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  1. #11
    pathwise dependent FDG's Avatar
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    Wait, entropie, there is an easy solution which you might enjoy (I've been thinking a lot about the issue, obviously): since this crisis is a balance of payments crisis, due to the differential in competitivness between german and italian, french, greek firms and the presence of a common currency that cannot appreciate, average german salaries should be let free to progressively rise, so that germans can buy more products from italy, france, greece etc. (basically another version of a monetary appreciation) and restore equilibrium in the balance of payments. This situation would (slowly) solve debt problems, since usually excessive public (or private) debt is a direct consequence of a skewed balance of payments - which can only happen when currencies are manipulated (see renmibi vs USD).

    Of course this would not solve the interest rate problem which has caused a boom-bust cycle in Spain, Ireland and Greece while the EBC was keeping interest rates low because france, italy and germany were not growing. In my honest opinion the Euro is not an optimal currency area and it needs to split, the other option would be a structural convergence among all the economies which may or may not happen, but which will require at least 30-40 years and large transfers from the core (the core being central-western france, benelux, germany, northern italy, nort-eastern spain) to the less competitive periphery, a policy which is not politically viable imho.

    Anyway there are already two central banks (ECB and EBI) and they act very similarly to the way you have described. The ECB lends relatively "free" money to banks which in turn lend to businesses, while the EBI lends to private companies and individuals whose projects are considered viable.

    Sooner or later the EU needs to start rigidly enforcing the agreed growth and stability pact: annual government deficit to GDP and gross government debt to GDP levels. In exchange for doing so, the richer nations have to either back poor countries or quite literally throw them out of the euro-zone.
    Well the real problem is that you cannot force growth, the government literally does not have a clue as to how promote growth in industrialized countries. So what happens if you enforce a balanced budget in a recessive economy? Such economy spirals into deeper recession, just like it's happening in Greece and how it will soon happen in Italy, which will likely record a -3% GDP in 2012 and an exploding budget deficit.

    IMHO a good pact would be: force a balanced budget when growth is zero, however when there's a recession ongoing (say GDP going down more than -0,5%), let the budget deficit float down without imposing any punishment. Conversely, when growth is above 0,5%, punish countries that incur in a budget deficit.
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  2. #12
    Senior Member pinkgraffiti's Avatar
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    Can someone that is moderately informed about this matter just tell me what I should do with my money before the Euro collapses and I'm back to my national coin and it devaluates? Should I transfer my money to a British account now? Thanks, bye.

  3. #13
    resonance entropie's Avatar
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    Quote Originally Posted by reason View Post
    Okay, I'll be more specific.

    "The rules of the money system have shifted. The majority of money that now changes hands does so electronically. As a result, far more than ever before, new money is not issued by the state but by banks."

    This isn't a new development and electronic transfer has nothing to do with it. The majority of money has been a product of banks for hundreds of years. In Scotland during the 18th Century, the government had no part in issuing money at all; almost 100 percent of the money supply was created by private banks. Scotland also had one of the most stable and productive banking systems in the world. Oh, and by the way, they didn't have electronic money transfer back then, so Huber & Robertson made an oopsie with that one.

    They are either ignorant or willfully misleading about a bunch of things. Commercial banks can only create money in proportion to what are called 'reserves', and bank reserves take the form of something called 'base money'. While commercial banks can create money, they cannot create base money. The issuance of base money is the sole prerogative to central banks, like the Bank of England in the United Kingdom, Federal Reserve in the United States, or European Central Bank in the Eurozone.

    These central banks indirectly control the total money supply by creating or destroying the base money that commercial banks depends on for reserves. If the central bank thinks that commercial banks are creating too much money, then the central bank just tightens its monetary policy (i.e. reduces the supply of base money) until the commercial banks are forced to reduce their own issues of money. The upshot is that while governments do not issue everything we call 'money', like bank deposits, they control the base money on which it all depends.

    An understandable confusion, in which Huber & Robertson appear to be mired, is the status of paper or metal money (i.e. currency). Currency is an already tiny and shrinking part of the money supply, and the proliferation of means of electronic transfer has something to do with that. However, Huber & Robertson imply that this reduces the government's part in money creation, but it doesn't at all. Currency is part of the supply of base money, but only a tiny part and it's insignificant to the government's control of the money supply. To suggest otherwise betrays a gross misunderstanding of the subject matter; this is introductory level stuff.

    The state receives public revenues from issuing cash, but banks make private profits. The benefits of the money system are therefore being captured by the financial services industry rather than shared democratically.
    The seignoirage earned from issuing cash is minuscule and has been for at least 100 years. The government shouldn't even bother. Private banks are perfectly capable of issuing bits of paper and metal, like they continue to do in Scotland to this day. Seignoirage from the issuance of base money, of which currency is just a tiny part, is most important to the government. You see, central banks alter the supply of money from buying and selling government bonds; they gradually accumulate government debt on their balance sheet. When the debt eventially gets paid, most of the money goes straight back to the government: it's basically a free loan.

    The profit earned by commerical banks from issuing money is simply the profit earned from financial intermediation, not seignoirage. Huber & Robertson seem to not recognise this distinction, but it's very important. Seignoirage is a stealth tax imposed by inflation, while financial intermediation is neither a tax nor inflationary. It's not like commercial banks are taking away the government's seignoirage; they just can't do that. Commercial banks are completely beholden to the whims of government central banks and regulators, and they can create money only at the central banks' pleasure.

    Alright, that's all for now. The rest of it is a garbled mess too, but only so many hours in one day.
    Thanks for your answer. Would you mind, if you have the patience, to explain that in a bit more common words ? I am a natural scientist and have already problems understanding financial in german but in english its doubly complicated. I am sorry to have to ask you for this, but I am intrested in the topic and want to learn more. I just need to find someone who can explain stuff a bit .

    Quote Originally Posted by FDG View Post
    Wait, entropie, there is an easy solution which you might enjoy (I've been thinking a lot about the issue, obviously): since this crisis is a balance of payments crisis, due to the differential in competitivness between german and italian, french, greek firms and the presence of a common currency that cannot appreciate, average german salaries should be let free to progressively rise, so that germans can buy more products from italy, france, greece etc. (basically another version of a monetary appreciation) and restore equilibrium in the balance of payments. This situation would (slowly) solve debt problems, since usually excessive public (or private) debt is a direct consequence of a skewed balance of payments - which can only happen when currencies are manipulated (see renmibi vs USD).
    I partly agree with you. Since I am not to big on financial, it'd like to tell you about the social and economical dimension to this: in my opinion the wages are right as they are and shouldnt be increased. Even in the world wide financial crisis, the unemployement rates drop in Germany and its possible for people to have longterm and safe jobs. If you'ld increase the wages this will only lead to people being fired.

    Another thing is that you can earn 10 times more if you found your own business. So low wages have led to an increase in business foundations. Germany has the largest density of small and medium sized companies on the World and this is a good thing, cause when small businesses fail not too many people loose their jobs.

    Another fact is that the xmas business is flourishing. People basically dont know where to spend their money. The thing but is, many people have started to buy on credit and have made huge loans they cant impossibly pay back. If you'ld increase their wages, they will never learn to handle their money with care. The average german normally is a very down-to-earth person, who needs 10 years to make a decision whether he spends money or not. Still he is not greedy, the average german aswell does put large amounts of money on the table if there is a chance for a lucrative investment and he does put money on the table to help poorer people. Charity organisations make vast amounts of money in Germany and have developed into a huge business.

    Another thing is the social component. People have become very egoistical assholes. I come from a socialistic workers domain in Germany and nobody ever had had much money here. The biggest thing we had here was our work in coal mines, our soccer and our family. Nowadays my region has prospered and people have become shitty. They dont care about each other no more and have become very antisocial. The most important thing is buying the newest Iphones as it is released, driving a big car or wearing overprized clothes. Those people actually deserve a strip in wage, cause they do only shit with it.

    A problem is the distribution. We have Unions for every branch. And while a steel worker would earn for example one sum, a nurse does earn 1/3 of that sum. And that tho the nurses job is needs a lot more responsibility and has a harder education. The thing is the Steel Workers Union is good, but nurses cant go to strike and they have virtually no Union. So distribution is a problem.

    What you are right about and I thought about this as well, is that we have nearly no imports in Germany. I know by the hand a dozen of people, who'ld like to import some parma ham or nice mozarrella, I'll never forget my 3 week trip thru Italy, havent eaten that good in all my life again. I myself wanted to import an electrical circuit from the States some time ago, it was only possible to buy it directly in the States. I thought that shipping costs were horrendous but they were actually a joke. What tho was horrendous was the fee for german customs. And that is unacceptable, but the main reason why many imports fail. German customs too has so rigid rules that especially importing food is the most difficult. And that tho this years number 1 xmas present is food...

    So my conclusion is: the buying power we have already in Germany and tho normally Germans are big money savers it has changed over the years and aint only so no more. But the markets dont are as transparant and easily accessible like they could be and should be in an European Union. The biggest fear here is that communes and small towns could be stripped off their shops if people start to buy products from all over the World. And this is a real problem of Globalisation that aint solved yet.

    Of course this would not solve the interest rate problem which has caused a boom-bust cycle in Spain, Ireland and Greece while the EBC was keeping interest rates low because france, italy and germany were not growing. In my honest opinion the Euro is not an optimal currency area and it needs to split, the other option would be a structural convergence among all the economies which may or may not happen, but which will require at least 30-40 years and large transfers from the core (the core being central-western france, benelux, germany, northern italy, nort-eastern spain) to the less competitive periphery, a policy which is not politically viable imho.
    Yea I rationally agree with you. Emotionally tho thats a problem. The main reason why our chancellor takes so long to decide upon things, is because she is waiting for the great idea which helps everybody even Greece. But as it seems this idea wont come. Americans and all other need to learn too in that regards that you cant rush some decisions. Even if taking so long for a decision does alienate the markets and the Americans suffer from that, well we all suffered from the crisis in the first place, tho germans had the least to do with it. Now we need to find a solution together, but in that process people have to accept that not everyone is the same and Germans always take time to decide to make a good decision ( except for Hitler, but he was austrian ).

    I inevitably more and more see the idea of a core Europe manifesting. The most difficult question is, what would be the criterias for a membvership in a core Europe ? Italy for example has one of the healthiest and strongest industries in Europe, but the government's debt will spike the first time I think in January '12. France on the other hand is alright with their debts, but their industry has problems and isnt that big. they have way too much nuclear power plants and are selling big parts of their waste to Germany, we have to store here. The plants are old and need to be modernized.

    I have seen numbers saying that if you want to build a Core Europe according to economical strength, France wouldnt be part of it. Thats actually a fact that wasnt too clear to me before.

    And the biggest question of them all: what to do with Greece and States approaching a breakdown. Obviously they need help, so you have to give them money and form some sort of controlling to see what they do with the money. Greece already hates my country for a reason I dont understand (namely because we took so long to give them our money). I do understand that as a strong export nation it was Greece money as well that we got, but we are still living in capitalism and its not like we hadnt to work for the products Greece wanted. Them calling us nazis I find utterly inappropiate and judging from the feedback we get from them I am emotionally nearly at the point to say: go to hell.

    The conclusion from this is: we cant help Greece, we cant help anyone. Our chancellor does understand that. if we want to institute some sort of emergency chute for Europe, this needs to be administered by a neutral organization. Otherwise everyone will put the blame on Germany when they forbid a country to buy another harbor for luxury yachts.

    My country isnt ready for that responsibility yet. America for example has to bear that responsibility for years already, but mine is not ready yet. There are still huge scarfs and an intellectual shame within the population because of WWII. it would feel wrong for us if we'ld win WWIII now, when you understand what I mean. This is coward and not helpful and a problem that needs to be overcome. But it is the explanation to why my country hasnt took on more responsibility already in the crisis.

    Anyway there are already two central banks (ECB and EBI) and they act very similarly to the way you have described. The ECB lends relatively "free" money to banks which in turn lend to businesses, while the EBI lends to private companies and individuals whose projects are considered viable.
    The authors said that basically commercial banks were able to "create" money as well and that he thinks that is the problem. He said that he wants only the ECB to be able to do so. Could you elaborate on that and what he means or if its bullshit ?

    Well the real problem is that you cannot force growth, the government literally does not have a clue as to how promote growth in industrialized countries. So what happens if you enforce a balanced budget in a recessive economy? Such economy spirals into deeper recession, just like it's happening in Greece and how it will soon happen in Italy, which will likely record a -3% GDP in 2012 and an exploding budget deficit.

    IMHO a good pact would be: force a balanced budget when growth is zero, however when there's a recession ongoing (say GDP going down more than -0,5%), let the budget deficit float down without imposing any punishment. Conversely, when growth is above 0,5%, punish countries that incur in a budget deficit.
    Yea I agree with that. Especially the part regarding "governmantl economical talent". In Germany you have the Bund, which controls the States; the States control the communes and the communes spent the money. I work for my commune and since you get a lifetime contract with a commune they are often run by idiots who have no clue what they are doing. Especially regarding industrial, I just prevented in my commune a big spending for geothermal energy. This could have been a wrong decision, but just because my commune has coal mining tradition it shouldnt be a reason for them to invest in geothermal.

    And as an engineer my opinion is that it is very bad to sawing the branch you sit on. And large scale geothermy would mean that they have to pump large amounts of water into the Earth and I think thats just stupid. I could be wrong but I think wind power, solar and storage power stations; as well as a better electrical grid are more important right now.
    [URL]https://www.youtube.com/watch?v=tEBvftJUwDw&t=0s[/URL]

  4. #14
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    Quote Originally Posted by pinkgraffiti View Post
    Can someone that is moderately informed about this matter just tell me what I should do with my money before the Euro collapses and I'm back to my national coin and it devaluates? Should I transfer my money to a British account now? Thanks, bye.
    If you think the Euro will collapse, don't invest in Sterling. All currencies will suffer if the Euro collapses - which it won't; too big to fail - but the British Pound will probably suffer the most along with all other European countries that haven't adopted the common currency. The Chinese Yuan should also fall down the stairs since the biggest consumers of Chinese goods just lost most of their spending power.

  5. #15
    Senior Member pinkgraffiti's Avatar
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    Quote Originally Posted by SmileyMan View Post
    If you think the Euro will collapse, don't invest in Sterling. All currencies will suffer if the Euro collapses - which it won't; too big to fail - but the British Pound will probably suffer the most along with all other European countries that haven't adopted the common currency.
    Hi. And thank you. Can you please tell me what you mean by "too big"? And also, why do you say the Euro just won't collapse? How do you see the situation evolve over the next months and year? Thank you.

  6. #16
    resonance entropie's Avatar
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    Quote Originally Posted by pinkgraffiti View Post
    Hi. And thank you. Can you please tell me what you mean by "too big"? And also, why do you say the Euro just won't collapse? How do you see the situation evolve over the next months and year? Thank you.
    Well if americans and europeans dont pull their shit together and try to work together instead of insinsting on a cowboy- or welfare state mentality in the future it wont be called U.S.S. Enterprise, but C.C.C.P. Mao I
    [URL]https://www.youtube.com/watch?v=tEBvftJUwDw&t=0s[/URL]

  7. #17
    FigerPuppet
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    Quote Originally Posted by pinkgraffiti View Post
    Hi. And thank you. Can you please tell me what you mean by "too big"? And also, why do you say the Euro just won't collapse? How do you see the situation evolve over the next months and year? Thank you.
    I don't have the background in economics to give you a proper qualified insight into the mechanisms of the market and so on, but what I mean by too big is that the consequences of a collapse - that is, a fast disintegration of the Eurozone - are so horrific that it is nightmare material of rational (that excludes UKIP and BNP, the main drives of which are emotional nationalism and xenophobia) policy-makers and financiers. Without even touching on the countless social consequences, one of the fiscal ones will be a global recession. A collapse will be a punch to the gut of the entire world - especially the US, whose main business partner is the EU. This means that national policy makers are willing to go to great lengths in order to ensure the survival and future stability of the Euro, even if it includes writing off some sovereignty to the Union, which is exactly what is needed. The danger is that the European public doesn't realize that they are hanging by a thread, so they will vote no to future referenda asking them to give up some fiscal sovereignty.

    Over the next few months we will see what was agreed upon at the summit a few days ago be condensed into some form of legal document that should, according to Merkel, be signed by March. This will most likely include the giving away of some fiscal sovereignty, so the challenge will be to persuade the public or somehow circumvent a public referendum. The people don't always know best - that's why we don't let the people decide how harshly a criminal should be punished - so I don't think the representatives of the people going ahead without any public referendum is a bad idea. Anyway, if the Eurozone + most EU member states without the common currency manage to sign this, budget discipline will follow and the stability of the Euro should be ensured.

    Another less positive consequence of the above will be a two-speed EU, with UK (and perhaps one or two other member states) walking while the rest runs. David Cameron flat out refused to participate in the proposed pact, which put him and his country in a lose/lose position. If the Euro collapses, the UK will be in no better position than had it agreed to participate in the pact, and the UK will be partly to blame for the collapse. If the Euro survives, which it most likely will, the UK will not even be invited to meetings that will directly influence the fiscal prosperity of the country. Why did he do this? He did it to protect the people partly responsible for the mess we are in now - The City of London - and at the same time appeasing the insane eurosceptics in his party, at least for now. Was it worth it? I don't think so. The UK is now on its way out of the EU and into the EFTA. British ideologues continually overestimate the importance of their country and think that their country will be at least as powerful outside of the Union as inside. What they don't realize is that once the UK is out of the EU, transaction costs and so on will increase, which will make business go from The City of London and into the new financial center of the Union. The country will become yet another European fringe economy offering esoteric services, ie. those that other European countries are trying to limit. The same will happen geopolitically. Obama will only call one phone number in Europe, and the owner of it will not be an outsider without any political influence inside the Union.
    Ever heard of the English newspaper headline "Fog in Channel, Continent Cut Off"? Well, that has changed to "Fog in Channel, United Kingdom Cut Off."

    FDG touched on the issue of growth. I unfortunately don't know enough about economics to comment on this, but I'm sure that very competent people are working to solve this if it is indeed an issue.
    Last edited by FigerPuppet; 12-10-2011 at 10:00 AM. Reason: Added some things.

  8. #18
    resonance entropie's Avatar
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    Quote Originally Posted by SmileyMan View Post
    I don't have the background in economics to give you a proper qualified insight into the mechanisms of the market and so on, but what I mean by too big is that the consequences of a collapse - that is, a fast disintegration of the Eurozone - are so horrific that it is nightmare material of rational (that excludes UKIP and BNP, the main drives of which are emotional nationalism and xenophobia) policy-makers and financiers. Without even touching on the countless social consequences, one of the fiscal ones will be a global recession. A collapse will be a punch to the gut of the entire world - especially the US, whose main business partner is the EU. This means that national policy makers are willing to go to great lengths in order to ensure the survival and future stability of the Euro, even if it includes writing off some sovereignty to the Union, which is exactly what is needed. The danger is that the European public doesn't realize that they are hanging by a thread, so they will vote no to future referenda asking them to give up some fiscal sovereignty.

    Over the next few months we will see what was agreed upon at the summit a few days ago be condensed into some form of legal document that should, according to Merkel, be signed by March. This will most likely include the giving away of some fiscal sovereignty, so the challenge will be to persuade the public or somehow circumvent a public referendum. The people don't always know best - that's why we don't let the people decide how harsh a criminal should be punished - so I don't think the representatives of the people going ahead without any public referendum is a bad idea. Anyway, if the Eurozone + most EU member states without the common currency manage to sign this, budget discipline will follow and the stability of the Euro should be ensured.

    FDG touched on the issue of growth. I unfortunately don't know enough about economics to comment on this, but I'm sure that very competent people are working to solve this if it is indeed an issue.
    I am glad we have no referendum in Germany, otherwise we'ld be out of the Eurozone, have the D-Mark again and stationed tanks on the borders. :/ Especially idealists in these times and days, may they be right or left are dangerous. Good old conservativism just is unbeatable
    [URL]https://www.youtube.com/watch?v=tEBvftJUwDw&t=0s[/URL]

  9. #19
    pathwise dependent FDG's Avatar
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    Quote Originally Posted by entropie View Post
    I partly agree with you. Since I am not to big on financial, it'd like to tell you about the social and economical dimension to this: in my opinion the wages are right as they are and shouldnt be increased. Even in the world wide financial crisis, the unemployement rates drop in Germany and its possible for people to have longterm and safe jobs. If you'ld increase the wages this will only lead to people being fired.
    Yeah, another solution is job creation in Germany (which is happening already). However this solution has the unfortunate side effect of many people flooding Germany from Italy, France, etc. (I am considering myself a potential transfer to Muenchen), which increases population density in Germany, which increases traffic, pollution, etc.

    But anyway I understand your point, most people's wages are already high enough, they can buy a lot of stuff, so any increase will likely be ineffective. It does make sense.

    A problem is the distribution. We have Unions for every branch. And while a steel worker would earn for example one sum, a nurse does earn 1/3 of that sum. And that tho the nurses job is needs a lot more responsibility and has a harder education. The thing is the Steel Workers Union is good, but nurses cant go to strike and they have virtually no Union. So distribution is a problem.
    Well, usually those jobs have a regulated pay (nurses), so they could definitely get a general pay rise if the economy is doing so well. So yes, trying to even the distribution by raising the salary of the "poorest" workers is another part of a potential solution.

    What you are right about and I thought about this as well, is that we have nearly no imports in Germany. I know by the hand a dozen of people, who'ld like to import some parma ham or nice mozarrella, I'll never forget my 3 week trip thru Italy, havent eaten that good in all my life again. I myself wanted to import an electrical circuit from the States some time ago, it was only possible to buy it directly in the States. I thought that shipping costs were horrendous but they were actually a joke. What tho was horrendous was the fee for german customs. And that is unacceptable, but the main reason why many imports fail. German customs too has so rigid rules that especially importing food is the most difficult. And that tho this years number 1 xmas present is food...
    Uhmm, that's really interesting. So in your opinion say food and wine from (say) Italy can't be easily found in german supermarkets? Our companies should look for ways to enter the market? (since it would both benefit our balance of payments and satisfy the german customers' desires)

    I don't think there are any customs between EU countries for food? I mean, there should not be, as far as I know.

    Yea I rationally agree with you. Emotionally tho thats a problem. The main reason why our chancellor takes so long to decide upon things, is because she is waiting for the great idea which helps everybody even Greece. But as it seems this idea wont come. Americans and all other need to learn too in that regards that you cant rush some decisions. Even if taking so long for a decision does alienate the markets and the Americans suffer from that, well we all suffered from the crisis in the first place, tho germans had the least to do with it. Now we need to find a solution together, but in that process people have to accept that not everyone is the same and Germans always take time to decide to make a good decision ( except for Hitler, but he was austrian ).
    Yeah well I see, I don't think there's an easy solution anyway, even if you decide for *something*, at the point we're now you'll be sure that someone will have to suffer, unfortunately. Which makes it even harder.

    I have seen numbers saying that if you want to build a Core Europe according to economical strength, France wouldnt be part of it. Thats actually a fact that wasnt too clear to me before.
    Well, France has Paris and the whole Ile de France region which is economically very strong, but its "provence" doesn't have a good industrial basis, that's correct.

    And the biggest question of them all: what to do with Greece and States approaching a breakdown. Obviously they need help, so you have to give them money and form some sort of controlling to see what they do with the money. Greece already hates my country for a reason I dont understand (namely because we took so long to give them our money).
    Eheh, they hate the fact that they can be controlled by foreigners. I understand them - I already hate the european commission now, because they are starting to come here and tell us how to run our balance sheet. I think, irrationally, many greeks would prefer to get no money, go broke, but at least be free from a direct international control.
    At the point we're now in europe, I think international sharing of debt is out of question. There isn't enough unity of character and the economies only converge slowly.

    The conclusion from this is: we cant help Greece, we cant help anyone. Our chancellor does understand that. if we want to institute some sort of emergency chute for Europe, this needs to be administered by a neutral organization. Otherwise everyone will put the blame on Germany when they forbid a country to buy another harbor for luxury yachts.
    Well yeah I mean, Greece has run a large current account deficit since the introduction of the euro. If it had no euro, the deutsch-mark would have appreciated whenever Germany exported and the greeks would have quickly been unable to buy german goods and thus the balance of payments would have tended towards equilibrium.

    It's a kind of dystopian mechanism, I personally have been to greece many times and so I cannot really share your feeling (and I've also read german newspapers that use very negative tones to describe the greeks themselves, so I understand their anger, in a way), many people there are hard workers - the lazy ones are almost exclusively concentrated in Athens, where government provides thousands of useless jobs to make voters happy.

    So yes, it's better to let a completely indipendent organization do the "save greece" part, lest having countries resent each other forever.

    The authors said that basically commercial banks were able to "create" money as well and that he thinks that is the problem. He said that he wants only the ECB to be able to do so. Could you elaborate on that and what he means or if its bullshit ?
    Yes, it's true they can "create" money because they can technically "loan" money for a total amount of 50 times their "reserves" - which is the liquidity (cash, not physical but still readily available) they hold. This isn't necessarily negative, since the right kind of credit (namely, credit to productive firms) has a positive impact on the economy. So I don't know exactly what's the problem with this?

    Yea I agree with that. Especially the part regarding "governmantl economical talent". In Germany you have the Bund, which controls the States; the States control the communes and the communes spent the money. I work for my commune and since you get a lifetime contract with a commune they are often run by idiots who have no clue what they are doing.
    Lol, that seems to be a very common problem indeed. I've yet to hear about a country were local state employees aren't considered the bane of mankind

    Especially regarding industrial, I just prevented in my commune a big spending for geothermal energy. This could have been a wrong decision, but just because my commune has coal mining tradition it shouldnt be a reason for them to invest in geothermal.

    And as an engineer my opinion is that it is very bad to sawing the branch you sit on. And large scale geothermy would mean that they have to pump large amounts of water into the Earth and I think thats just stupid. I could be wrong but I think wind power, solar and storage power stations; as well as a better electrical grid are more important right now.
    A very, very, very promising renewable project is Kite Gen:

    http://www.kitegen.com/en/

    but perhaps I've already linked this website to you, some time ago...

    @euro-collapse: personally, just personally, I think a shock return to national currency could happen. The situation in Italy is deteriorating quickly, many small-medium sized enterprises are closing because credit has dried up and internal demand is falling. Next year we will likely have a negative growth of -3% if further austerity measure are set in place, and thus we will necessarily fail our target of a balanced budget by 2012. If such a negative scenario was generalized, either the ECB decides to monetize some debt, or we will necessarily have to ask the Bank of Italy, and thus return to the lira...

    of course, there might be a great, positive technological shock (say, Kitegen is implemented on a nation-wide basis) that will generate growth and everyone will live happily thereafter this is something beyond economics and finance, so we can only try to do our best to promote those projects and get them funded
    ENTj 7-3-8 sx/sp

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    Quote Originally Posted by FDG View Post
    Uhmm, that's really interesting. So in your opinion say food and wine from (say) Italy can't be easily found in german supermarkets? Our companies should look for ways to enter the market? (since it would both benefit our balance of payments and satisfy the german customers' desires)
    Yes. The average german is a creature of habit and wont eat what he does not know. But since TV shows about cooking have become popular the general intrest has evolved. When I go to the supermarket, I am able to buy parma ham, but its from a german company most of the time. If I want to have real italian parma ham I have to go to an import store, which sells stuff at prices not affordable for a mere mortal. My gf is french and her favourite meal is horse steak. Try to get that here, its impossible. Sometimes they sell horse steak, but then its from a horse that was old and ill and shot because one felt pity for it.

    See Pizza for reference. When I was in Italy I was skimming the restaurants card for Pizza for about 30 minutes. Until I figured its actually under Antipasti cause thats what it is in Italy. In Germany a Pizza has a thick dough, not much unlike the American Pizza. So you cant serve it as Antipasti. Another thing is german pizzas aint stone baked. Only lately turkish restaurant runners in my hometown have discovered this market gap and are selling their asses of with pizza stonebaked. See there are days I'ld like to eat a italian pizza. Then there are days I like the german one and there are days I like to eat at PizzaHut, something with a huge cheese crust. The problem is, the average people being creature of habits aint like that and besides that I dont know if such a vast amount of offer in different food could be profitable. Still one thing is true: the availiabilty of american, italian or french food is very bad in Germany or far too expensive.

    Eheh, they hate the fact that they can be controlled by foreigners. I understand them - I already hate the european commission now, because they are starting to come here and tell us how to run our balance sheet. I think, irrationally, many greeks would prefer to get no money, go broke, but at least be free from a direct international control.
    At the point we're now in europe, I think international sharing of debt is out of question. There isn't enough unity of character and the economies only converge slowly.
    And I do understand that, wouldnt think any differently.

    It's a kind of dystopian mechanism, I personally have been to greece many times and so I cannot really share your feeling (and I've also read german newspapers that use very negative tones to describe the greeks themselves, so I understand their anger, in a way), many people there are hard workers - the lazy ones are almost exclusively concentrated in Athens, where government provides thousands of useless jobs to make voters happy.
    Yea thats true. When the Greece crisis happened german yellow press called them lazy and found other very harsh words. That was very dumb. Guess my frustration is more directed towards the statements lately about "Germany wants to win the third world war financially". I am just thick of that topic and I'ld like foreigners to recognize my country for other things aswell and not only always the same old shit. This may be a personal problem of mine, I cant really share with anyone who is not german.

    Yes, it's true they can "create" money because they can technically "loan" money for a total amount of 50 times their "reserves" - which is the liquidity (cash, not physical but still readily available) they hold. This isn't necessarily negative, since the right kind of credit (namely, credit to productive firms) has a positive impact on the economy. So I don't know exactly what's the problem with this?
    The author of the text I have the ops idea from said that this option leads to them speculating with the money. Like how they did (maybe I dunno) in Spain with investments in those appartments nobody needs. I dont know, I am already over the limit of my financial expertise .

    A very, very, very promising renewable project is Kite Gen:

    http://www.kitegen.com/en/

    but perhaps I've already linked this website to you, some time ago...
    Yea you showed me that and I like it too. Even seen it in a documentary on discovery channel some time ago .

    of course, there might be a great, positive technological shock (say, Kitegen is implemented on a nation-wide basis) that will generate growth and everyone will live happily thereafter this is something beyond economics and finance, so we can only try to do our best to promote those projects and get them funded
    Yes we are definitly on the same page and that tho you are one of those dirty Js .
    [URL]https://www.youtube.com/watch?v=tEBvftJUwDw&t=0s[/URL]

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