European Debt (Deutsch)Mark II

[Shryke]

Oh yeah, this won't really solve anything it's just preparing to avert absolute disaster if necessary.

Good to know it's looking like that's needed!!!

[Horza]

But it isn't really. It's giving a bit more time for Europe to come up with something. People are reading this as suggesting the ECB might pull its finger out but there's nothing actually to say that.

[Shryke]

The ECB doesn't need to pull it's finger out of anything to cause disaster. It just needs to keep doing nothing.

[ThinkerX]

The ECB doesn't need to pull it's finger out of anything to cause disaster. It just needs to keep doing nothing.

Probably looking at a major financial disaster no matter what the ECB does or does not do at this point. Question is, 'what course of action or inaction results in the smallest disaster?'

[Jon AS]

Well, since it might become relevant I might as well indulge myself and bring up a pet peeve of mine: it's spelled "Deutsche Mark", and the e at the end of "deutsche" is not silent.:P

[quirksome]

Bribery - though it won't be termed such.

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Are you saying the EU is corrupt?! And bribes its member states with rail/roads? Noway!

Rumor starting to percolate on the more paranoid sites - US Fed had to resort to draconian measures to keep a major Euro Bank from doing a Lehman Brothers type collapse today. Something called 'Deutche Bank' (sp?). Probably nothing to it, though, and even if there was, how much damage could it cause?

Interesting as I haven't heard anything about Deutsche Bank liquidity issues but I will ask Mr Q who is closer to the markets than me...

Yeah, this is just a bunch of central banks making it easier to lend to each other - not to other banks. It's a symptom of the slow-mo run on Euro banks as they've begun to freeze credit to each other. It will probably hold of a credit crunch for a few weeks but nothing more.

Hasn't interbank lending jumped a few tens of basis points in the last week? Never a good sign...

[quirksome]

Well, since it might become relevant I might as well indulge myself and bring up a pet peeve of mine: it's spelled "Deutsche Mark", and the e at the end of "deutsche" is not silent. :P

Sorry Jon AS and other Teutonic peoples! Mich entschuldigen, Hilfe! how do I edit the title of the thread?

So it's not pronounced Douche-Mark then? :leaving:

[Padraig]

Local politicians might opt to do something - like tinker with the tax laws or launch an investigation as to why some corporations products all turned out to be defective or something like that...but instead, this unelected group decides that said tax tinkering or investigation is a threat to their interests even though it is at least arguably a benefit to the country in question overall.

Nope. That's not what those suggested rules are about at all. The idea is that you have to simply live within your means. Making huge extrapolations from that would be incorrect.

The bailouts are a direct result of the imbalances caused by the Euro: essentially the Southern European states are stuck with current account deficits they can do nothing about.

Those countries aren't simply in a mess because of the Euro. Its a lot more complicated than that.

[Shryke]

The current issues are largely Euro related.

[Liffguard]

Those countries aren't simply in a mess because of the Euro. Its a lot more complicated than that.

The Euro certainly isn't the only (or even primary) cause of most of these countries problems. But it is presenting the biggest obstacle to being able to deal with those problems.

[The Marquis de Leech]

Trade adjustments should be done gradually, not suddenly. Otherwise Germany sees a frightening spike in unemployment as the export industry collapses. And given Germany's fear of inflation and adoration for austerity, I'd worry that they'd put themselves in the USA 1929-32 situation. Further all the German banks would need to be immediately bailed out by the German government - they hold a lot of Euro debt which would collapse in value. Their balances sheets would be underwater. Bank runs would follow.

The cost of recapitalising the German (and French) banking system vs the cost of bailing out Greece every six months for the rest of time, and trying to bail out too-big-to-fail-and-too-big-to-save Italy. It's one or the other really.

[The Iceman of the North]

The current issues are largely Euro related.

How so? To me it seems more like the problem are governments spending more money than they should.

[Lummel]

Those countries aren't simply in a mess because of the Euro. Its a lot more complicated than that.

I agree with this, the PIIGS would be trouble what ever their currency was called and whatever pictures and portraits they had on their notes and coins. The Euro is a complicating factor but resolving that isn't going to deal with low growth, small tax bases, the scale of tax evasion, government liabilities, the reactions of the money markets or low demand.

[Horza]

This just isn't true of all countries. Portugal and Greece have taxation and deficit problems.

Ireland and Spain were running surpluses until both had to bail out their banks when their loony property booms (fuelled in part by cheaper borrowing costs thanks to their euro membership) went tits up.

Iceland did something similar with foreign asset purchases but it has the luxury of devaluing its own currency and telling its creditors to get stuffed .

[Lummel]

Indeed. Although I have heard that Italy has a bit of a black market and issues with tax avoidance too.

[Shryke]

How so? To me it seems more like the problem are governments spending more money than they should.

No. There are big issues with internal trade deficits (ie - Germany is making all it's money selling it's shit to southern europe) and the current crisis for the PIIGS as a whole was largely started by a shock as the money flowing from the big players in the euro dried up suddenly. (Mexico saw the same sort of thing after NAFTA) Basically, you loosen up restrictions on trade and shit and money/investment will flow outward to the less rich countries. Eventually, this will stop/drop off/etc. This acts as a huge, largely unavoidable shock to those economies. All that money flowing outward also raises prices in the outer euro countries, which needs to be corrected but can't be because Germany refuses to let inflation rise.

Now, some places like Greece have OTHER issues as well, but don't let that get in the way of what the real problem is. Not every country in the shit right now had large fiscal imbalances or the like.

[Shryke]

Indeed. Although I have heard that Italy has a bit of a black market and issues with tax avoidance too.

Yes and yes afaik, but they were still quite stable. Large debt but they could easily handle it. (before the crisis anyway)

[The Progressive]

Dec 9th should be interesting. Right now there's a three-way staring contest between the market, Merkel and the masses.

The market wants eurobond and/or more aggressive action from the ECB or ECB-IMF (which seems more and more likely by the days).

We all knows that Merkel want ............. more fiscal discpline among the EU block.

The masses are still about as dumb and clueless as a month ago ............. really now, riotings in Greece and Portugal gonna help you how? Fucking idiots.

[Padraig]

Yes and yes afaik, but they were still quite stable. Large debt but they could easily handle it. (before the crisis anyway)

But the point is that there is a lot of negative factors in the mix. The fact that the Euro is making those problems worse doesn't mean all the other problems are small. Taking the Euro out of the mix just delays the inevitable problems for most countries.

[Shryke]

But the point is that there is a lot of negative factors in the mix. The fact that the Euro is making those problems worse doesn't mean all the other problems are small. Taking the Euro out of the mix just delays the inevitable problems for most countries.

What problems? Greece would be in the shit regardless of the euro, yes. But neither Ireland nor Italy would have any major issues and Spain wasn't too terrible either.

Shit, Ireland and Italy's problems are pretty much 100% due to the economic crash and being on the euro.