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TheSaint
Dalai Lama
Posts: 6586
Location: Cook Islands
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garus
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Posts: 34200
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 Posted: Mon, 11th Jun 2012 13:44 Post subject: |
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snip
Last edited by garus on Tue, 27th Aug 2024 21:39; edited 1 time in total
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| Posted: Tue, 12th Jun 2012 09:06 Post subject: |
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I guess you only need to check if a conservative or left government is in power to determine it's view on eurobonds:)
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spankie
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Posts: 2958
Location: Belgium
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| Posted: Tue, 12th Jun 2012 09:23 Post subject: |
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Not really.
In principle every one is pro eurobonds, just need to find a way to convince the local electorate.
For the zillionth time, it has nothing to do with 'socialism'. Why the fuck would you start a project if you want to kick out members the first time there is market tension. USA has USA-bonds, there are transfers from certain states to states with debt, the debt is nationalied in T-bills. Is USA a socialist country, not really. It just smoothens the conjunctural cycles throughout the monetary union, it is a way to smooth assymetric shocks and it just lowers the risk premium throughout the region long term. Anyone who is rejecting the eurobons based on the 'socialist' principle is a retard.
You could, however, reject it based on the lack of presence of a fiscal and labour union. There are too many differences now. But the new growth and stability pact should and will change that. Same labour market rules everywhere, same fiscal rules everywhere, max 3% debt with a penalty, max 60% GDP debt with a penalty. If those rules are implemented, assymetric shocks can still occur, but can only be fixed with a certain degree of transfer. The transfer however, if there is enough flexibility in the markets, will give the shocked region an advantage in later stages which will transfer the money back eventually.
For example. Imagine an assymetric shock in Germany, an earthquake, or a huuuuuge forest fire. 100k people die and half the Ruhr region is in the tank. German economy is tanking. To me, it is just logical to ship some money over, rebuild the country. If wages are flexible, if mobility is high, if fiscal policy is the same throughout the region, people will move to Germany and earn back the invested money.
And garus, Poland is no eurozone, so he should STFU. People who are not part of the eurozone should stop ventilating their view on the eurozone.
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| Posted: Tue, 12th Jun 2012 09:27 Post subject: |
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From Holland myself, even though Rutte says he is against them he probably has been told on the last Bilderberg meeting that they will be needed to save us all from going to hell.
Per Ardua Ad Astra
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garus
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Posts: 34200
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| Posted: Tue, 12th Jun 2012 09:47 Post subject: |
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snip
Last edited by garus on Tue, 27th Aug 2024 21:39; edited 1 time in total
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spankie
VIP Member
Posts: 2958
Location: Belgium
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| Posted: Tue, 12th Jun 2012 10:11 Post subject: |
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Yeah i know, nothing personal. But I don't get it why all these people feel the need to vent their views. First the UK, then Poland, even Norway. Not part of the club, so shut it. These people are making the eurobond concept a political matter, they are changing it from being a monetary and fiscal matter into a political matter, which could slow down or prevent the implementation of it.
If people would have no opinion, but just have an objective look at it, it would be implemented. The politicians are abusing this concept to justify their debt. With eurobonds, we will have to pay for another's debt, boooo. Vote me. Which is intellectually unfair.
@The Saint
It really doesn't matter what the governments think, they will have to comply.
option a) no eurobonds, the eurozone will tank, ECB will have to step up. ECB will intervene (already in July or August, quote me on this!) in an effort 'to restore market liquidity, normal market conditions, blabala'. They will find something to justify it. In practice, ECB will take sovereign bonds on its balance sheet, no matter what.
Then there are 2 possibilities.
Either ECB inflates its balance sheet using a repo agreement, which basically is an agreement that they will buy the government debt temporarily and sell it back to the market at a later point (like the LTRO, which is a 3 year 'temporary' measure). They have done it before using the SMP. Who bears the risk of government debt on the ECB balance sheet? The shareholders of the ECB. Who is that? #1 Germany, #2 France, #3 Spain, #4 Italy.
Or they will devise a way to raise money first, and buy the debt with that freshly raised money. EFSF has AAA rating because it is backed by the ECB. Once again, who backs the ECB, Germany, France, Italy, Spain...
Option b) Europe builds a system of eurobonds.
So it all turns out the same. So get those eurobonds and fix this problem, goddamnit
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| Posted: Tue, 12th Jun 2012 11:57 Post subject: |
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I don't quite understand why you use the USA (one big country by all accounts) as an example for eurobonds (a mishmash of different nations). Shipping money from one state to another in the USA is nothing like shipping money from one country to another.
I think the biggest fear with eurobonds is that countries like Spain, Italy, Portugal, Greece etc will drag everyone into the abyss.
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TheSaint
Dalai Lama
Posts: 6586
Location: Cook Islands
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| Posted: Tue, 12th Jun 2012 14:07 Post subject: |
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spankie you have some literature about this? cant really find anything on my sources..
thanks everyone for contributing, it helps!
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| Posted: Tue, 12th Jun 2012 16:32 Post subject: |
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Eurobonds will not fix anything it might just kick the can down the road for maybe another 2 years but I wonder if the whole system hasn't gone down in flames by that time.
Per Ardua Ad Astra
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spankie
VIP Member
Posts: 2958
Location: Belgium
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| Posted: Tue, 12th Jun 2012 22:22 Post subject: |
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@Mister_s, whether you like USA or not, they actually have a very powerful transfer mechanism. California is a shithole, debt-wise, yet they keep attracting the best students, have silicon valley, innovation etc. California is in a worse situation compared to Spain or Italy.
So yeah, USA is the reference example of how a monetary unoin should function. Mobility, transfers, flexible wages, flexible prices, resisting asymmetric shocks etc.
@Anticasper, what's your solution? You need to keep in mind that something has to be done. Can't close your eyes and hope for the little dwarfs to appear and fix it. Given all the possible outcomes of doing nothing, or doing crappy solution, eurobonds is the least painful for everyone. The only thing is, countries will have to give up some souvereignity. i.e. Countries will have to comply with strict budgetary rules in the future, and the EU will impose a tax, ~5% or so. That raised money can then be used to fix problems in countries where adverse conjunctural shocks appear or banking crises appear. Problems fixed in no time = no problem.
The alternatives such as a plain default or eurozone exit are absurd. Once Greece is kicked out, people will start a banking run in all the periphere countries. Banks in italy, spain, ireland, portugal will topple in no time. Spain falls -> France Falls -> Germany falls -> no more eurozone. A plain default of Spain or Italy? There is so much government debt in home country banks. Once a country defaults, the whole banking system is dead in the country. I am pretty sure I don't want the complete Spain bank system to collapse...
yeah, theSaint, actually I have some scientific papers floating around. They all state that eurobonds are the cheapest solution. Extreme left wing and extreme right wing authors all have the same opinion, so i am fairly sure that politicians will face reality once they do not fear their electorate anymore.
You might be interested in (pdf are available for download on the pages):
http://www.bruegel.org/publications/publication-detail/publication/674-the-euro-crisis-and-the-new-impossible-trinity/ (i like this one especially as it explains things very clear and gives a nice overview of the history)
http://www.oecd.org/document/14/0,3746,en_2649_37467_49544846_1_1_1_37467,00.html
(this one gives a nice overview of the hardcore underlying banking problems and the eurobonds solution)
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| Posted: Wed, 13th Jun 2012 01:40 Post subject: |
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I have nothing against the USA, but its uncomparable to the EU since the US citizens consider themselves US citizens. I have not met a single men who called himself European. I'm all for eurobonds, but I doubt it'll happen since no one trusts each other in the eurozone.
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Panoramix
Posts: 181
Location: Essen/NRW/Germany
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| Posted: Wed, 20th Jun 2012 21:47 Post subject: |
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our goverment supports the idea of eurobonds but as far as i'm concerned these are nothing less then war-bonds against the social stabilty in our country. Our kids will have to pay the price and if there will be hope to change the system back to the state it once was there has to be sacraficial bloodhed. The international banksters have put their agents in every branch of national politics. Nothing is debated or decided in a truly democratic fashion, we're ruled upon like cattle but so few are interested in politics. It's even hard to follow what this pigs in Brussels have figured out for europe this day- Names are changing, abstract ideas portrayed with no possiblity for the average citizen to understand wtf it's really about. Manipulation and propaganda media circus on television all day long... - our constitution is a big FAKE cause we're still secretly ruled by WW2's victors, we're betrayed by our "own" political (so called) representatives who left no chance undone to distract and prohibit us from taking the initiative to declare a new constitution by the PEOPLE.
honestly i think it's all going to hell and i'm very angry because this llife has to be given meaning and got to be righteously expressed and succeed by a civilized society that has learned of it's mistakes. I know that regardless of our country of origin this "european" development is not propelled by it's citizens but from the same powerhungry elitists that don't know any fatherland. All people of europe should come together to denounce their goverments and declare their freedom from slavery to this system once and for all. I see that i wrote more than i had intended but to put it brief: When i see little kids i begin to worry about what's going to happen and what future they will have to endure due to our passive attitude...
Nun, so soll es denn sein!
Reiche mir Schwert und Wein,
reiche mir Panzer und Gebein!
Zerschmettern will ich mit Hass!
Ich, das schwarze Nass!!!
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spankie
VIP Member
Posts: 2958
Location: Belgium
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| Posted: Thu, 21st Jun 2012 09:46 Post subject: |
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Wow, some frustration? Ruled by WW victors, really? I think it's pretty obvious who is ruling Europe at the moment and who is not...
There's only 1 group of people to blame for this whole mess. The babyboomers. They elected the politicians, they let them fuck the situation up for 20-30 years and they kept re electing them.
There are no bankers to blame or politicians to blame, only sheeple. If people really thought that retiring @ 50 with 100% of wage was a good idea (like in Greece or Spain), who's to blame if the system turns out to be unsustainable?
Atleast the youth is anxious and critical now, because we do realise the situation is unsustainable. Yet, politicians keep coming with a 'let's just spend some more money' propaganda. But, luckily, youth is not taking the story as realistic anymore.
It's a real shame that the youth (20-25year olds) have to worry about their pension. It's a shame that well educated people have to be scared of the future. It's a shame that a lot of the youth started working part time jobs at 15-16years, studies, works their ass of and then is unemployed or cannot afford a house.
We are evolving towards a society where the youth will just flip a finger and say 'well, i contributed, but got nothing back'. They will drop out of active workforce or just enjoy a more relaxed life. Who will be left to take care of the old people? Noone. Politicians should start realizing it. Give the youth opportunities, or let the situation escalate.
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| Posted: Thu, 21st Jun 2012 10:07 Post subject: |
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Germany should GTFO the EU before it bankrupts itself bailing out failing countries who live beyond their means.
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vaifan1986
Posts: 4638
Location: Birthplace of the necktie.
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| Posted: Thu, 21st Jun 2012 10:13 Post subject: |
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Is there a single country that isn't living beyond its means? That doesn't have debt? That doesn't have a deficit?
Micek:
i7 4790K @ 4.6GHz- Gigabyte Z97X-Gaming 3 - 980 WF3 \o/ - 16GB Corsair - WD 4TB - Mountain of SSDs - Dell UltraSharp U2414H 24''
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spankie
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Location: Belgium
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vaifan1986
Posts: 4638
Location: Birthplace of the necktie.
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| Posted: Thu, 21st Jun 2012 12:21 Post subject: |
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Yeah, about that. Why not blame it? I imagine you understand how money is created.
It's fine if you can repay it. But the amount of total debt is so mindbooglingly huge, there's no way to repay it. Ever. In order to repay a debt most countries take out new loans.
How long do you think a system like that can work?
Micek:
i7 4790K @ 4.6GHz- Gigabyte Z97X-Gaming 3 - 980 WF3 \o/ - 16GB Corsair - WD 4TB - Mountain of SSDs - Dell UltraSharp U2414H 24''
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spankie
VIP Member
Posts: 2958
Location: Belgium
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| Posted: Thu, 21st Jun 2012 13:31 Post subject: |
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There are 2 ways to get rid of excessive debt.
1) economic growth -> debt/GDP drops, in time you can repay
2) inflation -> nominal debt stays the same, real debt drops
I agree that the debt buildup was excessive, but on the other hand it's just a consequence of a flawed regulation/politics.
For example Ireland had a small deficit (20% GDP), but had to bailout their banks because the population went on a brick and mortar frenzy. bailout -> debt > 100% GDP. Given the circumstances, the debt buildup was the best solution. Better than letting the banks fail and all people lose their money.
That's something different than the Greece or Spain situation where the socialist governments (put France in that list as well... now at least...) lowered retiring age and handed out all sorts of benifits just to get re-elected, rather than invest the money properly.
So, money problems never have a monetary cause, and money problems are never solved with money. Just reform the job market, get rid of lazy bums and then the debt goes away 'automatically'.
And i strongly disagree that huge debts never can be repaid. In the 1990s Europe had huuuuuge debts (Belgium for example had >110% GDP i belief). To enter the Eurozone, the Maastricht treaty said that debt had to converge towards 60% GDP. Guess what, all of a sudden all countries reformed and in 10 year belgium went from 100% to 60%. So it is possible, if politics want to. If politics behave long term oriented rather than short term electoral oriented, debts are sustainable long term.
Just look at Italy and Greece. People got elected and they all put technocrates on the important positions. Why? BEcause politicians cant handle the long term responsibility. In that case debts can be cut to sustainable levels 
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