The BillyB, Aster & JR8 roundtable!

[JR8]

"Nearly 70 years after the end ofWorld War II, Germany controls all of Europe. The irony...they don't have an army. Who would have thought? The key to German world domination would wind up being an international banking conspiracy."

Heard this tonight.

Hmmm yes. You'll hear things like that expressed, though this war against democracy has been building for way longer than the man on the street has had a problem with banking.

But yes, a lot of people are wondering why Germany is seemingly running Europe now, when we are meant to be 27 countries as equals (snort). Why is it I read the UK media and see three times as much media coverage of Merkel and Sarkozy as I do on the UK PM or any other EU politician? It is a Franco-German stitch-up, no one voted for this, and as is being demonstrated at any opportunity to vote on anything the EU citizenry are expressing their hostility towards it!

[BillyB]

For once, I agree with Cameron

http://www.reuters.com/article/2012/05/ ... 2K20120509

[JR8]

I agree you can't have 17 governments in the EZ trying to run one currency.

But are the citizens of the EZ ready to be run by Germany, I mean one government? No way.

That one government would need the power to make trans-national fiscal transfers as happens within the UK with Sterling. Are the Germans willing to fund the EZ periphery? No way.

Shame they have no plan #B.

Edit to add:
And as if by magic here is an article I've just read that repeats most of these points I think It even demonstrates that it would make more sense for all the countries in the world whose names start with M to form a fiscal union than the EZ countries. Classic. And the cherry on the cake for me, he refers to the euro as a vanity project which is what I've been saying since the start of this thread...



http://blogs.telegraph.co.uk/finance/ti ... rst-place/

[Strong Eagle]

Are you saying the Nobel Laureate Paul Krugman is mistaken, and if so in what way

Interesting you should mention him.

He just had the living daylights knocked out of him by Ron Paul on Bloomberg TV. And I'll take RP's side any day over an advocate of turning a currency to shit and driving inflation up in the process...

Ron Paul = common sense.

Krugman believes in the massive printing of new US Dollars to solve the problem, as well as increasing the already ridiculous deficit to even more insane levels...

Are you sure you're still on his side?

People who think Krugman is wrong don't grasp the economic realities of today. Ron Paul is living in 1950. Gold standard arguments are nonsense in the modern economic world... gold is but one more commodity... or one more bubble. Why not platinum? Why not whale shit? Gold is not a store of value, it is a speculative commodity that right now is rising because of speculation.

You have to solve the right problem, and right now, the right problem is economic stimulation and jobs creation. Look what the stupid austerity measures have done... nothing... except create a worse mess and deeper deficits.

It is a fact that no country with substantial debt will ever pay that debt off... never... it is not a politically sustainable task. Therefore, the only way to reduce debt is to print money... inflation... it is a fact.

Somebody pays when money is inflated... and it is still preferable to the huge majority that pay when austerity measures kill jobs, kill taxes, kill everything.

The key: Debt can never be paid down in any meaningful way. It costs too much in a globalized economy, and in particular, the EZ. Thus, there is only one other way to reduce debt and that is to inflate the currency. That is a fact.

[JR8]

'Angela finally registers the elephant in the room'

[aster]

That is precisely the problem, and it was caused by the euro. The costs of borrowing for the PIIGS were inappropriately low, that was completely obvious at the birth of the euro (trust me I was there with sleeves rolled up). If countries were not herded into the ‘promised land’ of the euro back then this, it, could never have happened.

A low cost of borrowing is a good thing, it's the over-borrowing that's the problem. Let's have a crap currency instead of a solid one just so we have shitty borrowing costs which make borrowing extremely expensive is not the solution.

They should have looked at how to prevent excessive over-borrowing by the southerners, and there are plenty of ways to enforce fiscal responsibility by simply stopping the flow of certain EU funds to national budgets of countries that break the rules. Do this and no politician will step out of line at the risk of this happening...

Bankers are losing out on nothing.

Oh, they are losing out on an immense scale due to a common EU market and the Euro. But then didn't you come to the same conclusion in another thread?

This was a goldmine for them when Europe was all carved up and ALL trade between European countries meant banksters taking a sweet cut from everything.

Imagine breaking up the US Dollar, having each state issue its own currency and only accept their own notes and coins for transactions. So basically all trade and transactions within the US would be treated as if they were being made between 50 different countries, with banks cashing in on transfer costs, currency exchange rates, etc.

[aster]

You have to solve the right problem, and right now, the right problem is economic stimulation and jobs creation.

The problem in the US is that greed governing the corporate world has led to the very heart of blue-collar manufacturing to be ripped out of the US and handed over to the likes of China. In a way corporate America has betrayed its own country and is ultimately responsible for the downwards spiral that we're now seeing...

The whole "lowering the costs of manufacturing to deliver lower prices to end consumers" motto has ended up being a smoke screen simply aimed at filling up the corporate coffers with gold. Even a nice, branded sports shirt now costs more (even though it's made in China) that it used to when it was made in the US. Need I mention Apple?

Plus corruption, in which we need to include lobbying aimed at creating loopholes for corporations and all sorts of tax breaks (there's even one for... corporate jets, lol.) hasn't helped either. Looking at a historical chart of what % of the federal budget came from corporation tax should have had the alarm bells ringing a long time ago...

[JR8]

A low cost of borrowing is a good thing, it's the over-borrowing that's the problem.

How do you separate the two when you have no control over your interest rate? That's what caused the blow-up, and it was a known known to a section of the media and those in the industry from the outset of the EZ.


They should have looked at how to prevent excessive over-borrowing by the southerners,

Should being the operative word! But they didn't did they, and now it is too late. I wonder why they didn't look at the obvious fact that the PIIGS were going to blow-up in a credit bubble.... do you think it might have been because the politicians were more interested in the immediate task of empire-building and launching their vanity project... because that's what I think.

and there are plenty of ways to enforce fiscal responsibility by simply stopping the flow of certain EU funds to national budgets of countries that break the rules. Do this and no politician will step out of line at the risk of this happening...

If you say so, who knows. But the situation remains that they haven't done anything like this, hence where we are today.

Oh, they [bankers] are losing out on an immense scale due to a common EU market and the Euro.

That suggestion doesn't square with them making steady increasing YOY profits (bar the blips around say '92-95-98-01 etc) right up until the whole market went up at the end of '07.

But then didn't you come to the same conclusion in another thread?

Nope lol.

This was a goldmine for them when Europe was all carved up and ALL trade between European countries meant banksters taking a sweet cut from everything.

Refer comment above about 'doesn't square'.

Imagine breaking up the US Dollar, having each state issue its own currency and only accept their own notes and coins for transactions. So basically all trade and transactions within the US would be treated as if they were being made between 50 different countries, with banks cashing in on transfer costs, currency exchange rates, etc.

Yes and your point? Are you suggesting that banks in America make meagre profits then, because they can't take inter-state currency spreads/fees? Funny I'd have thought some of the US banks are the most profitable in the world!

I know that pre-euro EZ currency spreads/fees figure very large in your perspective, but I don't think you should let your personal experience cloud the overall picture.


How about this. Rather than some hair-brained project to create a totemic single currency in the EZ, why didn't they just outlaw intra-EZ FX spreads and fees?

The former cost and costs heaven knows how many trillion of euro to this day and ultimately has the EU on a path to ruin. The latter could have been enabled though a single law overseen by national regulators and at negligible cost. It seems an obvious choice if you are being economically pragmatic. Why didn't the politicians choose the obvious course? Because the euro is a political project and not an economic one.

[aster]

Just a quick question, but what happens when the Greeks leave the Euro in terms of the design of the banknotes?

Do the Greek letters finally disappear from the notes?

[Strong Eagle]

It's about to happen.

http://www.huffingtonpost.com/simon-joh ... 49444.html

[BillyB]

This is an interesting article; insurers operate on a yearly forecast model - premiums Vs. payouts (in it's simplest form), and they are quite bearish on the Euro going tit's up...

http://www.bbc.co.uk/news/business-18226128

[zzm9980]

The Euro is dead. They're just bickering over who pays for the funeral.

stolen from:
https://twitter.com/GSElevator/status/2 ... 6845106176

[zzm9980]

These are good too:

All-time yield lows, spread product selling, swap spreads pushing wider & Europe still freak. I've seen this movie before.
https://twitter.com/GSElevator/status/2 ... 0922412032


I heard the Euro was spotted at DisneyWorld wearing a Make-A-Wish T-shirt.
https://twitter.com/GSElevator/status/2 ... 4812887040


and who said Twitter was useless?

[aster]

The Euro is certainly not dead. The only question is will Greece leave? If yes - then the Euro will be even stronger going forward. There might be a bit of a mess when it happens, but in the long-run Greece doesn't really have an economy that can support the life-style, early retirements, fat pensions, allergies to tax, etc.

Secondly, I'm actually quite certain Greece will stay in the Euro. It's election time in the US so there will be outside pressure to prop up the Greeks and keep things stable, China too does not want to see the global economic outlook nose-dive so if push comes to shove... they too will come running to put out the fire.

If Greeks didn't want to be in the Euro, it would be an entirely different story. But they don't want to leave and go back to their old, dinky little currency...

[Strong Eagle]

The Euro is certainly not dead. The only question is will Greece leave? If yes - then the Euro will be even stronger going forward. There might be a bit of a mess when it happens, but in the long-run Greece doesn't really have an economy that can support the life-style, early retirements, fat pensions, allergies to tax, etc.

Secondly, I'm actually quite certain Greece will stay in the Euro. It's election time in the US so there will be outside pressure to prop up the Greeks and keep things stable, China too does not want to see the global economic outlook nose-dive so if push comes to shove... they too will come running to put out the fire.

If Greeks didn't want to be in the Euro, it would be an entirely different story. But they don't want to leave and go back to their old, dinky little currency...

You are correct... it might be delayed because of the US elections... but it Greece leaving the Euro is going to happen... austerity is not sustainable... and the debt amounts too large to deal with except by default.

IF the Euro were to inflate by at least 4 to 5 percent per year, and IF Greece were to continue to be bailed out for the next 3 to four years, then maybe not.