Its funny i dont believe Germany should leave the Euro but thats where i am biased as i add to my BUND short.
The QE which is supposed to benefit the southern european countries is actually benefitting germany the most. It may in fact be the case that QE bubbles the german local asset market heavily and then they suffer there own crisis if rates stay low enough for long enough this may happen.
Germany however is an old country lacking in youthful population which raises some serious issues for them in the next 30 years.
I actually work in Brussels at an EU styled institution and it is clear to me it is moving towards the super state model where all of these crisis's are been used to push government control from the voting population in the member states towards power as the EU parliament etc budgetary and otherwise.
Catholic's have a lot of guilt complex so that explains why ireland sucks up the debt and continues to pay it.
Ireland is now booming due to non austerity / anti austerity policies within the US and UK economies and not because of the austerity implemented by the troika. Ireland does more trade with the UK then with all of the other EU economies so when the UK is booming Ireland is booming which is quite lucky. The troika are delusional stating its been there policies that have enabled ireland to return to a growth economy it is not it is the growth policies of the UK and US.
What is been done to greece is just a really sad story they kind of inflicted some of it on them-self though and to be honest bringing in outside forces to enable them to understand what to do next is just like losing control of there rights to govern. They should leave and sort themselves out.
German i do not believe will be leaving too much too lose they need to keep EU laws that allow there overpollutant cars to not be forced to go green and they need a common market much more than the likes of greece.
Where do you think the money went that greece got fancy german imports i think u will find!
As an American who spent the better part of the past decade in the Balkans (Bosnia then Macedonia) I have to say that Fat Tails has hit the nail on the proverbial head, as usual.
Adding a bit of my culture to the discussion, while living in Europe I’d often find myself humming Jimmy Buffet’s song “Changes in Latitude, Changes in Attitude.” Although the song was originally meant to be played to working stiffs sipping tropical drinks during their vacations in the Caribbean, I think the song captures a larger concept, which is the closer to the North Pole a culture is, the more it had to plan and cooperate to survive the winter. Conversely, the closer you are to the equator, the more you can live hand to mouth.
While I was in Macedonia, a Swedish friend once asked me “How come you Americans are so allergic to anything that smacks of Socialism?” I said, “OK, well tell me this; if it were up to you, where would the southern border of the EU be located?” “About half way through Germany” was the reply.
I said, “OK, now let’s pretend the borders of the EU are where they are, but it is one country instead of a union of countries. How would you feel about socialism then?” “Bloody Hell!” was the reply. “OK, I’ll never bother you about that again!”
I’m not sure what the answer is, but I think a better appreciation of the problem helps. Clearly Europe has figured out that a currency union is not a silver bullet. But the mechanics of which and how member states could or should leave the euro currency zone has not been thought out yet. So there will be lots of headlines for some time to come.
• It should be kept in mind that not nearly all EU countries are in the Euro currency zone. Many of the countries, especially the ones that joined the EU later on, have kept their own currencies. Also Britain stayed on the pound. So being in the EU with your own currency is hardly novel.
• Greece is merely a canary in the coal mine, or a red herring or whatever other cliché works for you. Its economy is tiny compared to other PIGGS states. IMO the current discussion about Greece is really a proxy for what to do about the larger states that can become problems down the road.
• One of the books on my trading bookshelf is “The Time Paradox” by Phillip Zimbardo. A great read for many reasons, but relevant here is that the author discusses his Italian heritage, and in particular how different Northern and Southern Italy are, consistent with what I said earlier.
Finally, I have to ask Big Mike, as an American who headed south, does my latitudinal postulate make any sense to you?
Last edited by bob7123; August 2nd, 2015 at 10:01 AM.
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Unity in Diversity?
The core idea of the Euro is - besides all economical considerations - to end a 1000 year running war among the European countries. The idea is to bring together all archenemies whose wars also created the United States Of America.
The idea of uniting Europe by a common currency really started only 30 years ago in 1984, when two European nemeses remained standing hand in hand.
I remember receiving the new money, the EURO, in 2001: coins, worth 10,23 Euro, packed in a plastic bag - the "starter-kit". Same time my son Carl was born. He is turning 14 now - same age as the Euro. Carl is hitting puberty now - same as the Euro?
As long as there is only puberty and no war I experience the idea of the Euro as a turning idea in mankinds history.
I am sure the northern States of Europe are capable walking Hand in Hand with the southern States of Europe in the long run.
Even the United States Of America needed a little bit more time to unite...
So please leave Germany in the Euro, and Greece as well - and give us Europeans some uplifting support.
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In the entire Europe there is no battlefield more blood-stained than Verdun, where in 1916 nearly 800,000 French and German soldiers were killed or wounded in an inconclusive fight over a few square miles of territory. On September, 22, 1984, German Chancellor Helmut Kohl met the French president François Mitterrand at the Douaumont cemetery in Verdun. In front of the charnel house in which the remains of 150,000 French soldiers rest, two leaders stood in rain. Mitterrand extended a hand to Kohl, which the latter held in minutes-long gesture which became a symbolic gesture of reconciliation.
In 1988 Mitterand and Kohl agreed on a common economic zone, a year later the German reunification became reality – and now, in 2015, there are no physical borders but one currency among most of the European people…
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I think the idea of a European Union is a great one for reasons of peace and stability. The Euro itself is another matter. However well intentioned it was, having a currency union with a limited political union is proving problematic.
I do hope issues are resolved, but I think they are more easily achieved with pragmatism than hope.
These countries are in the EU and not on the Euro: Bulgaria, Croatia, Czech Republic, Denmark, Hungary, Poland, Romania, Sweden, & the UK. I'm not aware that any are in a particular rush to join the Euro.
Also, I was thinking on all this after my previous post, and I'll tell you why Germany will never leave the Euro. Just as with a Grexit Greece's debt would remain in Euros so it would skyrocket if priced in Drachmas, German creditors would see their paper priced in Euros lose significant value if that country left the Eurozone.
I don't mean to pick on Germany with the last statement, I think the same is true of all EU countries that are net creditors, I'm just trying to point out economic reasons (which quickly turn into political reasons) why a country wouldn't want to leave the Eurozone.
Greece will not repay the debt, whether is stays in the Eurozone or not. There are only few private creditors. Private creditors have already paid their share during the first haircut. The remaining debt is mainly held by sovereign creditors.
Also Germany does not need to leave the Euro. The rules for the common currency have been contractually fixed 23 years ago. Now and then some countries are not complying with the rules that are necessary for maintaining a common currency.
But members of the Eurozone who do not like the rules should be able to opt out and create their own Affengeld.
I'm Greek and I'm just sayin the poll here has some good results. People should be sticking up for each other not bailing each other out. If 300 years or whatever from now we want a world economy we gotta figure this shit out... together. We try as Greeks to downplay it. There are other countries having the same problems.
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You cannot have monetary union without true political union.
At best the EU itself can function - but the EZ in it's current form is dysfunctional in the long-term. It's entirely possible to have an EU without an EZ (although for obvious reasons more difficult currency wise).
There´s still a long way to go for Greek government and Greeks to get economy up. I guess the current discussed third bailout won´t be enough.
But I´m positive person so let´s hope anything what will happen will turn itself to be good option longterm