Is the end nigh for the Euro? [vol. 3]

[Art0ir]

I was offered a job in Dublin at the start of the year earning around 2.5 x what I do now but turned it down for the reasons above. As soon as the tax status changes, the IT sector in Dublin is going to collapse.

[DJRC]

You turned down a job paying you 2.5 x your current money because of what might happen at some indeterminate point in future??? Why would you care if it collapses? You just say thanks for the money and leave.

[anonymous-user]

Andy Zarse said:

Below is from my post of 8 July... I wondered how long until the guys at the wheel in the US finally woke up. To be fair, the US has some of the highest corporate taxes in the developed world, so it's hardly a surprise the big multinats avoid them. Obama can shout and holla' all he likes, the tax dollars ain't coming home to mama until there's a substantial tax cut.

In 2004 the US had a 'repatriation tax holiday', as the name implies allowing US multinationals to repatriate at a fraction of the usual tax rate; IIRC they brought back half a trillion $ at 5%! Obviously everyone who had brought the money home at 35% was pi55ed off and swore never to do it again until the next tax break and all usual lot cried about it not being 'fair'. The current situation is great for the rest of the world though, invest back home and pay 35% or invest here for free, thanks very much. The only good thing about the yanks being so gung ho is they shoot themselves in the foot so often. They tried to have another one a few years ago but congress didn't pass it.

[Andy Zarse]

Retail sales in Greece are exhibiting both deflation and disinflation as turnover falls 8.5% Y-O-Y in May and volumes fall 3.8%. Why've I got Ludacris's How Low Can You Go banging in my head?

[Art0ir]

Andy Zarse said:

Retail sales in Greece are exhibiting both deflation and disinflation as turnover falls 8.5% Y-O-Y in May and volumes fall 3.8%. Why've I got Ludacris's How Low Can You Go banging in my head?

I don't know, but I'm now afflicted too

[Digga]

Andy Zarse said:

Retail sales in Greece are exhibiting both deflation and disinflation as turnover falls 8.5% Y-O-Y in May and volumes fall 3.8%. Why've I got Ludacris's How Low Can You Go banging in my head?

Cash is king.

[Walford]

Need a major banking economy like Scotland to join the Euro and save it

[Digga]

When les frites are down, you can rely on a bit of bureaucracy and protectionism to make it all better: http://www.telegraph.co.uk/news/worldnews/europe/f...

[LongQ]

The Establishment's rehabilitation of Vicki Pryce continues as the Daily Mail provides her with a platform of column inches to publicise the developments in Greece and a few other parts of the dodgier end of the European banking system.

http://www.dailymail.co.uk/money/comment/article-2...


I would think that the ECB's "stress tests" could easily be designed to ensure that most of the banks fail (especially if mergers have left potentially fit banks (are there any?) saddled with less fit parts of other banks in the short to medium term. Plus Draghi is very likely to want to perpetuate his "whatever it takes" banking superman image.

The easiest way to manage direction at this time to satisfy political ego and push the "greater union" policy would be to ensure that the banks seem week as a result of the stress test.

Globally that ought to be seen as a huge gamble but "whatever it takes" might just be a good enough phrase in a murky world to carry the day long enough for the EU to attain the additional levels of control for integration that movers and shakers see as the longer term goal.

It's an ill wind that a practiced team of plotters cannot turn to their advantage one way or another.

[Andy Zarse]

Interesting take on the predicament of Italy...

http://italychronicles.com/is-italy-committing-sui...

[DJRC]

It's a daily discussion in middle to Northern Italy. The professional classes are very very depressed and pessimistic.

[Walford]

Euro went a long time ago, these countries are in effect using the German mark as there currency, and its killing them

[Digga]

Walford said:

Euro went a long time ago, these countries are in effect using the German mark as there currency, and its killing them

I disagree slightly. I'd say the Euro never really existed, not in the way people really thought it did. For a time, the PIIGS spent like they'd become an annexe of Germany, whilst the latter exported like it was trading out of one of the various joke currencies the Euro replaced in the PIIGS.

The invariable rule: Great party = Epic hangover.

[DJRC]

Getting close to a truth of sorts guys. I've said for a long time what exists now is not the same Euro as originally, a mk 2 as it were. Now the Bernie trial has given another example of how finance etc works slightly different out here. I'll pose something to you all: how much European debt do you think the Bavarian state bank owns? How much of said debt do you think the Swiss National Bank owns? Where have European indebted countries youngest and brightest hot footed it to the most? I don't actually know the answer to the first question I know the second answer is an awful awful lot as I pointed out three yrs ago on here as to who was keeping the Euro alive from autumn 2011 to Easter 2012. The third question is answered very easily in Switzerland and Bavaria. Zurich, St Gallen, Neufchâtel and Geneve are hoovering up any and every French Italian Spanish and Portuguese technical and financial professional and grad they can get. Munich has massive ex pat populations of Brits Spanish and Italians...and everybody else. Some people might argue this was scary.

[Gargamel]

DJRC said:

Getting close to a truth of sorts guys. I've said for a long time what exists now is not the same Euro as originally, a mk 2 as it were. Now the Bernie trial has given another example of how finance etc works slightly different out here. I'll pose something to you all: how much European debt do you think the Bavarian state bank owns? How much of said debt do you think the Swiss National Bank owns? Where have European indebted countries youngest and brightest hot footed it to the most? I don't actually know the answer to the first question I know the second answer is an awful awful lot as I pointed out three yrs ago on here as to who was keeping the Euro alive from autumn 2011 to Easter 2012. The third question is answered very easily in Switzerland and Bavaria. Zurich, St Gallen, Neufchâtel and Geneve are hoovering up any and every French Italian Spanish and Portuguese technical and financial professional and grad they can get. Munich has massive ex pat populations of Brits Spanish and Italians...and everybody else. Some people might argue this was scary.

I hire for a global business with a presence in Switzerland, the quality of candidate you can hire cannot be replicated in any other Euro country currently. ( though London is closest)

However you have to pay for it, and I note many similar businesses are gradually heading east....

[Steffan]

DJRC said:

Getting close to a truth of sorts guys. I've said for a long time what exists now is not the same Euro as originally, a mk 2 as it were. Now the Bernie trial has given another example of how finance etc works slightly different out here. I'll pose something to you all: how much European debt do you think the Bavarian state bank owns? How much of said debt do you think the Swiss National Bank owns? Where have European indebted countries youngest and brightest hot footed it to the most? I don't actually know the answer to the first question I know the second answer is an awful awful lot as I pointed out three yrs ago on here as to who was keeping the Euro alive from autumn 2011 to Easter 2012. The third question is answered very easily in Switzerland and Bavaria. Zurich, St Gallen, Neufchâtel and Geneve are hoovering up any and every French Italian Spanish and Portuguese technical and financial professional and grad they can get. Munich has massive ex pat populations of Brits Spanish and Italians...and everybody else. Some people might argue this was scary.

All very interesting indeed.

AS DJRC confirms with his usual delivery of the facts something has to give because, as so many contributors on here have recognised, over the last 12 months, there is nothing permanent in the current "solution" fabricated by the EU. Nothing that the EU have done addresses the fundamental problems within the failing economies of the southern EU states themselves.

These states are clearly failing by any economic measure and still falling steadily. There has been no improvement in the underlying economies themselves. What the EU have done is bolster the appearance of solvency within these states by happily printing money and lending it to the states whilst being fully aware that these states can never actually afford to repay the loans.

There has to be a crunch time with this nonsense and the crunch is steadily coming. Since none of the solvent EU states including Germany will accept that the losses will fall to them,then the only resolution will be one of two possible solutions, painful and indeed disastrous though these may be for the failing states themselves.

Either the EU will succeed in railroading budgetary union across the EU and the solvent states will pay for the failing states return to solvency through heavy trans EU taxation on every solvent country being directed to that effect. Or the EU will fail to achieve budgetary union and the cracks will show, no EU country will pick up the bill for keeping the failing states within the EU currency union and consequently the failing states will collapse in on themselves and then an almighty crisis will occur within the EU finances and the Euro.

I do not want to see this but 40 years of business taught me that spending more than you earn is not a long term, sustainable philosophy. Since none of these failing states can actually afford, from their own resources, to remain within a currency dominated by Germany and none of the Solvent EU countries will pick up the tab for these losses there must be an almighty collapse of the entire "solution".

I personally cannot see this budgetary union being forged quickly enough to pull the EU chestnuts out of the fire. We are therefore probably looking at scorched EU nuts. Not something I want to see but I defy anyone to explain how this charade can continue once the visibility of the fraud becomes apparent. Providing the UK is able to remain on the sidelines and not in the hotbed that must occur within the Euro union I think the effect on the UK will be rather less than on the more integrated states. I certainly hope it will. All very interesting indeed.

On a personal note as it happens we are moving to Italy and Lucca as our main base from October and I can only reiterate the comments of DJRC on the glories of Italy and the apparent frustration of the Italians at the way their country is being dragged down. It is the weather and the culture that is drawing us there but we will still have homes in the UK and we will not leave the UK as individuals. We do find the warmer weather and cappuccino and wine quaffing culture and the relaxed lifestyles most attractive. We will be renting primarily because I do not trust the real estate market security in Italy. See above for my reasons.

[RYH64E]

Steffan said:

I do not want to see this but 40 years of business taught me that spending more than you earn is not a long term, sustainable philosophy.

I don't disagree, but it seems that pretty much every state in the western world spends more than they earn and have been doing so for a considerable time. Yet life goes on, the printing presses roll (EUR, GBP and USD), debts rise, and the euro remains a major currency. I'm not expecting it's demise any time soon.

[Digga]

RYH64E said:

I don't disagree, but it seems that pretty much every state in the western world spends more than they earn and have been doing so for a considerable time. Yet life goes on, the printing presses roll (EUR, GBP and USD), debts rise, and the euro remains a major currency. I'm not expecting it's demise any time soon.

You're correct, debt and deficit is common, even more so post crunch, but in my eyes the value of the EUR does not seem right and there has yet to be a full, post-crunch correction for either the EUR or many of its constituent nations. For example, from what I hear, France is only now beginning to decline by any visible measure. I think there is further for the currency any nations to fall and little sign that any sensible measures for recovery are even being considered, let alone implemented.

Steffan, enjoy la dolce vita!

[Steffan]

Digga said:

RYH64E said:

I don't disagree, but it seems that pretty much every state in the western world spends more than they earn and have been doing so for a considerable time. Yet life goes on, the printing presses roll (EUR, GBP and USD), debts rise, and the euro remains a major currency. I'm not expecting it's demise any time soon.

You're correct, debt and deficit is common, even more so post crunch, but in my eyes the value of the EUR does not seem right and there has yet to be a full, post-crunch correction for either the EUR or many of its constituent nations. For example, from what I hear, France is only now beginning to decline by any visible measure. I think there is further for the currency any nations to fall and little sign that any sensible measures for recovery are even being considered, let alone implemented.

Steffan, enjoy la dolce vita!

Morning Digga I most certainly will try to enjoy life in Italy. Given the years of abuse that my body has suffered through my innate compulsive obsessive nature I am extremely fortunate to still be alive and broadly able to do what I want if I want. One of the many benefits of being an early baby boomer. I do think we are a very fortunate generation. Our good fortune will not remian for our children, already adults, I regret to say. Being solvent in old age will become a real struggle, given the way our cost base is rising, the demographic tends and self serving politicians in charge.

My advice to all my friends and their children has always been head for the hills, to avoid the UK in 30 years time because I do not think it will be a happy place. I suggest anyone under 30 should be looking to live within the English speaking world abroad and Canada, New Zealend and Australia and the USA specifically, in that order.

Years ago an old very wealthy, very sharp and very amusing Jewish Accountant,who taught me a very great deal, with all the humour that nation posseses in extremis, suggested to me as a lowly articled clerk that getting on a fast train in business was the best way forward. Never stay on slow trains moving quickly then becomes much harder to acieve. He meant put yourself in the best place for growth and it will come a lot easier. That is what I did and that is what I recommend to other's.

I agree with your comments, as ever, on the thread. I accept that the timing is the crucial factor but long term no nation can live beyond that level which its real economic output levels can maintain. In the abcsence of a global fairy godmother the failing states must fail therefore. Just a question of time.

[Mermaid]