Greece

[TLS Guy]

Why should Germany write of the Greek debt if the Greeks are not willing to change their ways? Thats freaken ludicrous. And don't be fooled.. The Greek aren't about to go through what England went through with Maragret Thatcher. The Greeks seem to have a false sense of entitlement that needs to change first before they could ever hope to make that country sustainable again. I don't forsee that happening soon, do you?

Maybe Germany is better leaving the EU and going it alone again and saying to hell with everyone.

My first answer to you is a practical one. The Germans and the other EU counties are going to loose the money loaned to Greece anyway. So a write down is the correct approach. Not that Greece should be off the hook. You are correct in a lot of what you say.

However this whole problem is amplified because of severe structural problems in the EU. For one thing there is no Federal tax or budget, just assessments for things like agricultural subsidies (which the French love and the UK hates) and paying enormous fees to officials. For instance the unelected Claude Junker is paid more than Obama.

The last higher than expected assessment to the UK caused a big row.

The other issue is that the EU has no bankruptcy laws. In fact the legal system is strange. Any financial case in the EU can be litigated in a country of choice. Most often chosen to try cases is the UK. This is because British justice is thought to be fair and not bent, like it so often is in continental Europe. My nephew's father in law is a QC who has made an enormous fortune litigating these cases. He demands $1.5 million to open a file. My niece is a young barister making a name for herself in this area and doing very well.

If a US state got into the kind of trouble Greece is in, it would be handled like the Detroit bankruptcy. The EU has nothing similar. What Greece really needs is a bankruptcy mechanism but there isn't one just endless fudging and chaos.

There are a lot of people in Germany who would like to leave the Euro, and the EU, but not the numbers in the UK for EU exit. The UK is still on Sterling and never joined the Euro project.

A recent well conducted study showed that the average UK household would be better off by $1600 a year by Britain leaving the EU.

The Eurozone countries have economically performed far worse than the non Eurozone countries, especially the UK. The fact that the Euro is a crude currency peg, is putting the Eurozone at constant risk of the deflationary trap. That especially applies to France.

 

[Swerd]

I don't understand it well enough to believe that what happened in the UK under Thatcher during the 1980s has any resemblance to Greece and its euro crisis. For one, Greece cannot control the euro, as the UK could control the pound.

I saw this article which explains the Greek crisis better to someone, like myself, who doesn't know all the recent euro history:

http://www.washingtonpost.com/blogs/wonkblog/wp/2015/07/14/greece-has-surrendered-but-europe-has-lost-too/?hpid=z4

 

[TLS Guy]

England would have suffered the same fate as Greece if it wasn't for Margaret Thatcher. She had the forsight and stones to make tough economic decisons which hurt a hell of a lot people. What she did had to be done. Many workers had to leave England and get jobs in Germany and other European countries. Hell, Mark Knopfler made reference of this in the album "Ragpicker's Dream".

Actually Margaret Thatcher's policies made an awful lot of Britons very wealthy. Only a few die hard unionists and spongers were hurt.

It was her defeat of the power of the unions with her careful planning and steel spine that turned the tide. A defeat the unions have never forgotten.

 

[3db]

My first answer to you is a practical one. The Germans and the other EU counties are going to loose the money loaned to Greece anyway. So a write down is the correct approach. Not that Greece should be off the hook. You are correct in a lot of what you say.

However this whole problem is amplified because of severe structural problems in the EU. For one thing there is no Federal tax or budget, just assessments for things like agricultural subsidies (which the French love and the UK hates) and paying enormous fees to officials. For instance the unelected Claude Junker is paid more than Obama.

The last higher than expected assessment to the UK caused a big row.

The other issue is that the EU has no bankruptcy laws. In fact the legal system is strange. Any financial case in the EU can be litigated in a country of choice. Most often chosen to try cases is the UK. This is because British justice is thought to be fair and not bent, like it so often is in continental Europe. My nephew's father in law is a QC who has made an enormous fortune litigating these cases. He demands $1.5 million to open a file. My niece is a young barister making a name for herself in this area and doing very well.

If a US state got into the kind of trouble Greece is in, it would be handled like the Detroit bankruptcy. The EU has nothing similar. What Greece really needs is a bankruptcy mechanism but there isn't one just endless fudging and chaos.

There are a lot of people in Germany who would like to leave the Euro, and the EU, but not the numbers in the UK for EU exit. The UK is still on Sterling and never joined the Euro project.

A recent well conducted study showed that the average UK household would be better off by $1600 a year by Britain leaving the EU.

The Eurozone countries have economically performed far worse than the non Eurozone countries, especially the UK. The fact that the Euro is a crude currency peg, is putting the Eurozone at constant risk of the deflationary trap. That especially applies to France.

You can also find highly over paid officials outside of the EU. That is not endemic to the EU alone. I also question the business about settling legal claims of countries involved in the EU outside of the EU. That doesn't make a whole lot of sense. You may as well point these cases to the US or Canada. Maybe there is an underlying English component in the case that makes them go to England. And like I told Swerd, Margaret Thatcher prevented the same thing from happening to England. Based on what you are saying, Germany should stop its hemoraging of monies to countries that are NOT willing to change their economic ways. What I find unfair of the anti German sentiment is that Germany got to where they are through hard work and good economic policies. That should not be looked upon negatively.

 

[TLS Guy]

That's the British view who always looked at themselves as outsiders to Europe. I would definately take it with a grain of salt. Bottom line is, Greece needs to desperately clean up its act just like Margy Thatcher did in England. Problem is Greeks aren't willing to change. They feel entitled to monies that Greece just can't afford at this time. That's what it ultimately boils down too and using smoke and mirrors and anti Euro sentiment to try hide what the real problem is just foolish.

I don't deny that Greece has severe political and institutional problems along with bribery and corruption. However the severe structural and political problems of the EUSSR have amplified it out of all proportion and beyond reason. The fact is Greece has unsustainable debt which the UK never had. Also the debt issue has been severely aggravated by the whole EU/Eurozone construct. This is not just the view from the UK, but other economists in the world including here in the US.

You really need to take a much more critical look at the EU and especially the Euro. If you do you will be appalled.

 

[markw]

 

[3db]

Actually Margaret Thatcher's policies made an awful lot of Britons very wealthy. Only a few die hard unionists and spongers were hurt.

It was her defeat of the power of the unions with her careful planning and steel spine that turned the tide. A defeat the unions have never forgotten.

Actually, it hurt a lot of people in the lower class where the unions were entrenched.

 

[TLS Guy]

You can also find highly over paid officials outside of the EU. That is not endemic to the EU alone. I also question the business about settling legal claims of countries involved in the EU outside of the EU. That doesn't make a whole lot of sense. You may as well point these cases to the US or Canada. Maybe there is an underlying English component in the case that makes them go to England. And like I told Swerd, Margaret Thatcher prevented the same thing from happening to England. Based on what you are saying, Germany should stop its hemoraging of monies to countries that are NOT willing to change their economic ways. What I find unfair of the anti German sentiment is that Germany got to where they are through hard work and good economic policies. That should not be looked upon negatively.

Britain is an EU member country and therefore governed by a lot of EU law. Britain is not a Eurozone country. You need to understand the difference between being an EU county outside the Eurozone and an EU country in the Eurozone. So claims adjudicated in the UK are NOT adjudicated out of the EU.

One last point. Germany was becoming uncompetitive and going into recession because of increasing value of the Deutchmark. They refused to inflate to devalue and roped in a bunch of South Med countries and Ireland to join the Euro. That is how they restored competitiveness. Then they floated cheap loans to buy German goods especially cars. Now I agree these countries did not have to take the bait, but they did.

Because of all this the Euro is devaluing. It used to cost me $2 for every Euro on my trips to continental Europe. My recent trip in the Spring was close to parity. Right now it is pretty much parity, and I expect it to go below parity before all this is over.

Which ever way you look at it recent events have and will do enormous damage to the Euro project. Future decisions will compound the problem.

You are right about one thing though, Germany should leave the Eurozone.

 

[3db]

I don't understand it well enough to believe that what happened in the UK under Thatcher during the 1980s has any resemblance to Greece and its euro crisis. For one, Greece cannot control the euro, as the UK could control the pound.

I saw this article which explains the Greek crisis better to someone, like myself, who doesn't know all the recent euro history:

http://www.washingtonpost.com/blogs/wonkblog/wp/2015/07/14/greece-has-surrendered-but-europe-has-lost-too/?hpid=z4

I read the article. I understand about having independent currencies and the advantages of that in trying to get out of debt instead of relying on a common currency controlled by Germany. However, it really gets under my skin when they paint Germany with a bad brush. Germany is loaning the money to Greece. They should have the right to dictate the terms especially when previously agreed upon terms were reneged on by Greece. If you and I defaulted on our loans, what would the banks do to us? That article is BS from that standpoint. That being said, I don't agree that Greece should sell off its historical items to help pay off the debt. That too me is extremist. However, playing the devil's advocate, if Greece hadn't reneged on their previous agreement, they would not be in this dilhema now.

 

[3db]

Britain is an EU member country and therefore governed by a lot of EU law. Britain is not a Eurozone country. You need to understand the difference between being an EU county outside the Eurozone and an EU country in the Eurozone. So claims adjudicated in the UK are NOT adjudicated out of the EU.

Thanks for explaining.

One last point. Germany was becoming uncompetitive and going into recession because of increasing value of the Deutchmark. They refused to inflate to devalue and roped in a bunch of South Med countries and Ireland to join the Euro. That is how they restored competitiveness. Then they floated cheap loans to buy German goods especially cars. Now I agree these countries did not have to take the bait, but they did.

Because of all this the Euro is devaluing. It used to cost me $2 for every Euro on my trips to continental Europe. My recent trip in the Spring was close to parity. Right now it is pretty much parity, and I expect it to go below parity before all this is over.

Which ever way you look at it recent events have and will do enormous damage to the Euro project. Future decisions will compound the problem.

You are right about one thing though, Germany should leave the Eurozone.

For Germany's own good but that would cripple most of the EU.

 

[Swerd]

… However, it really gets under my skin when they paint Germany with a bad brush…

I'm glad you understand the monetary aspect, because I find it difficult to explain. My entire understanding of macroeconomics comes from a single course taken in college, long before the existence of the European common market, much less the Eurozone.

As far as being unfair to Germany, they earned plenty of distrust in the past (my prejudices lurk just beneath the surface). And they earned it more recently by trying to manipulate the euro for their own benefit while hurting other eurozone partners. That's no way to run a political, financial, or transfer union.

 

[3db]

I'm glad you understand the monetary aspect, because I find it difficult to explain. My entire understanding of macroeconomics comes from a single course taken in college, long before the existence of the European common market, much less the Eurozone.

As far as being unfair to Germany, they earned plenty of distrust in the past (my prejudices lurk just beneath the surface). And they earned it more recently by trying to manipulate the euro for their own benefit while hurting other eurozone partners. That's no way to run a political, financial, or transfer union.

Well look to our own shore Swerd and outsourcing. Who benefited from that? Mainly the corporate elite. As far as manipulation goes, all countries including the US are involved in manipulation for their own self interests and carry them out.

 

[Irvrobinson]

Well look to our own shore Swerd and outsourcing. Who benefited from that? Mainly the corporate elite. As far as manipulation goes, all countries including the US are involved in manipulation for their own self interests and carry them out.

That's not correct, 3db. Reducing costs benefits every stockholder, and also the remaining employees. Unless a company is cost-competitive it'll fail for one reason or another over time. Either their products will be high-priced, and they'll lose market share, or the company will have less to spend on R&D, and there's an increased likelihood their products will fall behind the competition that can spend more. Corporations don't work in a vacuum. If your competition is employing a low-cost strategy, you probably have to do it too.

The only way to manufacture in high cost geographies is to produce premium products (like New Balance does with their high-end running shoes SKUs) or use a lot of automation, so you don't need very many workers in the first place. The auto companies, for example, do a combination of both strategies. Any way you look at it, if someone can do something cheaper than you can, you have to take advantage of the lower cost strategy or lose.

 

[3db]

That's not correct, 3db. Reducing costs benefits every stockholder, and also the remaining employees. Unless a company is cost-competitive it'll fail for one reason or another over time. Either their products will be high-priced, and they'll lose market share, or the company will have less to spend on R&D, and there's an increased likelihood their products will fall behind the competition that can spend more. Corporations don't work in a vacuum. If your competition is employing a low-cost strategy, you probably have to do it too.

The only way to manufacture in high cost geographies is to produce premium products (like New Balance does with their high-end running shoes SKUs) or use a lot of automation, so you don't need very many workers in the first place. The auto companies, for example, do a combination of both strategies. Any way you look at it, if someone can do something cheaper than you can, you have to take advantage of the lower cost strategy or lose.

I kind of over simplified it a little Irv but you can't deny that outsourcing has hurt a huge population base. Sure we have access to a lot more goods than we would have if manufactured in house. However, I rather have less goods knowing I've employed more locally (US and Canada) and are contributing to the tax pool.

What I find really dumb and Canada is very guilty of this is selling our raw resources for cheap and importing the finished product for much more than we sold the raw resources for. Keep the raw resources at home, develope them in house and sell them in house instead of importing the finished product.

 

[TLS Guy]

I kind of over simplified it a little Irv but you can't deny that outsourcing has hurt a huge population base. Sure we have access to a lot more goods than we would have if manufactured in house. However, I rather have less goods knowing I've employed more locally (US and Canada) and are contributing to the tax pool.

What I find really dumb and Canada is very guilty of this is selling our raw resources for cheap and importing the finished product for much more than we sold the raw resources for. Keep the raw resources at home, develope them in house and sell them in house instead of importing the finished product.

And that is exactly what Greece has done! It is chock full of restrictive featherbedding practices.

For instance pharmacies can not be chain owned and have legislated opening hours. There is layer upon layer of these types of uncompetitive practices. This is far more the problem than being spendthrifts.

So you would turn Canada into Greece, end of story!

 

[TLS Guy]

Thanks for explaining.



For Germany's own good but that would cripple most of the EU.

It would not cripple it but free it, and most economists agree. It would actually hurt Germany.

 

[3db]

It would not cripple it but free it, and most economists agree. It would actually hurt Germany.

That remains to be seen. Germany became an economic power long before the EU was ever conceived.

 

[3db]

And that is exactly what Greece has done! It is chock full of restrictive featherbedding practices.

For instance pharmacies can not be chain owned and have legislated opening hours. There is layer upon layer of these types of uncompetitive practices. This is far more the problem than being spendthrifts.

So you would turn Canada into Greece, end of story!

Selling commodity and buying them back at higher price finished good hardly equates to legislating opening hours, chain stores etc. Wow. Really??

 

[TLS Guy]

Well here is the latest tonight.

George Osbourne the UK Chancellor has scuppered Claude Junkers game with ESM. So it now appears Greek banks will be closed at least another month! They have to be closed until the final deal is done, which most likely will be September.

Now things get worse, as the deal is contingent on the involvement of Washington based IMF. Greece is already in default with the IMF.

IMF economists said before the conference that debt write down had to be part of the agreement.

Now a leaked document from the IMF says that the IMF will have no part in the next bail out unless there is debt relief.

Germany is dead against serious debt relief, especially writing down principle. As I explained before that will make other states in the PIIGS who are suffering mightily from German imposed internal devaluation want debt write down. That means a transfer union. However the EU does not have a Federal reserve bank only the ECB, which anyway has been operating way outside its legal remit under political pressure. There is no central taxation.

So this deal will unravel because of the inadequate structure of the EU and especially the Euro.

I don't see this easily resolved.

I should explain why Germany leaving the Euro benefits the periphery and hurts the core.

If Germany left the value of the Euro will fall, so the periphery is more competitive. In addition it causes inflation which makes for getting out of debt easier.

If Germany goes back to the Deutschmark then it will quickly rise in value and make Germany uncompetitive. In addition Germany has debts, and so will get caught in one of the worst economic problems, the deflationary trap. This has been at the bottom of Japan's difficulties.

So you thought spending and debt was all bad and hard work and thrift always a virtue. Well it ain't necessarily so! However it seems to me that is a problem with the NWO.

I like this forum as mainly people ask probing and appropriate questions. This thread is no exception.

Stay tuned, as unfortunately, I thing things are about to get really interesting!

 

[TLS Guy]

Selling commodity and buying them back at higher price finished good hardly equates to legislating opening hours, chain stores etc. Wow. Really??

It does because to do what you want would require import duties, which is the same side of the coin of restrictive practice.