The BillyB, Aster & JR8 roundtable!

[JR8]

The rise of nationalism. Wow, I thought that was what the EU was meant to erase, national identity.

First the euro implodes, and now Schengen.

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'Germany, France begin fight to close borders
Published: 20 Apr 12 07:11 CET
Germany and France began moves this week to reclaim the power to close their borders for up to 30 days, in a simmering battle over immigration in Europe's passport-free Schengen travel zone.'
[continues]
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http://www.thelocal.de/national/2012042 ... ontent=248

[JR8]

The trillion euro LTRO, a Sarkozy can-kicking exercise for 3 years lasted 6 months. Oh crap!

And it looks like the French people can see right through his 1 trillion LTRO (with their money) for precisely what he intended to be, a desperate measure to create an impression of stability in order to keep him and Merkel in power and running the EU for a further term each.

But yesterday Sarkozy was trounced in the first round of the election. LOL! Don't get me wrong, when Hollande wins his manifesto will - if followed through - cause bedlam in both France and probably the EU.... but despite the markets falling out of bed today over this, the schadenfreude is so sweet I can't say I'm not enjoying the show!

[JR8]

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'13.28 The European Investment Bank is including a legal clause in new contracts with Greek businesses that allows repayment in non-euro currencies, but a spokeswoman denied that it was preparing for an eventual Greek exit from the eurozone.'
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http://www.telegraph.co.uk/finance/debt ... -live.html


Bwahaha... ignore their words, observe their actions instead.

Bwaahahaha!!!

[JR8]

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'So EMU grinds on, a contraction machine for half a dozen countries, with France sliding slowly into this assembly of Miserables. To impose net fiscal tightening of 3pc a year or more on the South at this stage – without offsetting monetary stimulus or demand growth in the North – can lead only to a downward spiral that engulfs everybody in the end.

“Rather than admit that they’ve been wrong, European leaders seem determined to drive their economy — and their society — off a cliff,”

[aster]

We all know the Euro will keep going strong, can't find anyone willing to put their money against that.

And not a single person out there believes that the Euro is about to fall apart, not even the people churning out these articles...

[JR8]

So why are the ECB, IMF, OECD, G20, EU and the markets collectively cacking themselves then?

[aster]

Euro is still doing strong on the markets, it's a solid currency that will remain one of the world's main currencies. Absolutely no danger of falling apart and disappearing.

The media are acting like clowns with articles like these. They've been repeating the same jokes over and over again and frankly they're getting boring. Kind of like ratings agencies and their comical attempts which had the markets reacting in the opposite direction. Oh, and didn't they just RAISE Greece's credit rating? Buahahahhahaha!

[JR8]

Euro is still doing strong on the markets,

Is that why the Swiss had to halt the exodus from the euro into the safe-haven ChF. And why safe-haven central London residential property is booming with euro-zone buyers?

it's a solid currency that will remain one of the world's main currencies.

I'm sure the euro will remain in some form, but a different one from the present. At a wild guess I'd say that the PIIGS will leave, and the euro will remain in the stronger northern economies. For example Spain facing debt funding costs of say 6% are simply unsustainable. Unless Germany is willing to start direct fiscal transfers to the PIIGS it is just a matter of time.

I sat next to German guy on a flight at Easter. I don't chat with strangers on flights (:)) but he started to. We got talking about the euro and I have to say I found his thinking revealing. At one point I told him that 'you cannot turn the Greeks into Germans' (which is what austerity and a stable future under the euro demands) and he replied 'Well you know, given enough time...'. He honestly thought the people and Greece and the other PIIGS could all be like upstanding German citizens. No 2hr siestas, no back-handers to the taxman. Talk about cultural imperialism and wishful thinking!

I told him that I thought the only way the PIIGS could stay in the euro would be if Germany directly subsidises them in perpetuity, 'Do you think the German people are willing to accept that?'. He did not reply. [By the way the German people are definitely not willing to directly fund the PIIGS, and it would be illegal under the German constitution, and the Maastricht Treaty].

Austerity will not make the PIIGS functioning euro-zone countries, it is simply intended as a route to limit further damage. There is no plan and no clear method by which the PIIGS could ever become functioning, or perhaps even successful, euro-zone members. That is precisely why the markets fell out of bed yesterday, Merkel's ally the Dutch PM got toasted by Wilders, and Sarkozy is on his way out in 2 weeks time. She cannot enforce austerity on her own (not that it would work on it's own even if she could). The eurozone's problem is not one of speculative attack requiring fire-walls, it is that it inherently cannot function as envisioned and there is no Plan#B.

Another comment he'd made earlier in the conversation was observing how the EU had led to an unprecedented period without warfare in Europe, and how it has brought Europe together. This is a very common and strongly held German view. Of course the elephant in the room is that the only country with a track record of starting wars in Europe is Germany itself. Then you have the irony that the euro, with Germany at the helm, is currently doing a pretty good job at destroying the EU.

Absolutely no danger of falling apart and disappearing.

Well, that is the PR-line from Brussels, but back in the real world it is certainly a fringe minority view.


The media are acting like clowns with articles like these.

Such a broad dismissal doesn't advance the debate. Which bit of the quoted one didn't you agree with? Are you saying the Nobel Laureate Paul Krugman is mistaken, and if so in what way, or that Greece will have no difficulty complying with the German imposed austerity?


They've been repeating the same jokes over and over again and frankly they're getting boring.

Again the broad dismissal leads nowhere. Could you please quote from the articles what you consider 'these jokes', as otherwise no one knows what you're referring to.

Kind of like ratings agencies and their comical attempts which had the markets reacting in the opposite direction.

I think you need to follow the money, the vested interests. Ratings agencies certainly have those. But the Barclay twins, owners of the Telegraph, are lifelong Tories, and the Tories are pro-EU. So I have difficulty seeing how the Telgraph have a vested interest in publishing 'jokes' about the ails of the euro. Can you?

Oh, and didn't they just RAISE Greece's credit rating? Buahahahhahaha!

Yes . From Default to Junk, break out the Metaxa! But hang on, if you write-off that on which you were in default you're no longer in default are you? Yep, such is the sometimes twilight-zone logic of the credit ratings...

edit: typo

[aster]

And why safe-haven central London residential property is booming with euro-zone buyers? [/color]

Well, part of the reason is because the Pound has gone down the crapper in recent years. From 2:1 to 1.2:1 makes properties much cheaper today than they used to be. Of course I'm willing to bet that the weak Pound has obliterated a large segment of the property market in Spain which was focused on British expats.

I mean if Germans were scared their currency savings were going to disappear with the Euro going into disarray they could just as well get rid of their cash by buying properties in Germany, no?

[JR8]

Are you going to reply to the other points, or can't you?

[JR8]

Dan Hannan, the MEP and fine orator writes:

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...
'Since the crisis struck four years ago, Europe’s leaders have been concerned with preserving the single currency rather than with maximising the prosperity of the people who use it. It is now clear to almost everyone that the euro is a recessionary mechanism. It is causing deflation and emigration in the southern states, and threatens massive tax rises in the north.

Don’t imagine, by the way, that we in Britain are exempt. Already, we are on the hook for £12.5 billion in the Irish, Greek and Portuguese bail-outs. To put that figure in context, all our domestic cuts last year amounted to £8.6 billion. Now we are adding another £10 billion through the IMF. In defending this additional debt, Treasury officials make two claims. First, that the fund is not intended to bail out the eurozone. (Who’s it for, then? Canada?) Second, that it’s a tremendous investment, and that we’ll get the money back with interest. Well, if so, why not “invest”

[JR8]

Wow Sarkozy shows just how low politicians can stoop in order to get re-elected.

- He is facing electoral annihilation in a weeks time
- He is the key ally of Germany's Merkel (her last major one)
- He arranged the e1Tn LTRO band-aid to protect his own ar$e as much as anything else. That didn't work so now it's plan #B.
- He has now announced that he will give the French people a referendum on the Fiscal Pact (i.e. Austerity). This is simply stealing one of his rival Hollande's main policies and completely contrary to the path he has pursued up until today! If it happened, the people would without question vote no and the euro would be further towards ruin. It's like he is publicly bitch-slapping his biggest supporter Merkel, to try and garner a few desperate votes.
- But as 'enny fool knoze', even if Sarkozy were to be re-elected, he would never in 100 years go through with this promise (it is a close parallel to what happened at the last British election, all pre-election promises, and then an instant U-turn once in power).

Yes, he really is that desperate to remain in office that he is prostituting his stated beliefs, and one can only assume that he really does believe his citizens are stupid enough to get suckered in by this charade

[JR8]

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'S&P cuts Spain's credit rating by two notches to BBB+, and adds a 'negative outllook''
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Bam bam bam, another nail in the euro's coffin.

[aster]

They only need to become insolvent and default to have the so-called "ratings agencies" raise their outlook for them.

[aster]

Interesting article in the Economist about the property market,historical prices and where this could all be heading...

http://www.economist.com/node/21553459

I'm having a hard time believing the "Europe is going in the same direction as America. It is just getting there more slowly" line, but I guess it's just another opinion worth looking at...