit will occur or at least that the increasing the perception of the risk that an exit may occur.
Now imagine you are a German central banker or Chancellor and contemplating the possibility of an influx of Italian or Spanish deposits. Seems real nice for Germany . . . unless of course Italy/Spain ditches the Euro. Then you have an inflationary disaster scenario on your hands as Spaniards and Italians now have massive Euro denominated claims which can be used to purchase German goods and assets, but in return the German banking system now only has claims on Italian banks that are denominated in depreciated new peseta and lira (assuming they are collectible at all). Since imposing capital controls would breach EU rules, the only surefire protection against this scenario is if Germany pre-emptively exits the Euro itself before this can all play out.
So the danger is a prisoner's dilemma scenario where all sides would be better off staying in if everyone would agree to stick together, but absent foreknowledge of what the others will do in the future, there is a powerful incentive to defect. The more people start thinking that exit is a possible outcome, the more likely it is to actually come true.
Stolen from another forum I go to.
Dutch Lesbian
Lost in Space
In other words, Germany needs to help stabilize the situation or risk being left holding the bag when the contagion causes the weaker countries to exit the Euro and undergo forced deflation.
"It's Occam's Shuriken! If the answer is elusive, never rule out ninjas!"
Prince of Dorne
A seperation from the Euro would be an organizatorial mess of course, but it can be done with proper preparation and logistics.
Also, why should Germany agree to have its money devaluated? That's just normal self-interest not to agree, that doesn't make us any the bad guy! We should have our money be worth less because Greece and Italy fucked up? To hell with that! At least aid transfers are always limited to a set amount of money. With money develuation, you never know hoch much you de facto lose.
Unbent, Unbowed, Unbroken. Unrelated ME1 Fanfic
V
Meanwhile, it seems Britain is preparing for Second Impact:
- Mervyn King: banks 'must start hoarding cash’ to meet euro turmoil
- Bank of England subplot provides grim reading for us all
It's not your money. It's a single currency. It doesn't belong to you. If it was held to some democratic accountablity the question would be long past. It's a system that you signed up to based on the entire principle that being forced to help each other out and being interconnected would put you all in a stronger position. That was the idea and you got the benefits of that. Something bad happening to the rest of the Eurozone means that something bad is happening to you. You just have a choice of how much and you're going for the worst option.
You married Europe, "for better or for worse", the worse is happening, now help or pay the alimony.
edited 1st Dec '11 2:52:23 PM by SomeSortOfTroper
Prince of Dorne
Actually, yes, it is our money which would get devalued. After all, if the Euro is devalued, then this would include all the euros held by Germans, no? That's what I meant. So of course Germans don't want that, that's just valid self-interest.
I changed accounts.
Bleh... once again, I say let Germany be stupid. They built the Eurozone for their (and France's) own selfish purposes, and now they want to let it fall because it's not worth the trouble.
~shrug~
Too bad for Europe, I guess. The dream of a united Europe was exactly that: a dream.
I am now known as Flyboy.
Oh have you not noticed how that doesn't actually stop you from being in a system where my statement is true? It ties you together for an advantage. If it didn't, this conversation wouldn't be happening. The statements in the Euro treaty are just there to make it seem easier than it really is.
I have some Euros in a drawer, does that mean that I have the right to decide whether it should be deflated or not?
Prince of Dorne
Oh yes, we forced all the participants into the Euro zone for our benefit... no, wait actually, that isn't what has happened at all.
Actually, yes, very much so. Not that deflation is anywhere near likely. Let's not confuse that and normal, average inflation, yes?
And that system was set up by those treaties. You cannot appeal to the system, and then completely ignore what its foundations originally said! That's not a way to go about anything - if people can't be sure that the foudnations of an agreement are left untouched, how can people ever enter into agreements ever again?
Unbent, Unbowed, Unbroken. Unrelated ME1 Fanfic
Lost in Space
The treaty can be changed. Is being changed, in fact. And the solution being proposed by fiscal economists isn't deflation in Germany; it's allowing inflation to occur faster than it currently is; that way all the other countries don't have to resort to deflation to settle the balance of payments issue.
"It's Occam's Shuriken! If the answer is elusive, never rule out ninjas!"
I changed accounts.
No, but you definitely helped dictate what kind of economies they'd have once they joined. The Eurozone is just a mouthpiece for Germany's strong industrial base, while everyone else is relegated to cheap, squishy, useless service economies.
~shrug~
So I say, let it fall, and then they can rebuild it and hope to prevent Germany and France from dominating the thing. Or not, and Europe can go back to bickering constantly; whatever works.
I am now known as Flyboy.
Prince of Dorne
And yes the treaty is being changed. As I've said - really makes you wonder if then people can ever enter into agreements again, seeing as apparently foundations of agreements are worth nothing anymore.
EDIT: Done, here
.
edited 28th Nov '11 10:18:12 AM by Carciofus
But they seem to know where they are going, the ones who walk away from Omelas.