We need to discuss the euro

[Kyriakos]

A petition started yesterday, and having around 17.000 signatures by now. The end seems to be to stop the rise of hatred in the EU, and very particularly to cancel the current german gov (and assorted groups) attitudes:

http://germanexit.wesign.it/en

Based on the apparent threat by Schauble/germans that either Greece must leave or they will, and other such idiocies and misanthropy..

 

[Mechanicalsalvation]

They make their own debt. Their own homegrown, idiotic socialist politicians see to that.

They think they can get away with it because they believe the Germans will bail them out.
.

You may be surprised to learn but the goverments responsible for the majority of the debt in Greece were not socialist.

 

[Lohrenswald]

I can't pretend that I know how all this banking or debt or restructuring of debt or defaulting works or what really it means or entails. Same with the effects of net imports or exports.
Anyone care to explain?

However, my two cents in this is that the euro along with the entire EU itself was a bad idea that needs to be abolished.
Also, here in Norway politicians are much more keen on joining the EU than the people are, and I would imagine something similar could have been the case in smaller EU countries.

 

[Lillefix]

I don't know about the Euro, but the I think the EU is an absolute necessity. If it weren't for the EU China and the United States would steamroll the European countries and it would be much more difficult to negotiate fair trade agreements.

Among lots of other things.

 

[Verbose]

If there wasn't the EU, the Europeans would have to invent it. The Euro however, Europe might have to reinvent.

 

[Hygro]

So lying about their finances both before and after joining the EU is rational fiscal policy to you? Borrowing money just to give your government workers a wage increase that wasn't sustainable was rational fiscal policy to you? Ceasing just about all tax collection during election years to get in the good graces of voters is rational fiscal policy to you? Borrowing even more money to fund an out of control and over-bloated pension system is rational fiscal policy to you?

I'm sorry Hygro, but saying Greece had sound fiscal policies prior to the crisis is just not true, no matter how much you want it to be. No matter how much you want the narrative to be that way, Greece is not some poor innocent victim and the EU is not some greedy evil empire trying to subjugate the hard-working honest Greeks.

Well you've talked yourself into assuming I hold my position because of some ideological preference for one country over another.

This is about aggregate demand.

When you have an oversupply, as Europe did leading up to the crash--hence there being a freaking crash--boosts to demand are good. Tax cuts are good. Pension payouts are good. Breaking someone else's self-harming rules to help them and you is good (especially when after the fact they get to buy all your government property at a discount to "punish" you lol). Wage increases are good.

This is the economic reality, seperate from the story news editors want you to believe.

Spoiler more stuff :

The only thing that wasn't good was that they didn't just print the money on the government side and instead let the european banking system protected by bad economists informing ignorant politicians do it. Their private banking system grips Europe by the balls in a way even our (stronger) banking system does not do to us.

As such the prevailing legal system (and remember, laws aka guns trump economies) backed the private banks, who are profiting on every angle of this. They lent the money and boosted continent-wide demand and profited. They are getting paid back with interest (less than planned, more than needed) and are profiting. They get to buy up Greek assets for cheap and will either flip them for a profit, or own them profitably.

It may or may not be economically rational what the Greek government did and expected of other EU members. However mere economic rationality never ever ever played a role divorced from other factors in any decisions by any political actor. In the current crisis public perception and the idea that treaties are to adhered to or altered by mutual consent and not by covert or declaratory actions by one party played a huge role in the past and has been doing so in the past few weeks as well. By the way also a rational expectation as both disregarding the underlying legal framework governing the EU/Eurozone and disregarding the (voting) public 's perception outside Greece could have a destabilizing effect on the EU/Eurozone down the line and almost certainly would have a destabilizing effect on individual countries' governments again effecting the economies involved.

Hm, on one hand you have a categorically doomed legal framework, so you can't rationally expect it to continue unless you find that by whatever reason- ideology, misunderstanding, or malice- your union member acts against you (and ultimately itself). On the other, you risk upsetting people emotionally. What's more destabilizing: a system that is going to continually push countries into permanent financial crisis or reforming the system the first time the problem is identified? I would think holding the line and keeping nations in permanent debt crises is more destabilizing than fixing that. Don't you? (N.B. fascists come into power during recessions deepened by austerity.)


Germany actually expects every EU member state to run a trade surplus. Who is going to run the corresponding deficit? America and Japan? Not big enough. Sure, when America rebounds from a crash and Europe double dips its recession, you might have a couple of years. But overall? not reasonable.

 

[Nares]

You may be surprised to learn but the goverments responsible for the majority of the debt in Greece were not socialist.

Maybe not by Euro standards.

When you have an oversupply, as Europe did leading up to the crash--hence there being a freaking crash--boosts to demand are good. Tax cuts are good. Pension payouts are good. Breaking someone else's self-harming rules to help them and you is good (especially when after the fact they get to buy all your government property at a discount to "punish" you lol). Wage increases are good.

That sounds short-sighted. If you have an oversupply, just take the hit now. Why issue debt, only to be forced to take the hit later, while having to simultaneously pay off that debt?

They lent the money

Someone had to make the choice to issue the debt in the first place.

 

[Hygro]

I think you're a bit off base here. Greece incurred very high levels of debt in a currency that it cannot issue. Even in an MMT framework, that's irresponsible. It would have been totally different if they were Japan and issued even higher levels of debt in a currency they did control, but that's not the case here.

If Greece's currency was a pre-Keymes gold-standard currency or an external currency forced upon it by antagonists, you are right, it would have been irrational to borrow the money.

But since the Euro is their and their allies/partners, existing to serve their mutual interests, it's perfectly rational to think that if the currency itself goes bad, it will be reformed rather than adhered to for the sake of adhering to it.

Maybe the Greeks should have appreciated that in Germany even the anarchists don't jaywalk.

The Greeks fiscal policies were rational and responsible ?

When you spend 4 times the Finnish education system and yet have one of the lowest educations performance with Parents forced to hire private tutors.
When Public wages are 3 times to equivalent private
When Entire public department do NOT exist
When there is no public register for land
When public own companies are losing massive amounts of money and Billions and Billions in debt.
When the government spending says whatever they want it to say.
Where 10 Billion per year in Taxes are not collected


This is consider rational and responsible ?

"Their fiscal policy was irrational. I will prove this by listing a bunch of things that mostly aren't fiscal policy."

I don't know about the Euro, but the I think the EU is an absolute necessity. If it weren't for the EU China and the United States would steamroll the European countries and it would be much more difficult to negotiate fair trade agreements.

Among lots of other things.

Unfortunately for the EU, economically, China nad the United States currently ARE steamrolling Europe because of the EU.

That sounds short-sighted. If you have an oversupply, just take the hit now. Why issue debt, only to be forced to take the hit later, while having to simultaneously pay off that debt?

1)How do you "take the hit now"? What's now? The moment there's a single backlogged widget in a shelf? How do you know "now" and how do you take that hit?

You've got an onion layer problem that peels away to self-sufficient subsistence malthusianism.

2) Why "take a hit aka" crimp your real economic output so that it matches your preexisting artificial money distribution? Why not adjust the money situation so that it maximizes your real economic output and fixes the oversupply problem?

Over supply problems don't generally exist because their's literally too much supply but because that supply can't be properly cleared at the market do to mis-allocation or lack of demand. That is, the problem is "not enough money". Fortunately money does grow on trees. And cotton farms. And spreadsheets.

Someone had to make the choice to issue the debt in the first place.

Yes yes they must be punished. with leather belts.