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Will Germany leave the Euro ?
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View Poll Results: Will Germany leave the Euro
Yes 8 17.02%
No 36 76.60%
Don't know 3 6.38%
Voters: 47. You may not vote on this poll

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Will Germany leave the Euro ?

  #11 (permalink)
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check out some of Nigel Farage videos on youtube. Head of UK Independence Party, quite a eurosceptic.

He is much loved by the Germans.


Tiberius View Post
I had dinner with a German from Munich last week. And he told me that the Deutsch Menschen hate Merkel and her ilk. Are against any bailout. And hate the Euro to boot.

Vielen Dank für das Lesen


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  #12 (permalink)
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Tiberius View Post
I had dinner with a German from Munich last week. And he told me that the Deutsch Menschen hate Merkel and her ilk. Are against any bailout. And hate the Euro to boot.

Vielen Dank für das Lesen

Most German's dont hate Angela Merkel. She is not at the origin of the European crisis, and she is not a trained economist. Maybe she is not able of surrounding herself with appropriate consultants, because she has eliminated too many of her former opponents in the Christian Democrat Party. But that is no reason to hate her.

The European crisis requires a thourough understanding of economics and finance, and I do not think that the current German government will easily contribute a solution. They will try to avoid exposure to anything controversial and look for compromise wherever possible.

If the current government takes over too much liabilities from Southern European countries, this would destabilize the current coalition and even lead to a break up prior to the federal elections in 2013. There are lots of poor regions within Germany, so many people do not understand if billions of Euros are spent on a country as far away as Greece.

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  #13 (permalink)
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Fat Tails View Post
Most German's dont hate Angela Merkel. She is not at the origin of the European crisis, and she is not a trained economist. Maybe she is not able of surrounding herself with appropriate consultants, because she has eliminated too many of her former opponents in the Christian Democrat Party. But that is no reason to hate her.

The European crisis requires a thourough understanding of economics and finance, and I do not think that the current German government will easily contribute a solution. They will try to avoid exposure to anything controversial and look for compromise wherever possible.

If the current government takes over too much liabilities from Southern European countries, this would destabilize the current coalition and even lead to a break up prior to the federal elections in 2013. There are lots of poor regions within Germany, so many people do not understand if billions of Euros are spent on a country as far away as Greece.

Yes, hate is a big, wide ranging word. Maybe dislike would be better. My understanding isn't thorough, because I live here.

But this is my ancestral home:
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  #14 (permalink)
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Silvester17 View Post
unfortunately it's not that simple. that picture I posted is not from politicians or bankers, it's from normal people. it's a fact that there's still so much hate against germany in europe. not just in greece.

it's really sad. I just wish it would stop, we're facing enough "real" problems.


In my 31 years living in Holland ( small country next to Germany) this is absolute not true according my experience. I have not yet met anybody who has real hatred against Germany ( other than occasional joke but that's 'normal' for adjacent countries). In contrary, most people are just normal/positive biased to Germans. (We have been occupied by Germany during wo2)

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  #15 (permalink)
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Zwaen View Post
In my 31 years living in Holland ( small country next to Germany) this is absolute not true according my experience. I have not yet met anybody who has real hatred against Germany ( other than occasional joke but that's 'normal' for adjacent countries). In contrary, most people are just normal/positive biased to Germans. (We have been occupied by Germany during wo2)

I'm very happy to hear that. hope more people would think like that.

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Fat Tails View Post
This is a favourite subject of British and American subjects. The above posts are not very serious.

The Problem

Southern European countries historically never have kept their budgets under control, but have spent more than they could afford. Also Greek governments have in the past shown a high degree of incompetence and corruption. Greece is a country that

- has had a sovereign debt of 143 % of its GDP by the end of 2010
- has run a budget deficit of 15.4 % of GDP in 2009 and of about 10.4 % of GDP in 2010

If I use the terms of Hyman Minsky, Greece is now a Ponzi borrower. For those who are interested, here are the definitions by Minsky :

- Hedged borrowers, who can meet all debt payments – interest and principal repayment – from their cash flows.
- Speculative borrowers, who can meet their interest payments, but can only repay principal when the asset is sold.
- Ponzi borrowers , who cannot pay the interest, let alone the original debt, and rely entirely on rising asset prices to allow them continually to refinance their debt

The traditional way of Southern European countries of dealing with Ponzi borrowing was a currency devaluation and the increased use of the printing press, both leading to high inflationm which in the end may solve the debt problem.

Being part of the Eurozone, Greece can neither access the printing press nor devalue their currency. This means that they need to cut back their expenses and reduce their salaries. Both is not compatible with their Southern European heritage. That is why they are crying.

Although they have spent more than they can afford, they are now blaming each other, Germans and whosoever may serve as a scapegoat to explain their misery.


The Solutions

Solution 1: Greece defaults on its debt and declares bankruptcy. Creditors will heavily bleed.

Solution 2: Greece leaves the EuroZone and reintroduces the drachma. This will also lead to bankruptcy, as their debt is in Euros and not in drachma.

Solution 3: Greece is bailed out by other European countries to avoid the bankruptcy.

Looking at the different solutions, they need ot be judged against the outcome. Any outcome that maintains the current Ponzio scheme is not sustainable, but will just postpone the solution and lead to a greater problem in a few years. In its current state of finance, Greece cannot survive, so it is necessary

-> to cut back the sovereign debt to a sustainable level
-> let the holders of Greek bonds bleed to let them know that high interest Ponzi schemes are not sustainable
-> agree with Greece on a way to cut back expenses to match revenues

Now let us judge the three solutions against the potential outcome.

1. Possibly the best solution. It is a clean cut, allowing Greece to breathe afterwards. The problem is that there is no agreed procedure for the bankruptcy of a sovereign state. It would require an international chapter 11. After the bankruptcy, it would be easiest for Greece to install spending discipline and leave the ponzi scheme for the next years to come.

2. The drachma is no solution at all. It will lead to bankruptcy in any case and will make it near impossible for Greece to finance their debt. Greek investors will have all their assets in Euros, and who will purchase Greek bonds denominated in drachma?

3. The bail out will not work due to incompetence of politicians. A real bail out would have to include a restructuring of Greece's € 120 to 150 billion debt. Somebody else would need to pay - not to guarantee - for the losses, and in Europe nobody will be willing to do that. The problem will be postponed again and again. The Ponzi scheme will thus be maintained alive, just because nobody wants to make the necessary decisions.


Summary

The Euro makes it impossible to reduce national expenses and expropriate investors in Greek bonds via inflation. Therefore national expenses need to be cut back nominally and the investors need to be exproriated in a more explicit way. As usual, nobody likes to announce the truth. That is called politics.

By the way: My favourite restaurant round the corner is a Greek restaurant. I am friends with the owner and love their food. Don't let incompetent politicians and bankers have an impact on your personal relations or on judgement of another culture.


FT I am impressed by your succinct analysis of the Greek situation. As good an interpretation as I have heard.

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  #17 (permalink)
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Fat Tails View Post
If the current government takes over too much liabilities from Southern European countries, this would destabilize the current coalition and even lead to a break up prior to the federal elections in 2013. There are lots of poor regions within Germany, so many people do not understand if billions of Euros are spent on a country as far away as Greece.

@FatTails: Thank you for your wise and succinct posts. However, they still left me wondering: "Does the average German want to bail out Greece? Does the average German hate the idea? Does the average German care?"

I lived with a group of Germans in grad school at a top American engineering school. I can say with confidence that almost all of them would have hated the idea, and would have had about as much confidence in politicians as you do. Actually, mostly (but not completely) jokingly, they probably would have said that they would rather invade Greece than bail her out (which, although outlandish, considering the politicians and Ponzis, could be a better alternative for everyone involved). Your thoughts?

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  #18 (permalink)
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serac View Post
@FatTails: Thank you for your wise and succinct posts. However, they still left me wondering: "Does the average German want to bail out Greece? Does the average German hate the idea? Does the average German care?"

I lived with a group of Germans in grad school at a top American engineering school. I can say with confidence that almost all of them would have hated the idea, and would have had about as much confidence in politicians as you do. Actually, mostly (but not completely) jokingly, they probably would have said that they would rather invade Greece than bail her out (which, although outlandish, considering the politicians and Ponzis, could be a better alternative for everyone involved). Your thoughts?

Germans certainly do not want to bail out Greece. And by the way Finnish and Slovakian and other Northern or Central European Nations do not want either.

The problem is asymmetry. Some of the institutions of the European Union are centralized and others are decentralized. The European Parliament has little power. There is no common economic and financial policy. Some countries favor deficit spending, others try to maintain a reasonable budget. Udner these circumstances each government sets up its own rules, and they all come together and agree that they want to defend local power against the central institutions. The real problem is that the European institutions have no proper legitimation, as there is no powerful Parliament controlling them. The real political power therefore remains in the hand of local politicians.

In Italy you have a criminal premier, Greece has incompetent politicians, so why should the civilized world pay for all that mess? Paying presupposes common institutions, a common financial and economic policy, and a powerful, legitimate Parliament to control the institutions and central policy makers.

In short, the main preconditions for transferring money are not satisfied. The money which could be distributed would soon be out of control and end up in the hands of corrupt or criminal politicians. So not astonishing that the story is perceived as a nightmare by the taxpayers in Northern Europe.

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Keeping the Euro: Merkel Rules Out Return to Deutsche Mark - SPIEGEL ONLINE - News - International

Europe is not united. I also find not so nice words such as FT.
Europe has many problems to be solved so that they are one unit.
Western Europe has always been strong and the north it is. Eastern Europe comes straight out of the socialism. Southern Europe is not Western Europe. The systems in culture, politics and economics are different.
But they have almost all the euro. Bad for poor people. Inflation is low, the rise rate by open markets and tougher competition is enormous. Pressure comes from all sides.
Greece, then Portugal, Italy begins, and then the east (except the poles, which grow very quickly) all have massive problems. The problem is the media and the mismanagement of the systems.

America loses also in power. The dollar is still worth the dollar. China is bigger and dominates markets and currencies maybe in 10 years, if the Western world does not wake up.

The next problem:

All for the same work:

a german gets € 2,500 a month
the greek gets the same
a portuguese gets € 800
the romanian gets € 250 a month

and the chinese gets € 80

So many trouble ... No one wants more to Switzerland, because Switzerland for the Euro countries is too expensive.

Causality is the relationship between an event (the cause) and a second event (the effect), where the second event is a consequence of the first.
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  #20 (permalink)
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Ja..............



wh View Post
Keeping the Euro: Merkel Rules Out Return to Deutsche Mark - SPIEGEL ONLINE - News - International

Europe is not united. I also find not so nice words such as FT.
Europe has many problems to be solved so that they are one unit.
Western Europe has always been strong and the north it is. Eastern Europe comes straight out of the socialism. Southern Europe is not Western Europe. The systems in culture, politics and economics are different.
But they have almost all the euro. Bad for poor people. Inflation is low, the rise rate by open markets and tougher competition is enormous. Pressure comes from all sides.
Greece, then Portugal, Italy begins, and then the east (except the poles, which grow very quickly) all have massive problems. The problem is the media and the mismanagement of the systems.

America loses also in power. The dollar is still worth the dollar. China is bigger and dominates markets and currencies maybe in 10 years, if the Western world does not wake up.

The next problem:

All for the same work:

a german gets € 2,500 a month
the greek gets the same
a portuguese gets € 800
the romanian gets € 250 a month

and the chinese gets € 80

So many trouble ... No one wants more to Switzerland, because Switzerland for the Euro countries is too expensive.

As far as I am concerned the EuroZone is going DOWN. Abschied und kümmern. Your all can't fool the DEBT Reaper!!
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