[Luis Dias]

Seems to me the problem isn't so much that Germany needs to leave the Euro but rather that everyone should have been a lot more selective on who was allowed in in the first place.  Reading about Greece's fiscal situation makes me just about shake my head off my shoulders.  I have a great deal of difficulty feeling sorry for people who want top-notch social programs but refuse to pay the taxes necessary to fund them - and problem that seems to be fairly common in the nations in Europe that are in serious financial difficulty.  If you elected governments that left your fiscal liabilities unfunded and didn't ever question their books, you pretty much deserve what you've been sold.

Yeaaaaah, you are basically clueless about what's happening in the Eurozone. Greece's corrupted numbers are merely an excuse that blinded everyone from the real problems with the Euro.

Ok ok, now don't get annoyed with me. If you are really interested to know exactly what the problem is, I have a tremendous link for you. George Soros *nailed it* in his oped here a month ago. I cannot recommend it more, it analyses the economic / political problems so nicely:

http://www.georgesoros.com/articles-essays/entry/the_tragedy_of_the_european_union/

[MP-Ryan]

Yeaaaaah, you are basically clueless about what's happening in the Eurozone. Greece's corrupted numbers are merely an excuse that blinded everyone from the real problems with the Euro.

Ok ok, now don't get annoyed with me. If you are really interested to know exactly what the problem is, I have a tremendous link for you. George Soros *nailed it* in his oped here a month ago. I cannot recommend it more, it analyses the economic / political problems so nicely:

http://www.georgesoros.com/articles-essays/entry/the_tragedy_of_the_european_union/

The article fails to address why there are deficit countries in the first place (though it does elaborate on why their situations got worse under the Euro), which comes down to a very simple premise that anyone can understand:  if you spend more than you make, you're digging yourself in debt.  Not disputing that there are significant problems with the Euro as a whole and the way its policies have been run, but the simple fact is that some of the countries which were allowed into the Euro have a historical and cultural background of desire for little work, high pay, and great social programs.  In fact, those three factors are common to all the Euro countries currently in financial trouble.  Greece was only the first to show this because their situation was the worst.

Which comes back to my original point - the Eurozone would be in better shape had the financial side been more choosy about its membership.  Faulting Germany for paying their fiscal balance sheets properly seems like nothing more than whining at this juncture.

[Luis Dias]

Not only is your rant racist in tone, it's pretty much untrue. Every country in the developed world has a thing called "deficit", and the majority of deficits in europe was pretty much small compared to, lets say, the frakkin US of A, Japan, etc. For instance, Spain had a really low deficit compared to its own GDP.

To state that the woes were due to the "social programs" is inane GOP Glenn Beck style shenanigan going full retard. I know this kind of thing is quite common to say nowadays, but the issues are completely unrelated. If you make a chart comparing the social programs with the rate of "trouble" of the countries, you will find no correlation whatsoever. I know that Romney and his party likes to say these things "Let's not get towards Greece", but those kinds of statements only work because most of the audience is clueless about real economics and macroeconomics*.

Which comes back to my original point - the Eurozone would be in better shape had the financial side been more choosy about its membership.

Yes, that is probably right in the "meanwhile", but the problems are so systemic that it would come about anyway. Perhaps it wouldn't strike Greece so hard, but it would still be facing huge hurdles like Portugal for instance.

Faulting Germany for paying their fiscal balance sheets properly seems like nothing more than whining at this juncture

What. The. Hell. Did anyone make this point at all? Is this. What is this I don't even.

Did you even bothered to read the whole oped? Because at this point I really doubt you did.


* The only way the US would go the way of Greece would be for them to enter a currency union and forfeit the ability to print their own dollars, share such a union with larger economies with better productivity numbers, and be unable to pressure the central banks to induce inflation and growth out of their debts.

[MP-Ryan]

I wasn't ranting, and why do you keeping speaking to me like I'm an American?  I live in Canada - you know, that big northern country with a small population that has its financial **** together [mostly]?  FYI - racism implies denigrating a race.  I'm denigrating governments that can't tell their fiscal balance sheets from tourism advertisements.  And I did read the whole op ed which is a very good take on the problems with the Euro and how they may be resolved, but has no comment whatsoever on the fundamental systemic cause of the whole mess which can and should be laid directly at the feet of a few national governments.

Yes - every modern democracy runs a debt.  Not all of them run deficits (ours had been eliminated prior to the 2008 mess).  Now, the difference between a country like Greece running a deficit and a country like the United States running a deficit is what backs those deficits, how they are reported, and how accurately they are reported.  The Greek deficit had virtually no backing (Greece's economy was not export, manufacturing, technology, or resource driven), those deficits were never reported properly, and the Greek government outright lied about their fiscal situation until a new government was elected and they were forced to come clean.  Now, the reason the Greeks faced those deficits is because their expenditures outpaced their revenues - Greeks work short hours, their economy wasn't strong to begin with, and the government faced constant pressure to continue with generous social benefit programs (and retirement ages, and low taxes, etc) which were a continual net drain on the economy.  I have nothing against social programs - Canada has a strong history of them - but you have to pay for the things that you want to benefit from, and Greece didn't.  It was and remains a ingrained attitude that their lifestyle was sacrosanct and untouchable by lesser concerns like the whole country essentially headed for bankruptcy.  Social programs are not the root of the evil here (as morons like Beck would have us believe) - it's demand for them coupled with an unwillingness to properly pay for them.  Exhibits: P, I, I, G, S.  If fiscal liabilities matched revenues and fiscal backing, none of those countries would have landed in the mess they're in.  Yes, the Euro made it worse, but the fundamental source of this problem is systemic in the nations themselves - and they were all still operating their budgeting process as if they could rely on currency devaluation to bail them out, which is a bad backup plan anyway.

As for the "faulting Germany" comment, there is an awful lot of whining coming from the PIIGS countries about the Germans - some of it justified, most not.  The fact is that Germany has their fiscal **** together and these countries don't.  Part of the reason is the Euro, no doubt, but part is because they got themselves into the mess in the first place and now expect Germany to solve their problems without any fiscal hurt at home, and that just isn't going to happen.

Keep in mind you're getting an observer's opinion here while you're embroiled in the Portuguese mess.

[Luis Dias]

I wasn't ranting, and why do you keeping speaking to me like I'm an American?  I live in Canada - you know, that big northern country with a small population that has its financial **** together [mostly]?  FYI - racism implies denigrating a race.  I'm denigrating governments that can't tell their fiscal balance sheets from tourism advertisements.  And I did read the whole op ed which is a very good take on the problems with the Euro and how they may be resolved, but has no comment whatsoever on the fundamental systemic cause of the whole mess which can and should be laid directly at the feet of a few national governments.

The fundamental systemic cause was what Soros described in detail. You have a different idea on what is at "the core" of the Euro problem, but what I think you fail to understand is that the problem in the Euro is in its architecture, not at the "cultural ****tiness of some countries". (BTW when you rail against a culture for being "lazy" that's racist). This problem would have come up even if Greece was not in the eurozone. What happens is that it cracked on the weakest link, and because the weakest link is, by definition, weakest, people blamed the weaknesses instead of the whole architecture.

Yes - every modern democracy runs a debt.  Not all of them run deficits (ours had been eliminated prior to the 2008 mess).  Now, the difference between a country like Greece running a deficit and a country like the United States running a deficit is what backs those deficits, how they are reported, and how accurately they are reported.  The Greek deficit had virtually no backing (Greece's economy was not export, manufacturing, technology, or resource driven), those deficits were never reported properly, and the Greek government outright lied about their fiscal situation until a new government was elected and they were forced to come clean.

They lied about their past deficits when they entered the euro union. Your explanation is still lacking when it comes to explain what happen with Spain and other countries which had a not-so-bad deficit. No, the problem was not the deficit, and the focus on it was precisely what made the matters worse. Every country that adopted the so-called "Austerity" measures only made it worse, exactly what the latest FMI report concluded. The ****ing FMI, not a communist paper.

Now, the reason the Greeks faced those deficits is because their expenditures outpaced their revenues - Greeks work short hours, their economy wasn't strong to begin with, and the government faced constant pressure to continue with generous social benefit programs (and retirement ages, and low taxes, etc) which were a continual net drain on the economy.

Bollocks. The greeks work by far the largest amount of hours per year inside the eurozone.

Oh, what's that? Did you think otherwise? Well, it doesn't surprise me in the least that you've been lied to. You were not the only one. Here: http://www.guardian.co.uk/news/datablog/2011/dec/08/europe-working-hours

I have nothing against social programs - Canada has a strong history of them - but you have to pay for the things that you want to benefit from, and Greece didn't.  It was and remains a ingrained attitude that their lifestyle was sacrosanct and untouchable by lesser concerns like the whole country essentially headed for bankruptcy.  Social programs are not the root of the evil here (as morons like Beck would have us believe) - it's demand for them coupled with an unwillingness to properly pay for them.  Exhibits: P, I, I, G, S.

Jesus. Do you even know what the "S" in the PIIGS stands for? Spain. Spain had a surplus (not a deficit!) before the crisis hit. A ****ing surplus. The percentage of debt against GDP was like 60% or less. Do you consider having a surplus "heading for bankruptcy"? What bollocks are you trying to share here? The other countries did not have huge deficits, too. In 2009, however countries decided to go Keynesian against the biggest crisis they had faced yet, while their revenues bottomed, so sure the deficits skyrocketed. The problem was not that. The problem was that while they did this, Merkel decided to leave them in the ****ters, telling them that the banking problem was for each country to solve on their own, which then skyrocketed the borrowing yields, bankrupting everyone.

Yes, we can trace much of current Euro dire situation directly into Merkel's appalling political moves that were almost perfectly synchronized in time just to get the problems even worse each year.

Had that issue been resolved earlier (everyone knowing that the bank risks were not shared by the whole eurozone), it would have created problems in the periphery but they would have had been resolved on their own much easier.

If fiscal liabilities matched revenues and fiscal backing, none of those countries would have landed in the mess they're in.  Yes, the Euro made it worse, but the fundamental source of this problem is systemic in the nations themselves - and they were all still operating their budgeting process as if they could rely on currency devaluation to bail them out, which is a bad backup plan anyway.

No. This was not the problem at all. You are still not getting it.

The problem was that when these countries entered the Euro, everyone was fooled in thinking that the risks were shared and thus the borrowing yields lowered for the PIIGS, etc. By doing so, everyone in these countries thougth they had more cash in their hands (because they, ahhh, literally did), and thus they used it. Why shouldn't they? An argument that states that they shouldn't have done so is an argument against free markets (irony).

But the lack of risk was an illusion. And it shattered right when it shouldn't have, inside the 2009 crisis.

So to add up to the Keynesian measures every government decided it was sane to do, they ended up having to deal with the rise of those borrowing costs. And suddenly it all fell down.

As for the "faulting Germany" comment, there is an awful lot of whining coming from the PIIGS countries about the Germans - some of it justified, most not.  The fact is that Germany has their fiscal **** together and these countries don't.  Part of the reason is the Euro, no doubt, but part is because they got themselves into the mess in the first place and now expect Germany to solve their problems without any fiscal hurt at home, and that just isn't going to happen.

Keep in mind you're getting an observer's opinion here while you're embroiled in the Portuguese mess.

Faulting Germany is justified for plenty of reasons. Not only it was proved that their recipe is wrong (by empirical means), they had this canning ability to do everything exactly wrong in the exact right time to get things worse. And worse, they profited by this: by extending the crisis, they still have the splendid state of affairs of having amazing commercial balances against countries which should have devalued their own currency against Germany already (but can't, they are inside the Eurozone). This is why Germany's growth hasn't been negative lately, and why they don't care much about us. However, this thing can't go on, and even Germany will taste its own poison.

[MP-Ryan]

You're getting very worked up over all of this.

The problem, as I've repeatedly said, is not just the Euro's architecture, as I've acknowledged I agree with Soros on, but rather the state of the fiscal situation in the countries being admitted to the Euro.  Which you just agreed with concerning Greece's lies about past deficits.  Nor was I railing against the Greeks for being lazy (or being racist, since again I'm talking about government fiscal policy and not the people but anyway), I'm saying that the Greeks should have expected financial difficulty when they work less (productivity, not hours necessarily), expect high pay, and demand social benefits they aren't paying enough taxes to pay for.  As for Spain and other countries with low deficits or surpluses, the issue remains with the financial structure of their nations.  Spain's financial house wasn't in order either - the Euro may have exacerbated the problem, but the issues with the Euro required an outstanding deficit problem (unfunded liabilities) to exacerbate in the first place - as Soros states outright.

I haven't commented at all on the current measures in place for dealing with the issue, let alone taken a position on them, so I'm not sure why you're ranting about the IMF.

The Guardian article points out that while Greeks work longer hours (and acknowledges that Greek statistics are highly suspect), their productivity numbers are not reflective of those hours.  Hence, "work less."

Spain's surplus wasn't structural, either, and their banking system was on poor ground when the recession hit.  They're hardly a model of fiscal responsibility.  Which brings us to Merkel and Germany.  And in their shoes, I wouldn't be telling countries like Greece, like Spain, that I'm going to bail out the finances and banking sectors that they've allowed to run amok, either.  I'm getting it quite well, thank you.  As you've acknowledged, the problem was the shared assumptions when countries were admitted to the Euro.  Remember in my first post (which you immediate launched into diatribe mode on) that I said the problem was who was allowed into the Euro in the first place?  Thanks for agreeing with me.

Soros makes a good case for how to go about fixing the Euro mess, but once again - while Germany may have extended the Euro problems, their fiscal house was in order and they didn't force anyone to join the Euro.  In point of fact, they probably would have been wiser to keep a fair number of current Euro countries out.  Then they could happily devalue their currencies against the Euro and plunge their countries into further economic pain without taking the Eurozone with them.  There's a lot of German hate flying around Europe right now, but the fact of the matter is that PIIGS are only at the mercy of the Euro and German fiscal policy because they decided to put themselves there when they knew - or should have known - that their own financial books were on risky ground to begin with.

So, to come full circle and reiterate my first post - the problem, it would seem, is that membership in the Euro was not nearly selective enough and the countries that should have gotten their fiscal houses in order long ago are now feeling the pain and taking the rest of the Eurozone with them.  You haven't, despite all your huffing and puffing, managed to debunk that opinion, but rather agreed with it on a few occasions now.

So, can we move on or are you planning to rant at me, accuse me of racism, or basically say I have no idea what I'm talking about then proceed to agree with my fundamental assertion some more today?

[An4ximandros]

Can we please lower the heat over here? I feel like roasting!

 As for the topic... well you could see this as Germany's revenge for the conditions of the treat that ended The Great War.
 Remember in the end Capitalism is about profit, and Germany is definitely profiting form everyone else being tied to them.

I'll personally refrain from commenting much since I've never been to Europe, so I don't know the conditions people have to live with and I won't believe some article form the Internet.

[Al-Rik]

If the BMW costs 30% to 50% more he will buy a French or a Italian car - not a car made in Portugal.
And the middle range smart phones are - like the I Phone -  produced in China.

And this should be good for the balance sheet ?

Yes. First, if the car is bought in France / Italy, then it will improve France/ Italian balance sheets, two countries which would be under the new "euro-without-the-mark". These countries would be better off, and in a better position to buy whatever goods Portugal is able to export.

Shoes from Morocco, China or Vietnam are still cheaper.

Does not matter one iota. If Portuguese shoes are cheaper than they are right now, they will be bought more than they are now, irrespectively of other countries' own exports. This is econ 101.

Basic rules still have to be used on real conditions. Not always the real world economics behave like the econ 101 predict.
If there is a market for Portuguese shoes - or Portuguese cell phone - or Portuguese electronics they may profit from a potential Euro Zone without Germany.
If there exports are more or less similar than the products of the remaining Nations in the Euro Zone they still face competition.

And what's the real conditions ?
Many Germans spend their vacations in Turkey or Egypt. Most of the stuff they buy is produced in Asia (Clothes, Electronics, Shoes). Food is imported from Spain, France (the most selled Feta is produced in France, not in Greece) Italy and even Israel. Italian, French, Czech or Japanese Cars are common in the lower price bracket.
No doubt France and Italy - and several Asian Nations - would profit if Germany goes back to the Mark. But Portugal and Greece ? I doubt it. We will see it if Germany really leaves the Euro Zone, at the moment a  highly unrealistic scenario.

France and Italy suffer the same problems that Portugal faces against Germany. In simple words, they are economies "used to" some form of inflationary economic policies, which were abandoned in favor of a strong stable currency by the Mark standards. While Germany stabilized prices and salaries, France, Italy, Spain, Portugal and so on rose them. The reason why they did this is multiple, but a strong case can be made that the lowering of borrowing rates "fooled" everyone (public and private) in these countries into thinking they had more money in their pockets than they used to (and so they could "share the wealth" to the employees, who then borrowed money from the banks with the low rates, which in turn created another level of risk and so on).

And still the Greeks don't want to leave the Euro. Maybe they should ask the Argentinians?

They might have no choice on the matter. Argentina wouldn't have been any better off continuing to peg its currency to the dollar once they figured out they were in deep trouble. It would only have made matters worse before they were forced to unpeg their currency.

Greece is doomed to continue their completely unpopular "austerity measures" forever if they insist on being inside the eurozone. It would be much better for them to reach a deal where their debt would be nominated in Drachmas (whose value would be negociated politically), and then make them leave the eurozone. The fact that their debt is now in Drachmas makes sure they do not enter in hiper-inflation, and further measures can be taken so that the capital does not run off from panic (a long weekend may be required to secure every bank militarily so that no one is able to run off with the money, print new Drachmas and make the change in 3,4 days. A very difficult task, no doubt).

I agree with you, nobody likes  inflationary economic policies, that's the reason no Nation in the Euro Zone want's to leave it.
I also agree that Greece is doomed, but but the fleeing of the money has started. Wealthy Italians and Greeks are buying real estate in Germany, in the hope to save their money.

The funny thing is that Germany isn't really an good example for austerity and a well managed debt.
O.K, most investors believe that Germany is able to pay the interests on it's bonds.
Some even believe the Germany will spend money to keep the Euro Zone intact.
And in the German Constitution a law has been inserted that explicit forbids a too high debt...

But not everybody likes that law - especially politicians from  the left would like to get rid of it and spend more money.
Chances are hight what they will be part of the next Government, and what this law will be ignored for the duration of the crisis (as other, similiar laws have been ignored because there is always a crisis to justify more public spending). Chances are also high what the forced switch from Nuclear Energy to Renewable Energy would have a big negative impact on the German Economy.
 
If the investors on day came to the conclusion that there is a real chance Germany isn't able to pay the interest because the German Economy has massive problems or because the German Government doesn't seem to care about the debt any more... well when the Interesting Times ( as in the Chinese Proverb ) will start - not only for Germany, but for the whole Euro Zone... 

[Luis Dias]

You're getting very worked up over all of this.

Well, wouldn't you? It's not your fault MP, of course, but if you were in the middle of such storm (and paying the bills for the incompetence of others), you'd be pretty pissed as well...

The problem, as I've repeatedly said, is not just the Euro's architecture, as I've acknowledged I agree with Soros on, but rather the state of the fiscal situation in the countries being admitted to the Euro.  Which you just agreed with concerning Greece's lies about past deficits.  Nor was I railing against the Greeks for being lazy (or being racist, since again I'm talking about government fiscal policy and not the people but anyway), I'm saying that the Greeks should have expected financial difficulty when they work less (productivity, not hours necessarily), expect high pay, and demand social benefits they aren't paying enough taxes to pay for.

But this analysis pressuposes that everyone knows their "true" worth, among other impossible things. No one does, and if they earned X they thought they deserved it (like everyone else in the world). Greece had a particular problem of corruption that we can agree, but the whole crisis is a whole order of magnitude greater than that. Proof of what I am saying is that the pardon Greece received for their debts is much bigger than the value of the hidden debt they had.

As for Spain and other countries with low deficits or surpluses, the issue remains with the financial structure of their nations.  Spain's financial house wasn't in order either - the Euro may have exacerbated the problem, but the issues with the Euro required an outstanding deficit problem (unfunded liabilities) to exacerbate in the first place - as Soros states outright.

My point was that it is an error to say that the problem were the government deficits. Of course the housing bubble was a big problem, the whole shenanigan about that one started in the USA. Spain had this huge construction boom based on Iberia being a promising european "Florida". If Europe had been as cohesive as the USA was naturally the problems of Spain would have been solved very quickly (for instance, the state of Texas received, since the crisis began, more than 300 billion dollars from the federation itself by the natural redistributive mechanisms). However, Merkel stated "deal with it yourself", and so it is slowly collapsing.

I haven't commented at all on the current measures in place for dealing with the issue, let alone taken a position on them, so I'm not sure why you're ranting about the IMF.

Well, because the only alternative to the current measures is to have had much more cooperation intra eurozone. Share the burden. That is, if you want to keep the Euro. As things are going, I wouldn't mind going back to the Escudo myself. And having more cooperation means to stop having this conversation on how the governments were to blame.

They weren't. They did their best to keep the deficits under 3%, and let me remind you that the first country to ignore that rule was... ahem... Germany (creating a whole moral hazard in itself).

The Guardian article points out that while Greeks work longer hours (and acknowledges that Greek statistics are highly suspect), their productivity numbers are not reflective of those hours.  Hence, "work less."

Productivity has nothing whatsoever to do with "lazyness". It has to do with the overall structure of the economy. Germany uses top-notch processes, extremely organized, very high tech, and so on. Other countries have less efficient structures, and thus the productivity is smaller. It's a "holistic" measurement.

Spain's surplus wasn't structural, either, and their banking system was on poor ground when the recession hit.  They're hardly a model of fiscal responsibility.

Name one country at the time that had a "structural surplus". One.

Which brings us to Merkel and Germany.  And in their shoes, I wouldn't be telling countries like Greece, like Spain, that I'm going to bail out the finances and banking sectors that they've allowed to run amok, either.  I'm getting it quite well, thank you.  As you've acknowledged, the problem was the shared assumptions when countries were admitted to the Euro.  Remember in my first post (which you immediate launched into diatribe mode on) that I said the problem was who was allowed into the Euro in the first place?  Thanks for agreeing with me.

It has nothing to do with "who was allowed into the Euro". Even if you had the pipe dream of only accepting countries like Germany, France, Holland and Belgium, you'd still end up with a divergence between those countries (despite perhaps of such divergence take longer to notice). The problem of badly perceived assumptions is explained by Soros. The assumption was that the whole architecture would "eventually" be settled. The crisis hit before said settlement. You say you don't want to "bail out the finances and banking sectores that they've allowed to run amok". But the thing is that Europe is being forced to do just that. The trouble is that they have to do so and more, since the whole problem has been aggravated by not doing anything about it. So you are wrong on that one too. (Greece was already pardoned 50% of its debt, accounting for 75% of future earnings by the banks). Rescued countries are borrowing by rates much lower than the markets want (which means a bail out). Spain is about to ask for a huge bail out in the coming days / month (and everyone has to accept it).

Soros makes a good case for how to go about fixing the Euro mess, but once again - while Germany may have extended the Euro problems, their fiscal house was in order and they didn't force anyone to join the Euro.  In point of fact, they probably would have been wiser to keep a fair number of current Euro countries out.  Then they could happily devalue their currencies against the Euro and plunge their countries into further economic pain without taking the Eurozone with them.  There's a lot of German hate flying around Europe right now, but the fact of the matter is that PIIGS are only at the mercy of the Euro and German fiscal policy because they decided to put themselves there when they knew - or should have known - that their own financial books were on risky ground to begin with.

Bollocks. Only Greece had this "financial books" issue. Portugal was quite clean for example. No one knew there would be this misalignment between assumptions and realities (easy to see in hindsight) and the Euro was promising in the late 90s. Of course, if you ask me if Portugal would have been better if it had never entered the Euro, I say yeah obviously. Hindsight is amazing.

So, to come full circle and reiterate my first post - the problem, it would seem, is that membership in the Euro was not nearly selective enough and the countries that should have gotten their fiscal houses in order long ago are now feeling the pain and taking the rest of the Eurozone with them.  You haven't, despite all your huffing and puffing, managed to debunk that opinion, but rather agreed with it on a few occasions now.

Again, bollocks. The argument is that the trouble is systemic, meaning that even if you took away the "troubled countries", the rest of the eurozone would still diverge. However, to proclaim or imply that the economies of Spain, Italy and Ireland are "peripheric" in Europe is to enter in a very strange case indeed.

So, can we move on or are you planning to rant at me, accuse me of racism, or basically say I have no idea what I'm talking about then proceed to agree with my fundamental assertion some more today?

You called Greek culture "lazy".

[Luis Dias]

Does not matter one iota. If Portuguese shoes are cheaper than they are right now, they will be bought more than they are now, irrespectively of other countries' own exports. This is econ 101.

Basic rules still have to be used on real conditions. Not always the real world economics behave like the econ 101 predict.
If there is a market for Portuguese shoes - or Portuguese cell phone - or Portuguese electronics they may profit from a potential Euro Zone without Germany.
If there exports are more or less similar than the products of the remaining Nations in the Euro Zone they still face competition.

And what's the real conditions ?
Many Germans spend their vacations in Turkey or Egypt. Most of the stuff they buy is produced in Asia (Clothes, Electronics, Shoes). Food is imported from Spain, France (the most selled Feta is produced in France, not in Greece) Italy and even Israel. Italian, French, Czech or Japanese Cars are common in the lower price bracket.
No doubt France and Italy - and several Asian Nations - would profit if Germany goes back to the Mark. But Portugal and Greece ? I doubt it. We will see it if Germany really leaves the Euro Zone, at the moment a highly unrealistic scenario.

Germany is the third country to where Portugal exports. http://www.indexmundi.com/portugal/exports.html

If the investors on day came to the conclusion that there is a real chance Germany isn't able to pay the interest because the German Economy has massive problems or because the German Government doesn't seem to care about the debt any more... well when the Interesting Times ( as in the Chinese Proverb ) will start - not only for Germany, but for the whole Euro Zone... 

Bah. Those times are not going to happen. The Euro is a glorified Mark anyway.

[MP-Ryan]

Nowhere did I call the Greeks lazy.  Those are your words.  I merely pointed out that the Greek work levels, economy, and demand for social benefits produce unfunded liabilities.  You can accuse me of racism until you're blue in the face, but you've just constructed essentially a strawman.

So that's a no to the moving on then.  Since you haven't added anything new other than another long wall of text that still doesn't refute my original point, I'm simply done.  Enough is enough, the walls of text are tedious.  Nowhere have you demonstrated that withholding Euro membership from the weak economies couldn't have prevented the current mess from evolving so my original opinion post seems to stand up to scrutiny (or at least the scrutiny you've leveled at it) just fine. I'll let others be the judge of this exchange.

[Mars]

Yeah, unless something changed, there were five occurrences of the word 'lazy' in this thread four hours ago, and all of them were from you Luis.

[MP-Ryan]

Yeah, unless something changed, there were five occurrences of the word 'lazy' in this thread four hours ago, and all of them were from you Luis.

To be fair I just had to use it to point out that I hadn't earlier =)

[el_magnifico]

While I basically agree with MP-Ryan here on the whole "Euro for everyone! =) " thing being plainly irresponsible (not because people "work less" but because, as was pointed out later, their nation's economies don't enjoy similar levels of productiveness and competitiveness, and so they were doomed from the start), the old and tired argument of "it was their fault, they wanted a free ride, they should have put their houses in order first, blah blah blah" has already been beaten to death by reality.
Still, I'm not surprised people keep using it. I can only guess it works as a psychological defense to make people feel safer and somehow assure them that poverty is something that simply won't happen to them, both as individuals and as nations. Nor does it occur to them that PERHAPS they have a share of the responsibility.
Ultimately, it's not like all of that self-indulgent superiority complex is going to help anyway. The crisis will expand towards the core countries too until the whole thing is an indescribable mess. And then the more developed nations of the partnership are going to be a lot less harsh with themselves than they were with their former partners. It's always easier to blame it on the victim. Have seen it happen so many times already.

[Mort]

Look, I'm no economist but implementing austerity measures in the middle of a global recession is the stupidest thing Merkel has done. Austerity can work in the middle of a recession but only if global growth is strong enough to buffer it. Canada did it in the 1990s but benefited from the boom in the US.

The problem from my perspective is that Europe wants all the benefits of integration(The Euro) without paying for it(Sovereignty). I still do not fully understand the depth of the Euro crisis but I know that it is much more complex than simply saying that it is the fault of profligate governments.

In any case, if the status quo goes on, I predict France getting lumped with the PIIGS instead of Germany. Then breakup would have its foot in door and the costs of maintaining the Euro would probably be more than allowing it's disintegration.

[Zacam]

I enjoy that there is a wide ranging conversation taking place. But debate the issues, not the people presenting them. Lets scale back a bit on the more member personal directions that this could go into please.

[Mikes]

The problem from my perspective is that Europe wants all the benefits of integration(The Euro) without paying for it(Sovereignty).

This is very much the root of the issue.

Even Helmut Kohl already said, before the Euro was introduced, that a financial unification of Europe has to be followed by a political one, or it will ultimately fail.

One can bicker and quarrel and point fingers during the current crisis until everyone is blue in the face and one can rescue this and that country and introduce whatever reforms are the flavor of the month, but this is what it will always come back to and this is the issue that will eventually have to be addressed, if anything is to be accomplished at all. In the long term, Europe will have to aim for political unification and the financial crisis may as well be the catalyst that could finally convince everyone of that fact and start at least some movement in the right direction.

A painful process for all countries involved for sure... but arguably less painful than a continuation of a status quo that can not be sustained.


The pink elephant in the room of course being the fact that Europe in general is hardly the biggest issue the "world" has right now. I.e. if the US thoroughly drives itself fullspeed against the debt wall then there won't be anyone in position to rescue anyone else and it frankly won't matter what European country is worse or better off than the rest, the whole world's economy will suffer on a scale not seen since the Great Depression. The scary part here is that, as already shown during the housing bubble, it only takes one key company to go down to trigger financial armageddon and then it's all a question of whether the government can still take the additional abuse i.e. debt or whether the whole mess truly blows up in everyones face right there and then. National bancruptcy down the road vs. financial armageddon here and now is a wonderful choice...  and right now, since the systemic issues have still not been addressed (and are matter of fact mostly not even being discussed as a "main/major issue", not even with an upcoming presidential election, funny that), any step to avoid the later still inevitably takes you closer to the former.

[headdie]

The problem from my perspective is that Europe wants all the benefits of integration(The Euro) without paying for it(Sovereignty).

This is very much the root of the issue.

Even Helmut Kohl already said, before the Euro was introduced, that a financial unification of Europe has to be followed by a political one, or it will ultimately fail.

One can bicker and quarrel and point fingers during the current crisis until everyone is blue in the face and one can rescue this and that country and introduce whatever reforms are the flavor of the month, but this is what it will always come back to and this is the issue that will eventually have to be addressed, if anything is to be accomplished at all. In the long term, Europe will have to aim for political unification and the financial crisis may as well be the catalyst that could finally convince everyone of that fact and start at least some movement in the right direction.

A painful process for all countries involved for sure... but arguably less painful than a continuation of a status quo that can not be sustained.


The pink elephant in the room of course being the fact that Europe in general is hardly the biggest issue the "world" has right now. I.e. once the US thoroughly drives itself fullspeed against the debt wall then there won't position to rescue anyone and it frankly won't matter what European country is worse or better off than the rest, the whole world's economy will suffer just the same.

The big problems with any political unification is that was not what the EU was set up for, it was intended as a means of creating an economic alliance and forcing economic reliance between members to prevent a 3rd Global War stemming from a European conflict as under the EU such a conflict would between member states would instantly deny crucial resource sources their economy had become dependant on.  As a result the groundwork was never put in place for it to be a de facto or full blown government. 

What has happened is that we no longer have a significant risk of a war between the big powers in Europe and thus the EU has achieved it's founding goal, but the open trade and other economic benefits are really handy for it's member states and so the EU has been maintained past its use by date to administer these conditions.  Now when you have an organisation like the EU you generally need some for of council to administer changes formed by representatives of member states, currently this is in the form of a parliament which is in session most days of the week whose representatives are elected by national populations, all good so far, here is the catch, without fail every member government for the last several decades have dumped varying amounts of blame for economic issues in their country on the EU in general of the activities of other member states through the EU structure, meaning that the general consensus of the masses is either neutral or slightly anti EU.

These disillusioned national populations are of course the same population demographics who elect the Members of the European Parliament for their regions/nations so members are pulled between national loyalties + pressure from their home government and what's in the best interest in the EU and tbh national loyalties is what often wins out so everything is a cluster **** of compromises and special cases which makes new/revised legislation at best questionably effective.

This division also frustrates attempts to change the EU structure and cause it to get bogged down in years of negotiation as each nation tries to impose their own view on what should be done and ultimately each attempt fails as an agreement due to at least one veto carrying nation will be opposed to the current form because their aspects have been watered down too much for them to find acceptable.  There is also the issue that some legislation needs to be ratified by each member nation to be applied to them.

And this is all before we consider recent EU expansions adding more voices to this mess from Nations wanting a piece of the economic pie at the time was not a bad pie to have.

[Mikes]

The big problems with any political unification is that was not what the EU was set up for, it was intended as a means of creating an economic alliance and forcing economic reliance between members to prevent a 3rd Global War stemming from a European conflict as under the EU such a conflict would between member states would instantly deny crucial resource sources their economy had become dependant on.  As a result the groundwork was never put in place for it to be a de facto or full blown government. 

What has happened is that we no longer have a significant risk of a war between the big powers in Europe and thus the EU has achieved it's founding goal, but the open trade and other economic benefits are really handy for it's member states and so the EU has been maintained past its use by date to administer these conditions.  Now when you have an organisation like the EU you generally need some for of council to administer changes formed by representatives of member states, currently this is in the form of a parliament which is in session most days of the week whose representatives are elected by national populations, all good so far, here is the catch, without fail every member government for the last several decades have dumped varying amounts of blame for economic issues in their country on the EU in general of the activities of other member states through the EU structure, meaning that the general consensus of the masses is either neutral or slightly anti EU.

These disillusioned national populations are of course the same population demographics who elect the Members of the European Parliament for their regions/nations so members are pulled between national loyalties + pressure from their home government and what's in the best interest in the EU and tbh national loyalties is what often wins out so everything is a cluster **** of compromises and special cases which makes new/revised legislation at best questionably effective.

This division also frustrates attempts to change the EU structure and cause it to get bogged down in years of negotiation as each nation tries to impose their own view on what should be done and ultimately each attempt fails as an agreement due to at least one veto carrying nation will be opposed to the current form because their aspects have been watered down too much for them to find acceptable.  There is also the issue that some legislation needs to be ratified by each member nation to be applied to them.

And this is all before we consider recent EU expansions adding more voices to this mess from Nations wanting a piece of the economic pie at the time was not a bad pie to have.

Your post indeed excellently describes why there was up to this date no political unifcation - despite everyone knowing beforehand that a financial/economic unification would later require a political one in order to remain stable.

Possibly it was thought that political union may be easier to achieve "later" once everyone enjoyed all the benefits of a common currency... :shrugs: well so much for that. lol.

It's important however, to not confuse the European Economic Community (EEC), which was indeed founded (around 1958) out of the desire to prevent future wars like the first two world wars, with the much later conceived idea of the "European Union", which only really gathered momentum by the end of the millenium and which actually is aimed at well.... unifying Europe - and not just economically.

[headdie]

very true, a mistake I should have know better than to make