Is the end nigh for the Euro? [vol. 3]
Discussion
steveT350C said:
Thing ain't all that great in Deutschland.
http://www.spiegel.de/international/germany/low-ge...
"When Fratzscher, the head of the German Institute for Economic Research, gives a talk these days, he likes to pose a question to his audience: "Which country is this?" He then describes a place that has seen less growth than the average among euro-zone countries since the turn of the millenium, where productivity has only increased slightly and where two out of three employees earn less today than they did in 2000.
Fratzscher usually doesn't have to wait long before people begin raising their hands. "Portugal," one person offers; "Italy," says another; "France," exclaims a third. The economist allows his audience to continue searching for the right answer, until, with a triumphant smile, he announces the answer. The country he is looking for, the one with the weak economic results, is Germany."
The erosion of real wages is a large part of the method by which they Germans have become so powerful. That and investment. Fifteen years ago you may recall they were the sick man of Europe and had a finance minister dubbed "Red Oscar". http://www.spiegel.de/international/germany/low-ge...
"When Fratzscher, the head of the German Institute for Economic Research, gives a talk these days, he likes to pose a question to his audience: "Which country is this?" He then describes a place that has seen less growth than the average among euro-zone countries since the turn of the millenium, where productivity has only increased slightly and where two out of three employees earn less today than they did in 2000.
Fratzscher usually doesn't have to wait long before people begin raising their hands. "Portugal," one person offers; "Italy," says another; "France," exclaims a third. The economist allows his audience to continue searching for the right answer, until, with a triumphant smile, he announces the answer. The country he is looking for, the one with the weak economic results, is Germany."
The problem is the Germans think wage compression will repair the broken EZ. They ignore the debt dynamics, and if wages continue to fall, particularly in Italy, there's going to be a monumental default once the currently benign markets eventually turn sour. Meanwhile the madness of lending money to Italy for ten years at about 2.5%pa continues unabated...
steveT350C said:
Thing ain't all that great in Deutschland.
http://www.spiegel.de/international/germany/low-ge...
"When Fratzscher, the head of the German Institute for Economic Research, gives a talk these days, he likes to pose a question to his audience: "Which country is this?" He then describes a place that has seen less growth than the average among euro-zone countries since the turn of the millenium, where productivity has only increased slightly and where two out of three employees earn less today than they did in 2000.
Fratzscher usually doesn't have to wait long before people begin raising their hands. "Portugal," one person offers; "Italy," says another; "France," exclaims a third. The economist allows his audience to continue searching for the right answer, until, with a triumphant smile, he announces the answer. The country he is looking for, the one with the weak economic results, is Germany."
The article could quite easily replace the word Germany with United Kingdom, especially the energy generation and road areas mentioned.http://www.spiegel.de/international/germany/low-ge...
"When Fratzscher, the head of the German Institute for Economic Research, gives a talk these days, he likes to pose a question to his audience: "Which country is this?" He then describes a place that has seen less growth than the average among euro-zone countries since the turn of the millenium, where productivity has only increased slightly and where two out of three employees earn less today than they did in 2000.
Fratzscher usually doesn't have to wait long before people begin raising their hands. "Portugal," one person offers; "Italy," says another; "France," exclaims a third. The economist allows his audience to continue searching for the right answer, until, with a triumphant smile, he announces the answer. The country he is looking for, the one with the weak economic results, is Germany."
This might explain what's propping-up some of the Euro banks: http://www.zerohedge.com/news/2014-09-30/another-c...
zh said:
Since 2009, foreign banks have earned roughly $5 billion by borrowing dollars cheaply, often at less than 0.10%, in short-term funding markets and depositing those funds at the Fed for 0.25%, according to the Journal analysis. That estimate doesn't take into account the costs of raising money through other means, overhead and taxes, which affect net income.
Digga said:
This might explain what's propping-up some of the Euro banks: http://www.zerohedge.com/news/2014-09-30/another-c...
$1bn a year gross is a nice little arb but spread across every non-US bank in the world it's entirely the wrong order of magnitude to attribute to propping the Euro banks up.zh said:
Since 2009, foreign banks have earned roughly $5 billion by borrowing dollars cheaply, often at less than 0.10%, in short-term funding markets and depositing those funds at the Fed for 0.25%, according to the Journal analysis. That estimate doesn't take into account the costs of raising money through other means, overhead and taxes, which affect net income.
fblm said:
Digga said:
This might explain what's propping-up some of the Euro banks: http://www.zerohedge.com/news/2014-09-30/another-c...
$1bn a year gross is a nice little arb but spread across every non-US bank in the world it's entirely the wrong order of magnitude to attribute to propping the Euro banks up.zh said:
Since 2009, foreign banks have earned roughly $5 billion by borrowing dollars cheaply, often at less than 0.10%, in short-term funding markets and depositing those funds at the Fed for 0.25%, according to the Journal analysis. That estimate doesn't take into account the costs of raising money through other means, overhead and taxes, which affect net income.
Digga said:
I know that was the excerpt I quoted, but - and do correct me on this - the article suggested the banks were able to leverage these deposits.
First of all this is zerohedge, you should only read it with tinfoil covering all your windows to stop the government implanting conformist thoughts in your mind from space.Secondly you can steal $1m from me and use leverage to buy, roughly, 200 eminis or $20m exposure to SPX. If you get lucky and SNP rallies 10%, you make $2m. That doesn't mean you have stolen $3m from me any more than the $5bn in Fed rate arb 'could be more' by using it as leverage for other speculative investments.
ZH... read with care!
fblm said:
Digga said:
I know that was the excerpt I quoted, but - and do correct me on this - the article suggested the banks were able to leverage these deposits.
First of all this is zerohedge, you should only read it with tinfoil covering all your windows to stop the government implanting conformist thoughts in your mind from space.Secondly you can steal $1m from me and use leverage to buy, roughly, 200 eminis or $20m exposure to SPX. If you get lucky and SNP rallies 10%, you make $2m. That doesn't mean you have stolen $3m from me any more than the $5bn in Fed rate arb 'could be more' by using it as leverage for other speculative investments.
ZH... read with care!
Digga said:
Not one of their more objective pieces then.
Has there ever been an objective piece on ZH? I know I slag it off but I still read it, it's like self flagellation. For gods sake don't venture into the comments section though or you will get drawn into a vicious circle of increasing stupidity from which no one has ever escaped. fblm said:
Digga said:
Not one of their more objective pieces then.
Has there ever been an objective piece on ZH? I know I slag it off but I still read it, it's like self flagellation. For gods sake don't venture into the comments section though or you will get drawn into TBH, I think the danger of ZH is that it's a stopped clock, occasionally, it gets things right. It also lures you into a false sense of security by using real, actual facts within the fictional stuff.
More can kicking - Draghi has finally got his way and the ECB are going to start buying "covered" bonds, i.e. bonds backed by public sector loans or mortgages. Specifically they will not be buying government bonds. Presumably this is some kind of compromise with the Germans who would not allow government debt to be bought up by the ECB as this would effectively be national debt sharing across the Eurozone.
http://www.bbc.com/news/business-29459157
Question is, doesn't this amount to the same thing? A bond based on public sector loans is backed by government money that has been borrowed, so there must still be a risk of default. Similarly with mortgage backed bonds, aren't the ECB effectively exposing themselves to a potential sub-prime scenario as economies turn turtle and mortgage holders default?
Another step closer to a federal bank.
http://www.bbc.com/news/business-29459157
Question is, doesn't this amount to the same thing? A bond based on public sector loans is backed by government money that has been borrowed, so there must still be a risk of default. Similarly with mortgage backed bonds, aren't the ECB effectively exposing themselves to a potential sub-prime scenario as economies turn turtle and mortgage holders default?
Another step closer to a federal bank.
YankeePorker said:
More can kicking - Draghi has finally got his way and the ECB are going to start buying "covered" bonds, i.e. bonds backed by public sector loans or mortgages. Specifically they will not be buying government bonds. Presumably this is some kind of compromise with the Germans who would not allow government debt to be bought up by the ECB as this would effectively be national debt sharing across the Eurozone.
http://www.bbc.com/news/business-29459157
Question is, doesn't this amount to the same thing? A bond based on public sector loans is backed by government money that has been borrowed, so there must still be a risk of default. Similarly with mortgage backed bonds, aren't the ECB effectively exposing themselves to a potential sub-prime scenario as economies turn turtle and mortgage holders default?
Another step closer to a federal bank.
http://www.bbc.com/news/business-29459157
Question is, doesn't this amount to the same thing? A bond based on public sector loans is backed by government money that has been borrowed, so there must still be a risk of default. Similarly with mortgage backed bonds, aren't the ECB effectively exposing themselves to a potential sub-prime scenario as economies turn turtle and mortgage holders default?
Another step closer to a federal bank.
Walford said:
YankeePorker said:
Another step closer to a federal bank.
Another step closer to a federal EuropePossibly is my overall view on these enturely reasonable suggestions. However the continued success of this nonsense bailout of totally insolvent states within the EU without any admittance that this is in fact what is happening can only continue providing Draghi and Co can maintain the confidence of the investors in ther fiddles.
Perhaps the most serious matter in all of this is the total dishonestly involved in what is effectively a monumental Ponzi scheme. Whilst the confidence remains this clearly can continue. Equally clearly Draghi has no means and no interest in addressing any of the economic robkems ans failing economic output of the states which his policy is supporting. No one will admit to there actually being a problem and whilst everyone believed in the dreams in this nonsense t can continue.
I am convinced that reality must come home eventually. Look at the Catalonian question in Spain, the misery and economic disaster that Greece has become. Draghi's method will only work whilst the EU can keep up the pretence. There is no solid foundation economically in the approach of the EU leaders. Just a gesperate desire to keep the lovely gravy train running as long as possible. Since not one of the EU stares will actually admit to being prepared to pay for any of this largesse including Germany this cannot be sustained long term. The real question is how long can this be kept up. It cannot be sustained long term. The truth will out, one if more if the stares will fail and then who knows where the game will run.
Digga said:
fblm said:
Digga said:
Not one of their more objective pieces then.
Has there ever been an objective piece on ZH? I know I slag it off but I still read it, it's like self flagellation. For gods sake don't venture into the comments section though or you will get drawn into TBH, I think the danger of ZH is that it's a stopped clock, occasionally, it gets things right. It also lures you into a false sense of security by using real, actual facts within the fictional stuff.
I see there is some kind of summit on, with Hollande asking for some further credit lines. If only he had started reforming a few years ago, instead of taxing the rich. Ah well.
I note the BBC still using debt and deficit interchangeably. Italy has a big debt, for sure. But has a current account surplus, yet the bbc continue to say that Italy need to plug their deficit?
Anyway, the Euro is falling apart, but back to 79p Still plenty of cracks in the Euro master plan.
Read this earlier and found the first part very interesting as it explained why I didn't visit Berlin last year (a daytrip there was not time for) due to something in Germany not working due to lack of maintenance/investment!
AEP Torygraph said:
France may look like the sick man of Europe, but Germany’s woes run deeper, rooted in mercantilist dogma.
http://www.telegraph.co.uk/finance/comment/ambrose...Super Mario will naturally be delighted the Euro is so weak; Herr Rollstuhl less so...
I read the AE-P article, as per normal he over-eggs the pudding. However, he makes a number of fair points; Germany had some strokes of good fortune particularly in the timing of its reforms and it looks like the lucky streak is finally running out. Add to this the insane self-imposed Russian sanctions and China falling on its arse and a pretty picture it does not paint.
I read the AE-P article, as per normal he over-eggs the pudding. However, he makes a number of fair points; Germany had some strokes of good fortune particularly in the timing of its reforms and it looks like the lucky streak is finally running out. Add to this the insane self-imposed Russian sanctions and China falling on its arse and a pretty picture it does not paint.
Gargamel said:
I see there is some kind of summit on, with Hollande asking for some further credit lines. If only he had started reforming a few years ago, instead of taxing the rich. Ah well.
I note the BBC still using debt and deficit interchangeably. Italy has a big debt, for sure. But has a current account surplus, yet the bbc continue to say that Italy need to plug their deficit?
Anyway, the Euro is falling apart, but back to 79p Still plenty of cracks in the Euro master plan.
Indeed there are!I note the BBC still using debt and deficit interchangeably. Italy has a big debt, for sure. But has a current account surplus, yet the bbc continue to say that Italy need to plug their deficit?
Anyway, the Euro is falling apart, but back to 79p Still plenty of cracks in the Euro master plan.
Iinteresting times coming up for the Euro. France as DJRC correctly predicted years ago, is toast and the awful Hollonde is steadily ruining the country whilst feathering his own nest. The Euro is indeed sinking although no doubt the printing presses of the EU offering rubber Euro's in profusion printing Euro's by the Billion and feathering their own gravy trains will enable this to continue currently. For how long must be the question.
Perhaps the most important approaching test currently is the Calalonian Independence referendum. The EU can and does dictate to countries entirely dependant on EU aid including Greece, Portugal and so on.nBut Catelonis certainly looks to be perfectly viable as an independent state within the EU and arguably could well be better off given the reduction in their financial commitments to sustaining Spain and the poorer parts of Spain currently.
If Scotland had actually had a viable economic future alone then I think the outcome of the recent vote might well have been very different. I am expecting a Catelonian vote for independence by a significant majority. Whilst the Spanish government may rattle sabres and declare the vote illegal under the constitution in modern EU democracies I cannot see any real action that the Spanish government could actually take to recent the cessation of Catelonia from the Spanish membership and achieving independence with recognition from the EU. I think the days of force majeure within a European democracy are long gone. I certainly hope so.
That in itself could well be the beginning of the realisation within the EU that there are better ways to protect oneself than continuing to pay excessive contributions to support elements of a country that are actually best left to fend for themselves. The Catelonian test is a process the EU have never faced before. This could well be the first sign of the changing approach of EU democracies. Equally of course the vote may reject independence. But I cannot see long term how the economics of the EU running as a huge Ponzi scheme can be sustainable and I still believe the EU wheels are going to come right off.
May I once again reiterate my belief in many of the EU benefits being retained. My own lifestyle would be almost impossible without the free easy and cheap movements between EU counters being as they now are. Clearly there are major beneefits to being within the EU. What I cannt accept is that major insolvent states can be supported within an unaffordable currency with elastic money printing by the EU without a recognition that the huge debts being incurred by the failing states will in fact be written off and must be paid by one state or another. Whilst that nonsense goes on there can be on future in this nonsense!
As Andy Zarse reminds us the economic strengths of Germany are taking something of a pasting currently. However you view this matter and whichever way you would like to see the cookie crumble there are an awful lot of stumbling blocks in the way of the EU being abe to continue this delberate deception . For deception it as become. Lending billions to insolvent countries whilst proclaiming the strengths underlying those loans and then lending further money to the same insolvent states without which those states could not affordto be actually able to pay the interest on thise loans cannot be anything other than deception. Deceptions in life are invariably discovered. Matter of time IMO. The Catelonian test may well make for more very interesting times within the EU and Euro.
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