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

[DJRC]

Seriously? We are whinging about the black economy thing now? On here? Two months ago chaps, two months ago it might have been worth comment when it came out, but even then...er...well it wasn't really worth commenting about. Everything stayed equal relative to each other, just some figures either way, so there was no actual difference in reality. In theory Ive no problem with said black economy stuff being added in either as best guesses, they are valid economic figures, just not taxable.

[Walford]

Andy Zarse said:

Yes Dire straits indeed.

Your Latest Trick

Money for Nothing

Where Do You Think You're Going

Industrial Disease

Setting Me Up

Why Worry

[LongQ]

DJRC said:

they are valid economic figures,

Hmm. Well if we accept guesstimates as valid economic figures there's not much point in trying to measure the circa 80% of numbers that are collected bureaucratically.

So it would be just as valid to cut all the number collection cost overhead and guess the total value.

So long as people agreed the real numbers probably don't matter at all, although for "science" that sometimes gets excited by a fraction of a percentage point change in some seemingly obscure indicator the concept of "best guess" would seem to be alien.

I mean, what would the Economists have left to pontificate about in return for their salaries?

[London424]

If you thought the French couldn't introduce any more dumb policies to sink the country...I give you...

http://tallbloke.wordpress.com/2014/10/11/french-p...

[turbobloke]

London424 said:

If you thought the French couldn't introduce any more dumb policies to sink the country...I give you...

http://tallbloke.wordpress.com/2014/10/11/french-p...

Madness. But par for the course.

Thanks for the link. Good to see PHer tallbloke covering this news.

[LongQ]

London424 said:

If you thought the French couldn't introduce any more dumb policies to sink the country...I give you...

http://tallbloke.wordpress.com/2014/10/11/french-p...

As I recall they have a few on the somewhere not too far from the Channel coast. Are they old or new? If new we could do a deal with them to sell (or lease) us the north of the country (at a knock down price of course) and the Nuclear plants (at a very knockdown price if course) and rapidly solve part of the UK energy problem and help them on their way to penury their green renewable targets.

Wins all round.

Once in charge of Calais it should be possible to sort out the lorry problem too. Or at least discover what our politicians really intend to do about illegal immigration and asylum seeking. Probably nothing of course ...

Edited by LongQ on Monday 13th October 21:13

[London424]

Shots fired in Italy over the weekend (not literally)

http://www.telegraph.co.uk/finance/economics/11159...

[Irish]

I am looking foward to this.

http://www.youtube.com/watch?v=ukMFijjmfJc&fea...

[Mermaid]

Irish said:

I am looking foward to this.

http://www.youtube.com/watch?v=ukMFijjmfJc&fea...

So is Draghi , how long before he is pushed?

[traxx]

From ZH



Having noted last week of the rising tensions between the French (pushing forward with plans for a budget deficit that far exceeds EU Treaty rules) and Germany (letting a Frenchman run EU's finances is "an unwise personnel decision") and Brussels (planning to reject the French budget); it seems the French are unimpressed. As les Echos reports, French finance minister Michel Sapin has proclaimed he won't change the budget, arguing that the EU commission has no power to reject a budget as sovereignty belongs to France's parliament... fighting words for a 'union'! In addition, the EU is now planning to reject Italy's budget, due to its "serious violation" of EU rules.

Italy is now up for rejection:

ITALY BUDGET PLANS LIKELY TO BE SEEN AS "SERIOUS VIOLATION" OF EU RULES AND REJECTED BY COMMISSION - EU SOURCE
As France previously did, but is now fighting back (as Bloomberg reports),

The EU Commission has no power to reject a budget as sovereignty belongs to France’s parliament, Finance Minister Michel Sapin says in an interview with Les Echos.

France will give nature and calender of planned structural reforms very soon, Sapin says in the interview.

• * *

Which seems odd - let's see the Greeks pull the same game...

Via Les Echos,

The Commission, I believe, has absolutely no power to "reject", "return" or "censor" a budget, as I have read it.

Here as elsewhere, sovereignty rests with Parliament French. About the bullies I hear often uttered anonymously, can only harm Europe ...

France is a responsible country, we can not have the same currency without concern for consistency of budgetary developments in each of our countries.

The euro zone is in a situation of very low growth and very low inflation. With a clear risk of " Japanese-style scenario ."

• * *

The bottom line is that France is arguing that it will run bigger deficits now to ensure better growth in the future and that the EU commission needs to comprehend that and let them off... once more, hope trumps reality - for now we wait to see just how quickly Brussels folds.

Or summing it up in two words, it appears France is telling the EU to "F##k Off" - we'll do what we like! Having learned the lessons of the Greeks as beggars can be choosers...

[Gargamel]

I wonder if the EU will treat France the same as they previously treated Italy and Greece ?

Both Italy and Greece received letters from the EU stating that unless reforms to budget were implemented then the EU would no longer purchase bonds. Italy (Berlusconi) told them to go shove it. Eu then allowed the Italian Bond rates to hit near 8% for debt re financing.

Berlusconi was subsequently toppled and an EU placeman installed, exactly the same scenario in Greece.

Are the French next in line for a taste of the EU "medicine"

http://www.openeurope.org.uk/Content/Documents/Pdf...

[Steffan]

Gargamel said:

I wonder if the EU will treat France the same as they previously treated Italy and Greece ?

Both Italy and Greece received letters from the EU stating that unless reforms to budget were implemented then the EU would no longer purchase bonds. Italy (Berlusconi) told them to go shove it. Eu then allowed the Italian Bond rates to hit near 8% for debt re financing.

Berlusconi was subsequently toppled and an EU placeman installed, exactly the same scenario in Greece.

Are the French next in line for a taste of the EU "medicine"

http://www.openeurope.org.uk/Content/Documents/Pdf...

Absolutely on the button and as the comments of Mermaid and Traxx have underlined the facts that something has to give because the current French approach is plainly unsustainable and either the French change their approach, or Hollande is replaced or Draghi comes up with some new scam, or there really will be trouble at the EU mill. Personally I think the EU deceipt of the EU electorate that failing sovereign states can be sustained within unaffordable currency printing is sufficient dishonesty for one organisation. The crunch is coming and the EU can deny reality only as long as they can fool the markets. But this is getting more and more expensive to maintain and difficult to cover up. I wonder what will drop first?

Clearly France is unlikely to accept the imposition of a puppet administrator placed above their own elected government. But by any economic measure now France must massively change her approach to the reality of economics, France will not do that so presumably the EU leaders will have to invent some new crookery to spin this along for a little longer. Only going to end one way. All these failing states are steadily falling further and further behind the currency value of the Euro which is buoyed up by Germany.

But as DJRJ has said and here I must recognise my own failure to recognise that DJRC has in fact been saying for some considerable time, the German economy is already suffering from the self imposed nonsense of sanctions against Russia, which is another madness, and in a general fall in the growth of the German economy. Overall it looks very very tricky for the EU and Draghi, who must be getting sleepless nights over where to extend the fiddles next. The crunch is steadily building up and will end only one way. The unsustainable Ponzi scheme that has become the EU has been running for years but must collapse.

The latest election results in the UK with UKIP polling one MP and damned nearly polling another losing by ony 600 odd votes is food for though for anyone interested or concerned with UK politics. Another frisson to the pot that is current in the UK political game. Certainly any further acceptance of the extension of EU powers within the UK seems most unlikely now. By this time next year we could well have a very different and far more hostile government in the UK regarding the continuance of the UK within the EU. Let us never forget that the EU has undoubtedly massively benefitted the UK and the UK population with massively greater easly travelling and business administration all across the European Community which is a huge advantage.

However a currency based on carefully hidden dishonest misrepresentation and elastic money printing being used to sustain individual failing states within that currency, who clearly cannot afford the " loans" being foisted upon them to that end or indeed the interest on the loans is clearly outright deliberate dishonestly which must be discovered in time. The crunch is coming.

[s2art]

Steffan said:

Let us never forget that the EU has undoubtedly massively benefitted the UK and the UK population with massively greater easly travelling and business administration all across the European Community which is a huge advantage.

The Tax payers alliance, amongst others, would take issue with that. Its certainly not clear if membership has been a positive thing for the UK.

[Walford]

If some countries are eventually forced out the Euro and float off back to Drachma, Lira, Peso,s Francs and Deutsche Mark,s at 1 to 1 from the old Euro

were would they be trading 6 months down the road?

[anonymous-user]

Steffan said:

Let us never forget that the EU has undoubtedly massively benefitted the UK and the UK population with massively greater easly travelling and business administration all across the European Community which is a huge advantage.

Yet somehow the Swiss manage to struggle on outside the EU, perhaps those benefits aren't quite so massive.

[Andy Zarse]

Steffan said:

But as DJRJ has said and here I must recognise my own failure to recognise that DJRC has in fact been saying for some considerable time, the German economy is already suffering from the self imposed nonsense of sanctions against Russia, which is another madness, and in a general fall in the growth of the German economy. Overall it looks very very tricky for the EU and Draghi, who must be getting sleepless nights over where to extend the fiddles next. The crunch is steadily building up and will end only one way. The unsustainable Ponzi scheme that has become the EU has been running for years but must collapse.

Hi Steffan, chow beller fella!

Brent is today below $84 per barrel, so down from a peak of US $115 in June, it's fallen by 27%. Whilst a falling oil price does signal demand issues with the current state of the world economy it is also a strong reflationary influence. Thus many economies will get a much-needed boost. Indeed it will be oil importers, including most of Europe, who benefit most.

For once this is good news for the Eurozone, although it's a potential problem for Mario'n'Ange if they get disinflation (neg CPI) before any growth boost. Imagine the panic and even greater pressure for massive full-blown QE if Eurozone CPI were to fall below zero!

Once Germans start to feel poorer it will be interesting to see how long monetary sticklers like Wolfgang Schauble (who I always think of as a wheelchair-bound version of Norman Tebbit's Spitting Image puppet) are able to throw their weigh around; just you watch, every dog has his day.

[DJRC]

s2art said:

Steffan said:

Let us never forget that the EU has undoubtedly massively benefitted the UK and the UK population with massively greater easly travelling and business administration all across the European Community which is a huge advantage.

The Tax payers alliance, amongst others, would take issue with that. Its certainly not clear if membership has been a positive thing for the UK.

There is no debate to be had as would be clear to anybody who deals I'm Europe on a regular basis. The biggest benefit has been the universal adoption of English as the language of business. Never ever underestimate the impact this has had to British business and culture. The dominant culture in Europe? British. The dominant dynamic in Europe? British. Forget any pretensions the French had even ten or so yrs back, the Euro and the EU has turned Europe into an extension of British business norms. Outside of business in society the impact is arguably greater, the language, culture and vibe amongst all European ex pats is decidedly British.

The tax payers alliance sees none of this.

[Digga]

Walford said:

If some countries are eventually forced out the Euro and float off back to Drachma, Lira, Peso,s Francs and Deutsche Mark,s at 1 to 1 from the old Euro

were would they be trading 6 months down the road?

Lower undoubtedly. Any theoretical exit from the Euro would, I would think, be difficult to achieve without triggering at least some sort of technical default. Certainly, if they want rid of the denominator effect on their debt.

As others here say, the undercurrents do seem to be building and threatening to pull the feet out from under the German hegemony of the purse strings. So perhaps the more relevant question is where the Euro will be trading six months from now. (I'm not playing with any leverage on that bet again!)

[Andy Zarse]

DJRC said:

s2art said:

Steffan said:

Let us never forget that the EU has undoubtedly massively benefitted the UK and the UK population with massively greater easly travelling and business administration all across the European Community which is a huge advantage.

The Tax payers alliance, amongst others, would take issue with that. Its certainly not clear if membership has been a positive thing for the UK.

There is no debate to be had as would be clear to anybody who deals I'm Europe on a regular basis. The biggest benefit has been the universal adoption of English as the language of business. Never ever underestimate the impact this has had to British business and culture. The dominant culture in Europe? British. The dominant dynamic in Europe? British. Forget any pretensions the French had even ten or so yrs back, the Euro and the EU has turned Europe into an extension of British business norms. Outside of business in society the impact is arguably greater, the language, culture and vibe amongst all European ex pats is decidedly British.

The tax payers alliance sees none of this.

It does however see the balance of payments...

Our current balance of payments situation is an utter disgrace. The UK has run a combined current and capital account deficit in every year since 1983, and every single quarter since Q3 1998. Look at Q2 of 2014 (from the ONS) to gain a little perspective:

"The UK's current account deficit was £23.1 billion in Quarter 2 2014, up from a revised deficit of £20.5 billion in Quarter 1 2014. The deficit in Quarter 2 2014 equated to 5.2% of GDP at current market prices, up from 4.7% in Quarter 1 2014."

More recently we have also seen a deterioration in our income account. There is much to consider here, and I think that a continuous annual current and capital account deficit since 1983 does give us a clue! We need to do better and the only way to do it is to do it differently. Unfortunately our political class and big business cartels have hamstrung us via its concentration on - and obsession with - Europe. In my opinion the EU is an insular, backward-looking solution to a problem which ceased to exist in about 1990.

This is not especially an anti-European point as many EU countries have long been our friends and I hope that they remain so. However, it is a strong indicator that we have been ignoring the rest of the world, much to our cost. The EU prevents the UK from signing Free Trade agreements with other countries; I am certain that if we had, we would now be far far better off as a nation.

[Mermaid]

Digga said:

. So perhaps the more relevant question is where the Euro will be trading six months from now. (I'm not playing with any leverage on that bet again!)

Nice Euro bounce against GBP last few fortnight - almost 3%, reversing the fall in the prior fortnight. Volatile markets