Ongoing European Debt Crisis

The personal debt you are talking about — the housing bubble — was enabled precisely because of cheap money flowing in from German banks to invest in the Spanish housing market. The bubble and subsequent crash was a predictable and direct consequence of the botched currency union.

Contrary to popular belief, "throwing money at the situation" has never been Merkozy's policy — far from it. They have used bridge loans to try to consolidate Greek and Portuguese debt, but there was never any public money — tax dollars — invested in stimulus programs or debt forgiveness, the only two things that might have stood a chance of breaking the downward spiral.

Instead, EU policy was to pander to the bond holders in an attempt to keep them happy so they wouldn't take their toys and run home, because Germany and France wanted to avoid having their super-low and highly advantageous bond rates contaminated by proximity to a Greek or Portuguese default. This program took the already weak peripheral economies and forced them into a full-blown depression, all to satisfy a bunch of rich bankers.

A more progressive government might take steps to solve the root cause of this crisis, rather than slapping Band-Aids on it and hoping it stops bleeding long enough to get the next bond issue out the door. Said steps include: fiscal stimulus, debt forgiveness, and core inflation to correct the balance of payments. None of those have been attempted.

edited 24th Apr '12 3:01:45 PM by Fighteer

"It's Occam's Shuriken! If the answer is elusive, never rule out ninjas!"

And a full-on Legal, Fiscal and Military Union, creating a single United Europe?

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Well, it's either that or a complete dissolution. I agree with Octo that the Eurozone as it currently stands is completely unworkable. However, there are demographic and social issues that would hamper complete political integration — for one thing, Europe is nowhere near as culturally unified as was the fledgling United States, and that's not saying much.

edited 24th Apr '12 3:11:56 PM by Fighteer

"It's Occam's Shuriken! If the answer is elusive, never rule out ninjas!"

Chances are it'll be the former — a Single Market or some form of Trading Area might survive, but little more...

There are major culture unification problems within countries (like Britain and Spain), let alone between the EU Member States.

edited 24th Apr '12 3:16:41 PM by Greenmantle

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Everybody agrees Greece is bankrupt, which means the ESFM the money is in fact money thrown away, money Germany and the other countries will never see again. Several hundred billions of Euros.

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Well, yeah, but that's their own stupid fault for trying to bail out a clearly sinking ship. Smart move would have been to cut losses and force investors to suffer the consequences for their bad investments, then rebuild Greece's economy via stimulus and, yes, tax and governmental reform.

edited 24th Apr '12 5:30:35 PM by Fighteer

"It's Occam's Shuriken! If the answer is elusive, never rule out ninjas!"

I agree. And it was in fact always the German government who basically had to be dragged kicking and screaming to EFSM commitments. It were always France (indeed mostly France) or Spain or Luxemburg or Poland who wanted to make the EFSM ever bigger and bigger and bigger, while the Merkel government always stalled. And the opposition here wouldn't even stall... so, the idea that the Euro policy is dominated by Germany could not be farther from the truth.

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Germany wanted to hang Greece out to dry and make it suffer austerity to boot. I can't really say that it's an improvement over what happened. I mean, if you have a patient who's bleeding to death and you say, "Bandaging him is pointless, let's just shoot him instead," I don't consider you a better person.

edited 24th Apr '12 5:49:50 PM by Fighteer

"It's Occam's Shuriken! If the answer is elusive, never rule out ninjas!"

No. Completely, factually wrong on several levels. For one, Germany just demanded balanced budgets, not per se austerity. That this is attempted via austerity measures is solely the fault of the Greek elites, not of Germany. And second, Germany only demanded that after paying - which makes sense; Germany of course has the valid interest to not pay forever and ever. Plus, only those payments brought Germany in the position to demand anything begin with.

This borderline conspiracy mongering in this thread is really annoying and does not line up with facts. Fact is that Germany had to be pushed to do anything at all, fact is that only then did it make demands in return for the moeny and fact is that the German government i snot pushing austerity as an ideological end in itself, but is instead pushing for balanced budgets solely out of the pragmatical interest that Germany can eventually stop paying *

. Which is also justifies the double standard in Germany itself not meeting budget requirements: Well, nobody pays for the German budget but Germany itself, so that is actually a different situation.

edited 24th Apr '12 6:28:06 PM by Octo

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I understand the historical context behind Germany's fear of hyperinflation, but seriously guys that was nearly a century ago. We forgave you for the Third Reich, forgive yourself for the magical devaluing deutshmarks.

Share it so that people can get into this conversation, 'cause we're not the only ones who think like this.

Well, you can call it stupid, but it's not ideology-mongering or some great master plan (for European domination, for neoliberalism or whatever). That was my point.

Now I agree it's practically impossible that such a hyperinflation would occur. However, an inflation rate adjusted so that it could comparatively help the south European states would comparatively hurt the North European states. It's all a question how the monetary flow goes. If the inflation rate is low across the board, money/monetary value flows northward. If it's high across the board it flows southward. Neither is really fair. So the best solution would indeed be to not have one inflationr ate across Europe, i.e. to not have one currency across Europe. But short of that, if the only two options are money/monetary value flowing southward or northward, well, then of course the German government will do its best to maintain the latter. Not out of paranoia, but out of regular self-interest.

edited 24th Apr '12 6:52:50 PM by Octo

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UK economy in double-dip recession:

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And this while house prices are through the roof. If we could just get some more houses built in this country we'd kill two birds with one stone.

The term "Great Man" is disturbingly interchangeable with "mass murderer" in history books.

...and connected to that Rents are expensive as well, especially in London — hence that decision that London Council made a day or two ago.

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What rich moron is opposed to cheap housing for everyone? This looks like a reflection of our foreclosures crisis on this side of the pond.

Share it so that people can get into this conversation, 'cause we're not the only ones who think like this.

Not one person, many; added to that, many cannot afford housing (even so-called "affordable" housing), due to not being able to afford Mortgages — the average age of a First-Time buyer is now approaching 40). And, well, there's a shortage of housing anyway...

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Well, Cameron has apparently accomplished the unprecedented task of making Britain's depression worse than in the 1930's. So yay, austerity?

"It's Occam's Shuriken! If the answer is elusive, never rule out ninjas!"

Man, your parliament is gonna see a bloodbath next election. Then again, so will ours hopefully.

Share it so that people can get into this conversation, 'cause we're not the only ones who think like this.

In favour of whom?

Right now, I'll guess there will probably be a very low turnout — since none of the current Politicians are that inspiring, or interesting, or anything really, and all the major parties agree with Austerity (they vary in the details, but there's a consensus in favour of it).

They're just Political Managers, little more.

edited 25th Apr '12 9:18:18 AM by Greenmantle

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Probably the Far right >.> or the Greens

Dutch Lesbian

Austerity in the dock?

A mother and daughter is seeking to charge the Greek government with peacetime genocide and crimes against humanity. The ICC have said that it would look at the evidence before seeing if there is a case to answer.

Dutch Lesbian

A quarter of its citizens in poverty?

Damn it Greece doesn't need austerity, it needs help.

The term "Great Man" is disturbingly interchangeable with "mass murderer" in history books.

Bingo. This is why insisting on the austerity is rather missing the problem. I, too, think the various people in the various governments and those they schmoozed with that helped lead Greece into this should face some form of music. Legal, painful music.

The culture of tax avoidance could have been changed with the right attitudes at the top. It wasn't. Even when they had plenty of evidence of where it was going.

Europe faces Japan syndrome as credit demand implodes

It Got Worse.

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That's businesses and households retrenching in the face of overwhelming private debt loads. Exactly as the Keynesian folks predicted. Le sigh.

"It's Occam's Shuriken! If the answer is elusive, never rule out ninjas!"