Could UK U-turn on Referendum Result (Vol 2)

[NJH]

Sway said:

It's not to enable hard pegging of the Euro across the EZ, it's to ensure the fiscal transfers which are banned under the Treaty of Lisbon.

Yanis Varoufakis talks about it in his book. Is it just me or this system fundamentally a state (or rather supranational state) sponsored fraud of the likes the world has never seen before.

You are of course right that fundamentally the system only works if there is no intent to ever reduce the total (and by extension it can only increase). If we are wrong I would like someone to explain how.

[Sway]

The more I look into it, the more I understand it - the harder I find it to avoid predictions that my younger self would have called wibble headed tin foil hattery.

I'm not (I don't think) inclined to hyperbole - but the only result I can see as a result of this is true, proper, European conflict.

Of what form, I simply cannot determine.

Or, as some suggest, somehow it'll just keep on getting kicked down the road, with no one caring or it ever unwinding.

[Murph7355]

Sway said:

The more I look into it, the more I understand it - the harder I find it to avoid predictions that my younger self would have called wibble headed tin foil hattery.

I'm not (I don't think) inclined to hyperbole - but the only result I can see as a result of this is true, proper, European conflict.

Of what form, I simply cannot determine.

Or, as some suggest, somehow it'll just keep on getting kicked down the road, with no one caring or it ever unwinding.

I don't see it ending up in fisticuffs. I don't see NATO allowing that to happen. But unless it is unwound somehow (probably by mostly the German electorate feeling some serious pain to spread the love south), I do see it creating massive political tensions across the EU member states.

This is one reason why I'm really interested in how the EU is proposing filling the budget gap we will leave. They appear to be running on a cast iron assumption that we will be leaving no gap...and yet there appears to be little in return being offered. All talk is of us noting what we must do and decide, but I am intrigued about when they are intending coming clean to the member states individually.

The numbers may be dismissed as relatively small...but I'm not convinced it's not a case of straws and camels backs.

Fun times.

[Einion Yrth]

Murph7355 said:

I'm really interested in how the EU is proposing filling the budget gap we will leave.

Currently seems to involve badgering the pathetic bunch we have in charge of "negotiations" into paying more for less; sadly it seems to be working.

[Sway]

Murph7355 said:

Sway said:

The more I look into it, the more I understand it - the harder I find it to avoid predictions that my younger self would have called wibble headed tin foil hattery.

I'm not (I don't think) inclined to hyperbole - but the only result I can see as a result of this is true, proper, European conflict.

Of what form, I simply cannot determine.

Or, as some suggest, somehow it'll just keep on getting kicked down the road, with no one caring or it ever unwinding.

I don't see it ending up in fisticuffs. I don't see NATO allowing that to happen. But unless it is unwound somehow (probably by mostly the German electorate feeling some serious pain to spread the love south), I do see it creating massive political tensions across the EU member states.

This is one reason why I'm really interested in how the EU is proposing filling the budget gap we will leave. They appear to be running on a cast iron assumption that we will be leaving no gap...and yet there appears to be little in return being offered. All talk is of us noting what we must do and decide, but I am intrigued about when they are intending coming clean to the member states individually.

The numbers may be dismissed as relatively small...but I'm not convinced it's not a case of straws and camels backs.

Fun times.

I hope I agree. Not sure what influence NATO has in preventing fighting amongst it's own members though.

Not that I think it'll come to that - I think the EZ will 'merely' be collapsed in chaotic order, with member states being forced to revert to their previous currencies - which will be utter fking carnage.

If we thought the 'migrant crisis' was bad, I'm not sure what it'll look like when those in the South are starving due to hyperinflation.

As said, I don't have a calibrated crystal ball - I simply cannot see how the unwinding could possibly not cause scenes we haven't seen in many, many years in Continental Europe.

[Einion Yrth]

Sway said:

I hope I agree. Not sure what influence NATO has in preventing fighting amongst it's own members though.

The NATO treaty includes a hard requirement for NATO members to support each other in the event of an attack. Could be interesting...

[Gloria Slap]

Looking at the TARGET2 graphs, one feature is that the divergence started from 2008, and Spain debt peaked at 2012, with Germany spiking also.



Whilst I'd agree this has got worse again since, with Italy also at high debt levels, I'd be interested to know what went well from 2012-2014 to allow the German excess to be eroded and for Spain to recover.

It is not simply the case that German excess just gets bigger and bigger and never drops - as the graphs shows this need not be the case.

I don't doubt the graph shows some imbalances that are not necessarily a good thing, but I'm still not convinced this is particularly more threatening to the region than the UK's current debt of £1.83 Trillion.

UK debt is 88% of GDP, whilst the EU average is 82%.


PS I specifically excluded Gold in the export stats for a good reason:

https://news.sky.com/story/revealed-how-gold-takes...

[Dr Jekyll]

Einion Yrth said:

Sway said:

I hope I agree. Not sure what influence NATO has in preventing fighting amongst it's own members though.

The NATO treaty includes a hard requirement for NATO members to support each other in the event of an attack. Could be interesting...

In theory any NATO member that attacks another is chucked out of NATO, But Greece and Turkey have exchanged the odd shot and are still in. As is Iceland of course.

[citizensm1th]

Dr Jekyll said:

Einion Yrth said:

Sway said:

I hope I agree. Not sure what influence NATO has in preventing fighting amongst it's own members though.

The NATO treaty includes a hard requirement for NATO members to support each other in the event of an attack. Could be interesting...

In theory any NATO member that attacks another is chucked out of NATO, But Greece and Turkey have exchanged the odd shot and are still in. As is Iceland of course.

Remember when David Cameron alluded to war if we went down the brexit route

Roundly decried on here as project fear

The irony is delicious

[Ridgemont]

Gloria Slap said:

Looking at the TARGET2 graphs, one feature is that the divergence started from 2008, and Spain debt peaked at 2012, with Germany spiking also.



Whilst I'd agree this has got worse again since, with Italy also at high debt levels, I'd be interested to know what went well from 2012-2014 to allow the German excess to be eroded and for Spain to recover.

It is not simply the case that German excess just gets bigger and bigger and never drops - as the graphs shows this need not be the case.

I don't doubt the graph shows some imbalances that are not necessarily a good thing, but I'm still not convinced this is particularly more threatening to the region than the UK's current debt of £1.83 Trillion.

UK debt is 88% of GDP, whilst the EU average is 82%.


PS I specifically excluded Gold in the export stats for a good reason:

https://news.sky.com/story/revealed-how-gold-takes...

The following nearly covers the recovery of 2012-14 and what was happening in all likelihood:

https://ftalphaville.ft.com/2017/09/14/2193700/gue...

It makes for depressing reading. The deterioration tracks first off the collapse of Italian and Spanish interbank lending. The recovery initially tied into Draghi’s QE. However since then the 2nd divergence appears to be the flight of private capital from government to foreign bonds and funds.

[Sway]

Gloria Slap said:

Looking at the TARGET2 graphs, one feature is that the divergence started from 2008, and Spain debt peaked at 2012, with Germany spiking also.



Whilst I'd agree this has got worse again since, with Italy also at high debt levels, I'd be interested to know what went well from 2012-2014 to allow the German excess to be eroded and for Spain to recover.

It is not simply the case that German excess just gets bigger and bigger and never drops - as the graphs shows this need not be the case.

I don't doubt the graph shows some imbalances that are not necessarily a good thing, but I'm still not convinced this is particularly more threatening to the region than the UK's current debt of £1.83 Trillion.

UK debt is 88% of GDP, whilst the EU average is 82%.


PS I specifically excluded Gold in the export stats for a good reason:

https://news.sky.com/story/revealed-how-gold-takes...

Nothing 'went well' in the period where T2 balances decreased '12-'14. Instead, foreign (extra EZ) money stopped flowing into the Southern EZ states to buy junk bonds. They also couldn't really afford to buy much in the way of German goods - whilst the Germans were still buying olive oil and salads...

It peaked, as that was the point where as many people as possible in Spain, Greece, etc. moved as much cash out of the country as possible - in order to avoid things like the depositor haircuts.

The fact it's getting to those levels again is very concerning - as your last posted link explained.

This is the problem (and please, stop comparing it to the UK national debt - this isn't anything like it, and is on top of the massive debts they've already got) that the EZ faces - when times are 'good', much can be bought from Germany, increasing the balance.

When times are pretty bad, then everyone suffers but an imbalance is lowered slightly.

When times are awful, capital flight happens very quickly, with very little able to prevent it.

The only good scenario is that the debtor nations' economies and balances of trade reach parity with the creditor nations'. Which is rather bloody unlikely.

[wc98]

Sway said:

I hope I agree. Not sure what influence NATO has in preventing fighting amongst it's own members though.

Not that I think it'll come to that - I think the EZ will 'merely' be collapsed in chaotic order, with member states being forced to revert to their previous currencies - which will be utter fking carnage.

If we thought the 'migrant crisis' was bad, I'm not sure what it'll look like when those in the South are starving due to hyperinflation.

As said, I don't have a calibrated crystal ball - I simply cannot see how the unwinding could possibly not cause scenes we haven't seen in many, many years in Continental Europe.

what would be the exchange rate with a new deutschmark against the pound , ten to one ? base 2.0 tdi audi 200 k ? would do wonders for german exports .
a bit o/t but looking at global debt i think the entire financial system is taking the piss and actually knows it. those running the show don't give a flying fk as they will live very high quality lives as a result of all the printed money .hard to blame them, we are only here once for a short time.

[Murph7355]

Gloria Slap said:

...
PS I specifically excluded Gold in the export stats for a good reason:

https://news.sky.com/story/revealed-how-gold-takes...

I don't believe that article shows why gold should be legitimately excluded...it seems to be simply because it's a large export to non-EU markets and that removing it flattens the numbers.

I would imagine that if I could be arsed I could suggest other exclusions that would show the figures swing the other way. The change in make up has been happening for a long while now, and keeps going. Much like the T2 spreads. My strong suspicion is that there are far stronger trends in those two charts than pretty much anything underpinning the forecasts (details still not forthcoming) that you place so much faith in.

[SpeckledJim]

The bit of Target 2 I think I understand baffles me.

How did they ever start it without knowing that this would happen, and without designing-in some kind of righting mechanism? It just seems so obvious that Germany would end up miles on one side of the graph, and the weaker economies would end up so far on the other.

On the other hand, if the architects knew this would happen, and didn't want, for whatever reason, to include any mechanism to bring the arrangements back to stability as-and-when this happened, then isn't this a terrible thing? Seems it to little ol' me.

I keep thinking that surely there's some higher level of economics I don't know or understand that means this isn't all anywhere near as bad as it seems. But the more I read, the longer it goes without someone spelling out to me what that might be, the more likely it seems that, no, it's exactly as bad as it seems.

Then I wonder why it's not more famous?

[Sway]

It's working exactly as planned - ever increasing 'crises' that permit ever more centralised solutions.

Ultimately, there will either need to be acceptance of full fiscal union under the ECB, or fragmentation.

One is likely to cause massively political unrest, the other massive economic unrest.

I'm not sure which is worse.

[SpeckledJim]

Sway said:

It's working exactly as planned - ever increasing 'crises' that permit ever more centralised solutions.

Ultimately, there will either need to be acceptance of full fiscal union under the ECB, or fragmentation.

One is likely to cause massively political unrest, the other massive economic unrest.

I'm not sure which is worse.

So the end game is along the lines of

"You owe us hundreds of billions. We can't afford to let you default, but you can't afford to pay. So how about we all move in together and as long as you do the washing-up and buy a BMW, I'll let you pay back at £2 a week"

Is it conceivable that this was the intention all along? Under the noses of the various governments and electorates? I'll need persuading...

[JagLover]

SpeckledJim said:

Is it conceivable that this was the intention all along? Under the noses of the various governments and electorates? I'll need persuading...

An undergraduate in Economics could have told them the Euro wouldn't work as a currency area and in fact we talked about this very subject in class back when the Euro was planned. The political leaders would therefore have known this from the start.

[Sway]

That's the exact intention - and it's not like the architects were quiet about it.

Delors nearly a decade ago (and look at what the suggestions were to 'solve' the problems then...) :

https://www.telegraph.co.uk/finance/financialcrisi...

[paulrockliffe]

SpeckledJim said:

The bit of Target 2 I think I understand baffles me.

How did they ever start it without knowing that this would happen, and without designing-in some kind of righting mechanism? It just seems so obvious that Germany would end up miles on one side of the graph, and the weaker economies would end up so far on the other.

On the other hand, if the architects knew this would happen, and didn't want, for whatever reason, to include any mechanism to bring the arrangements back to stability as-and-when this happened, then isn't this a terrible thing? Seems it to little ol' me.

I keep thinking that surely there's some higher level of economics I don't know or understand that means this isn't all anywhere near as bad as it seems. But the more I read, the longer it goes without someone spelling out to me what that might be, the more likely it seems that, no, it's exactly as bad as it seems.

Then I wonder why it's not more famous?

Perhaps it's because the context was that there was no other 'solution' to the Euro Crisis? Better to kick the can and make it someone else's problem and perhaps the outcome won't be as bad anyway?

My loose recollection of the context was that the only solution with any merit involved the establishment of a permanent mechanism to facilitate fiscal transfers to balance out the economic distortions caused by the Euro. But, that wasn't possible because the German *something*stag had an effective veto though the requirement to vote on fiscal matters.

[Sway]

Maastricht and Lisbon both explicitly prevent fiscal transfers.

They went ahead anyway - and created the regs in such a way that fiscal transfers are intrinsic, but effectively hidden from the electorates.

Everyone knows the only way a currency union can succeed is through fiscal union. However, the electorates will never willingly sign up to that.

So instead, they sold the dream of 'just' currency union. Doesn't it make life easy?

Then, as it all turns to st, fiscal union is by far the least worst option to implement in the emergency that follows...