Is the end nigh for the Euro? [vol. 3]
Discussion
Steffan said:
I remain distinctly sceptical that the Banking sector has really learned any lessons. I do think that the growth of unsecured credit in the UK is getting much too large. I spent some time working (unpaid) for the CAB on Debt counselling and I was very concerned at the levels of credit being offerred to some benefit claimants. Not a good game IMO. But I would agree that the figures do suggest that this form of credit is reasonably balanced.
Like you Steffan, I was a volunteer advisor with the CAB. I worked out of two different offices, one in a working class, or more accurately a non working area and one in a very middle class area. The poorer area had many people who were completely broke, but their debts were pretty small. In the wealthier area, the people coming in had huge debts, comfortably into six figures. These big debtors all seemed to have salted away some money, which they were hiding from their creditors. I'd be very surprised if this situation was not the same for other areas of the south east. So coming to an accurate figure of debt vs assets for this group would be quite difficult.Steffan said:
The EU can and are deliberately misrepresenting their solution because by that means the EU gravy train continues to provide wealth and grandiose lifestyles to the stage strutting EU leaders and bureaucrats. That is the reason this is continuing. There is no thought in this for the insolvent failing states.
That's pretty much what I've been saying all along in my simple, non-economist language.It's what they've been apparently doing from the start and will continue to do because it's all make believe anyway and because, as you say, they can.
Steffan said:
Greece cannot recover economics stability within this pioe dream. The transparency of the predicament of Greece is becoming more and more apparent. Inevitably Greece will default.
Care to make a guess as to when? 
Gargamel said:
fblm said:
Great in theory? Are you serious? Someone owns all that debt. You just bankrupted every pension fund, insurance company and bank. Where does your food come from? The looting would start within hours.
So pensions are bankrupt, Insurance no longer exists (apparently) and the banks close. Even assuming any of this is in anyway correct - which I would challenge in the strongest terms. http://www.dmo.gov.uk/documentview.aspx?docname=pu...
Gargamel said:
the next bit, where does your food come from is utterly bizarre.
Food comes from farms/crops - real stuff. Not from Banks Insurance companies or pension funds.
Please tell me which Insurance company currently supplies your food ?
You just bankrupted every bank. Do you really think Tescos is going to be open? How are you going to pay for your food if it is? You don't seem to have much of a grasp of just how precarious our way of life is or how utterly dependent on the banking system we are. (OK I'm assuming you don't live on an off grid smallholding).Food comes from farms/crops - real stuff. Not from Banks Insurance companies or pension funds.
Please tell me which Insurance company currently supplies your food ?
Gargamel said:
We can argue about a debt reset, fact is, a reasonable amount of debt may be netted off between banks, companies etc.
Twaddle. The net debt is vast. Gargamel said:
I agree with you if you are sat on "assets" that are in fact loans out on which you recieve interest, then debt cancellation is bad
Jeez, you think?Gargamel said:
However, we could give you as the creditor your money back, and still cancel the debt - QE is precisely that.
No it isn't. Not even close.Edited by anonymous-user on Wednesday 4th March 21:40
You are approaching this with logic, and that is a mistake
This is about the power of an idea.
However, I don't really want to argue, I like the capitalist system, but fractional reserve banking and the creation of money, is leading us to some very strange places. Money is a concept, a big idea. We can if we choose re shape that idea.
QE I would argue is precisely what I said it is. It's magic money. If I create a billion pounds, buy up debts with it and then take no interest in reclaiming those debts... no banks need be harmed, and debts could be wiped out.
I think the fed in the us thought sincerely about creating 5 1trn dollar coins, which they would repay fed debt with. Keep the coins in a safe, a lo, the debt was gone.
This is about the power of an idea.
However, I don't really want to argue, I like the capitalist system, but fractional reserve banking and the creation of money, is leading us to some very strange places. Money is a concept, a big idea. We can if we choose re shape that idea.
QE I would argue is precisely what I said it is. It's magic money. If I create a billion pounds, buy up debts with it and then take no interest in reclaiming those debts... no banks need be harmed, and debts could be wiped out.
I think the fed in the us thought sincerely about creating 5 1trn dollar coins, which they would repay fed debt with. Keep the coins in a safe, a lo, the debt was gone.
Gargamel said:
You are approaching this with logic, and that is a mistake
This is about the power of an idea.
However, I don't really want to argue, I like the capitalist system, but fractional reserve banking and the creation of money, is leading us to some very strange places. Money is a concept, a big idea. We can if we choose re shape that idea.
QE I would argue is precisely what I said it is. It's magic money. If I create a billion pounds, buy up debts with it and then take no interest in reclaiming those debts... no banks need be harmed, and debts could be wiped out.
I think the fed in the us thought sincerely about creating 5 1trn dollar coins, which they would repay fed debt with. Keep the coins in a safe, a lo, the debt was gone.
Something about value of the currency devaluing is the issue though. This is about the power of an idea.
However, I don't really want to argue, I like the capitalist system, but fractional reserve banking and the creation of money, is leading us to some very strange places. Money is a concept, a big idea. We can if we choose re shape that idea.
QE I would argue is precisely what I said it is. It's magic money. If I create a billion pounds, buy up debts with it and then take no interest in reclaiming those debts... no banks need be harmed, and debts could be wiped out.
I think the fed in the us thought sincerely about creating 5 1trn dollar coins, which they would repay fed debt with. Keep the coins in a safe, a lo, the debt was gone.
Unless of course there is a global wide action whereby they all create the exact same % of QE so that the currency values stay static then 0% interest forever more all creditors repaid instantly to avoid any risk to them.
Interesting. Wouldn't ever happen though imagine all agreed to do it but one sneakily didn't suddenly much stronger currency
turbobloke said:
I appreciate that your question was a global one, but for the sake of a quick response with numbers to-hand, the answer would be no if the UK is anything to go by. There appears to be significantly more net worth than debt so not zero overall.
The average household debt in the UK (excluding mortgages) was £6,016 in November 2014. Average household debt including mortgages was £54,197 and if you add to that each household share (two adults for the sake of argument) of national debt then the total including mortgages is around £85,000 whereas two adults in a household co-owning the property have an average net worth per household of around £149,000 including a paltry average cash savings of £1700 per person. That's about 175% of the debt figure if the back of my fag packet is working.
The problem I have with those figures is the assumption that "property" - in general but especially bricks and mortar - has any significant value (other the shelter if it is still vaguely habitable) in a post financial apocalypse world.The average household debt in the UK (excluding mortgages) was £6,016 in November 2014. Average household debt including mortgages was £54,197 and if you add to that each household share (two adults for the sake of argument) of national debt then the total including mortgages is around £85,000 whereas two adults in a household co-owning the property have an average net worth per household of around £149,000 including a paltry average cash savings of £1700 per person. That's about 175% of the debt figure if the back of my fag packet is working.
On the other hand, as a sort of balancing trade, a worthless property and worthless mortgage seem well matched. Assuming they can be matched once the electronic records at the Land Registry have been eradicated. (Worst case scenario .... or is it?)
LongQ said:
turbobloke said:
I appreciate that your question was a global one, but for the sake of a quick response with numbers to-hand, the answer would be no if the UK is anything to go by. There appears to be significantly more net worth than debt so not zero overall.
The average household debt in the UK (excluding mortgages) was £6,016 in November 2014. Average household debt including mortgages was £54,197 and if you add to that each household share (two adults for the sake of argument) of national debt then the total including mortgages is around £85,000 whereas two adults in a household co-owning the property have an average net worth per household of around £149,000 including a paltry average cash savings of £1700 per person. That's about 175% of the debt figure if the back of my fag packet is working.
The problem I have with those figures is the assumption that "property" - in general but especially bricks and mortar - has any significant value (other the shelter if it is still vaguely habitable) in a post financial apocalypse world.The average household debt in the UK (excluding mortgages) was £6,016 in November 2014. Average household debt including mortgages was £54,197 and if you add to that each household share (two adults for the sake of argument) of national debt then the total including mortgages is around £85,000 whereas two adults in a household co-owning the property have an average net worth per household of around £149,000 including a paltry average cash savings of £1700 per person. That's about 175% of the debt figure if the back of my fag packet is working.
LongQ said:
On the other hand, as a sort of balancing trade, a worthless property and worthless mortgage seem well matched. Assuming they can be matched once the electronic records at the Land Registry have been eradicated. (Worst case scenario .... or is it?)
EMP?Another day, another Eurozone recession; Italian (YoY Q4F)GDP @ minus 0.50%.
Terrible. Absolutely terrible. That's thirteen straight quarters in a row without positive growth. Unlucky for some, especially if your name is Matteo Renzi. The wheels really must have come off their debt dynamics and yet ten year bond yields are circa 1.39%.
Presumably this is on the basis that Italian banks are buying everything they can get to sell on to the ECB and that ultimately the Germans will pick up the tab... I don't think so!
Terrible. Absolutely terrible. That's thirteen straight quarters in a row without positive growth. Unlucky for some, especially if your name is Matteo Renzi. The wheels really must have come off their debt dynamics and yet ten year bond yields are circa 1.39%.
Presumably this is on the basis that Italian banks are buying everything they can get to sell on to the ECB and that ultimately the Germans will pick up the tab... I don't think so!
Andy Zarse said:
Another day, another Eurozone recession; Italian (YoY Q4F)GDP @ minus 0.50%.
Terrible. Absolutely terrible. That's thirteen straight quarters in a row without positive growth. Unlucky for some, especially if your name is Matteo Renzi. The wheels really must have come off their debt dynamics and yet ten year bond yields are circa 1.39%.
Presumably this is on the basis that Italian banks are buying everything they can get to sell on to the ECB and that ultimately the Germans will pick up the tab... I don't think so!
Living in Lucca, Tuscany currently I have seen the steady decline of the Italian economy first hand and you are absolutely correct AZ this is ominous stuff. Italy is not recovering at all and there are more and more visibly closed manufactures about who have shut up shop because they cannot make a living. It may well cause unrest and change the voting habits in Italians. We constantly receive diatribes from the local Italians who blame the politicians for everything.Terrible. Absolutely terrible. That's thirteen straight quarters in a row without positive growth. Unlucky for some, especially if your name is Matteo Renzi. The wheels really must have come off their debt dynamics and yet ten year bond yields are circa 1.39%.
Presumably this is on the basis that Italian banks are buying everything they can get to sell on to the ECB and that ultimately the Germans will pick up the tab... I don't think so!
There are huge amounts of corruption and crooked dealings here. However I am bound to say that my experience is that many ordinary Italians have adopted exacty the same approach. Tax is avoided as a. Natonal Pastime in Italy. Successfully by the majority I suspect. The land of Berlusconi is definitely taking hints from the Master. Inevitably the Italian economy is nosediving and the Itlalias are happy to blame the politicians.
The Italians have no intention lining the pockets of the Governent in Italy whatsoever. Understandably since the corruption is very obvious and very visible. Problem here is that the Italians have adopted the same approach as the politicians they despise. The markets in Lucca are a classic example you can stand and watch the Police arriving and the illegal stall holders have ealy warning systems and disappear with their wares sharpish. Twenty minutes after this nonsense the same vendors return. Honour is satisfied as the corruption continues unabated.
Tax Avoidance here is massive almost at epidemic proportions, and this is reducing the take of the Italian government and local governent administrations dramatically. In the opinions the Italians I meet only fools pay any tax and I have to say I can understand that approach given the appalling corruption in the Italian admimistrations. However the combination of bent corrupt politicians and taxpayers who avoid all taxation all the time is resulting in a failing, shrinking economy and penury becoming more and more apparent. Not going to end well is it?
Hi Steffan,
Which manufactures are those that are closing down at quite a rate?. The company who we are agents for have a large order book at present with equipment going all over the world. When we popped over for a little software training the factory was heaving with a full range of equipment being loaded up and built. Even a tour of the R+D area for upcoming machines showed that stuff is in the pipeline.
Granted this is just outside Venice so I'm not to sure on how this relates to the area that you live.
Which manufactures are those that are closing down at quite a rate?. The company who we are agents for have a large order book at present with equipment going all over the world. When we popped over for a little software training the factory was heaving with a full range of equipment being loaded up and built. Even a tour of the R+D area for upcoming machines showed that stuff is in the pipeline.
Granted this is just outside Venice so I'm not to sure on how this relates to the area that you live.
Steffan said:
Living in Lucca, Tuscany currently I have seen the steady decline of the Italian economy first hand and you are absolutely correct AZ this is ominous stuff. Italy is not recovering at all and there are more and more visibly closed manufactures about who have shut up shop because they cannot make a living. It may well cause unrest and change the voting habits in Italians. We constantly receive diatribes from the local Italians who blame the politicians for everything.
Steffan said:
Living in Lucca, Tuscany currently I have seen the steady decline of the Italian economy first hand and you are absolutely correct AZ this is ominous stuff. Italy is not recovering at all and there are more and more visibly closed manufactures about who have shut up shop because they cannot make a living. It may well cause unrest and change the voting habits in Italians. We constantly receive diatribes from the local Italians who blame the politicians for everything.
There are huge amounts of corruption and crooked dealings here. However I am bound to say that my experience is that many ordinary Italians have adopted exacty the same approach. Tax is avoided as a. Natonal Pastime in Italy. Successfully by the majority I suspect. The land of Berlusconi is definitely taking hints from the Master. Inevitably the Italian economy is nosediving and the Itlalias are happy to blame the politicians.
The Italians have no intention lining the pockets of the Governent in Italy whatsoever. Understandably since the corruption is very obvious and very visible. Problem here is that the Italians have adopted the same approach as the politicians they despise. The markets in Lucca are a classic example you can stand and watch the Police arriving and the illegal stall holders have ealy warning systems and disappear with their wares sharpish. Twenty minutes after this nonsense the same vendors return. Honour is satisfied as the corruption continues unabated.
Tax Avoidance here is massive almost at epidemic proportions, and this is reducing the take of the Italian government and local governent administrations dramatically. In the opinions the Italians I meet only fools pay any tax and I have to say I can understand that approach given the appalling corruption in the Italian admimistrations. However the combination of bent corrupt politicians and taxpayers who avoid all taxation all the time is resulting in a failing, shrinking economy and penury becoming more and more apparent. Not going to end well is it?
It seems they too need the German tax collectors to get the money in.There are huge amounts of corruption and crooked dealings here. However I am bound to say that my experience is that many ordinary Italians have adopted exacty the same approach. Tax is avoided as a. Natonal Pastime in Italy. Successfully by the majority I suspect. The land of Berlusconi is definitely taking hints from the Master. Inevitably the Italian economy is nosediving and the Itlalias are happy to blame the politicians.
The Italians have no intention lining the pockets of the Governent in Italy whatsoever. Understandably since the corruption is very obvious and very visible. Problem here is that the Italians have adopted the same approach as the politicians they despise. The markets in Lucca are a classic example you can stand and watch the Police arriving and the illegal stall holders have ealy warning systems and disappear with their wares sharpish. Twenty minutes after this nonsense the same vendors return. Honour is satisfied as the corruption continues unabated.
Tax Avoidance here is massive almost at epidemic proportions, and this is reducing the take of the Italian government and local governent administrations dramatically. In the opinions the Italians I meet only fools pay any tax and I have to say I can understand that approach given the appalling corruption in the Italian admimistrations. However the combination of bent corrupt politicians and taxpayers who avoid all taxation all the time is resulting in a failing, shrinking economy and penury becoming more and more apparent. Not going to end well is it?
Matt p said:
Hi Steffan,
Which manufactures are those that are closing down at quite a rate?. The company who we are agents for have a large order book at present with equipment going all over the world. When we popped over for a little software training the factory was heaving with a full range of equipment being loaded up and built. Even a tour of the R+D area for upcoming machines showed that stuff is in the pipeline.
Granted this is just outside Venice so I'm not to sure on how this relates to the area that you live.
Italy is, for many product sectors, an export only economy. The key to what your supplier's success is that their sales are not shackled to the fortunes of the local economy.Which manufactures are those that are closing down at quite a rate?. The company who we are agents for have a large order book at present with equipment going all over the world. When we popped over for a little software training the factory was heaving with a full range of equipment being loaded up and built. Even a tour of the R+D area for upcoming machines showed that stuff is in the pipeline.
Granted this is just outside Venice so I'm not to sure on how this relates to the area that you live.
However, I have long suspected that Italian exports and presence at trade shows is sufficiently prolific (compared to similar sized European industrial economies), especially in the small-to-mid business range, as to be anomalous. Something drives this and I think a lot of the 'lost' EU grant money is part of the answer, as is backing of black economy cash. Either way, something does not fit and we may now be seeing the initial states of it unwinding.
I have a meeting next week with a firm from Bologna who we've done business with for nearly 20 years and I am very interested in catching up with them in regard to these matters.
turbobloke said:
EMP?
Possibly but I was thinking more along the lines of a service supplier pulling the plug on the basis of unpaid bills - assuming that the situation was not so chaotic that "central admin" fell apart before the issues of billing for payment with worthless currency reached the top of the pile.I suspect that for complete meltdown one would have to look to humanity in the short term and galactic effects at some point in the future if doing risk analysis.
Digga said:
Matt p said:
Hi Steffan,
Which manufactures are those that are closing down at quite a rate?. The company who we are agents for have a large order book at present with equipment going all over the world. When we popped over for a little software training the factory was heaving with a full range of equipment being loaded up and built. Even a tour of the R+D area for upcoming machines showed that stuff is in the pipeline.
Granted this is just outside Venice so I'm not to sure on how this relates to the area that you live.
Italy is, for many product sectors, an export only economy. The key to what your supplier's success is that their sales are not shackled to the fortunes of the local economy.Which manufactures are those that are closing down at quite a rate?. The company who we are agents for have a large order book at present with equipment going all over the world. When we popped over for a little software training the factory was heaving with a full range of equipment being loaded up and built. Even a tour of the R+D area for upcoming machines showed that stuff is in the pipeline.
Granted this is just outside Venice so I'm not to sure on how this relates to the area that you live.
However, I have long suspected that Italian exports and presence at trade shows is sufficiently prolific (compared to similar sized European industrial economies), especially in the small-to-mid business range, as to be anomalous. Something drives this and I think a lot of the 'lost' EU grant money is part of the answer, as is backing of black economy cash. Either way, something does not fit and we may now be seeing the initial states of it unwinding.
I have a meeting next week with a firm from Bologna who we've done business with for nearly 20 years and I am very interested in catching up with them in regard to these matters.
It's also interesting to note Italy did very badly even in the so-called good times. If we accept Italian GDP is back to where it was in around 2000, and also note the population has grown by 7% (mainly immigration) then I reckon GDP per head is now around 8% lower than back then.
The national debt is Eu2.134 trillion, with central Govt tax revenue of Eu465 billion, so it's quite clear this is a "Houston we've got problemissimo" moment. I fully expect an Italian default at some point in the future.
Steffan said:
Tax Avoidance here is massive almost at epidemic proportions, and this is reducing the take of the Italian government and local governent administrations dramatically. In the opinions the Italians I meet only fools pay any tax and I have to say I can understand that approach given the appalling corruption in the Italian admimistrations. However the combination of bent corrupt politicians and taxpayers who avoid all taxation all the time is resulting in a failing, shrinking economy and penury becoming more and more apparent. Not going to end well is it?
But the EU has allowed the likes of Google, amazon and almost every other large corp to avoid paying tax, the likes of Mr Junka, must realise this has created an attitude of, if they aint why should i payAndy Zarse said:
Digga said:
Matt p said:
Hi Steffan,
Which manufactures are those that are closing down at quite a rate?. The company who we are agents for have a large order book at present with equipment going all over the world. When we popped over for a little software training the factory was heaving with a full range of equipment being loaded up and built. Even a tour of the R+D area for upcoming machines showed that stuff is in the pipeline.
Granted this is just outside Venice so I'm not to sure on how this relates to the area that you live.
Italy is, for many product sectors, an export only economy. The key to what your supplier's success is that their sales are not shackled to the fortunes of the local economy.Which manufactures are those that are closing down at quite a rate?. The company who we are agents for have a large order book at present with equipment going all over the world. When we popped over for a little software training the factory was heaving with a full range of equipment being loaded up and built. Even a tour of the R+D area for upcoming machines showed that stuff is in the pipeline.
Granted this is just outside Venice so I'm not to sure on how this relates to the area that you live.
However, I have long suspected that Italian exports and presence at trade shows is sufficiently prolific (compared to similar sized European industrial economies), especially in the small-to-mid business range, as to be anomalous. Something drives this and I think a lot of the 'lost' EU grant money is part of the answer, as is backing of black economy cash. Either way, something does not fit and we may now be seeing the initial states of it unwinding.
I have a meeting next week with a firm from Bologna who we've done business with for nearly 20 years and I am very interested in catching up with them in regard to these matters.
It's also interesting to note Italy did very badly even in the so-called good times. If we accept Italian GDP is back to where it was in around 2000, and also note the population has grown by 7% (mainly immigration) then I reckon GDP per head is now around 8% lower than back then.
The national debt is Eu2.134 trillion, with central Govt tax revenue of Eu465 billion, so it's quite clear this is a "Houston we've got problemissimo" moment. I fully expect an Italian default at some point in the future.
LongQ said:
Mermaid said:
It seems they too need the German tax collectors to get the money in.
Of course in a "fully integrated" country called Europe they would have them.Mermaid is of course correct in his assessement that the Italians would pay a lot more tax if the Germas were responsible fr collection thereof. A LOT more tax.
Andy Zarse is also absolutely spot on concerning the economic dire straights that the Italians are diving into steadily. LongQ is absolutely correct in his assertion that a fully integrated country called Europe could resolve these difficulties With common fiscal polices administered from one central point of control. Just as Calfornia in the USA supports many of the less wealthy states without question because the federal tax regime endures that support. But the EU will never achieve that.
That is exactly why ths nonsense is never going to work. In the EU the only support that can be given is made to insolvent nations who can never afford to repay the debts s made by loans to the states themselves. Already hopelessly insolvent. Which is why this nonsenses bound to explode in the end. There is IMO absolutely no possibility of an intergrated taxation system being introduced acress the EU. It is never going to happen particularly as more and more evidence of the mistrust that the electors of the individual states have for the EU is now becoming all too apparent. That is what the EU needs and that would enable substantially hidden support to be made to the failing states. But that is way beyond the capacity of the EU to engineer any of this.
In consequence there is only one solution to this disgrace. The failing states will inevitably fall away from the EU and Euro as their complete lack of economic strength becomes more and more apparent. Greece will fail first IMO and I can well understand the reasons why the EU are desperate to avoid this. The Domino effect will turn the spotlight on Spain, Portugal and so on once the first state goes. The EU will seek to extend this as far as they can. It may stagger on for a while.
But without the central point of taxation control and collection, which the EU will never be abe to achieve, such failing states must inevitably fall from the currency which is simpy beyond their economic abilities to achieve. It is a matter of time now I think. Three years ago there were many who thought the solution was to hand and the EU were in control. The EU is still in control but this is no solution! The EU cannot find a solution and is defrauding the unsuspecting taxpayers of Germany and the other EU solvent states who will pick up the tab. Once that happes the Federalstion of the EU will be finished. Awful lot of cats and pigeons coming then! Three excellent posts and all on the button.
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