Is the end nigh for the Euro? [vol. 3]
Discussion
It's f
king scary stuff.
My thoughts, way back when, were more "how did they ever think this might work?!!!" rather than "I hope this all goes horribly wrong". I still don't think it can work and am living in the hope there's some Damascene moment of resolution, rather than another can kick.
It probably all hinges on Germany now. I can't really see another way forward. Sure, they could take their ball home - revert to the mark - but they would have no one left to play/trade with as the remainder of the Eurozone plunged into chaos, with most of the big players in some sort of default situation.
king scary stuff.My thoughts, way back when, were more "how did they ever think this might work?!!!" rather than "I hope this all goes horribly wrong". I still don't think it can work and am living in the hope there's some Damascene moment of resolution, rather than another can kick.
It probably all hinges on Germany now. I can't really see another way forward. Sure, they could take their ball home - revert to the mark - but they would have no one left to play/trade with as the remainder of the Eurozone plunged into chaos, with most of the big players in some sort of default situation.
Mortarboard said:
Laugh all you like, the US trade deficit with the EU27 is 186 billion pa.
https://ustr.gov/countries-regions/europe-middle-e...
M.
How can that be with the EU being such a huge and important market, so easy to trade with etc etc.... https://ustr.gov/countries-regions/europe-middle-e...
M.
skwdenyer said:
No, they're not. We're far weaker. That's the problem. We have a poor economy, with little resilience. We've committed to keeping house prices up at any cost. We're more exposed to FX risks with our major trading partners. We don't export enough. We're still dealing with the fallout from Brexit. We never recovered properly from the GFC, so we were in a worse position to start with. And we haven't been investing properly for a decade, so our backlog / deficit is way higher.
So, no, for my money there are few silver linings right now.
Apologies - I missed your reply before.So, no, for my money there are few silver linings right now.
On the above, I really can't agree that other western style economies are in a bed of roses. Which ones were you thinking of?
The EU is in a mess, as noted is a couple of the above posts.
The US?
Which ones?
I wonder whether we don't export enough, or if we import too much. I agree that we need to do better on our balance of trade. But it's not the only metric to be looked at, as other nations with a better BoT demonstrate.
And on the Blair/Brown investments...
NHS waiting lists are driven by numerous things. We need to think very carefully about the most meaningful metrics for a successful health service. I'm not convinced this is the best one.
Education? What's happening to our relative standing internationally? Everyone Must Have Degrees has done nothing for this. We are sliding and have been for a while. Of course that could be others improving faster than us from a lower base, but if we are to keep ahead, that is what we must deal with. And that is what will help our exports...metrics that compare ourselves with our historic selves are largely irrelevant in this context.
"Cross party" choices during 2008? I'll remind you of that one day
The government were in charge. They made political decisions on moral jeopardy IMO. It's not just western economies that are dysfunctional - look at the banking and real estate crisis unraveling right now in China.
As for edumactation. Labour did tremendous harm, by stigmatising and eventually abolishing (one way or another) both polytechnics and many vocational learning channels.
As for edumactation. Labour did tremendous harm, by stigmatising and eventually abolishing (one way or another) both polytechnics and many vocational learning channels.
Murph7355 said:
On the above, I really can't agree that other western style economies are in a bed of roses. Which ones were you thinking of?
The EU is in a mess, as noted is a couple of the above posts.
The US?
Which ones?
As you yourself note further down, it is important to choose appropriate, relevant, useful & actionable metrics to compare one economy with another.The EU is in a mess, as noted is a couple of the above posts.
The US?
Which ones?
One I think incredibly important is resilience: how well does one economy respond to / rebound from shocks?
In turn this is linked to a variety of other factors, such as wage levels / growth, spending power, investment, balance of trade (not just balance of payments), and so on.
The US has many problems, but it is rich in natural resources, has a thriving domestic manufacturing base, is able to export (both finished goods and IP-driven industries) at an unprecedented rate, and generates a level of prosperity far in excess of most other comparable countries.
It is resilient; shocks impact it, but it is able to bounce back strongly.
Can we take any one element of its systems and apply them here, however? No, because each is intertwined with many others. That's one of the problems with the comparison game - we can't play Top Trumps with features; instead we need to focus on how *out country* can use the resources available *to us* in order to do better. Too many people lose sight of that.
Murph7355 said:
I wonder whether we don't export enough, or if we import too much. I agree that we need to do better on our balance of trade. But it's not the only metric to be looked at, as other nations with a better BoT demonstrate.
It is not the only metric no, as I mention above. We need to look objectively at our situation. And, if you do that, I believe objectively we're in real trouble:- too much debt
- too little manufacturing
- too little domestic consumption of domestic product
- poor BoP (meaning "inward investment" aka selling off assets is our direction of travel)
- poor BoT (meaning we can't "export or die" to help fix our situation)
- unaffordable & substandard housing (average prices ignore the fact that our living arrangements are tiny compared to many comparable nations)
- too little land
- low wage growth, low purchasing power
- over-exposure to FX risks (we're a tiny ship in a large ocean there)
- over-reliance on a small number of industries (especially financial services)
- sub-standard, under-resourced education
- poor/declining health service delivery rates & outcomes
and so on. There are few if any areas in which we do well, very few strengths we can fall back on. We *were* however a very successful member of the EU, strongly influencing policy in our own interests and with strong cross-border trade potential...
Murph7355 said:
And on the Blair/Brown investments...
NHS waiting lists are driven by numerous things. We need to think very carefully about the most meaningful metrics for a successful health service. I'm not convinced this is the best one.
The primary function of the NHS has to be to allow people to be economically productive. That's strongly tied to waiting lists. The only way demand is self-limiting if waiting lists are allowed to expand is because of literal die-off. That's unacceptable.NHS waiting lists are driven by numerous things. We need to think very carefully about the most meaningful metrics for a successful health service. I'm not convinced this is the best one.
It feeds into not only basic metrics (sick days, output, etc.) but also the national mood - if people lose hope, they stop striving & start exploiting. Crime goes up (as it did), resentment goes up (as it did - just look at that infamous Leave ad showing the NHS inside & outside the EU, a tissue of lies but very effective), economic activity stagnates / retrenches (as it did).
It isn't rocket science. People have to have a safety net, have to know they will be treated.
B/B did an admirable job of investing properly. C/O & successors destroyed that good work. It really is that simple.
Murph7355 said:
Education? What's happening to our relative standing internationally? Everyone Must Have Degrees has done nothing for this.
I didn't mention anything about degrees. But that trend was started by Major, not B/B: in the ludicrous transformation of polytechnics to universities, he decimated a really good system of delivering technical & vocational education.Murph7355 said:
We are sliding and have been for a while. Of course that could be others improving faster than us from a lower base, but if we are to keep ahead, that is what we must deal with.
That's the problem with flip-flop politics - people don't wait for results.Proper investment didn't start until B/B in 1998. How long do you think that takes? Let's say 5 years to bed in (expansions, new staff, etc.). Then we have to wait 12-15 years to see the results. So we'd expect to see some pay-off by about 2015-20.
So let's look at the PISA ranking for reading at age 15. UK ranked 14 in 2000, 16 in 2006, 25 in 2009, 23 in 2012, 22 in 2015 and 14 in 2018. That put us on a par with the USA for instance.
It was obvious to B/B that we had a problem. Although our rank was "ok", the amount being spent on teaching (as opposed to the amount spent on education overall) was declining, and the long-term signal in performance was obvious. But the pay-off takes so long.
The bottom line is this: by taking proper steps to invest in education, B/B stopped our decline and brought us back to a sensible level. We can do much better, but education spending has dropped off again, so expect to see us falling down the league tables again.
Frankly I can't believe education spending is a political issue - in most sane countries it isn't.
Murph7355 said:
And that is what will help our exports...metrics that compare ourselves with our historic selves are largely irrelevant in this context.
Indeed. And as above that stuff takes years-to-decades. People are simply too stupid or too impatient to understand that.Murph7355 said:
"Cross party" choices during 2008? I'll remind you of that one day The government were in charge. They made political decisions on moral jeopardy IMO.
The record is pretty clear. The government were in charge. They made political decisions on moral jeopardy IMO. 
skwdenyer said:
The record is pretty clear.
How does one become so blinkered about things and where does the want/need to talk down your country come from?Given your depressive outlook for the UK, why on earth havent you migrated somewhere else?
To get back on topic, yes the UK economy is in trouble, but as Murph says, its pretty much the same everywhere in the world right now.
I would however say, I am MUCH happier being in the UK (and out of EU) right now. With the EU having 27 completely disperate economies to deal with, there are no common solutions. Those individual countries' futures really are out of their own hands now.
skwdenyer said:
- too little manufacturing
We are roughly 6th largest economy and 9th largest manufacturer. When you take into account manufacturing needs a.) space and b.) relatively low wages, we're doing pretty well.As for Labour and manufacturing:
https://www.independent.co.uk/news/business/news/m...
https://www.ft.com/content/f32a3392-df7a-11de-98ca...
Brown stated we no longer needed it - financial services would be the savior.
Digga said:
skwdenyer said:
- too little manufacturing
We are roughly 6th largest economy and 9th largest manufacturer. When you take into account manufacturing needs a.) space and b.) relatively low wages, we're doing pretty well.As for Labour and manufacturing:
https://www.independent.co.uk/news/business/news/m...
https://www.ft.com/content/f32a3392-df7a-11de-98ca...
Brown stated we no longer needed it - financial services would be the savior.
(Not quite as much as Italy on manufacturing mind
). jsf said:
Mr Whippy said:
Got to take the rough with the smooth.
Perhaps if we didn’t party it up so much in the good times we’d leave some aside for the bad times, and could use such times to stimulate the economy with infrastructure investment.
We just need a few big distractions to get us through the next 5 years without people looking for politicians heads on spikes.
What good times? Wages have been stagnant for decades for most working people. In reality there has been a slide, especially since 2008, unless you are well up the income and asset class.Perhaps if we didn’t party it up so much in the good times we’d leave some aside for the bad times, and could use such times to stimulate the economy with infrastructure investment.
We just need a few big distractions to get us through the next 5 years without people looking for politicians heads on spikes.
Those good times should have been to benefit society to weather the bad times… not opportunities to enrich the few.
Carl_Manchester said:
Here is a number I found surprising, the ECB now holds 722 billion EUR of Italian government debt, 40% of GDP.
Meanwhile Germans could be chopping wood to keep warm this winter.
If they do, surely some political cracks will start to appear.
In the UK we can’t even chop wood to keep warm in most new build houses.Meanwhile Germans could be chopping wood to keep warm this winter.
If they do, surely some political cracks will start to appear.
But hey it’s green. Don’t worry about reality. The reality that you’re screwed if either the gas or electric goes off at any point.
skwdenyer said:
How about education? Consider this:
Educational outcomes are impacted by the inputs over the preceding 10+ years. B/B inherited a sharply-declining school system (look at the shape of the curve), and worked hard to turn it around. The uptick in 2010-15 was clear evidence of a result, but obviously much more needed to be done. That requires sustained investment, something that Cameron / Osborne killed off.
We're an unusual country; most of our peers don't use education spending as a political football, recognising that long-term prosperity requires long-term spending, consistently, on education.
You've picked some rather odd countries to include on that graph! If you actually include our peers on a graph instead of oddities like Thailand, Peru and Japan that in no way meet that criteria, it seems that treating educational spending as a political football - if, as you say, others don't do it - may be no bad thing, given that we consistently perform above Spain, Italy and France, and Germany are nose-diving down towards us?Educational outcomes are impacted by the inputs over the preceding 10+ years. B/B inherited a sharply-declining school system (look at the shape of the curve), and worked hard to turn it around. The uptick in 2010-15 was clear evidence of a result, but obviously much more needed to be done. That requires sustained investment, something that Cameron / Osborne killed off.
We're an unusual country; most of our peers don't use education spending as a political football, recognising that long-term prosperity requires long-term spending, consistently, on education.
https://ourworldindata.org/grapher/share-of-studen...
ETA - Not sure why my graph wasn't displaying, but hopefully you can click through to it?
Edited by Kermit power on Friday 15th July 18:14
Digga said:
Check the stats on motorway miles built for the most damning indictment of out lack of investment. Yes we're a small, densely packed island, a fact that often makes roads more expensive, but for the size of economy, we're consistently lagging: https://en.wikipedia.org/wiki/Evolution_of_motorwa...
Is that really a damning indictment? I'd like to see answers to a few questions before being able to determine that, because to me it feels more as though we're fortunate that geography means we have less need of motorway miles than many of our peers.1. How many comparative miles of dual-carriageway does each country have? Many European motorways are two-lane only, and functionally not all that different to many UK dual-carriageways.
2. How much of the funding in each of those countries came from direct public investment from national coffers rather than EU funding (eg Spain and Italy) and tolls, which can be massive, especially in France?
3. How much additional investment is required to cope with the impact of carrying through traffic to/from much of the rest of Europe in countries like France and Germany, compared to being a cul-de-sac like the UK?
4. Look at the map below (which is from the Wiki link you provided). Given the population distribution in the UK, which areas of significant population do you feel are particularly under-served by motorways compared to other major European nations? East Anglia? The Highlands? Mid and West Wales?
Overall, not only are countries such as Germany, Spain and France 50 to 120% larger than us in terms of surface area, they're also much squarer than us, so where we can be well served by a few major arterial motorways with dual carriageways branching off them, they can't.
Bandit said:
skwdenyer said:
The record is pretty clear.
How does one become so blinkered about things and where does the want/need to talk down your country come from?Given your depressive outlook for the UK, why on earth havent you migrated somewhere else?
I know how great we can be; I'm not talking down my country, I'm talking down my Government's ability to actually unlock potential or manage a piss up in a brewery.
I always thought we should be doing alot more ship building. Even military ones just keep selling knew tech level below our own use. And use our own steel works.
The French really got the right idea exporting power it's practically free passive income.
We could get there if we can sort out storage for renewable energy.
The French really got the right idea exporting power it's practically free passive income.
We could get there if we can sort out storage for renewable energy.
Kermit power said:
Digga said:
Check the stats on motorway miles built for the most damning indictment of out lack of investment. Yes we're a small, densely packed island, a fact that often makes roads more expensive, but for the size of economy, we're consistently lagging: https://en.wikipedia.org/wiki/Evolution_of_motorwa...
Is that really a damning indictment? I'd like to see answers to a few questions before being able to determine that, because to me it feels more as though we're fortunate that geography means we have less need of motorway miles than many of our peers.1. How many comparative miles of dual-carriageway does each country have? Many European motorways are two-lane only, and functionally not all that different to many UK dual-carriageways.
2. How much of the funding in each of those countries came from direct public investment from national coffers rather than EU funding (eg Spain and Italy) and tolls, which can be massive, especially in France?
3. How much additional investment is required to cope with the impact of carrying through traffic to/from much of the rest of Europe in countries like France and Germany, compared to being a cul-de-sac like the UK?
4. Look at the map below (which is from the Wiki link you provided). Given the population distribution in the UK, which areas of significant population do you feel are particularly under-served by motorways compared to other major European nations? East Anglia? The Highlands? Mid and West Wales?
Overall, not only are countries such as Germany, Spain and France 50 to 120% larger than us in terms of surface area, they're also much squarer than us, so where we can be well served by a few major arterial motorways with dual carriageways branching off them, they can't.
In general, I feel the UK is slightly unique in its challenges. I think prosperity and population density are critical factors.
I also think in terms of prosperity, there is definitely an element of “build it and they will come”. If you provide better links between less prosperous and populous areas, to those with more affluence and population, there are cross benefits.
There is also the point of redundancy; anyone who’s done a few road trips in and through Germany will realise they have a pretty resilient road network. Here, talking to friends with huge experience in transport and logistics, there have been times where, with simultaneous closures on M6 and M1, the nation - or at least a huge chunk of the economy that relies on timely freight movements- could grind to a halt. Which is daft.
We’re also critically weak on East-West routes, although the new Oxford-Cambridge corridor projects will help this.
IMHO major trunk routes like A34 and A5 have been wrongfully downgraded in the Midlands.
Gassing Station | News, Politics & Economics | Top of Page | What's New | My Stuff