[Mort]

www.economist.com/blogs/schumpeter/2012/10/greece’s-shadow-economy

A relevant discussion on how things might not be as bad for a portion of Greece

[Luis Dias]

*Not to pound, but to clarify*, since it is already on record that I may have lied or something. The thing that sparked my comment about "racism" (which was a very small nuanced point) was this comment by MP-Ryan:

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.

IOW, "lazy". I won't further the point, it's so marginal and I'm sure MP didn't mean any offense whatsoever.

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.

This is somewhat disappointing. I've explained to you why these budget problems were created and exarcerbated by the systemic problems deriving from the architecture of the Euro, refuting or at least marginalizing most of your points, and your answer is "you haven't refuted me at all". Extremely disappointing.

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.

That's not really a problem. As I've stated before, the US can only run into these kinds of problems when they cannot command their own printing presses and monetary policies. (If such issues would be so problematic, the japanese would have "hit" that wall a decade or more ago. They haven't). The biggest thing we can learn from this crisis is how much more awesome the architecture of the dollar is compared to the euro.

[MP-Ryan]

This is somewhat disappointing. I've explained to you why these budget problems were created and exarcerbated by the systemic problems deriving from the architecture of the Euro, refuting or at least marginalizing most of your points, and your answer is "you haven't refuted me at all". Extremely disappointing.

No, you haven't.  You've pointed out repeatedly how the Euro has made problems worse, but every time we get into the financial state of affairs pre-Euro you're hand-waving about how stable these economies were.  Since you've backed off the wall-o-text line-by-lines for the moment, let's get into that.  Spain, the poster child you keep holding up, did not have a structural surplus.  You're correct that no country does (or at least for long, because all democratic governments either spend that surplus or eliminate it through tax cuts).  But my point in saying that is that the fact that Spain may have had a surplus is irrelevant.  What the Euro crisis has shown is that a number of these countries who didn't have their financial ducks in a row when times were good - but looked as though they did, like Spain - subsequently got thrashed when the global markets tanked and took their house-of-cards banking systems with them.

Did the fact that they were part of the Euro make it worse?  Absolutely.  But that is precisely why I've said that membership in the Euro should have been more exclusive to begin with.  It's perfectly fine to have a financial union between nations with disparate productivity levels provided they all have similar principles in the way their economies function and produce.  The trouble arises when you throw a country like Greece (who I'm picking on because their finances were a corrupted trainwreck even before they were admitted to the EU, as we've found out in the last year or so) and a country like Germany into the same financial union without political union as well.

A few other posters have hit the nail on the head here - if you want a wide membership in the Euro, you need a political union as well.  This is why countries like Canada have managed to do quite well even with the recession (Canada's finances are arguably the most stable in the G8 at the moment).  While our provinces have some local autonomy and widely different levels of productivity while being unified with a single currency, there is still an overarching government that sets financial policy for all of them and equalizes the system.  Luis, you've been drumming this point for a while about how the Eurozone could have experienced a great deal less pain - had the EU gone at it with unified financial policy you could have probably fixed this mess sooner.  The trouble with that is that national governments would have to give up political autonomy as well - a point you already railed against when talking about Merkel suggesting the EU should be dictating control over national budgeting.

The Germans are in a tough spot - if they say everyone goes it alone, they get *****ed at for being selfish and causing the members-who-shouldn't-have-been-members to flatline.  If they call for political unity to address the crisis, they get called worse (see swastikas in Greece on Merkel's visit) because they're perceived as trying to take away political autonomy from some EU member nations.

Circling back, that means either devising a Euro with a much more selective membership (as I've been saying should have been done in the first place), or devising a Euro in which member nations essentially become provinces/states of a unified European Union with complete political and financial authority.  Given the response to German influence in the financial affairs at the moment in some of the PIIGS, I don't see option 2 as being politically palatable to a number of countries anytime soon.  That means either taking Soros' advice or similar points to fix the Euro now, or start over with a much more selective membership and a condition in which auditors from the EU are doing forensic audits of each nations books over a period of years before a country can be admitted.

And please, if you're going to respond just leave the line by lines at the door and respond to the general message of the post rather than minutiae.

[Mort]

The US will hit the wall sooner than Japan. Japan's bond yields have been so low due to the high savings rate of the Japanese. The US does not have such a high savings rate but bond yields will be low for the foreseeable future as the the dollar is still the universal currency reserve(for now) and many still see treasury bonds as a safe haven.

Trying to pin the blame on the crisis on any one cause is fruitless at this stage. Firstly, such a crisis does not come from a simple cause like the ones politicians like to say they're about. Secondly, the focus should be on how to resolve the damn thing which is more political union or at the very least a banking union. Kicking anyone out of the Euro at this stage is counterproductive as it would trigger capital flights on the current PIIGS and bring breakup from a possibility to near certainty.

No one is blameless. The austerity Germany has imposed has unnecessarily prolonged the crisis and their unwillingness to take any real leading position looks likely to impose a lost decade on Europe. A depression in Greece and very likely the periphery, yet their greatest worry is still inflation. The PIIGS need to start pushing through labour reforms to get rid of labour rigidity to help employment instead of simply dumping more taxes on the people and more spending cuts. Everyone is to blame here but all the finger pointing right now has prolonged the crisis and made it far more painful than it needed to be.

[Luis Dias]

@MP-Ryan

They were just as stable as any other non-eurozone country was. You were nitpicking about Spain's budget surplus not being structural (fair point), but the irony is that there was practically no other advanced country whatsoever running surpluses (be them structural or not) at all, so your point was moot. Small deficits are not even a problem (and this is why the Euro had a 3% limit on those, not 0%). The rate of debt against GDP in Europe is, despite all the troubles we are going through and all the deficits skyrocketing, still lower than the USAs (and let's even forget about Japan).

The main proof against all this backlash against the troubled countries debts and so on is to point out that the private debt in these countries is just as bad. Clearly, both the markets and the state institutions "failed" at the same time, which is a clear evidence that neither were at fault and rather a common denominator tackled them to the floor.

That same denominator was an inherently badly calculated borrowing yields from all banks in Europe. This is easy to calculate: if you suddenly pay less interest from all your debts, you will fool yourself into thinking you have more cash in your own hands. Which in turn you will spend, booming the economy (but not improving the productivity of it). Everyone will have the same potato in their hands, and suddenly they find out it's a hot one. This was a consequence of a badly managed Euro, not of a bad process of getting certain countries into it.

Now, we can discuss Spain if you want. The trouble of Spain can be summed up as having too many eggs in one basket, and it was the precise basket that collapsed in 2009 worldwide - as I said before, the construction in Spain was promoted by the idea of creating an "European Florida", which was a very worthwhile idea.

Now, if Europe were to be a more cohesive territory, the fact that a part of it tanked would be hedged by all the other parts that didn't. That's the whole premise behind securities, insurances and... ahem... economic unions. Had Spain been under the impression that they were really alone on their "venture", perhaps everyone involved (not only the public, but the private as well) would have been a lot more careful on their risk management.

A few other posters have hit the nail on the head here - if you want a wide membership in the Euro, you need a political union as well.  This is why countries like Canada have managed to do quite well even with the recession (Canada's finances are arguably the most stable in the G8 at the moment).  While our provinces have some local autonomy and widely different levels of productivity while being unified with a single currency, there is still an overarching government that sets financial policy for all of them and equalizes the system.  Luis, you've been drumming this point for a while about how the Eurozone could have experienced a great deal less pain - had the EU gone at it with unified financial policy you could have probably fixed this mess sooner.  The trouble with that is that national governments would have to give up political autonomy as well - a point you already railed against when talking about Merkel suggesting the EU should be dictating control over national budgeting.

I railed against it because of its lack of democracy, that is, what is being proposed is that a non-elected intergovernmental body have the final say on what each country decides to do in their own budget (which would be akin, realpolitically, to give up democracy on every peripheral country to Merkel and, by a lesser degree, Hollande), I fully agree with the larger point (which is rather obvious) of a currency union needing a political union.

If Europe would share the social burdens, all the austerity measures would have worked. Had Europe be built in such a way so that the unemployment subsidies, retirement salaries (?) and social security costs been completely shared (as in the USA or as in any particular country that controls its own currency), each country (or state) would have been able to manage their debt so much easier it isn't funny.

However, that entails a whole different conversation. Are we gonna build a federalized Europe? Are we gonna give up our independences? Right now, I don't see that happening without the curtail of democracy itself, that is, they building it behind our backs and against our interests (the devil is always in the details). A bureaucratic system that caters to every interest from the powerful against the minorities and the "peripherals" (call them PIIGS if you wish, or anything else). This process is happening before our very own eyes: the destruction of the soverreignity of the periphery bowing down to the core europe's interests.

And that means that the people will be against the whole idea, the program will have little popular support. And how is that sustainable?

[MP-Ryan]

To be clear, I was never pinning the blame for the Eurozone crisis on just one cause, but it's interesting that there are a variety of options that - if any just one had been exercised - could have prevented the whole thing from becoming a deeper mess.

The general theme that I'm seeing - that national finances weren't the fundamental problem at the basis of all of this, and they were victims of bad early-crisis planning - holds up only so long as you don't look at comparator nations.  I already pointed at Canada's situation a couple times, but it's worth highlighting again because it demonstrates my point.

Canada at no point took a devaluation approach to manage the crisis - despite some whining from certain provinces, our currency has floated higher than usual against its usual benchmark (the US) since 2008.  Part of that is because other currencies took a hit, but the point here is we didn't intentionally have to devalue the dollar to ride this out.  This is a key issue because you've pointed out that the PIIGS could have avoided catastrophe had they devalued against the Euro mid-crisis.  But, had any of those countries insisted on diversified economies, realistic national budgeting processes, or stricter regulation of overexposed banking sectors (Canada has done all three of these things) before or soon after joining the Euro, they could have weathered the storm quite nicely.

Instead what's happened is irresponsible national management of economies coupled with the benefits of the Euro and then the subsequently individualistic policies proposed to deal with the banking sectors collided to make a perfect storm and tank the economies of going-on 5, perhaps soon to be 6, countries.  So while different policies on the Euro could have prevented the crisis from going nowhere nearly as badly, the entire mess could have been avoided through fiscal prudence in the first place.  We (Canada) were lucky - our budgetary process was fixed, our banks were regulated, and our economy was diversified back in the 1990s through to 2006.  Despite the fact that we also went Keynesian, we were in a good fiscal place beforehand.  The PIIGS weren't - else the Euro mismanagement would not have hit them nearly as hard as it did (or, quite frankly, at all - look at the Germans).

And on the political union front, you're clearly demonstrating why the Germans ended up between a rock and a hard place.  You really can't dump this all on Germany - there's no doubt this could have been handled better, but they would have been hated just as much or more for it.  The German public (and probably the French, Belgian, and even Dutch) would not have bought into the idea of bailing out the banking sectors in countries that hadn't properly regulated them without some sort of political union, which is rejected by everyone needing bailouts because they lose their influence and autonomy, as you've frankly said.

So here we sit with the Eurozone in crisis.

[Luis Dias]

This is where we depart. You insist on the general idea that countries were "irresponsible" and so on. I disagree with you there. I think they were just as "irresponsible" as any other country.

The major difference between a PIIGS country and Canada is that Canada can control its own currency, and the borrowing yields the canadian government has to subscribe to is realistic according to its currency and general economy. This was not the case with the PIIGS, where the markets had "established" that the risk was "shared" in the eurozone, thus the interest rates could go extremely low (2 to 3%). When the **** hit the fan and Merkel read the Maastricth treaty she noted that in fact the risk wasn't shared at all (woopsie daisy, my bad fellow peripherical friends it says right here you are on your own!), and thus those interests rose to 6,7% in Italy, Spain, and more in Portugal, and much much more in Greece, etc.

Let's be clear. If those interests had never risen (like in the USA where they actually fell, or Canada or so on), we wouldn't even be having any discussion on this. This has never happened in Canada. So I feel good for you that you do not have this problem, but let's have some perspective here.

There was also the matter of the Swiss central banks making huge buyings of central core european countries' debts, thus lowering their own rates (Germany, France), which even made things worse (by diverging even more their yields against the periphery). And perhaps a lot more "outstanding" market manipulators were in it real deep.

And on the political union front, you're clearly demonstrating why the Germans ended up between a rock and a hard place.

I didn't blame the "Germans". I blamed Merkel. Her incompetence, lack of leadership, downright sleaziness "where's the problem if our balance sheets are so amaaazing?", is what really annoys me, since she is the de facto leader of the eurozone and I never even elected her.

[Mort]

The periphery would not have to depreciate their own currency if they had one. The markets would probably do that for them by themselves.

Germany was one of the first countries to break the 3% deficit rule by the way. Then Merkel suddenly declared the rule to be cast in stone once Germany would clearly have no issue meeting that limit. Italy has a primary budget surplus and even during Berlusconi it still maintained that. Financial mismanagement is an inaccurate diagnosis of the Euro crisis.

[MP-Ryan]

As I believe I said earlier, the concern is not the size of the deficit so much as the solid financial backing behind it.  Germany has the solid backing behind their economy where they can comfortably run a deficit of 3% or more.  Somewhere like Greece doesn't.  And Luis, you did give me some food for thought concerning the way the Euro and implied shared risk influenced the interest rates - but again, there was nothing stopping any of the peripheral countries from picking up a copy of the Treaty themselves and realizing that 'Oh ****, the risk in our financial sectors isn't actually shared so perhaps we'd better do something about this to deal with the possible risks we could face.'  It's a measure that Canada is taking now - with astronomically low interest rates, or private debt levels and real estate markets went nuts, but the Bank of Canada and federal government have both taken action to bring those levels down so the country isn't overexposed.  The peripheral countries had that option, and had they fully read the terms of the Treaty they should have considered exercising it.

I don't think we can escape from the fact that, regardless of German influence on overall Euro policy, there were a lot of things the periphery could have and should have done to keep their own finances in line, but ultimately didn't.  Sure, hindsight is 20/20 and all but the collapse of the global financial system was predicted by several economists 6+ months in advance, who were promptly ignored.  The nations who ignored them and hadn't got their financial affairs in order got hit hard (the US, PIIGS) while those that had their financial **** sorted didn't have to worry so much either way.

[Luis Dias]

but again, there was nothing stopping any of the peripheral countries from picking up a copy of the Treaty themselves and realizing that 'Oh ****, the risk in our financial sectors isn't actually shared so perhaps we'd better do something about this to deal with the possible risks we could face.'

It wasn't written but it was implied in every political move, because the "process" was "inevitable", and the consolidation of a more robust architecture was believed to be "in the pipeline" by everyone, including the markets. And you are still talking about "countries", when the problem was much more generic: the markets that established the rates were free markets, not institutional governments. The "common knowledge" everyone had was that the risk was de facto shared. No one had predicted that a crisis like in 2008/9 would occur, and further no one would predict that in such a crisis a $*"#head like Merkel would leave everyone in the ****ters, based on a piece of paper rather than getting her sights from the spirit of the euro.

Sure, hindsight is 20/20 and all but the collapse of the global financial system was predicted by several economists 6+ months in advance, who were promptly ignored.

Nassim Taleb, a very marginal man, but mostly Robert Schiller who has this uncanny ability to foresee a crash before everyone else (had done the same in 2000/1). I myself was already furiously talking to everyone around me in November 2007 about the ****storm that was about to hit us. However, the "consensus" (whenever I read this word as an argument, I just LAFF) was the opposite: it was going to be a
 mild correction. And it couldn't be otherwise, for the collapse of a boom happens precisely (like by definition) when a sufficiently big number of people (an elite minority) realises that it is going to collapse. Had the consensus been reached earlier, the collapse would have happened earlier as well.

[MP-Ryan]

I work in law enforcement and hear the "but it's the spirit of the law" "but that's not how we meant to write it" "it's implied!" arguments all the time.  If there's one thing I've learned in approaching 8 years of law enforcement experience, it's this:

If it's not written into legislation, it's irrelevant.  If these countries were basing their fiscal policy on an implied principle that didn't make it into the treaty, I feel even less sorry for them.

And it IS governments.  Even in a free market, governments have a considerable ability to influence interest rates through policy decisions.  Even without manipulating interest rates there is quite a bit that government can do to adjust economic functions - particularly if the functions in need of adjustment concern housing, construction, imports, and exports.  Just because an interest rate is established at an absurd level does not mean that other policy actions aren't possible to discourage financial overexposure.  Action along these lines is precisely what several national governments (mine included - see mortgage rule adjustments) have been doing this year.

[Luis Dias]

Well, of course, but that is a long term process, not a short-term emergency. The PIIGS were surprised by the events exactly when everyone was doing Keynesian measures. This also happened in Portugal. In Portugal, 2009 was an election year. The Socialist Party in power tried to porsue Keynesian policies to counter the coming deep recession, by porsuing public works. At the time I liked the decision, so I voted for them. However, in that same year, the interest rates boomed, and the result was that after a year where we had managed to control the deficits (the overall debt had actually decreased in 2007 and 2008), the deficit in 2009 was 9.6%. Everyone blamed the "socialists", but they had no power over the interest rates, for they rallied in less than 5 months.

We must realise that the crisis was sparked precisely because of the lack of understanding of long-tail events in the finantial sector, and a misunderstanding of the risks of derivatives, which were at the time left for computer algorithms to calculate and so on. The Black-Scholes model*, for instance, was a "huge breakthrough" at the time that managed to calculate precisely the amount of risk that anyone would incur by buying derivatives (and thus created the whole derivatives market). People like Nassim Taleb raged furiously against these kinds of "naive" equations that underestimated the risks, but they were ignored. So the markets boomed.

When the **** hit the fan circa march 2008, it became slowly obvious that all the agencies which rated these "products" triple A and so on had flawed methodologies, they were filled with corruption and so on. Then in 2009, Merkel made that speech. By the fall of that year, these agencies had rated Greece, Portugal, Ireland and so on as "trash", and the yields skyrocketed. You might say that the countries can do things to create credibility and so on, but you have to realise that this credibility existed before these moments (and so to demand to the rulers of these countries that they had to create credibility when there was one already would be silly), and it took only a few months for everyone to realise that after all, these countries' finances were in deep trouble.


I remember reading really good things about how the central bank / finance minister of Canada understood the fragilities named by Taleb much sooner than everyone else, and actually made sound policies to minimize their exposure to a possible crisis. So, again, I congratulate your government for having the insight practically no one else had.


*

[Al-Rik]

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

And Spain is the biggest partner, and France as big as Germany.
Portugal Exports - partners: Spain 25.2%, Germany 13.8%, France 12.2%, UK 5%, Angola 5% (2009)

And that is the meaning of it ? Nothing in special.
Do the German's drink more Wine from Portugal, if the Wines from Spain, France and Italy are also reduced in their price because Germany has left the Euro Zone ?
If Mercedes sells less cars and buys less leather and fine wood from Portugal for the seats and dashboards, is this a positive Effect ?

Econ 101 may give a general hint, but the real effects may differ, depending on the good exported and imported - and even by company.

So if generally Portugal will profit from an Euro Zone without Germany because Germany is the third country to where Portugal exports... how much bigger will be the benefit for the prime Import Partners ?
Germany: Imports - partners:  China 9.7%, Netherlands 8.4%, France 7.6%, US 5.7%, Italy 5.2%, UK 4.7%, Belgium 4.2%, Austria 4.1%, Switzerland 4.1% (2009 est.)

Netherlands Exports - partners: Germany 26%, Belgium 13%, France 9.2%, UK 7.7%, Italy 4.9% (2009)
France Exports - partners: Germany 16.4%, Italy 8.2%, Belgium 7.7%, Spain 7.6%, UK 6.8%, US 5.1%, Netherlands 4.2% (2009)
Italy Exports - partners: Germany 13%, France 11.6%, US 6%, Spain 5.9%, UK 5.2%, Switzerland 4.7% (2009)
Belgium Exports - partners: Germany 19.1%, France 17%, Netherlands 12.2%, UK 7.2%, US 5.3%, Italy 4.7% (2009)
Austria Exports - partners: Germany 32.1%, Italy 7.9%, Switzerland 4.8%, France 4.2%, Czech Republic 4.1% (2009)
Spain Exports - partners: France 18.7%, Germany 10.7%, Portugal 9.1%, Italy 9%, UK 6.3% (2009)

If you want to apply Econ 101 the real profiteers from a Euro Zone without Germany would be these Nations, not Greece or Portugal.
And if the effect on Portugal and Greece is big enough to save them ?

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.

Your fate in the German Economy and the wisdom of the next Federal Government of Germany is bigger than mine

I'm cynical about it. Using the actual low interest rates for German Bonds to spend more money and hope what nobody will notice it until the next elections are over would be a logical thing for any politician.
And even than you can always blame the American Rating Agency's the greedy Banksters and the 1% when the problems start.

[Luis Dias]

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

And Spain is the biggest partner, and France as big as Germany.
Portugal Exports - partners: Spain 25.2%, Germany 13.8%, France 12.2%, UK 5%, Angola 5% (2009)

And that is the meaning of it ? Nothing in special.

Are you trolling me now? Because either you are not paying attention to basic reasoning here, or you are just pulling my leg. If you think that 12.3% of exports is "nothing in special" and that a devaluation against the Mark wouldn't have a noticeable effect in the commercial balance sheets then you are pretty high on weed.

Of course, it is not only about the Mark. It's about the entire rest of the world, to which the euro-without-the-mark would behave much differently. If you will porsue this line of thinking without making any reasonable argument from now on, I'll just stop the conversation.

Do the German's drink more Wine from Portugal, if the Wines from Spain, France and Italy are also reduced in their price because Germany has left the Euro Zone ?

Yes, Germans will buy more Portuguese wine, just as they will buy more spanish, french and italian wine.

If Mercedes sells less cars and buys less leather and fine wood from Portugal for the seats and dashboards, is this a positive Effect ?

Yes, because a Mercedes car is much more expensive than the whole amount of portuguese goods in it.

So if generally Portugal will profit from an Euro Zone without Germany because Germany is the third country to where Portugal exports... how much bigger will be the benefit for the prime Import Partners ?
Germany: Imports - partners:  China 9.7%, Netherlands 8.4%, France 7.6%, US 5.7%, Italy 5.2%, UK 4.7%, Belgium 4.2%, Austria 4.1%, Switzerland 4.1% (2009 est.)

Netherlands Exports - partners: Germany 26%, Belgium 13%, France 9.2%, UK 7.7%, Italy 4.9% (2009)
France Exports - partners: Germany 16.4%, Italy 8.2%, Belgium 7.7%, Spain 7.6%, UK 6.8%, US 5.1%, Netherlands 4.2% (2009)
Italy Exports - partners: Germany 13%, France 11.6%, US 6%, Spain 5.9%, UK 5.2%, Switzerland 4.7% (2009)
Belgium Exports - partners: Germany 19.1%, France 17%, Netherlands 12.2%, UK 7.2%, US 5.3%, Italy 4.7% (2009)
Austria Exports - partners: Germany 32.1%, Italy 7.9%, Switzerland 4.8%, France 4.2%, Czech Republic 4.1% (2009)
Spain Exports - partners: France 18.7%, Germany 10.7%, Portugal 9.1%, Italy 9%, UK 6.3% (2009)

If you want to apply Econ 101 the real profiteers from a Euro Zone without Germany would be these Nations, not Greece or Portugal.
And if the effect on Portugal and Greece is big enough to save them ?

Yes. It would be a benefit to all those countries against Germany. And to the rest of the world.

Your fate in the German Economy and the wisdom of the next Federal Government of Germany is bigger than mine

I'm cynical about it. Using the actual low interest rates for German Bonds to spend more money and hope what nobody will notice it until the next elections are over would be a logical thing for any politician.
And even than you can always blame the American Rating Agency's the greedy Banksters and the 1% when the problems start.

Germany is far, far from a debt problem, so I really have no idea what you are banging about here.

[Mikes]

I railed against it because of its lack of democracy, that is, what is being proposed is that a non-elected intergovernmental body have the final say on what each country decides to do in their own budget (which would be akin, realpolitically, to give up democracy on every peripheral country to Merkel and, by a lesser degree, Hollande).

Political Union, as mentioned earlier, would of course not mean the abolishment of democracy. (That's some crazy line of thinking, seriously.)

What political union ultimately means is of course a unified Europe with some kind of federal system for its membership states - why would you think that this would/should be anything else but an European democracy? /shakes head.

[SpardaSon21]

Sounds like Europe is having to deal with the same stuff we had to deal with when we were trying to make a unified American nation.

[Mikes]

Sounds like Europe is having to deal with the same stuff we had to deal with when we were trying to make a unified American nation.

Yeh well... one might hope that during our now oh so civilized 21st century :cough: it might be possible to do such a thing without the obligatory civil war   lol.

A cynic would propably say the lack of civil war is definitely why it's taking so frigging long to even decide how or even if to unite

[An4ximandros]

Yeah, I hope that nonsense does not happen again.
 Last thing the world need is an European Congress filled with byzantine politics and politicians that can't even get why people are mad at the idea of internet censorship.

[SpardaSon21]

Sounds like Europe is having to deal with the same stuff we had to deal with when we were trying to make a unified American nation.

Yeh well... one might hope that during our now oh so civilized 21st century :cough: it might be possible to do such a thing without the obligatory civil war   lol.

A cynic would propably say the lack of civil war is definitely why it's taking so frigging long to even decide how or even if to unite

Considering the Civil War was 80 years after the Constitution, give or take, you've got time to iron out your problems.  No guarantees on the Scottish and Irish not rebelling against freshly-imposed liquor taxes, though.

[Luis Dias]

I railed against it because of its lack of democracy, that is, what is being proposed is that a non-elected intergovernmental body have the final say on what each country decides to do in their own budget (which would be akin, realpolitically, to give up democracy on every peripheral country to Merkel and, by a lesser degree, Hollande).

Political Union, as mentioned earlier, would of course not mean the abolishment of democracy. (That's some crazy line of thinking, seriously.)

What political union ultimately means is of course a unified Europe with some kind of federal system for its membership states - why would you think that this would/should be anything else but an European democracy? /shakes head.

Perhaps before calling people crazy you'd do better by actually reading what they are saying. I have little against a "politically unified europe". This is not what is at the table right now. Right now, what is being discussed is a bureaucratic comittee nominated by the "EU" (much like the european commission right now) which will have powers over the national budgets. The lack of democratic oversight over these kinds of comittees and commissions means they have zero de facto power, and the leaders of Germany, France and a few others are who actually develop the policies. But the problem is, those leaders are elected by their own electorate and owe nothing to everyone else.

So TL DR: your pipe dream of a "of course it would be democratic" EU is far from what is actually happening.