The End of the Euro

[GoodSarmatian]

May it profit Germany. Would you say the German government's actions are those of a country which wants to keep the euro? Or perhaps the actions of a government which wants to take the medicine of tossing Greece now rather than when things are worse later? Why are they doing what they're doing?

Conventional wisdom is that Germany is the iggest benefactor of a weak Euro due to our overreliance on exports.
2010, when the whole mess started, I was convinced that Merkels's hard stance was entirely motivated by two upcoming German state elections and a chance to score cheap "no money for those lazy Greeks" points with the worst people in our country. It didn't help her party much, but she successfully prevented a quick resolution of the crisis.
I'm not sure why Germany is doing what it's doing now. I think it's clearly the wrong path, and it's destroying an notion of a shared European identity. The aim is probably to protect German banks which have lend a lot of money to Greece and given a lot of money to our two ruling parties. I am sure that the well being of the Greek people and economy and the stability of the European Union weren't factors. I am also pretty sure that the German government would prefer to keep the Euro, but it's not as important as chasing polls and keeping the donors happy.

The problems in Italy and Spain were offset by the bringing in of Greece which promised a new even lower tier of the pyramid was going to form. Once Greece blows out and Spain and Italy recognize that they really are signed on as 'bottom tier forever' I would expect those problems to resurface.

Italy and Spain have issues, but they're still too large and powerful to be screwed with the way we're screwing with Greece. And we still have Bulgaria and Romania.

 

[CavLancer]

How can a nation have an over reliance on exports if its so good at making stuff?

Maybe its not destroying the notion of a shared European identity as much as its hurting her party which I assume its doing? Or perhaps you are out of step with the majority?

Which is "The Horned City" if I may ask. I spent some time in Germany, wonder if I'm familiar with where you are.

 

[GoodSarmatian]

How can a nation have an over reliance on exports if its so good at making stuff?

Through overexploitation of cheap labor (compared to the rest of Europe of course) and very low domestic demand. I just think it's unwise to make yourself so dependant on foreign markets that you have absolutely no control over.

Maybe its not destroying the notion of a shared European identity as much as its hurting her party which I assume its doing? Or perhaps you are out of step with the majority?

I'm out of step with conservatives and the lumpenproletariat and I'm hardly the only one. Schäuble was never popular with the SDP and the coalition is under a lot of strain right now.

Which is "The Horned City" if I may ask. I spent some time in Germany, wonder if I'm familiar

with where you are.

Cologne. The horns refer to the cathedral's spires. I just thought it sounds cool. Like something out of Warhammer.

 

[CavLancer]

I hadn't heard that Germany has cheap labor compared to Europe. Germans on average make less than French and Italians?

Very beautiful old city, yes? Heard good things about Cologne though I've never been there. You are from the same region that my mother's family emigrated from over a century ago. Maybe we're related.

 

[GoodSarmatian]

I hadn't heard that Germany has cheap labor compared to Europe. Germans on average make less than French and Italians?

It depends how you calculate it. Wages haven't risen with productivity gains, and while labor costs more than in other European countries, the way our welfare system is financed effectively boils down to a regressive tax, ensuring that the common worker gets to keep a smaller percentage of his nominal income than the upper middle class. And that's assuming companies actually follow the law.
Labor may not be cheaper here, but workers are definitely more exploited.

Very beautiful old city, yes? Heard good things about Cologne though I've never been there. You are from the same region that my mother's family emigrated from over a century ago. Maybe we're related.

I don't have much to compare it to. The only other cities I've lived in are Mainz (which is "OK, I guess") and Frankfurt (which is horrible). It does have a reputation as the most open and tolerant city of Germany and our gay capital. Parts of it are certainly charming, and I just like the thought that the ancient border of the Roman Empire is always within walking distance.
It's quite unlikely that we're related. I was born in Germany, but my parent's came here from Yugoslavia in the seventies.

 

[Verbose]

I hadn't heard that Germany has cheap labor compared to Europe. Germans on average make less than French and Italians?

That's not really how it's structured. Germany has the numerically largest low-wage labour sector in the EU.

This might provide something:
http://www.reuters.com/article/2012/02/08/us-germany-jobs-idUSTRE8170P120120208

 

[GoodSarmatian]

That's not really how it's structured. Germany has the numerically largest low-wage labour sector in the EU.

This might provide something:
http://www.reuters.com/article/2012/02/08/us-germany-jobs-idUSTRE8170P120120208

As of January this year Germany has a minimum wage. It's slightly better now, but still pretty bad.

 

[Timsup2nothin]

As of January this year Germany has a minimum wage. It's slightly better now, but still pretty bad.

Does it apply to the "come to Germany and labor for our industrialists, live in poverty but send a few Euros to your even more impoverished families" workforce, or just to Germans?

That is, ultimately, what the EU is all about economically, yes?

 

[GoodSarmatian]

There are exceptions, but they don't single out immigrants. Only the unemployed and people who are just entering the workforce.

 

[CavLancer]

Fascinating, learned a lot today and its still early. :b:

 

[Takhisis]

No one made Greece join. Rather the opposite. The Greek government was jumping down eveyone's throat to get in at the time.

Oh, I'm not saying that the by then already irredeemably corrupt PASOK party machine wanted to get even fatter pickings whichever way they could.
But, curiously enough, all this bailout really consists of the German and other governments overtly bailing out their own private banks, who are Greece's creditors.
Now, the euro was an economic tool to implement political goals. Why didn't any of the existing EU members veto Greece's entry into the eurozone? Why weren't those doctored financial statements checked? Perhaps there were pickings to be had by all and not just PASOK? Perhaps they were more interested in that? Or perhaps they were blinded by that horrible combination of ‘Death to ideologies+Europe 4evah+random squee’ that meant other equally corrupt countries, e.g. Andreotti and Craxi's Italy or Aznar's Spain, also joined without having their finances thoroughly checked?

And back to the Greek government, I'd have them all jailed. Also EU officials for good measure, and irresponsible bankers. The last bit worked for Iceland.

--------------------------------
Also, an operation remarkably similar to the eurozone was carried out in Argentina a few years earlier when, in effect, the U.S. dollar had become the Argentine currency. In less than half a decade, it had caused widespread unemployment, destroyed all local industry, etc. It was also propped up by ballooning sovereign debt, i.e. IMF and other loans. The USA dropped the ball on that one because GWB didn't give a crap about South America and they had a commodities boom while Shrubby was pulling his Middle East stunts, but if they'd leaned on Argentina to stay on the dollar back then, well, Argentina wouldn't just have gone down but stayed down. Right now, Germany's throwing good money after bad and they know it, in part because Merkel and her cronies to want to acknowledge their own incompetence.

 

[Agent327]

But, curiously enough, all this bailout really consists of the German and other governments overtly bailing out their own private banks, who are Greece's creditors.

Errr, no, it's the Greek banks that are in trouble. Also, no private banks are being bailed out by the EU. That really isn't a EU responsibility.

Why didn't any of the existing EU members veto Greece's entry into the eurozone?

Because exchanging national currencies for the euro was done on a voluntary basis. The UK declined.

Why weren't those doctored financial statements checked?

They were. Hence the current Greek debt crisis situation.

 

[Phrossack]

Through overexploitation of cheap labor (compared to the rest of Europe of course) and very low domestic demand. I just think it's unwise to make yourself so dependant on foreign markets that you have absolutely no control over.

What, then, should Germany rely on economically?

Cologne. The horns refer to the cathedral's spires. I just thought it sounds cool. Like something out of Warhammer.

Echt? I just went there on Thursday and Friday, and sat right in front of the cathedral! I'm just 30 minutes away!

 

[GoodSarmatian]

What, then, should Germany rely on economically?

It's OK to rely on exports, but we're overdoing it. Domestic demand has been notoriously low for decades and it would be healthier for us and the rest of the EU if wages rose with productivity.

Echt? I just went there on Thursday and Friday, and sat right in front of the cathedral! I'm just 30 minutes away!

Technically I live in a city that nobody on this forum has ever heard of, but I can walk to Cologne in less than 30 minutes.

 

[Verbose]

What, then, should Germany rely on economically?

As the GoodSarmatian sort of indicated, we absolutely don't want you Germans to have a BAD time of it.

Really, we want you to get some substantial pay-raises, and get more of the good stuff. You know, the joys of consumption. To live it up a bit more, like the rulers of Europe you just might be.

 

[Terxpahseyton]

As Volker Pispers said: In the 90s Germany had the highest wages in Europe. Today it has the largest low-wage-sector in Europe. It is a populist statement. But its sentiment speaks some truth.
Moreover, since the 70s/80s an export-orientated economy means in the case of Germany an economy which uses a lot of the value created to invest abroad. A trend which has dramatically increased in recent years as every blind fish-head could have seen, wouldn't he have been blinded by the glamorous tales of world-wide success of German companies.
Papers praised Germany as an "export world champion", but the other side of the coin is an export surplus which means nothing but that more money comes out than comes in.

Under such conditions, it is extremely easy for companies to run high profits while maintaining that they need to keep wages low so to remain "competitive". And the government has passed legislation to support that endeavor. We now praise this as the reason for the German recovery after years of recession. Weather that is true or just a political and ideological-motivated myth while the actual reason is simply an improved demand situation, I don't know. It is clear what the media is telling the people to believe. Similarily how it loves to echo that there today are more people employed in Germany in absolute numbers than ever before, while neglecting that work hours have dwindled and where higher in the 90s (because of low-pay short-time jobs courted by favorable legislation) It also is clear that the share of the cake by those doing the actual concrete work for the German society has decreased.

 

[Hygro]

You mean more product goes out than comes in, right? Money's doing the opposite.

 

[Terxpahseyton]

@Hygro
I meant what I said.

The commercial balance or net exports (sometimes symbolized as NX), is the difference between the monetary value of exports and imports of output in an economy over a certain period, measured in the currency of that economy. It is the relationship between a nation's imports and exports.

https://en.wikipedia.org/wiki/Balance_of_trade

But you caught me off-guard and it is possible that I got something wrong about the technicalities of trade balances. I am willing to settle on "value" rather than money, since this is all my point is about, really.

Oh and here is a map of trade balances highlighting the situation while we are at it, from the same wiki page:

 

[Hygro]

Yeah, not arguing, just clarifying.

 

[Phrossack]

As the GoodSarmatian sort of indicated, we absolutely don't want you Germans to have a BAD time of it.

Really, we want you to get some substantial pay-raises, and get more of the good stuff. You know, the joys of consumption. To live it up a bit more, like the rulers of Europe you just might be.

I am proud to be mistaken for a German