I know, I know. It's Alex Jones. And for some reason there's footage of Mark Rudd (I think) from the '68 Columbia strike.
I watched it w/o sound and just watched the police brutality.
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That's not discipline. And if you borrow too much, and then discover you can't afford the bill, it will likely impact on your lifestyle as you point out - but that's a necessary corrective, I would suggest.And here we are, back at the moralistic handwaving. They deserve austerity and depression and hardship, because their economies are the result of a moral failing. Their failing, however, was Germany's gain. You even hint at it:
In other words, they were borrowing incontinently to buy stuff they couldn't afford from surplus countries like China and Germany due to low productivity at home.Their moral failing was not having the industrial and economic base that Germany and France had when the EU was formed. So, then, the EU was fine when it was enriching the interior, but now that the interior is doing fine at the expense of the periphery, suddenly the EU is a failure and the periphery nations should leave, to deal with the damage done on their own.
I wasn't making a moral point, I was making a political point. The southern European governments have all backslid on necessary reforms when the going got less tough - normally after a conference, or intervention by the ECB - repeatedly. They seem to think that they can ride this out with a bit of window-dressing, but they can't as the return of the crises demonstrates. The crisis conditions hold their feet to the fire, to do what is right by their citizens in the long term (albeit that the citizens don't appreciate it much, but then there are vested interests which will resist change, especially in the relatively closed economies of southern Europe). If someone else is stumping up the cash, it is necessary to reciprocate - otherwise that is unfair, immoral even. I understand that they need the transfers. What you don't understand is that, to avoid lurching from crisis to crisis again and again, they need more than just that - genuine reform. If that doesn't happen, the EU will probably break up under domestic political pressure from disgruntled northern European electorates. The crisis helps concentrate minds.
As for your comments about moral failings re industrial policies or people deserving austerity... I never said that.
What's more, you even point out that it's only the currency union causing the lasting harm, and that, despite the UK acting the same way, they were able to ride things out relatively unharmed because their currency wasn't beholden to an uninterested foreign power.
Relatively unharmed? Try living here - we are relatively better off compared to Sothern Europe but we have lost massive amounts of production. And we have a productivity problem too, issues with our reliance on finance, a massive budget deficit... It is not the case that because we have our own monetary policy that our economic woes somehow evaporate. The people of the UK are paying, I can assure you.
You have conceded every fact of my argument...
Your argument was that because certain nations ran low government debts they were disciplined - I corrected that. Since you haven't argued the point, I assume you've actually accepted mine. The outrage is just misunderstanding on your part.
... but the only reason you can come up with is that Spain deserves to fail to teach them a lesson. (And, admittedly, you weren't arguing for it, as far as I can tell.) It's very easy to wish misery on the Spanish people if you yourself happen not to be Spanish.
Which I've addressed above.
Not only is this monstrous, but it's also self-defeating. As I said before, depression is a communicable disease, and no economy is immune. If the interior nations let Spain's debts go septic, they're going to find that the collapse of the banking sector doesn't leave them untouched. Then, there won't be anyone to turn things around.
I'm sure you are right that the collapse of Spain would be disastrous for the euro. However, perhaps you should tell the Spanish Prime Minister, rather than me, since he seems to be ballsing things up. Not that he is alone.
Also, you were half-right, before, about the overheated political rhetoric and Nazis and whatnot. It is going to teach the periphery nations to hate the interior for inflicting this situation on them. Because, regardless of the initial cause of the crisis, the ECB could have done a great deal to mitigate this but did not, chiefly because of interior interests. You cannot watch your neighbor's house burn down while they plead for help and expect them not to hate you! Honestly, you mentioned Nazis in the same breath that you justified inflicting economic hardship in order to teach a moral lesson to an entire nation. Think about that.
No, the ECB couldn't do anything because it simply wasn't allowed to under its constitution. It is not supposed to engage in fiscal policy because that could be inflationary and cause moral hazard - that's in its constitution. Plus a central bank can only mitigate or stave off problems for a while - without fundamental economic reform in the countries affected, the ECB cannot make them suddenly more productive, which is the key issue. And given its constitutional limitations, that is why a series of new structures are being created - slowly - to address EU-wide financial issues, although whether they will actually arrive in time or actually work is moot. All the central banks are really doing right now is creating bubbles in debt markets to keep interest rates low. That's both inflationary and likely to end in tears.
As for the burning house analogy, I've alluded to the issues above and in other posts. In terms of the Greeks, for example, I appreciate that they are suffering great hardship. But they seem to think (and are probably encouraged to think by politicians keen to deflect the blame for their own policies) that this is being unfairly inflicted on them, when actually their democratic choices led them to implement closed, cronyistic economic and industrial policies which have bitten them on the arse now the music has stopped. In other words, they chose the easy way out. Another example - Spain has had chronic unemployment, especially youth unemployment, for a couple of decades. It is worse now, but the massive levels of unemployment they are currently experiencing are a facet of their failure to tackle vested interests in good times. Germany, on the other hand, engaged in significant reforms under Gerhard Schroder.
So I'd say the situation of the burning house is actually, "Hey! My house - which isn't properly built but which came with a free TV - is on fire. Come and put it out - Nazis!" It's not the most compelling pitch. You can hardly be surprised if some people want to resist that call. That's a fundamental political problem that runs through the whole of the euro crisis. It's not even really wrong, in a moral sense, even if it is not expedient or wise.
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Something...vaguely insulting
So your personal attack aside...do you have an opinion on the colossal economic shark that a Russian Diamond Corporation would be if it suddenly had 2+ trillion carats (that's about $13,200,000,000,000,000 - as in thirteen thousand-trillion) to financially power it?
They like to think free trade - but in the end these guys could employ a billion people on fifty thousand a year for twenty years - that's real economic power.
They could pay a billion dollar bounty on the head of all future US Presidents.
They could finance Lunar or martian Colonization by 10 million women.
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If they sell them to us, we'll just build a giant laser and take our money back.
Or conversely, finally figure out nuclear fusion and control the worlds energy.
Something...vaguely insultingSo your personal attack aside...do you have an opinion on the colossal economic shark that a Russian Diamond Corporation would be if it suddenly had 2+ trillion carats (that's about $13,200,000,000,000,000 - as in thirteen thousand-trillion) to financially power it?
They like to think free trade - but in the end these guys could employ a billion people on fifty thousand a year for twenty years - that's real economic power.
They could pay a billion dollar bounty on the head of all future US Presidents.
They could finance Lunar or martian Colonization by 10 million women.
Ummmm... You aren't really serious, are you???
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Something...vaguely insultingSo your personal attack aside...do you have an opinion on the colossal economic shark that a Russian Diamond Corporation would be if it suddenly had 2+ trillion carats (that's about $13,200,000,000,000,000 - as in thirteen thousand-trillion) to financially power it?
They like to think free trade - but in the end these guys could employ a billion people on fifty thousand a year for twenty years - that's real economic power.
They could pay a billion dollar bounty on the head of all future US Presidents.
They could finance Lunar or martian Colonization by 10 million women.
I'm thinking a serious deflation in the price of diamonds.
Seriously, who are they going to sell 13 thousand trillion worth of diamonds to?
Considering these are super-hard diamonds- they would sell them to companies who want to etch Integrated circuits on the diamond in your wife's diamond engagement/wedding rings - so they can record the blessed event. Mostly to industrial buyers. Weirdo's who what to carve normal diamonds into bits that lock together into a Diamond Throne, Cut Regular Diamonds down into an almost perfect lens...stuff like that.
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Ummmm... You aren't really serious, are you???Something...vaguely insultingSo your personal attack aside...do you have an opinion on the colossal economic shark that a Russian Diamond Corporation would be if it suddenly had 2+ trillion carats (that's about $13,200,000,000,000,000 - as in thirteen thousand-trillion) to financially power it?
They like to think free trade - but in the end these guys could employ a billion people on fifty thousand a year for twenty years - that's real economic power.
They could pay a billion dollar bounty on the head of all future US Presidents.
They could finance Lunar or martian Colonization by 10 million women.
They're Russian - I'm thinking Lunar Brothels and Casinos all run by the Russian Diamond Corporation. Free of Earthly Government. Given the amount of Money its all worth They would be the only ones capable of financing a Massive Lunar Colonization Effort on the ten million population scale.
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I wasn't making a moral point, I was making a political point. The southern European governments have all backslid on necessary reforms when the going got less tough - normally after a conference, or intervention by the ECB - repeatedly. They seem to think that they can ride this out with a bit of window-dressing, but they can't as the return of the crises demonstrates. The crisis conditions hold their feet to the fire, to do what is right by their citizens in the long term (albeit that the citizens don't appreciate it much, but then there are vested interests which will resist change, especially in the relatively closed economies of southern Europe). If someone else is stumping up the cash, it is necessary to reciprocate - otherwise that is unfair, immoral even. I understand that they need the transfers. What you don't understand is that, to avoid lurching from crisis to crisis again and again, they need more than just that - genuine reform. If that doesn't happen, the EU will probably break up under domestic political pressure from disgruntled northern European electorates. The crisis helps concentrate minds.More moralizing. The periphery governments "need" to demonstrate their worthiness for support from the ECB and the interior by slashing government spending, which is just making the problem worse. They're only allowed medicine if they "reciprocate" by tearing their sores open.
Er, yeah. Bear in mind who is paying - taxpayers. I'm one of those, I want to know my money is spent responsibly. Only an idiot thinks that is unreasonable under any circumstances. It should certainly be appropriate for there to be some sort of democratic accountability before elected politicians go handing out billions to other countries. It is for politicians to make the case for this. And the recipient countries need to demonstrate they are using this money appropriately otherwise the politics of the situation will mean that the electorates in the creditor countries will turn against them and bailouts in general.
It is certainly the case that an insistence on deep austerity cuts right now is in many ways not helpful. I'm not really disagreeing with that. The austerity measures seem to arise from a misunderstanding that the issues are about government spending when actually they are about competitiveness. But because the banks need to be recapitalised, probably at public expense, there will be some deep public spending issues arising at some point, as well as supply-side reforms. The issue is (or should be) primarily one of timing. On the other hand, European countries also don't have the capacity to fund deficit spending in the same way as the US, as the euro is much less of a reserve currency and for demographic reasons.
And it is a big ask to expect Germany to basically fund all of this off its own bat and credit rating. When we blithely talk about assisting these countries, that is what it actually means. Basically, asking German taxpayers to pay for the mistakes of others.
No, the ECB couldn't do anything because it simply wasn't allowed to under its constitution. It is not supposed to engage in fiscal policy because that could be inflationary and cause moral hazard - that's in its constitution.And, of course, it doesn't matter one bit that one of the most powerful interior nations was responsible for dictating that constrained role due to their overblown fears of inflation, eh?
Overblown fears? First, you are aware of hyper inflation in Germany's past? Second, it's funny how everyone is turning to the country with the overblown fears to bail them out because - hey look! - they actually have their economic house more-or-less in order. A bit more overblown fear - or, to give you its alternative name, economic responsibility - from other countries might have gone a long way. Anyway, the ECB has no democratic mandate - there are already accountability issues with the model of handing monetary policy to unelected officials (and that's before we even go near the fact that there is no clear control or democratic mandate at a national level). Do you want them to be making fiscal policy too? Does democracy mean nothing, given that the US was founded on the principles of "No taxation without representation"?
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Er, yeah. Bear in mind who is paying - taxpayers. I'm one of those, I want to know my money is spent responsibly. [...] It is certainly the case that an insistence on deep austerity cuts right now is in many ways not helpful.Your first paragraph is at odds with your second. At the moment, ECB measures that amount to easing and foreign bailouts are predicated on austerity, with the argument that the austerity is necessary to "demonstrate responsibility" and "restore confidence". You are using the exact same rhetoric as those arguing for austerity, while also claiming that you're not calling for austerity. What are you calling for, then? "Responsibility" isn't a course of action.
No it isn't, or it only looks that way if you take the sentences out of context. I'm used to your dishonest posting style but that's lazy and obvious, even for you.
First, you are confusing the roles of the council of the national governments and the ECB in the bailouts. The ECB isn't bailing any countries out or requiring austerity - it can't. That comes through inter-governmental conferences and is conducted between countries. The ECB perates through lending to banks, as you might expect for a monetary authority. So your comments are garbled.
Second, see below re moral hazard. I am acknowledging the issue that you can't seem to see.
Overblown fears? First, you are aware of hyper inflation in Germany's past?Yes. Too much inflation can be dangerous. That said, inflation wasn't the cause of Weimar Germany's problems, but rather a symptom of a completely depressed and destroyed economy. It's confusing an effect for a cause. More practically, artificially low Euro inflation favors Germany over everyone else because inflation inherently favors debtors over creditors, and oh look Germany is much richer than the rest of Europe how about that.
True, but irrelevant - the ECB constitution is intended to favour sound money and economics and moral hazard, not just stave off hyperinflation. As for your ludicrous conspiracy theory - Germany doesn't actually want to lend money to these countries, so the inflation rate is irrelevant there too. They are doing it to preserve the euro, not because they see it as a way of making money. Actually, they see it as a way of losing lots of money if the countries default. Your comments betray a basic ignorance of the situation.
A bit more overblown fear - or, to give you its alternative name, economic responsibility - from other countries might have gone a long way.Hey look it's the morality argument. Again. Sorry, Spain and Ireland, you suffered a little too much from a global economic downturn without resolving it on your own, despite having responsible government spending. We've found an after-the-fact reason that the downturn that hit everyone is somehow your fault, so you don't deserve help. Sorry!
OK, there's actually no logical connection between what I wrote and your characterisation of it.
I'm also slightly at a loss as to whose fault you think it was, then. Like I said, the fault was their personal economic and political choices. I mean, how come Germany isn't in the same sitaution - because they made different choices. Clearly no individual was to blame - personally, I think boom and bust will exist as long as we continue to think like African hominids, and that it is intrinsic to economic life. Nor was I talking about not helping those countries as such. But it needs to be on a hard-headed assessment of what is in the national interest of the donor countries.
And I imagine you can see the issues of moral hazard emerging from this too, which can be toxic - after all, it was moral hazard that brought us to this in the first place. Moral hazard in banks, moral hazard where countries that couldn't cope with it piggybacked on Germany's credit rating. It's real, it causes lots of damage, and a refusal to acknowledge that weakens your arguments. You might chose to set aside concerns about moral hazard in favour of a greater good (the avoidance of massive economic meltdown, for example) but to ignore it as an issue is stupid.
Aubrey, honest question...
What should Spanish-Portuguese-Greek people do? Look with no complains how our economy is worse is passing month with no complains?
Spain have done many things wrong? ABSOLUTELY. But the current economic politics are only doing things worse.
Everyone should drop the Euro and be done with it.
If the ship is sinking, grab the life boats instead of going down with it.
I must say, I've learned more about economics in the last year on these messageboards than I did in, uh [counts on fingers and toes], 15 years of public school.
Shut up, Grand Magus.
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Considering these are super-hard diamonds- they would sell them to companies who want to etch Integrated circuits on the diamond in your wife's diamond engagement/wedding rings - so they can record the blessed event. Mostly to industrial buyers. Weirdo's who what to carve normal diamonds into bits that lock together into a Diamond Throne, Cut Regular Diamonds down into an almost perfect lens...stuff like that.Something...vaguely insultingSo your personal attack aside...do you have an opinion on the colossal economic shark that a Russian Diamond Corporation would be if it suddenly had 2+ trillion carats (that's about $13,200,000,000,000,000 - as in thirteen thousand-trillion) to financially power it?
They like to think free trade - but in the end these guys could employ a billion people on fifty thousand a year for twenty years - that's real economic power.
They could pay a billion dollar bounty on the head of all future US Presidents.
They could finance Lunar or martian Colonization by 10 million women.
I'm thinking a serious deflation in the price of diamonds.
Seriously, who are they going to sell 13 thousand trillion worth of diamonds to?
Diamonds are just rocks. Their industrial applications are not enough to merit them being considered a wildly valuable commidity.
Diamonds are only valuable right now because of an artificial shortage. The companies that own diamonds and diamond mines carefully control the amount that reach the market to inflate the price. Your scenario would rectify that nicely and devalue them to the price of gravel.
It would be a good way to stick it to DeBeers, though.
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Aubrey, honest question...
What should Spanish-Portuguese-Greek people do? Look with no complains how our economy is worse is passing month with no complains?
Spain have done many things wrong? ABSOLUTELY. But the current economic politics are only doing things worse.
The people, or the government(s)? In the end, the big problem with the euro is that it does not allow for cross-border transfers to countries which are in trouble in the short term. There need to be reforms in the southern European countries to improve their competitiveness, but these inflict misery in the medium term (which is why most politicians avoid them, as they will not see the benefit until likely after their political careers). Because the solution will take time to actually come good, there needs to be a mechanism to shift money around the eurozone to cover crises. This is the big difference between the dollar and the euro, where there are massive federal transfers between states in the US. However, because the euro is made up of individual countries the politics of that is extremely difficult, which is why (so far) it isn't happening. It is also the case that Germany could do more by reforming its own services sector which might boost demand in the eurozone.
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Bailing out the periphery without some structural reforms (which are not necessarily austerity measures, which you both agree were counter productive at this time) presents a moral hazard because it provides an incentive to take unreasonable risk, since the EU will bail countries out. Not that those periphery countries were immoral. Reforms in banking, public and private spending, tax policy and financial regulations are needed in the long term, however.
Thank you, that states things more clearly than I managed.
Second, it's funny how everyone is turning to the country with the overblown fears to bail them out because - hey look! - they actually have their economic house more-or-less in order.
The backside to Germany having "their economic house more-or-less in order" is the fact of how they have kept much of their competitiveness.
They have done so by going "the American way," slashing salaries so you now have an increasing number of working poor in Germany. So, yes, they have kept their competitiveness on the international market, but at a high cost to many citizens.Another problem with the whole situation (not related to the quoted text) is the fact that the EU has been on a slightly doomed mission from the very beginning. The member countries are simply not homogeneous enough to enact a smoother running union. Aubrey touches on this a bit.
Without stricter rules and guidelines from the beginning (i.e. making an actual union rather than just a collection of very different countries) would have been necessary to really make it work. This incremental expansion and consolidation of power has just made things even worse.
Now, could that actually have happened? Maybe, maybe not. The streamlining of the member countries would have meant some serious changes in most countries, from both ends of the spectrum.
Compare the slightly more laissez faire attitude towards some forms of corruption in e.g. Greece and a couple other countries to the almost non-existent corruption in e.g. the Scandinavian countries (not a moral condemnation, just making a comparison that's easy to grasp and is documented).
The attitude towards so many issues in society is difficult to streamline.
So, what do we do then? I'm not sure, it's a clusterf*ck in some areas. Even our center-left government here in Denmark has embraced the austerity measures, despite the protests from the various parties own membership - who agree that unless you're blinded by right-wing politics or have a clear (EU-centric) political agenda, austerity isn't going to do any good.
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Yeah, you still haven't said what this entails, and everyone else who is talking about "reassessment" and "confidence" and "responsibility" is demanding steep austerity cuts. You keep vaguely hinting at what the periphery countries should be doing differently, then changing the subject when I ask you what exactly that is. So, what exactly should Spain and Ireland be doing differently?
Supply-side reforms. I said it several times.
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The backside to Germany having "their economic house more-or-less in order" is the fact of how they have kept much of their competitiveness.
They have done so by going "the American way," slashing salaries so you now have an increasing number of working poor in Germany. So, yes, they have kept their competitiveness on the international market, but at a high cost to many citizens.
There's nothing profoundly American about this. It's economics, and it works like that wherever you are. As for the "high cost" to their citizens, I'm sure they are all much happier to be in Germany - arguably, "the Greek way" imposes more costs on its citizens and in a much more drastic way. And not just in a crisis. I'll say it again - Spain had massive youth unemployment in the good times, never mind the bad. Its problems in that regard were always much worse than Germany's.
Another problem with the whole situation (not related to the quoted text) is the fact that the EU has been on a slightly doomed mission from the very beginning. The member countries are simply not homogeneous enough to enact a smoother running union. Aubrey touches on this a bit.
Without stricter rules and guidelines from the beginning (i.e. making an actual union rather than just a collection of very different countries) would have been necessary to really make it work. This incremental expansion and consolidation of power has just made things even worse.
Now, could that actually have happened? Maybe, maybe not. The streamlining of the member countries would have meant some serious changes in most countries, from both ends of the spectrum.
Compare the slightly more laissez faire attitude towards some forms of corruption in e.g. Greece and a couple other countries to the almost non-existent corruption in e.g. the Scandinavian countries (not a moral condemnation, just making a comparison that's easy to grasp and is documented).
The attitude towards so many issues in society is difficult to streamline.
So, what do we do then? I'm not sure, it's a clusterf*ck in some areas. Even our center-left government here in Denmark has embraced the austerity measures, despite the protests from the various parties own membership - who agree that unless you're blinded by right-wing politics or have a clear (EU-centric) political agenda, austerity isn't going to do any good.
Denmark isn't in the euro, so actually the austerity may not be so bad as the currency can adjust. In the end, the banking crisis and the recesssion which precipitated the current euro crisis will require massive public spending, tearing holes in government spending plans. Some sort of fiscal consolidation is inevitable unless taxes are to rise massively, which is both economically problematic and politically divisive. The issue when. For the countries already in freefall which cannot adjust through a weaker currency, now is probably not the time. But it will have to happen eventually.
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And this is (somewhat) reasonable when talking about Greece. (The enforced consequences to somehow correct this moral hazard are not, however.) It's less reasonable when you get to countries like Italy and Portugal, and ridiculous when you're talking about Spain and Ireland. Not all of the countries in trouble mismanaged their economies; they merely did not benefit from free trade making the rich countries richer.
Well, clearly they did, actually, otherwise why are they where they are now when other countries are not? Both Portugal and Italy have had very low growth levels, even in the boom. This isn't an accident, this is down to microeconomic policiy mismanagement. The only country which grew less than Italy over the last decade or so was Zimbabwe. Their education system, employment system, legal system, political system are all poor. They are massively in debt, and were before the crisis. It is ripe for reform. Similarly with Portugal, which has a very bloated and inefficient public sector and an inefficient and unproductive private sector. Again, ripe for reform. Similarly with Spain, with its massive unemployment rate (20%+ in the good times).
Ireland mismanaged it banks dramatically during the boom. It allowed extremely excessive borrowing on property and construction of houses that no one would ever live in. It had a massive current account deficit, which was handwaved away but got it into serious trouble. A lot of stuff it got right, in particular its educated and flexible workforce, and that has helped it bounce back (relatively). But it's hardly that it was just unlucky.
It is also a moral argument. It is the argument that those countries won't learn to...do whatever it is they're supposed to learn, I'm not even clear on that...unless sufficient hardship is inflicted upon them. It's a ridiculous moral argument, since the people who are suffering have only the most tenuous connection to acting on this lesson, but it is still a morality play.
Pay attention - say it with me, slowly. SUPPLY-SIDE REFORM. These countries went into the crisis with significant problems that were papered over in the debt-fueled boom. Once the debt blew away, so did their economies. This isn't about morality, it's about economics. Supply-side reform hurts, but it hurts a lot more if you don't do it. Morally, these countries were failed by their political instituions, although as they are democracies the electorate is also responsible too. They could have bitten the bullet, like Germany did in the 1990s, but they didn't. But it's not a moral argument to suggest that a country should commit to reform to improve their competitiveness and productivity - it's to ensure that they don't come back with the begging bowl in a few years' time when things turn bad again, thereby costing the creditor nations even more money.
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True, but irrelevant - the ECB constitution is intended to favour sound money and economics and moral hazard, not just stave off hyperinflation. As for your ludicrous conspiracy theory - Germany doesn't actually want to lend money to these countries, so the inflation rate is irrelevant there too. They are doing it to preserve the euro, not because they see it as a way of making money. Actually, they see it as a way of losing lots of money if the countries default. Your comments betray a basic ignorance of the situation.
Little fact: Germany banks have already lent a lot of money to those countries. More money will be lost by Germany (and England, BTW) if those countries default completely that will be lost by helping them.
Another little thing: most of the cost of Germany reunification was on the shoulders of the UE, not on Germany alone, and that is why it did go so smoothly, but apparently there is little willingness to reciprocate.
Considering these are super-hard diamonds- they would sell them to companies who want to etch Integrated circuits on the diamond in your wife's diamond engagement/wedding rings - so they can record the blessed event. Mostly to industrial buyers. Weirdo's who what to carve normal diamonds into bits that lock together into a Diamond Throne, Cut Regular Diamonds down into an almost perfect lens...stuff like that.Something...vaguely insultingSo your personal attack aside...do you have an opinion on the colossal economic shark that a Russian Diamond Corporation would be if it suddenly had 2+ trillion carats (that's about $13,200,000,000,000,000 - as in thirteen thousand-trillion) to financially power it?
They like to think free trade - but in the end these guys could employ a billion people on fifty thousand a year for twenty years - that's real economic power.
They could pay a billion dollar bounty on the head of all future US Presidents.
They could finance Lunar or martian Colonization by 10 million women.
I'm thinking a serious deflation in the price of diamonds.
Seriously, who are they going to sell 13 thousand trillion worth of diamonds to?
Diamonds are just rocks. Their industrial applications are not enough to merit them being considered a wildly valuable commidity.
Diamonds are only valuable right now because of an artificial shortage. The companies that own diamonds and diamond mines carefully control the amount that reach the market to inflate the price. Your scenario would rectify that nicely and devalue them to the price of gravel.
It would be a good way to stick it to DeBeers, though.
I know yellowdingo is a little nuts, but there is a little bit to this story. The diamonds in this crater aren't regular diamonds. They're too small, hard and rough to be used for jewelry. They're roughly twice as hard as normal diamonds. Their applications are entirely industrial, for lasers or research into nuclear fusion.
Russia isn't just sitting on the largest supply of these diamonds, they're sitting on the majority of all of these diamonds in the world, be an extremely wide margin.
Due to economics, they can't capitalize on the whole thing at once. There just isn't enough demand for the high end uses that you need these diamonds for.
The crater is important, I don't think it's going to destabilize the world economy though.
Pay attention - say it with me, slowly. SUPPLY-SIDE REFORM.
Supply side economics don't work very well.
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True, but irrelevant - the ECB constitution is intended to favour sound money and economics and moral hazard, not just stave off hyperinflation. As for your ludicrous conspiracy theory - Germany doesn't actually want to lend money to these countries, so the inflation rate is irrelevant there too. They are doing it to preserve the euro, not because they see it as a way of making money. Actually, they see it as a way of losing lots of money if the countries default. Your comments betray a basic ignorance of the situation.Little fact: Germany banks have already lent a lot of money to those countries. More money will be lost by Germany (and England, BTW) if those countries default completely that will be lost by helping them.
Another little thing: most of the cost of Germany reunification was on the shoulders of the UE, not on Germany alone, and that is why it did go so smoothly, but apparently there is little willingness to reciprocate.
Yes, I know, which is why they don't want to euro to collapse. I was talking more about the bailouts, but the same principles apply. The risks of capital loss far outweigh the potential gains, so the comment above that Germany favours low inflation to maximise its returns is basically false - getting their money back is more important.
As for German reunification, it certainly impacted upon the rest of the EU as it impacted upon Germany's economy. However, the main direct cost was borne by the West Germans through a special levy. Plus, the cost of integrating East Germany surely pales before the cost of bailing out half of the EU.
I'm talking primarily about deregulation.
Deregulation of what, and to what extent ?
For instance, further deregulation of the financial doesn't seem the way to go : we already saw how some economical actors wrecked the economy to futher their own ends.
On the german reunification topic : other UE members contributed through the UE development funds. But their main direct support was the canceling of the London Accords of 1953 and of the war debts that came with them. Greece alone was entitled to collect more than 130 billion euros from Germany !
I think Freddy Mercury sums up the European crisis best.
" easy come, easy go
Little high, little low
Any way the wind blows, doesn't really matter to me, to me"
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I'm talking primarily about deregulation.Deregulation of what, and to what extent ?
For instance, further deregulation of the financial doesn't seem the way to go : we already saw how some economical actors wrecked the economy to futher their own ends.
On the german reunification topic : other UE members contributed through the UE development funds. But their main direct support was the canceling of the London Accords of 1953 and of the war debts that came with them. Greece alone was entitled to collect more than 130 billion euros from Germany !
I find this fascinating, what does Aubrey think should have its regulation cut?
Did't public debt increase because banks were given greater leeway to offer borrowing to those increasingly incapable of dealing with debt?
Isn't Greece's problem built on a foundation of cronyism and tax-avoidance (essentially, poor enforcement of existing legislation).
Which laws should the UK government do away with?
I still think living on deficit is living on lies.
Sure, maybe increasing public spending helps in the short run, but then it creates inflation, on which everybody loses.And for those who think prices have not increased that much, think especially about Real Estate prices.
Moral stances such as "living on deficit is living on lies" has nothing to do with modern economics. It's just as useful in the debate as "progressive taxes are bad because... they are bad. Jesus said so" I heard from some Bible Belt guy. Creation of money has been decorrelated from real, tangible goods for a long time now.
By your reasoning, our paper money is a lie : just a promise made by the government that it is worth something.
I don't think than going back to the archaic gold standard would help a lot.
On real estate : it depends on where you live. Paris downtown has known a big real estate bubble, coming in a large part from all the rich guys who wants a flat there to bolster their ego (as nice as a third yacht !). Prices in other part of the country fall between a consistent raise and an almost flat line.
We have nowadays an negligible inflation (under 2 %), an historical low (look at the graphs here). Inflation is currently the very least of our worries.
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One thing I have always found intriguing is the study regarding the differences between the living conditions a society can support and the living conditions it actually supports.
One of the basic principles of modern Economics is that "The quality of life of a country depends on its production". While there are many debates to be had regarding that principle, it does tell a very important thing: What we can produce defines what we can consume, and what we can consume defines how we can live (production and consumption here has to be understood in its full extent, not just shoes and cars. Healthcare, education, and entertainment are also products).
Now, deficitary spending relies on credit. The fundamental concept behind credit is "To make future income available now"; ie, you want to buy a home now, but it will take you 10 years to gather enough money, so you borrow the money now and pay it back over the years (plus interest to make up for both the risk involved and the cost of opportunity it represents to the one that gave you the money. Credits are investments).
Thus, when a country overspends, it is making future production current, using credit to emulate. And since production will determine life quality, it is trading future life quality for current. Which is perfectly normal and quite reasonable, assuming the country will be able to continue growing in such a way as to back up both its future production and the future production made current.
Problem is, overspending also artificially distorts the level of quality of life a society can sustain, and said distortion eventually makes its way into the perception said society has on its own rights and demands. This wouldn't be problematic if the nation kept a stable borrowing model that never goes above what it will need in the future (which basically means "Don't borrow more money than what you expect to spend plus what you expect to produce"), which in turn requires the country to have reasonable expectations of the level of production it will be able to achieve.
So, the question remaining is, if a country like Greece clearly shows that it spent far above its own capacity to produce, what is the actual level of life quality it can consistently sustain? If we take out deficitary spending and make the numbers sincere, how well can Greek society support itself?
Of course, once you give something to a society it is extremely hard to take it away. The political costs are tremendous, and anyone who tries to go against it will likely have its career ruined. But how sustainable is the situation of a society that lives better than it can afford, yet is unwilling to decrease said quality to its actual capacity? Sure, some adjustments can be made, but I'm not "some adjustments" will be enough to bring Greece's life quality in line with its effective capacity.
My guess is that it will take a group of political and social martys ready to sacrifice their careers for extremely unpopular measures in order to give future Greek generations a stable future. The alternative is, I believe, the usual: The country sinks progressively deeper into a structural crisis until something gives, causing considerably more harm, and then eventually something else gets rebuilt, which does not necessarily have to be better, and takes considerably longer.
One solution.
F~$+ yeah!
It's interesting to see that as soon as the people disagree on the fundamentals of how a society works, "democracy" looses importance and "security" becomes top concern - security for those at the top, that is.
Banning protests? No problems for the EU!
Kicking out semi-democratically elected leaders and instituting their own preferred ideologist? No problems for the EU!
Beating people to pulp for protesting against this new world order (or rather, old world order - it's the same corporativistic private feudalism that we've had for quite a while now)? No problems for the EU!
Aiding militant fascists in torturing anti-fascists? No problems for the EU!
Everything becomes so much more apparent now when the s#$# hits the fan.
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Moral stances such as "living on deficit is living on lies"I still think living on deficit is living on lies.
Sure, maybe increasing public spending helps in the short run, but then it creates inflation, on which everybody loses.And for those who think prices have not increased that much, think especially about Real Estate prices.
I won't answer the rest, but it is not about morality by any means.
You can choose to believe that spending more will solve the current problems. I don't.
I believe the choices offered are : shoot yourself a bullet in the foot now, or shoot yourself a full ammunition clip in the brain later.
Given this, I know what I would choose. It may be a grim choice, but then again I don't believe in fairy tales, and I think the current "everyhting is well" talk is just that.
YMMV, of course.
I don't believe in fairy tales
Sure you do. You seem to believe that global macroeconomics functions the same way as a household budget. You believe that aggressively cutting gov't spending will somehow magically shore up the economy.
Targeted government spending is absolutely necessary in times of crisis, like we are in. Now, if you want to debate WHERE we should target that spending I'm all ears. But your statements have shown you to have drunk the kool-aid of austerity and that you have a fundamental misunderstanding of monetary theory as it relates to global macroeconomics.
I don't believe in fairy talesSure you do. You seem to believe that global macroeconomics functions the same way as a household budget. You believe that aggressively cutting gov't spending will somehow magically shore up the economy.
Targeted government spending is absolutely necessary in times of crisis, like we are in. Now, if you want to debate WHERE we should target that spending I'm all ears. But your statements have shown you to have drunk the kool-aid of austerity and that you have a fundamental misunderstanding of monetary theory as it relates to global macroeconomics.
The great issue here is that the situation is not so clear-cut. While government spending can indeed help countries get out of crisis, it does not work under all scenarios.
In particular, the problem here is that some of the economies simply do not have the money to spend it without causing even more problems.
Deficitary spending requires two things to work:
1) A structured, localized spending in areas that have will have a possitive social return in the long run, such as what the US did after the Great Depression by throwing money into large-scale infrastructure construction.
2) A strong State able to back the spending and an economic outlook that will be able to offset the deficit eventually.
I'm sure that with enough heads the former can be met. It is the second that doesn't seem likely for countries like Greece.
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While government spending can indeed help countries get out of crisis, it does not work under all scenarios.
Can you give me a historical example where cutting social programs and shifting the tax burden onto the lower classes has improved an ailing economy?
If there are two choices and one sometimes works and the other literally never works or has worked...well...
As to your second point, that's why Germany has to step in. There are complex issues at play in Greece, and every country is different.
Honestly, I can't really imagine a solid foundation for some of the spending Greece is doing. It really is a problem, not necessarily the amount, but the wastefulness. Because of circumstances it doesn't make sense to try to redirect this spending, the wasteful stuff should just go away. The problem with some of the EU guidelines was that the spending cuts were being done with a hammer, not a knife, so good spending was going away at the same time, or even going away in the place of wasteful spending.
Greece is a mess, I don't think any kind of economics is going to solve it.
I think the supply/demand argument should be more pointed at France and the UK. How does supply side reform make their economy better?
The problem with supply side reform, you make it cheaper or simpler to produce a good. But the problem is if you have unemployed workers, they still can't afford it. Supply side arguments only make sense when you are talking about specific laws that inhibite legitimate and beneficial economic activity. They do not cure unemployment.
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While government spending can indeed help countries get out of crisis, it does not work under all scenarios.Can you give me a historical example where cutting social programs and shifting the tax burden onto the lower classes has improved an ailing economy?
If there are two choices and one sometimes works and the other literally never works or has worked...well...
As to your second point, that's why Germany has to step in. There are complex issues at play in Greece, and every country is different.
If I were going to end Unemployment payments- it would be to shut down the bureaucracy that is dependent on there being unemployment. So instead of moving the burden to the unemployed - pay them in shares in companies that produce resources which will provide them with incomes that match unemployment. Build a State owned Power Company that builds wind farms and have the unemployed as share holders - so the unemployment payment can be cut. Once everyone is a share holder in windisawesomedotgov and puling in a personal income of fifty thousand a year they become tax payers - not tax eaters.