About the Catholic Church, Cooperation and Game Theory
Actually it is my belief that the EURO has little to do with the current crisis.
There is no correlation between economic wealth of a European country and the probability that it will be affected by a crisis. Ireland actualy has a higher GDP per capita than Germany. But the PIIGS have something else in common. They are all Catholic countries. Does this mean that the Catholic Church which has promoted bigotry and hypocrisy over thousands of years is the culprit?
No this was not meant to be a serious statement. But there is a strong cultural split between Mediterranean Europe (Greece and the Latin speaking countries France, Spain, Portugal, Italy and Romania) and the Northern European countries which are mostly protestant.
Cooperation versus Lack of Cooperation
The culture of Northern European countries is coined by collective decision making. Cooperation has been necessary over the centuries to survive in a hostile climatic environment. The cooperative spirit is most developed in Scandinavia, Austria & Switzerland. Those are the coldest countries. German companies are run by a collective body (the Vorstand), French companies are run by the boss (PDG), who is the final decision maker.
Statistically (this means that the majority is well-behaved, but that the share of free riders is significantly higher) Southern Europeans do not care much about the commons
-> they are not paying taxes
-> they are not caring about the environment
-> the society does not have a working contract between the older and the younger generation
It is the young Greeks, Spaniards and Portuguese who pay the bill for the lack of cooperation. Around 50% of them are unemployed. The first settlers in New England brought with them a spirit of cooperation which allowed them to survive in a hostile environment. Cooperation is the key. It is the set of rules required to make the invisible hand by Adam Smith work.
Cooperation is the only way to overcome all sorts of prisoners dilemmas and the tragedy of the commons. Cooperation needs institutions which have not been built in Southern Europe. It is the lack of the institutions and the irresponsibility of the political leaders (think about such criminals as Berlusconi) that makes the difference. With irresponsibility I mean the tendency of an agent of a state instutions to pursue his own interests rather than the creation of common wealth. Not very much different from somobody who is a free rider on public transport - except for the scale of the damage. In the US the agency problem became evident with the behavior of bankers. The derailment - which has not ended yet - is made possible by
-> the absence of an ethic preventing bankers from self-enrichment
-> the absence of formal rules and institutions that are sanctioning this behavior
The same applies to politicians. There are spending money of future generations in order to be reelected. The ovrfisihing of the Mediterranean and Greek budget policies are just two examples for unsustainable policies. Both can be best described by the lack of cooperation which is amplified by the agency problem.
This Thread was about the Euro?
What has the Euro to do with the lack of cooperation? When governments have a tendancy of overspending and taxpayers have a tendancy of not paying taxes, it is more difficult to contol the sovereign debt. In this case the easiest way of milking the taxpayer is to print money. In the end inflation is a way of recycling money and transfer it from the haves to the have-nots. Salaries are automatically deprecated, which makes the economy more competitive. High inflation economics is nothing else than lying to the public about taxes. The lie becomes necessary as a cure to compensate for the low degree of social cooperation and to cushion the impact of the state run ponzi scheme.
Yes, if you believe that the Southern European countries should continue to run Ponzo schemes, Germany should leave the Euro and the Southern European economies can turn use the Euro to cut down the standard of living to a sustainable level via the leverage offered by the printing press.
But what about introducing the concept of cooperation - the original concept was based on ethics, the modern concept is based on laws and institutions - to Southern Europe.? The only problem is that such a process cannot be instantaneous, but would take decades. Also it is expensive. The European Union now has 28 member states, and at least half of them could be tempted to follow the example of Greece and feed on the other states. To avoid another prisoner's dilemma (or moral hazard) Greece cannot be allowed to get away with all the arrogance and confusion that they have created.
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While in theory I agree with you, I don't actually believe it. Entry into the Euro was designed to be like the mafia, once you're in, you're in for life. The steps that are being taken with Greece recently point to how important this "permanence" idea is.
Bottom line, if a pillar country like Germany jumped ship, look out.
And don't even get me started on how many decades "World Government" and the "New World Order" would be set back. The Rothschilds would never stand for it.
Now here is a smile for fun, and because it's my first reply.
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Commentators seem confused about how flexible Europe, the EU, and Eurozone are. Member states frequently move in, out, and sometimes sit on the side-lines.
To see what I mean, take a look at the "structure" of the European political units in this pretty picture:
"Please remove links from your message, then you will be able to submit your post."
Greece could realistically leave Eurozone and remain in the EU. The UK can much more easily exit the EU and re-join EFTA. Sweden is relevant because they agreed, long-ago, to adopt the Euro but have chosen to repeatedly ignore that agreement. Russia sometimes flies the same blue flag with yellow stars because of its membership in the Council of Europe, and several attempts have been made to draw Russia into EFTA. The concept of entry or exit has a peculiar meaning in continually re-negotiated affiliations between European states. Members of this extended community have repeatedly moved around inside the complex European political landscape. Within a century, they could each have switched places again - and that would add more volatility to the markets!
I have a view on the opening post. The Eurozone implies one monetary policy for multiple economies. How can that ever work?
Not sure I agree about the UK being an odd one out in Europe. The ancient pan-European union had an eagle for a flag. It excluded Germany, Sweden, and Scotland. It included Italy, Switzerland, England, France, Greece, Spain... and Egypt.
Last edited by London Trader; July 24th, 2015 at 08:11 PM.
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Isn't Germany 40% gay? The gays don't procreate. That's why the Greeks don't get along with the Germans. The Greeks are family oriented and create families. The gays are extreme greed people. We have a problem and 2006 thru
2008 is an example of "Extreme Greed" destroying value! How many trillions of dollars in economic value were destroyed by the removal of the Glass Stigelman letting commercial banks marry and create strategies with investment banks without any government oversight. Gays have a disease called "Extreme Selfishness". They don't sacrifice to have kids, a family and replace themselves. This extreme selfishness has been pushed by the Internet. The Silicone Valley Cartel is probably mostly gay. You probably can't start an internet business and get funded in Silicone Valley by the informal cartels unless you have a business to start with and in order to get funding you have to give up 50% of your company to the VC's. Our birth rate has been going down for the last 50 years. We can't find enough geniuses like Elon Musk from South Africa to kick start our economy. We need more people being born and the sacrifice of the parents to create these unborn children is very important. We are going down he wrong road where people aren't replacing themselves. The US and all countries of the world are in trouble because the unborn babies aren't getting born. You were brought in this world by your parents. Have you replaced yourselves, Kimosabeys?
Germany created World War I and World War II because of "Extreme Greed". It's the worse thing for capitalism. And now Chancellor Merkel expects these socialist "pig" countries to be German Colonies. I have read from Spain that they
do not want to be a German Colony.
The US started as a currency union until we got our central bank called "The Fed".
Why couldn't Greece turn off their banks and central bank and do all their banking in Iceland and use the Kronor as their currency? It would mean outsourcing their finances with Iceland. Iceland would create their own IU, Icelandic Union. They have already paid off their IMF money and could work out a payment program with the IMF. They wouldn't
have to pay off the EU. What do think about these issues?
Maybe it would, maybe not... but at the moment it seems at risk of a violent explosion/implosion.
The Euro Zone infrastructure seems too brittle. Unable to cope elegantly with stresses. It needs each member to be in-sync economically with the others. Greece may have faked its way in, but it still reveals a vulnerability in the system. Unless they improve that, Germany getting out of the boat will do more to restore the other members more in balance with each other, than having Greece exit. Otherwise, if say Greece exited, you'd still need about six more to also exit in order to have a group similar to each other.
Does Germany even need Euro Zone, except to help make its exports cheaper (while over-pricing everyone else's exports)?
Last edited by vchase; July 30th, 2015 at 09:05 AM.