Is the end nigh for the Euro? [vol. 2]
Discussion
Steffan said: Using Spain as an example of the effect of such a decision, if Spain already has 22% unemployment and massive further cuts will be needed and certainly will be required and dictated by the imposed Mandarins, then unemployment will soar to probably 40% possibly more. No country can support benefits at that level
HundredthIdiot said: Putting aside debt servicing costs, is it really true that a developed country cannot cope with 40% unemployment? Surely the standard of living just has to drop until there is enough export income to feed everyone.
Norfolkit said: Totally with Steffan on this, imposing a savage austerity package on a country that already has 25% unemployment is politically impossible. Unemployment levels and loss of tax income would soar catastrophically, benefits would have to be cut again to match, probably down to subsistence levels, the Government would effectively have to sacrifice an entire generation for the greater good. People bought that in 1914, they'll never buy it again. It would be political suicide Such savage austerity will neither sort the defecit out nor allow the country to function. It is a dream of politicians desperate to solve a crisis entirely of their own making. It will not work. Indeed IMO the complete failure to recognise the absolute impossibility that this can work speaks volumes about how utterly out of touch the elite of the EU are becoming. This is NOT a workable solution.
But the "savage austerity" is being imposed extremely unevenly. There are presumably lots of people in Greece and Portugal doing just fine; there certainly are in Ireland.
In 2004 average public sector pay was €35k in the UK, €34k in Germany and €46k in Ireland (I don't have more recent figures to hand). According to the ECB, public sector compensation in Ireland grew by 64 per cent between 1999 and 2007.
Despite some cuts in public sector pay in the last couple of years, Ireland is still paying twice as much for hospital consultants as the UK and Germany, and has kept in place annual increments for time in service. Where is the austerity there?
My argument is that certainly in Ireland and probably in Greece this "austerity" message is being pushed by a self-serving, union-protected establishment. It's bulls
t - the gravy train rolls on.
HundredthIdiot said: Putting aside debt servicing costs, is it really true that a developed country cannot cope with 40% unemployment? Surely the standard of living just has to drop until there is enough export income to feed everyone.
Norfolkit said: Totally with Steffan on this, imposing a savage austerity package on a country that already has 25% unemployment is politically impossible. Unemployment levels and loss of tax income would soar catastrophically, benefits would have to be cut again to match, probably down to subsistence levels, the Government would effectively have to sacrifice an entire generation for the greater good. People bought that in 1914, they'll never buy it again. It would be political suicide Such savage austerity will neither sort the defecit out nor allow the country to function. It is a dream of politicians desperate to solve a crisis entirely of their own making. It will not work. Indeed IMO the complete failure to recognise the absolute impossibility that this can work speaks volumes about how utterly out of touch the elite of the EU are becoming. This is NOT a workable solution.
But the "savage austerity" is being imposed extremely unevenly. There are presumably lots of people in Greece and Portugal doing just fine; there certainly are in Ireland.
In 2004 average public sector pay was €35k in the UK, €34k in Germany and €46k in Ireland (I don't have more recent figures to hand). According to the ECB, public sector compensation in Ireland grew by 64 per cent between 1999 and 2007.
Despite some cuts in public sector pay in the last couple of years, Ireland is still paying twice as much for hospital consultants as the UK and Germany, and has kept in place annual increments for time in service. Where is the austerity there?
My argument is that certainly in Ireland and probably in Greece this "austerity" message is being pushed by a self-serving, union-protected establishment. It's bulls
t - the gravy train rolls on.HundredthIdiot said:
Steffan said: Using Spain as an example of the effect of such a decision, if Spain already has 22% unemployment and massive further cuts will be needed and certainly will be required and dictated by the imposed Mandarins, then unemployment will soar to probably 40% possibly more. No country can support benefits at that level
HundredthIdiot said: Putting aside debt servicing costs, is it really true that a developed country cannot cope with 40% unemployment? Surely the standard of living just has to drop until there is enough export income to feed everyone.
Norfolkit said: Totally with Steffan on this, imposing a savage austerity package on a country that already has 25% unemployment is politically impossible. Unemployment levels and loss of tax income would soar catastrophically, benefits would have to be cut again to match, probably down to subsistence levels, the Government would effectively have to sacrifice an entire generation for the greater good. People bought that in 1914, they'll never buy it again. It would be political suicide Such savage austerity will neither sort the defecit out nor allow the country to function. It is a dream of politicians desperate to solve a crisis entirely of their own making. It will not work. Indeed IMO the complete failure to recognise the absolute impossibility that this can work speaks volumes about how utterly out of touch the elite of the EU are becoming. This is NOT a workable solution.
But the "savage austerity" is being imposed extremely unevenly. There are presumably lots of people in Greece and Portugal doing just fine; there certainly are in Ireland.
In 2004 average public sector pay was €35k in the UK, €34k in Germany and €46k in Ireland (I don't have more recent figures to hand). According to the ECB, public sector compensation in Ireland grew by 64 per cent between 1999 and 2007.
Despite some cuts in public sector pay in the last couple of years, Ireland is still paying twice as much for hospital consultants as the UK and Germany, and has kept in place annual increments for time in service. Where is the austerity there?
My argument is that certainly in Ireland and probably in Greece this "austerity" message is being pushed by a self-serving, union-protected establishment. It's bullst - the gravy train rolls on.
Certainly an interesting view. And well argued.HundredthIdiot said: Putting aside debt servicing costs, is it really true that a developed country cannot cope with 40% unemployment? Surely the standard of living just has to drop until there is enough export income to feed everyone.
Norfolkit said: Totally with Steffan on this, imposing a savage austerity package on a country that already has 25% unemployment is politically impossible. Unemployment levels and loss of tax income would soar catastrophically, benefits would have to be cut again to match, probably down to subsistence levels, the Government would effectively have to sacrifice an entire generation for the greater good. People bought that in 1914, they'll never buy it again. It would be political suicide Such savage austerity will neither sort the defecit out nor allow the country to function. It is a dream of politicians desperate to solve a crisis entirely of their own making. It will not work. Indeed IMO the complete failure to recognise the absolute impossibility that this can work speaks volumes about how utterly out of touch the elite of the EU are becoming. This is NOT a workable solution.
But the "savage austerity" is being imposed extremely unevenly. There are presumably lots of people in Greece and Portugal doing just fine; there certainly are in Ireland.
In 2004 average public sector pay was €35k in the UK, €34k in Germany and €46k in Ireland (I don't have more recent figures to hand). According to the ECB, public sector compensation in Ireland grew by 64 per cent between 1999 and 2007.
Despite some cuts in public sector pay in the last couple of years, Ireland is still paying twice as much for hospital consultants as the UK and Germany, and has kept in place annual increments for time in service. Where is the austerity there?
My argument is that certainly in Ireland and probably in Greece this "austerity" message is being pushed by a self-serving, union-protected establishment. It's bulls
t - the gravy train rolls on.HundredthIdiot is certainly correct that there will be winners as well as losers. He may well be right, that collapse is not inevitable.
But I disagree.
My concern is that the inevitable economic aftermath of countries like Ireland, Greece, Spain, Portugal and so forth living way beyond their means for year after year can only be collapse. This is about economics: countries that are wholly insolvent in the way that these defaulters already are cannot recover without first admitting the debt and then withdrawing from a currency they probably can never actually afford to join.
Ireland is so small the EU could comfortably subsidise the country without any real pain. Possibly Greece could be supported.
But Spain and Portugal are simply too big for the EU to support. The contagion also goes way beyond these countries. The Banks of France are bust if these countries fail as DJRC pointed out months ago.
Italy really is too big to fail. Dealing with the Insolvency of Italy in itself is too much for the EU.
The real problem is that the EU remedy is a smoke and mirrors subsidy from QE. Nothing is being done to address the fundamental problems inherent in whole countries spending way beyond their gross domestic product. These countries have NEVER had the economic strength to remain in a currency largely controlled by Germany. This has always been a smoke and mirrors job, ably abetted by the corrupt EU accounting policies.
The real problem is that the economic smoke and mirrors is gradually thinning out. Reality, in the shape of hopelessly insolvent sovereign states is beginning to dawn of world economics and the markets.
The conundrum is how this is to be resolved.
I believe that the clearly Insolvent countries must fall out of the Euro and not return for decades if ever. This will take decades to resolve whether by collapse or continuous subsidy.
Can the EU get its act together? I do not think so. I believe collapse and recovery is the only real way for Insolvent organisations to recover.
I also think the reality of the EU actually agreeing the Tobin Tax and Central Fiscal collection process in Brussels within a reasonable timescale is most improbable if, in fact, it is actually possible at all.
Time waits for no man: that is why I am convinced that default is inevitable.
Irish said:
Time waits for no man: that is why I am convinced that default is inevitable.
Why? The US seems to be suviving on a diet of credit?
Bernake unleashed $1trillion in QE, they have always gone into and out of recession about 6 months to a year before the UK. Why? The US seems to be suviving on a diet of credit?
With further spending cuts to come the UK is going to take longer to emerge, but the US owe some very very hefty sums of money.
Gargamel said:
Bernake unleashed $1trillion in QE, they have always gone into and out of recession about 6 months to a year before the UK.
With further spending cuts to come the UK is going to take longer to emerge, but the US owe some very very hefty sums of money.
You've already implied this in two letters of your first line - in that however many dollars the US owes, they still have potentially infinitely more USD than the rest of the world put together. With further spending cuts to come the UK is going to take longer to emerge, but the US owe some very very hefty sums of money.
http://www.ekathimerini.com/4dcgi/_w_articles_wsit...
Greek Paper said:
Prime Minister Lucas Papademos is preparing for a make or break meeting with Greek political leaders and is said to be considering resigning if the three parties in his coalition government cannot agree on the set of reforms Greece should adopt so it can qualify for more loans.
Will the Greeks allow them to drop the national minimum wage?Greek Paper said:
Sources told Kathimerini that the troika is demanding that the minimum wage of 751 euros per month (gross) be reduced and that labor costs in the private sector drop by 25 percent in a bid to help Greece regain competitiveness.
Labor unions and employers wrote to Papademos on Friday to inform him that they cannot agree on a wage cut.
Labor unions and employers wrote to Papademos on Friday to inform him that they cannot agree on a wage cut.
Crusoe said:
http://www.ekathimerini.com/4dcgi/_w_articles_wsit...
Nope. No measure that has had a REAL impact on the budget problems in Greece has or will be implemented. When it comes to real change (not just talking, signing agreements or attending summits) things are ignored, fudged or deferred.Greek Paper said:
Prime Minister Lucas Papademos is preparing for a make or break meeting with Greek political leaders and is said to be considering resigning if the three parties in his coalition government cannot agree on the set of reforms Greece should adopt so it can qualify for more loans.
Will the Greeks allow them to drop the national minimum wage?Greek Paper said:
Sources told Kathimerini that the troika is demanding that the minimum wage of 751 euros per month (gross) be reduced and that labor costs in the private sector drop by 25 percent in a bid to help Greece regain competitiveness.
Labor unions and employers wrote to Papademos on Friday to inform him that they cannot agree on a wage cut.
Labor unions and employers wrote to Papademos on Friday to inform him that they cannot agree on a wage cut.
HundredthIdiot said:
----
But the "savage austerity" is being imposed extremely unevenly. There are presumably lots of people in Greece and Portugal doing just fine; there certainly are in Ireland.
In 2004 average public sector pay was €35k in the UK, €34k in Germany and €46k in Ireland (I don't have more recent figures to hand). According to the ECB, public sector compensation in Ireland grew by 64 per cent between 1999 and 2007.
Despite some cuts in public sector pay in the last couple of years, Ireland is still paying twice as much for hospital consultants as the UK and Germany, and has kept in place annual increments for time in service. Where is the austerity there?
My argument is that certainly in Ireland and probably in Greece this "austerity" message is being pushed by a self-serving, union-protected establishment. It's bullst - the gravy train rolls on.
I'm not so sure that Spain itself has a real issue with the public sector pay/employment. Its real issue was the fact that it developed an economy of builders and then it collapsed. Most of those people out of work right now are in that industry or related industries. Spain will not fire masses more people, especially in the public sector as due to their unemployment payments system there is no real advantage. The cuts will be in wages, hours and in infrastructure and services. This will hurt them a lot. Already outside of Madrid and Barca it is possible to see the country suffering. The bars and restaurants are empty on the weekends. Even in Madrid I notice the bars in the main nightspots now close at 1am and not 3.But the "savage austerity" is being imposed extremely unevenly. There are presumably lots of people in Greece and Portugal doing just fine; there certainly are in Ireland.
In 2004 average public sector pay was €35k in the UK, €34k in Germany and €46k in Ireland (I don't have more recent figures to hand). According to the ECB, public sector compensation in Ireland grew by 64 per cent between 1999 and 2007.
Despite some cuts in public sector pay in the last couple of years, Ireland is still paying twice as much for hospital consultants as the UK and Germany, and has kept in place annual increments for time in service. Where is the austerity there?
My argument is that certainly in Ireland and probably in Greece this "austerity" message is being pushed by a self-serving, union-protected establishment. It's bulls
t - the gravy train rolls on.Spain is just going to see less and less spending and its going to collapse that way. THEN the unemployment levels will skyrocket but that'll be the small shop keepers and restaurant owners all going bust.
Whats worse is that by any real measure their banks are insolvent and yet they carry on as normal.
jonah35 said:
Well, the end did not come for the euro in autumn 2011.
The ftse is near 6,000.
The people who said the end was nigh were wrong.
Perhaps there is too much doom around?
life goes on.........................
I agree with that. It is because there is so much doom that the stock indices are having such a good time with the central bankers fuelling their fire. Ride the rally, don't fight the Fed{s).The ftse is near 6,000.
The people who said the end was nigh were wrong.
Perhaps there is too much doom around?
life goes on.........................
A year from now, I doubt life will be much different for most people.
Mermaid said:
I agree with that. It is because there is so much doom that the stock indices are having such a good time with the central bankers fuelling their fire. Ride the rally, don't fight the Fed{s).
A year from now, I doubt life will be much different for most people.
The reality may be all of the above happens but the problem from our point of view is maybe that economists don't work on the same time frames as us mere mortals. Greece could leave the Euro but went if at all, Italy will certainly struggle to pay it debts due to it's social security system but the reality is that the World and Europe just keep cutting these and other errant countries more slack and it puts off the day of reckoning.A year from now, I doubt life will be much different for most people.
Back in early 2010 I read loads about Greece defaulting, 2 years on and it has/will default yet the EU say "PSI haircut".
The stock market is up because there's money to be made but as Chuck Prince from Citibank once said, "he wouldn't want to be the last one on the dance floor when the music stops"
Never forget that if you're in government, debt doesn't matter so long as you've got your old friend rampant inflation. A 5% differential between base rate and RPI sounds more or less "rampant" to me.
Similarly people may think house prices aren't falling, or aren't falling much. But deduct 5% p.a. for the shrinking pound and it all looks very different.
Similarly people may think house prices aren't falling, or aren't falling much. But deduct 5% p.a. for the shrinking pound and it all looks very different.
Hyper10 said:
The reality may be all of the above happens but the problem from our point of view is maybe that economists don't work on the same time frames as us mere mortals. Greece could leave the Euro but went if at all, Italy will certainly struggle to pay it debts due to it's social security system but the reality is that the World and Europe just keep cutting these and other errant countries more slack and it puts off the day of reckoning.
Back in early 2010 I read loads about Greece defaulting, 2 years on and it has/will default yet the EU say "PSI haircut".
The stock market is up because there's money to be made but as Chuck Prince from Citibank once said, "he wouldn't want to be the last one on the dance floor when the music stops"
Im waiting to get into the ftse after the music stops! Should be a nice drop when the EU crap hits the fan.Back in early 2010 I read loads about Greece defaulting, 2 years on and it has/will default yet the EU say "PSI haircut".
The stock market is up because there's money to be made but as Chuck Prince from Citibank once said, "he wouldn't want to be the last one on the dance floor when the music stops"
Mermaid said:
bobbylondonuk said:
Im waiting to get into the ftse after the music stops! Should be a nice drop when the EU crap hits the fan.
I too would like to short the indices but mindful we could enjoy a further spike if the EU stuff gets nicely packaged.I'll either make money or Chuck will be making eyes at me across the floor and I'll be paying the price of my errant ways!
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