Is the end nigh for the Euro? [vol. 2]
Discussion
loafer123 said:
The banks are being told to get smallerand safer.
At the same time they are being told to lend more to riskier companies and individuals.
And you wonder why they aren't doing what you want.
On the second opint, I don't think that constructive and, in any case, the final iteration of govt loan guarantee At the same time they are being told to lend more to riskier companies and individuals.
And you wonder why they aren't doing what you want.
In fairness to QE (and Merv & Carney) you can see a repeat of the post Great Depression, beggar-thy-neighbour, currency wars at play, which sort of necessitates deflationary tactics.
amir_j said:
So anyone on here changed their minds?
Looking much more probable that political will , will prove all conquering and the euro will survive with greece with a stylidh new haircut et al remaning in.
Not me, but I never thought it would be over by the autumn. Depends how long the Med populations can stand being horsewhipped by a strong Euro.Looking much more probable that political will , will prove all conquering and the euro will survive with greece with a stylidh new haircut et al remaning in.
The EZ politicians will of course take any amount of pain whilst having their electorate whipped. But look at poor old Spain, all those efficiency drives and "reforms" leading to high unemployment and trying to export its way out of trouble... Then the Yoyo goes up about 10% in about six weeks and ruins all the hard work. And still their economy contracts month by month with no sign of a rebound. You have to feel sorry for them!
OTOH you have to take your hat of to Draghi though, his conjuring has certainly bought the Euro some extra time to, well, who knows what... My best guess is that we just need one more full blown financial crisis, possibly involving banks and derivatives (misuse thereof, see Italy for details) to hit them when they least expect it, and that will be that.
turbobloke said:
'Sources in Brussels say that spending will be cut by €34.4billion over the next seven years from €1trillion to almost €960billion. That represents a decrease of around three percent, the first time a long-term EU spending plan has seen a net reduction. The cuts agreed on Friday fell mainly on a new fund for cross-border transport, energy and telecoms projects and on pay and perks for EU officials, a top target for Britain.'
CMD's position on the EU budget appears to have prevailed.
Beware of white man bearing gifts. Bet our contribution will rise.CMD's position on the EU budget appears to have prevailed.
The cracks are there for all to see:
http://www.bbc.co.uk/news/world-europe-21377378
BBC said:
The UK has argued for a figure as low as 886bn and its calls for restraint are echoed by Germany, the Netherlands and Sweden
Denmark too, can be added to this list.BBC said:
France and Italy favour the November figure but want spending refocused on investment for growth
Poland, the biggest of the new member-states which benefit significantly from EU subsidies, has said further deep cuts to the budget are "inconceivable"
Neither POV is surprising, but since they are diametrically opposed, how long can it go on?Poland, the biggest of the new member-states which benefit significantly from EU subsidies, has said further deep cuts to the budget are "inconceivable"
http://www.bbc.co.uk/news/world-europe-21377378
Digga said:
Neither POV is surprising, but since they are diametrically opposed, how long can it go on?
http://www.bbc.co.uk/news/world-europe-21377378
AS DJRC once said, "those who pay, say".http://www.bbc.co.uk/news/world-europe-21377378
OTOH, Cameron is studid enough to sign up for a deal where the UK pays more than the others who proportion will presumably decrease...
Edited by Andy Zarse on Friday 8th February 15:55
Can some one explain how (I know Iknow its Blairs fault) we have a "victory" but our net contributions WILL increase from the £50m a day we pay.Whilst other contributors will conversly pay less?
I also am confused by the theroy that new eastern members should recieve more to raise them to a level playing field,this to me will be then where the "growth" will be well for a few years, previously near bankrupt eastern europeans being given our hard earned cash to enter into the consumer boom another bubble that will surely burst do they ever learn?They cannot belive their luck its not even as though we can afford it!
It really does make me angry.
I also am confused by the theroy that new eastern members should recieve more to raise them to a level playing field,this to me will be then where the "growth" will be well for a few years, previously near bankrupt eastern europeans being given our hard earned cash to enter into the consumer boom another bubble that will surely burst do they ever learn?They cannot belive their luck its not even as though we can afford it!
It really does make me angry.
Meanwhile the FT report on Carney's term of office in Canada.
http://www.ft.com/cms/s/0/47ee21dc-7045-11e2-ab31-...
Seems like a good time to be leaving.
http://www.ft.com/cms/s/0/47ee21dc-7045-11e2-ab31-...
Seems like a good time to be leaving.
LongQ said:
I posted a thread a few months ago regarding the Canadian Housing Bubble, judging by the replies most thought it nonsense. They are in a dangerous position.LongQ said:
Meanwhile the FT report on Carney's term of office in Canada.
http://www.ft.com/cms/s/0/47ee21dc-7045-11e2-ab31-...
Seems like a good time to be leaving.
Last updated: February 6, 2013 4:27 pmhttp://www.ft.com/cms/s/0/47ee21dc-7045-11e2-ab31-...
Seems like a good time to be leaving.
Canada housing cloud cast over Carney
Residential and commercial buildings in Vancouver
Desperate times demand desperate measures. When Jordan and Russ Macnab, estate agent brothers in Vancouver, Canada, had a glamorous single-bedroom apartment, priced at over C$600,000, that was stubbornly refusing to sell, they decided on a marketing innovation: the “crib crawl”.
They rented a limo bus, stocked it with drinks and snacks, and took a party of possible buyers on an evening tour to see the apartment in question and about half a dozen others, in a mobile viewing party.
Canada house construction data
The experiment was not a complete failure: the Macnabs attracted a lot of interest, and are developing a television series based on their idea. They are planning their second crib crawl next month.
As a way to shift slow-moving inventory, however, it was a flop. Not one of the apartments they showed found a buyer. Vancouver, which until last year had Canada’s strongest growth in house prices, is now its weakest region. The number of homes sold in the greater Vancouver area dropped by 23 per cent last year.
“It’s a bit of a stalemate at the moment,” says Jordan Macnab. “Buyers are waiting for it to crash, and sellers don’t want to give it up.”
The lack of buyers is sobering evidence that Canada’s housing boom, which began in 2000 and bounced back to life after the financial crisis of 2008-09, is now over.
Nervousness about the outlook for house prices, and the effect on the economy if they slump, is casting a pall over the last few months in office of Mark Carney, the Bank of Canada governor who will take over at the Bank of England on July 1.
Mr Carney, who will appear to face questions before the British parliament for the first time on Thursday, was courted by UK Prime Minister David Cameron’s government partly on the strength of Canada’s relatively strong performance compared with other large economies. Just as he is leaving, the shine is coming off that record.
Worries about Canada’s house prices and rising consumer debt prompted Moody’s, the rating agency, to cut the credit ratings of six of the largest Canadian banks last month.
Construction is still booming. Toronto is putting up more skyscrapers over 150 metres tall than any other city in the western hemisphere. But the demand for homes is fading.
The Teranet/National Bank of Canada index of average house prices has been falling for four consecutive months; its weakest performance since early 2009. Nationally, average prices were still up by 3.1 per cent in the year to December, but in Vancouver they were down 2 per cent.
Paul Ashworth of Capital Economics, a research company, believes other cities are likely to follow.
“Everybody is hoping for a soft landing,” he says. “Maybe we’ll just get a few weak spots like Vancouver and apartments in Toronto. But I am not convinced.”
Mr Carney deserves neither all the credit for Canada’s successes nor all the blame for its failures. The economy has been driven by forces beyond his control, particularly events in the US, and he has shared economic management with ministers and government agencies. The biggest changes in the housing market last year were the government’s moves to cut back the availability of mortgage insurance provided by the Canada Mortgage and Housing Corporation, a state-owned company.
Nevertheless, it was the decisions by the Bank of Canada under Mr Carney’s leadership to cut interest rates during the crisis and hold them down subsequently that enabled a surge in household debt and house prices. While American consumers were running down their debts, Canadians were adding to theirs, so that by the end of last year household debt was 165 per cent of income, in the same territory as the peak in the US at the start of the crisis.
House prices, meanwhile, rose 23 per cent in the three years to April 2012. The International Monetary Fund has been warning since 2011 that Canadian homes looked overvalued, because the ratios of house prices to incomes and to rents were respectively 20 per cent and 29 per cent above their long-run averages.
Mr Carney has acknowledged the problem. Testifying to the Canadian Senate last October he said: “One of the known side-effects of having low interest rates for a period of time can be the build-up of financial imbalances in various sectors of the economy . . . [including] the household sector.”
But he said there were “various lines of defence to address those risks” that could be taken by banks, individuals and the government. He added: “Under our flexible inflation targeting regime, we could use monetary policy as the last line of defence to reinforce these other measures if it were necessary.”
Those defences are likely to be tested, economists argue. Mr Ashworth says the pattern seen in Canada is a familiar one.
“When you build up so much debt and load it into the housing market, that’s generally a worrying sign,” he says. “The US, the UK, Spain . . . they had fast rising house prices, and high levels of consumer debt, then a house price correction. The only difference with Canada is we haven’t had the last step yet.”
If house prices do crash, it will be a blow to consumer spending and to the construction industry, which is still engaging in significant “overbuilding” of apartment buildings, according to the Bank of Canada.
One threat that appeared imminent last year – the impact on heavily indebted Canadian consumers of higher interest rates – seems to have receded. Presenting the central bank’s latest Monetary Policy Report last month, Mr Carney said the Canadian economy was growing more slowly than the bank had expected, partly because of the global slowdown, meaning that rate increases could be put off for a while.
Even so, the housing market is still one the most serious threats to the outlook. Canada is “unlikely” to suffer a US-style housing boom and bust, the IMF said last year, but warned: “the unwinding of domestic imbalances could prove more disruptive than anticipated in our baseline scenario”.
The Vancouver housing market is not entirely dead, and at the top end of the market there are often foreign buyers prepared to put their money down. Yet in a sign of how the tables are turning, the reviving US market is now attracting envious looks from across the border. Mr Macnab says he knows many Canadians who are planning to buy property in Arizona.
Art0ir said:
Interesting approach. I certainly agree that ramping up debt upon debt upon debt upon debt cannot work in the medium or long term. Politics has become so concerned with pushing problems forward onto the shift of others that politicians have actually begun to believe that this is a workable strategy. They avoid making the difficult decisions. They push this on to the next guys instead, For them, a short term suspension of disaster, which leaves them personally unaffected by the losses of billions, is all that is required. The politicians hope, like Tony Blair, to retire before the crunch comes. It worked for him.It is not and never can be the real economic solution required to restore the sovereign states to insolvency. Massive sovereign insolvency can only be addressed by appropriate structural changes in the sovereign state concerned. The single currency denies those states the very economic mechanism to address the problem. In consequence lending more and more money to insolvent states, who remain in am unaffordable currency, is a massive political dishonesty which can only result in catastrophic collapse of those states.
Short term, it is as the EU has established, possible to fool the markets. But such foolery cannot be sustained. As the Banking crisis eventually displayed once the confidence required to support the massive insolvencies is perceived then the markets turn away wholesale. There is bound to be an event which pricks the bubble just as there was in the Banking crisis some five years ago. It is simply a question of when.
A combination of EU law and ooman royts legislation (EU again in effect, ECHR) is blocking efforts to deport 200 non-Brits convicted for their role in the riots of 2011. So far 15 have been booted out and most of the rest look like being granted the right to stay. The end isn't nigh for criminals staying put here. Apart from a past tradition of retirement on the Costa Packet our EU exports are mostly urban outdoor urinating and vomiting youth, iirc, which isn't quite the same.
Well I caught up on UK news last week and reading the Sundays it looks as if the political relations situation that we said was developing in the EU was bang on the money. Hollande screwed by Merkel, Angie backing up CMD and practically offering him a Valentine's Day quickie to get CMD to see Germany would really rather like us as an ally. Club Med is...well Club Med and now that France is looking ever more in trouble they will only cling to each other more. The New Boys Club of Eastern Europe absolutely doesnt want subsidies to be cut or any kind of austerity. Germany is basically left as last man standing. It needs CMD and the Brits.
The question now is, what do we propose to do about such a historic situation? We have the chance to forge a new alliance and partnership with Germany and a Northern Europe pact. Do we take it?
The question now is, what do we propose to do about such a historic situation? We have the chance to forge a new alliance and partnership with Germany and a Northern Europe pact. Do we take it?
Gargamel said:
I see no downside to aligning ourselves economically to Germany and the Northern Europe bloc.
Provided they can persuaded to complete the single market project, especially on services.
Talking with a bunch of Danish, Dutch and Swedish mates the weekend before last and this was the overriding view we shared - economic and not political union of northern European economies. We were all very uncertain about the inclusion of the French in that.Provided they can persuaded to complete the single market project, especially on services.
Gassing Station | News, Politics & Economics | Top of Page | What's New | My Stuff