Why Italy Could Be the Epicenter of the Next Financial Crisis(nytimes.com)
nytimes.com
Why Italy Could Be the Epicenter of the Next Financial Crisis
https://www.nytimes.com/2018/10/12/business/italy-debt-crisis-eu-brussels.html
182 comments
Those are small fires, but there's a sleeping volcano as well which is fed by the historically low European interest rate.
This is leading to inflated housing prices, company valuations and increasing private and corporate debts. The longer the ECB is keeping its interest rate at zero, the larger this bubble will become.
Also, we have the enourmous astroid coming towards us which is climate change and the ongoing inaptitude of politicians to actually tackle climate change.
All these problems will be neglible when have done to little to prevent a global temperature runoff.
All these problems will be neglible when have done to little to prevent a global temperature runoff.
> Also, we have the [enormous asteroid] coming towards us which is climate change
Maybe someone in particular could sign the Paris agreement, not naming names or anything....
Maybe someone in particular could sign the Paris agreement, not naming names or anything....
China produces more Carbon Dioxide Than The U.S. and EU Combined.
https://en.wikipedia.org/wiki/List_of_countries_by_carbon_di...
It's critically important for developing nations to avoid the China route of fueling economic growth via stored carbon. Even if the rich nations needs to subsidize them.
https://en.wikipedia.org/wiki/List_of_countries_by_carbon_di...
It's critically important for developing nations to avoid the China route of fueling economic growth via stored carbon. Even if the rich nations needs to subsidize them.
China also produces more goods than those countries combined. It doesn’t matter where it’s made, the issue is making things produce waste that is harmful to the the environment. There are ways to do better, product less waste, but that is more expensive. The real issue is no one (well, not the majority of people) is willing to pay the price of environmentally considerate manufacturing processes.
> China also produces more goods than those countries combined.
That's a popular myth used to excuse China's extraordinary environmental abuses.
China and its national corporations are currently building or planning to build a thousand new coal power plants around the greater Asia region. [1][2][3]
China does not produce more goods than those - US + EU - entities combined. Not even close.
All by itself US manufacturing output is nearly as large as China. Just US + German manufacturing and exports together are about 30% larger than China. US + EU manufacturing is far larger than China, closer to double the size than not.
[1] 2017 https://www.nytimes.com/2017/07/01/climate/china-energy-comp...
"Overall, 1,600 coal plants are planned or under construction in 62 countries, said Urgewald, which uses data from the Global Coal Plant Tracker portal. The new plants would expand the world's coal-fired power capacity by 43 per cent. The fleet of new coal plants would make it virtually impossible to meet the goals set in the Paris climate accord. Electricity generated from fossil fuels such as coal is the biggest single contributor globally to the rise in carbon emissions, which scientists agree is causing the earth's temperatures to rise. Shanghai Electric Group, one of the country's largest electrical equipment makers, has announced plans to build coal power plants in Egypt, Pakistan and Iran with a total capacity of 6,285MW – almost 10 times the 660MW of coal power it has planned in China."
[2] 2018 https://www.bbc.com/news/science-environment-45640706
"Building work has restarted at hundreds of Chinese coal-fired power stations, according to an analysis of satellite imagery. The research, carried out by green campaigners CoalSwarm, suggests that 259 gigawatts of new capacity are under development in China."
[3] https://www.theguardian.com/world/2018/sep/26/satellite-imag...
That's a popular myth used to excuse China's extraordinary environmental abuses.
China and its national corporations are currently building or planning to build a thousand new coal power plants around the greater Asia region. [1][2][3]
China does not produce more goods than those - US + EU - entities combined. Not even close.
All by itself US manufacturing output is nearly as large as China. Just US + German manufacturing and exports together are about 30% larger than China. US + EU manufacturing is far larger than China, closer to double the size than not.
[1] 2017 https://www.nytimes.com/2017/07/01/climate/china-energy-comp...
"Overall, 1,600 coal plants are planned or under construction in 62 countries, said Urgewald, which uses data from the Global Coal Plant Tracker portal. The new plants would expand the world's coal-fired power capacity by 43 per cent. The fleet of new coal plants would make it virtually impossible to meet the goals set in the Paris climate accord. Electricity generated from fossil fuels such as coal is the biggest single contributor globally to the rise in carbon emissions, which scientists agree is causing the earth's temperatures to rise. Shanghai Electric Group, one of the country's largest electrical equipment makers, has announced plans to build coal power plants in Egypt, Pakistan and Iran with a total capacity of 6,285MW – almost 10 times the 660MW of coal power it has planned in China."
[2] 2018 https://www.bbc.com/news/science-environment-45640706
"Building work has restarted at hundreds of Chinese coal-fired power stations, according to an analysis of satellite imagery. The research, carried out by green campaigners CoalSwarm, suggests that 259 gigawatts of new capacity are under development in China."
[3] https://www.theguardian.com/world/2018/sep/26/satellite-imag...
I would say it really depends by what we measure "produces" and "more" as. Are we talking dollars, weight, or quantity of items? If think if we looked at the specific items, we'd find that there are a lot of items, often highly toxic items, produced in that region. Take the example of Bangladesh, so much dye work that we've intentionally shipped away so we can wipe our hands clean of the environmental damage. In reality all that really happened was we shifted the problem to someone else.
Disagree. Being utterly cynical, climate change represents a huge economic opportunity. We've already seen the beginning of this as solar and wind displaces older energy sources, creating new economic opportunities. Likewise for electric cars, etc etc
Things will still be bleak for various species and the poor...but I expect climate change will make many immensely wealthy
Things will still be bleak for various species and the poor...but I expect climate change will make many immensely wealthy
There's a classic cartoon about that: https://starecat.com/content/wp-content/uploads/planet-got-d...
Yeah, people building dams on ocean shores.
Turkish crisis is caused by government corruption and extreme dependency on USD, not by ECB interest rates.
[deleted]
Rising interest rates will be a major, if not the major factor.
Emerging markets borrowing in $US means their payments increase exponentially with every point increase.
The euro is a shit show of debt and QE. Add rising rates and the house of cards shakes hard.
But, your points when added to that mix create a primordial soup of new paradigms...
Emerging markets borrowing in $US means their payments increase exponentially with every point increase.
The euro is a shit show of debt and QE. Add rising rates and the house of cards shakes hard.
But, your points when added to that mix create a primordial soup of new paradigms...
Small fires are a good thing. It usually makes the system prepare for the big ones.
The big problem in hyper-connected systems is feedback loops.
The big problem in hyper-connected systems is feedback loops.
Small fires, yes. Small fires all together as OP describes may be the problem.
2016 felt like a first wave, Europe resisted well, it seems the second one is coming .. surprise surpsrise.
And russian metastasis all around it. Also Middle East and South China Sea.
- geopolitical tensions
- natural catastrophes
- natural catastrophes
Increasing tension between countries that reduce emissions of greenhouse gasses and developing countries that immediately undo the reduction with growth.
Growing immigration as a result of flooding and draught.
Growing immigration as a result of flooding and draught.
There will definitely not be a single course for next recession. But one triggers another, Multiple bubble burst. Although I don't think we are quite near there yet, but it will make 2008 down fall looks like child play.
Since the removal of the gold standard we seem to be in a wave amplification patter - higher highs and lower lows. Our most recent bubble has been described as a "bubble in everything"...so one could expect the bust to also impact every financial asset class.
In this case, there are no hedges and people are motivated to be even more risk prone (since they are assured of being wiped out in any asset class in the next bust).
This I find particularly scary...the fatalistic present embrace of high risk given the inability to find a future safehaven (i.e. enjoy today since you're surely fked tomorrow)
The preppers might be on to something...
In this case, there are no hedges and people are motivated to be even more risk prone (since they are assured of being wiped out in any asset class in the next bust).
This I find particularly scary...the fatalistic present embrace of high risk given the inability to find a future safehaven (i.e. enjoy today since you're surely fked tomorrow)
The preppers might be on to something...
What is not discussed in this article is the staggering amount of Italian debt the German government is exposed to as a legacy from the 2008 financial crisis. An Italian default would be like an atom bomb going off in European markets and the ECB no longer has the means to do much to stop it.
Post 2008, the ECB forced a lot of unpopular economic restructuring measures, but it never forced bondholders to take the large haircuts necessary to allow the countries to properly delever. Instead the solution was more debt at favorable rates and forced adoption of contractionary fiscal policy. The result is that you have countries like Greece and Italy that were crushed under a wave of austerity and slowly ballooning debt whose economies never really recovered because of the toxic combination.
Germany was largely acting out of self-interest when it provided the financing the countries were asking for so now German banks were terribly exposed to all that debt. The German bailout of European nations moved bank exposure to the German taxpayer. There's some lingering resentment amongst the German public about propping up the Greeks, in particular, but they ain't seen nothin' yet! The next financial crisis doesn't even have to start in Italy in order to trigger the Italian debt bomb and wreck the European economy. A no-deal Brexit could do it. A sharp drop in the American economy could do it. All of this is to say that we've been crossing a shaky rope bridge across two mountains for quite some time and I'm not sure that we'll get to the other side. Happy Sunday everyone!
Post 2008, the ECB forced a lot of unpopular economic restructuring measures, but it never forced bondholders to take the large haircuts necessary to allow the countries to properly delever. Instead the solution was more debt at favorable rates and forced adoption of contractionary fiscal policy. The result is that you have countries like Greece and Italy that were crushed under a wave of austerity and slowly ballooning debt whose economies never really recovered because of the toxic combination.
Germany was largely acting out of self-interest when it provided the financing the countries were asking for so now German banks were terribly exposed to all that debt. The German bailout of European nations moved bank exposure to the German taxpayer. There's some lingering resentment amongst the German public about propping up the Greeks, in particular, but they ain't seen nothin' yet! The next financial crisis doesn't even have to start in Italy in order to trigger the Italian debt bomb and wreck the European economy. A no-deal Brexit could do it. A sharp drop in the American economy could do it. All of this is to say that we've been crossing a shaky rope bridge across two mountains for quite some time and I'm not sure that we'll get to the other side. Happy Sunday everyone!
> and the ECB no longer has the means to do much to stop it
This is incorrect. The ECB is the emitter of Euros. They run the whole system, so they always have the option to buy government bonds, for example.
Now, whether the politics will allow that to happen is not necessarily obvious. But that's a separate question, let's not get confused about that.
This is incorrect. The ECB is the emitter of Euros. They run the whole system, so they always have the option to buy government bonds, for example.
Now, whether the politics will allow that to happen is not necessarily obvious. But that's a separate question, let's not get confused about that.
> they always have the option to buy government bonds
The ECB is uniquely restricted, compared with other central banks, by "Maastricht treaty provisions that prohibit the ECB from financing member states" [1]. (These limits are "in terms of proportion of overall public debt (33 per cent) and of each country’s specific debt issue (33 per cent).")
[1] https://www.ft.com/content/8c3ea45c-acd5-11e7-beba-5521c713a...
The ECB is uniquely restricted, compared with other central banks, by "Maastricht treaty provisions that prohibit the ECB from financing member states" [1]. (These limits are "in terms of proportion of overall public debt (33 per cent) and of each country’s specific debt issue (33 per cent).")
[1] https://www.ft.com/content/8c3ea45c-acd5-11e7-beba-5521c713a...
The EU institutions invariably ignore treaties the moment they become problematic to the further progress of the EU project. It doesn't matter what the Maastrict treaty says - if the political will is there to print euros to bail out Italy it will happen, if there isn't, it won't.
Consider what happened last time the treaties forbade bailouts:
https://www.reuters.com/article/us-france-lagarde-idUSTRE6BH...
“We violated all the rules because we wanted to close ranks and really rescue the euro zone,” Lagarde was quoted as saying.
“The Treaty of Lisbon was very straight-forward. No bailout.”
The summit approved a two-sentence amendment to the treaty at Germany’s behest to permit the creation of a European Stability Mechanism to handle financial crises from 2013.
Consider what happened last time the treaties forbade bailouts:
https://www.reuters.com/article/us-france-lagarde-idUSTRE6BH...
“We violated all the rules because we wanted to close ranks and really rescue the euro zone,” Lagarde was quoted as saying.
“The Treaty of Lisbon was very straight-forward. No bailout.”
The summit approved a two-sentence amendment to the treaty at Germany’s behest to permit the creation of a European Stability Mechanism to handle financial crises from 2013.
Amending a treaty isn’t the same as ignoring it.
Clearly the French FinMin (Lagarde) didn't agree with you. But if the 'rules' a group of people agree to are such that they are thrown out the minute they become inconvenient, then the entire concept of a treaty or written law itself becomes irrelevant.
> The ECB is the emitter of Euros. They run the whole system, so they always have the option to buy government bonds, for example.
There is a 33% limit imposed on the total amount of any country’s public sector debt that can be held by the ECB.
Now what you're saying is not just that the limit be increased but also that the ECB only buys Italian bonds, creating a moral hazard arguably as bad as any other outcome.
There is a 33% limit imposed on the total amount of any country’s public sector debt that can be held by the ECB.
Now what you're saying is not just that the limit be increased but also that the ECB only buys Italian bonds, creating a moral hazard arguably as bad as any other outcome.
It's useful to contrast the effect of an Italian default on the European economy to e.g. Illinois defaulting on the American economy. The former is an existential crisis. The latter a bad day.
Europe's sensitivity to member states defaulting comes from its lack of an EU-wide deposit insurance scheme [1]. There was an opportunity to do this after the Greek crisis. But Germany's undercapitalized regional banks opposed the measure. (With centralized insurance comes centralized supervision.)
So when Italy's €2.4 trillion debt [2] implodes, it isn't shouldered by the EU's $18.8 trillion production base [3]. It wipes out every Italian bank. Which wipes out the Italian deposit insurance scheme. Which sends the pain straight to Italian pocketbooks, and through it, consumption. Meanwhile, French banks only get to rely on France's €2.3 trillion economy; German banks on Germany's €3.3 trillion economy; Malta's banks on Malta's €11 billion economy.
The last crisis could be called a growing pain. This next one will be the result of a broken political institution.
[1] https://global.handelsblatt.com/opinion/german-banks-must-op...
[2] https://www.nationaldebtclocks.org/debtclock/italy
[3] https://en.wikipedia.org/wiki/Economy_of_the_European_Union
Europe's sensitivity to member states defaulting comes from its lack of an EU-wide deposit insurance scheme [1]. There was an opportunity to do this after the Greek crisis. But Germany's undercapitalized regional banks opposed the measure. (With centralized insurance comes centralized supervision.)
So when Italy's €2.4 trillion debt [2] implodes, it isn't shouldered by the EU's $18.8 trillion production base [3]. It wipes out every Italian bank. Which wipes out the Italian deposit insurance scheme. Which sends the pain straight to Italian pocketbooks, and through it, consumption. Meanwhile, French banks only get to rely on France's €2.3 trillion economy; German banks on Germany's €3.3 trillion economy; Malta's banks on Malta's €11 billion economy.
The last crisis could be called a growing pain. This next one will be the result of a broken political institution.
[1] https://global.handelsblatt.com/opinion/german-banks-must-op...
[2] https://www.nationaldebtclocks.org/debtclock/italy
[3] https://en.wikipedia.org/wiki/Economy_of_the_European_Union
That's a very federalist viewpoint. Many Germans would undoubtably view it as a working political institution - that is, they don't want to have to bail out the Italians, they never agreed to that, and in fact insisted on budget clauses and agreements in various treaties (which they then themselves violated but in the 'right' direction, but even so).
For your view to be correct everyone has to be totally on board with perma-bailouts of profligate states. They are not.
For your view to be correct everyone has to be totally on board with perma-bailouts of profligate states. They are not.
> “We care about markets,” Mr. Di Maio said in a television interview last week. But faced with a choice between bond yields and the Italian people, he added, “I choose the Italian people.”
That demagogic rhetoric comes up commonly and it makes the same fundamental mistake or perhaps not wanting to understand that serving your creditors serves you as long as you need credit. The consequence for defaulting is not getting any more loans. Setting up an unsustainable system is setting up for a nasty fall.
Reminds me of some claiming that Greece being able to print the drachma would give them an easy out to their crisis. Even if they did it just plain wouldn't work last I heard Greece was still very dependent on imports for things like pharmaceuticals. Hyper-inflating their own currency relative to growth would not be a solution - it does nothing for the cost of imports which they depend upon and is worse than disease it is meant to cure. Less extreme inflation relative to economic growth could boost relative competitiveness of labor costs is their own slight advantage but even that would call for a decline in standard of living as a corollary.
Which brings to mind a thing about loans in general and fiscal wisdom - one should take out a loan only if it is an investment in some way - either generating more money or reducing long-term expenses in some way. It may in fact go bust but it has actual potential to pay for itself. The same seems like it would apply to countries and investments can also include some humanitarian purposes - a healthy and well educated workforce can generate more and is a case of everyone wins.
That demagogic rhetoric comes up commonly and it makes the same fundamental mistake or perhaps not wanting to understand that serving your creditors serves you as long as you need credit. The consequence for defaulting is not getting any more loans. Setting up an unsustainable system is setting up for a nasty fall.
Reminds me of some claiming that Greece being able to print the drachma would give them an easy out to their crisis. Even if they did it just plain wouldn't work last I heard Greece was still very dependent on imports for things like pharmaceuticals. Hyper-inflating their own currency relative to growth would not be a solution - it does nothing for the cost of imports which they depend upon and is worse than disease it is meant to cure. Less extreme inflation relative to economic growth could boost relative competitiveness of labor costs is their own slight advantage but even that would call for a decline in standard of living as a corollary.
Which brings to mind a thing about loans in general and fiscal wisdom - one should take out a loan only if it is an investment in some way - either generating more money or reducing long-term expenses in some way. It may in fact go bust but it has actual potential to pay for itself. The same seems like it would apply to countries and investments can also include some humanitarian purposes - a healthy and well educated workforce can generate more and is a case of everyone wins.
"[..] That demagogic rhetoric comes up commonly and it makes the same fundamental mistake or perhaps not wanting to understand that serving your creditors [..]"
Insisting that the path taken with Greece was the good decision is what looks like demagogic rhetoric to me:
-In a country of 10 million persons, half a million have immigrated (probably the young and with more studies).
-They had a fall of their economy bigger than the USA in the Great Depression, for longer.
-They had been (and are being) forced to sell assets that belong to all the Greeks.
-Their industrial capacity is in its way to disappear totally.
-Of course, the quality of life have fall and unemployment is very high.
-Their economy have been directed by foreign powers.
-All the previsions done from the IMF, EuroArea and company were totally wrong.
-Their public debt is the same, if not bigger, that when the crisis started.
So, my question: what have to happen for you understanding that the option taken was wrong?
Insisting that the path taken with Greece was the good decision is what looks like demagogic rhetoric to me:
-In a country of 10 million persons, half a million have immigrated (probably the young and with more studies).
-They had a fall of their economy bigger than the USA in the Great Depression, for longer.
-They had been (and are being) forced to sell assets that belong to all the Greeks.
-Their industrial capacity is in its way to disappear totally.
-Of course, the quality of life have fall and unemployment is very high.
-Their economy have been directed by foreign powers.
-All the previsions done from the IMF, EuroArea and company were totally wrong.
-Their public debt is the same, if not bigger, that when the crisis started.
So, my question: what have to happen for you understanding that the option taken was wrong?
Counter question: what would have been the alternative? Default, exit €, and then all of the above but worse? I know that there are lots of people out there that think more debt is just the answer, but consider two things:
1. Your today's debt is other people's pension fund. So with what right shall a Greek pensioner retain her quality of life at the expense of a Dutch pensioner? 2. Exiting the Euro would undoubtedly shut down imports. At least for a while it would be effectively the same as cutting wages, savings, and pensions by some massive margin. Also the state would have no one to lend money from just after a default. Hence it would be forced into an even stronger austerity program.
1. Your today's debt is other people's pension fund. So with what right shall a Greek pensioner retain her quality of life at the expense of a Dutch pensioner? 2. Exiting the Euro would undoubtedly shut down imports. At least for a while it would be effectively the same as cutting wages, savings, and pensions by some massive margin. Also the state would have no one to lend money from just after a default. Hence it would be forced into an even stronger austerity program.
The troika's handling of Greece was despicable, vengeful, irrational, and counterproductive.
> what would have been the alternative?
An early writedown of some debt and extension of other, enabling the economy to return to growth and service the remaining debt.
Re 1.: Pension funds and other institutional investors invest in equity and debt world wide, taking into account risk and return. Sometimes they make mistakes (or even not - sometimes the dice fall badly), and an investment goes sour. That's the market at work. In this case, however, European put massive amounts of money into Greece that were not used to prop up the economy, but to bail out investments by German and French banks. So, basically a transfer from the European tax payer to some banks.
2. It would make imports very expensive, but free up the domestic economy and make it more competitive.
"Optimum currency area" describes what's necessary for a currency union: homogeneity wrt external shocks (not the case in the EU), high factor mobility (limited in the EU, due to language/culture), or internal transfer payments.
In my view, Europe sat down for a nice dinner (10 years ago with the introduction of the Euro) in a restaurant and enjoyed it over a decade (with massive growth financed by cheap debt in many "peripheral" countries), and when the bill came (oops, we need these internal transfers now) - refused to pay. Shameful.
> what would have been the alternative?
An early writedown of some debt and extension of other, enabling the economy to return to growth and service the remaining debt.
Re 1.: Pension funds and other institutional investors invest in equity and debt world wide, taking into account risk and return. Sometimes they make mistakes (or even not - sometimes the dice fall badly), and an investment goes sour. That's the market at work. In this case, however, European put massive amounts of money into Greece that were not used to prop up the economy, but to bail out investments by German and French banks. So, basically a transfer from the European tax payer to some banks.
2. It would make imports very expensive, but free up the domestic economy and make it more competitive.
"Optimum currency area" describes what's necessary for a currency union: homogeneity wrt external shocks (not the case in the EU), high factor mobility (limited in the EU, due to language/culture), or internal transfer payments.
In my view, Europe sat down for a nice dinner (10 years ago with the introduction of the Euro) in a restaurant and enjoyed it over a decade (with massive growth financed by cheap debt in many "peripheral" countries), and when the bill came (oops, we need these internal transfers now) - refused to pay. Shameful.
>but to bail out investments by German and French banks. So, basically a transfer from the European tax payer to some banks.
This is what gets me. What is an "investment" after all? Some amount of potential profit with some amount of risk. If the risk just gets eliminated (win: keep the money, lose: taxpayers cover your losses) then what the fuck kind of game are we playing?
I want in too! I want to go to the casino, if I win I keep the money, if I lose people I will pick everyone's pockets until I'm in the green again.
This is what gets me. What is an "investment" after all? Some amount of potential profit with some amount of risk. If the risk just gets eliminated (win: keep the money, lose: taxpayers cover your losses) then what the fuck kind of game are we playing?
I want in too! I want to go to the casino, if I win I keep the money, if I lose people I will pick everyone's pockets until I'm in the green again.
If you want to play that kind of the game, you better be friends with the casino boss.
In short, here you better be friends with the politicians, so that you can be bailed every time you need them. That doesn't come for free either, when you are winning you need to share some spoils with them.
In short, here you better be friends with the politicians, so that you can be bailed every time you need them. That doesn't come for free either, when you are winning you need to share some spoils with them.
> European put massive amounts of money into Greece that were not used to prop up the economy, but to bail out investments by German and French banks. So, basically a transfer from the European tax payer to some banks.
Could you elaborate a little bit more? I never heard about it before.
Could you elaborate a little bit more? I never heard about it before.
Another good source, if you want a necessarily subjective, but I think sincere inside view, is the tell-it-all by famed former Greek finance minister Yanis Varoufakis Adults in the Room: My Battle With Europe’s Deep Establishment.
It's a bit technical occasionally, but really riveting and full of drama (unfortunately not fictional).
It's a bit technical occasionally, but really riveting and full of drama (unfortunately not fictional).
https://www.esmt.org/pub/where-did-greek-bailout-money-go
> Could you elaborate a little bit more? I never heard about it before.
Where are you from?
> Could you elaborate a little bit more? I never heard about it before.
Where are you from?
No need to be snarky. Most media reporting on that crisis was histerical rhetoric about "lazy Greeks who won't pay their debts" -- a narrative enabled by North-European politicians like Schäuble and Dijsselbloem to cover their actions. A lot of well-meaning people fell into that propaganda trap.
I wasn't snarky...
The Euro is, for all purposes, a foreign currency.
You are making the (in my opinion wrong) assumption that Greece default has been avoided instead of delayed.
There is no way Greece can pay that, the only difference is that the money is now owned to international institutions instead of French and German private banks.
You make also the assumption that a Greek government with it's own floating currency would follow a pro-cyclical fiscal policy, like the one force on them now, instead of a sane one.
1. I don't know anything about the Netherlands pension system, but I doubt is based in only private institutions. If they have a public system, the dutch pensioners could receive whatever the Netherlands decide through its democratic institutions, only constrained by the real resources available to the Netherlands. Of course, being an Euro country, that could be decided outside of Netherlands.
2. A country that works with its own floating currency don't need to borrow its own currency. So the problem would not be money.
The biggest problem for a Greece outside the Euro, would be that they are very dependent of imports. In order to fix that you have to develop an industry. In order to develop an industry you need investment and industrial policy. That's it: the opposite of what is being forcing now in Greece.
You are making the (in my opinion wrong) assumption that Greece default has been avoided instead of delayed.
There is no way Greece can pay that, the only difference is that the money is now owned to international institutions instead of French and German private banks.
You make also the assumption that a Greek government with it's own floating currency would follow a pro-cyclical fiscal policy, like the one force on them now, instead of a sane one.
1. I don't know anything about the Netherlands pension system, but I doubt is based in only private institutions. If they have a public system, the dutch pensioners could receive whatever the Netherlands decide through its democratic institutions, only constrained by the real resources available to the Netherlands. Of course, being an Euro country, that could be decided outside of Netherlands.
2. A country that works with its own floating currency don't need to borrow its own currency. So the problem would not be money.
The biggest problem for a Greece outside the Euro, would be that they are very dependent of imports. In order to fix that you have to develop an industry. In order to develop an industry you need investment and industrial policy. That's it: the opposite of what is being forcing now in Greece.
That is what is supposed to happen though. If you have your own currency you have more control over your economic destiny. Greece's monetary policy was set by their creditors, and they were insolvent, that is a highly irregular situation for a country to be in. Instead of weakening their currency which at least brings in more foreign investment, they had to sell assets off, which serves nobody but their creditors.
> Default, exit €, and then all of the above but worse?
Says who? The economists who did not even seen the financial crisis coming and were clamoring that the real estate market was solid and totally fine even as late as 2007??
Just wondering...
Says who? The economists who did not even seen the financial crisis coming and were clamoring that the real estate market was solid and totally fine even as late as 2007??
Just wondering...
The rethoric you cite is indeed somewhat demagogic, but the idea that "the consequence for defaulting is not getting any more loans" is disingenous.
Most countries in the world have had sovereign defaults, often several times throughout their history. See, for example, the map at https://katapult-magazin.de/en/artikel/artikel/fulltext/ston...
Spain defaulted 9 times, Portugal and Greece 6 times, Germany 5 times, the UK 4 times. They still get loans now.
Most countries in the world have had sovereign defaults, often several times throughout their history. See, for example, the map at https://katapult-magazin.de/en/artikel/artikel/fulltext/ston...
Spain defaulted 9 times, Portugal and Greece 6 times, Germany 5 times, the UK 4 times. They still get loans now.
> Spain defaulted 9 times
This was all before 1900 though, things have changed quite a bit since then.
This was all before 1900 though, things have changed quite a bit since then.
They have? Details, sure, like structure of debt and who the creditors are (things like the IMF didn't exist previously), but countries still default.
https://www.rstreet.org/2016/02/22/countries-dont-go-bankrup...
https://en.wikipedia.org/wiki/List_of_sovereign_debt_crises
https://www.bankofcanada.ca/wp-content/uploads/2016/06/r101-...
In any case, defaulting on debt is completely natural. It is what's part of how the system is supposed to work. If lenders didn't pay attention, out of lack of knowledge or willfully, and the debtor cannot repay, that's it. There has been a very successful campaign that strengthened the side of the lenders, big and small, over many decades - not necessarily consciously and deliberately (not a concerted effort). It's been successfully made into a moral issue.
https://www.rstreet.org/2016/02/22/countries-dont-go-bankrup...
https://en.wikipedia.org/wiki/List_of_sovereign_debt_crises
https://www.bankofcanada.ca/wp-content/uploads/2016/06/r101-...
In any case, defaulting on debt is completely natural. It is what's part of how the system is supposed to work. If lenders didn't pay attention, out of lack of knowledge or willfully, and the debtor cannot repay, that's it. There has been a very successful campaign that strengthened the side of the lenders, big and small, over many decades - not necessarily consciously and deliberately (not a concerted effort). It's been successfully made into a moral issue.
Also, most of these nations defaulted because of vast political and societal changes. (russia has defaulted many times on it's debt thanks to the soviet revolutions and dissolution of the USSR for example).
The (most likely German) authors of that map forgot about the existence of their neighbours to the West - the Netherlands are a blank void, same color as the North Sea.
> Less extreme inflation relative to economic growth could boost relative competitiveness of labor costs is their own slight advantage but even that would call for a decline in standard of living as a corollary.
The question is do you focus on the "real" economy or the spreadsheet? If you are able to devalue and take the increase of import costs and generate competitive advantage by adding more value at a lower cost then the possibility is that your real economy will grow. More activity will create more actual wealth, which will help your fiscal position and restore standards of living over time. There are a lot of dependencies there, but there is a possible out.
On the other hand you can do what happened in Greece, stand behind the currency, slash spending. The problem is that this cuts the real economy without improving competitiveness. The Greek solution (and IMF standard) is to liberalise, sell assets and introduce more market activity into controlled sectors. The problem with this is that you have to actually do it and not just talk (Greece largely hasn't) and also while sometimes it has worked it seems that the precondition for it working has to be that the sectors in question are healthy and straining at the leash... which is not the case in crisis economies in general.
The question is do you focus on the "real" economy or the spreadsheet? If you are able to devalue and take the increase of import costs and generate competitive advantage by adding more value at a lower cost then the possibility is that your real economy will grow. More activity will create more actual wealth, which will help your fiscal position and restore standards of living over time. There are a lot of dependencies there, but there is a possible out.
On the other hand you can do what happened in Greece, stand behind the currency, slash spending. The problem is that this cuts the real economy without improving competitiveness. The Greek solution (and IMF standard) is to liberalise, sell assets and introduce more market activity into controlled sectors. The problem with this is that you have to actually do it and not just talk (Greece largely hasn't) and also while sometimes it has worked it seems that the precondition for it working has to be that the sectors in question are healthy and straining at the leash... which is not the case in crisis economies in general.
"[..] and also while sometimes it has worked [..]"
Can you give us some examples where this IMF standad solution has worked?
Can you give us some examples where this IMF standad solution has worked?
Britain in 1976, I think it was the first bailout by the IMF and was controversial at the time.
UK 1976, Mexico 1980's, India and Kenya in the 1980's too.
It's a pretty dire record though. I think that it's easy to argue that where there have been positive results that's mostly by accident. The UK is the best example of this - there was an IMF rescue and liberalisation but also an oil discovery which recapitalised the commercial base of the country and allowed an infrastructure building program.
It's a pretty dire record though. I think that it's easy to argue that where there have been positive results that's mostly by accident. The UK is the best example of this - there was an IMF rescue and liberalisation but also an oil discovery which recapitalised the commercial base of the country and allowed an infrastructure building program.
If you are betting on an Indian styled recovery, then your odds are exceedingly low. Not only did we have a great economist as finmin, but also a lot of people who grew up to later take on major roles as bureaucrats and politicians.
And all of that worked because we had a PM who was able to thread the needle and make it work without giving in to any political group.
It’s a very very small window, and the resulting growth was pent up demand being brought online.
And all of that worked because we had a PM who was able to thread the needle and make it work without giving in to any political group.
It’s a very very small window, and the resulting growth was pent up demand being brought online.
>>If you are betting on an Indian styled recovery, then your odds are exceedingly low.
And very painful.
Nobody talks of the pain in the immediate after math of the 1992 reforms. A huge section of people >40 years of age were crushed under computer based automation in factories and industries that followed. Several companies were shut down. Scores and scores of people lost jobs, and dumped into a labor market that had way high demands of productivity and skill they had to offer. This was with a huge number of both public sector and private sector companies. Heck even Bank employees suffered. All of a sudden a whole spectrum of jobs were just not needed(Accountants, Typists, Postmen etc etc)
Several families suffered quite bad. I was lucky that my dad was a driver, and those skills were reusable outside. But there were plenty of 'Supervisors' and other 'Desk job' people, who just got ruthlessly eliminated out of the economic scene.
Basically its not easy, for the existing population masses to face huge economic changes rapidly unfolding in months/decades.
And very painful.
Nobody talks of the pain in the immediate after math of the 1992 reforms. A huge section of people >40 years of age were crushed under computer based automation in factories and industries that followed. Several companies were shut down. Scores and scores of people lost jobs, and dumped into a labor market that had way high demands of productivity and skill they had to offer. This was with a huge number of both public sector and private sector companies. Heck even Bank employees suffered. All of a sudden a whole spectrum of jobs were just not needed(Accountants, Typists, Postmen etc etc)
Several families suffered quite bad. I was lucky that my dad was a driver, and those skills were reusable outside. But there were plenty of 'Supervisors' and other 'Desk job' people, who just got ruthlessly eliminated out of the economic scene.
Basically its not easy, for the existing population masses to face huge economic changes rapidly unfolding in months/decades.
I think that the lesson is that you can't avoid reality in the long run and government's role is to manage the transitions with the least destruction of human capital possible. This is what is so notable about Greece - there has been an utter disregard of the destruction of people's place in their community. I believe that this was due to the fact that the imposing authority was so overwheeningly powerful and so disconnected from Greek democracy.
I couldn't agree more; as I said, the record is dire and where it's been seen to work I think a counter factual can be constructed that could have produced as good or better results. That's not to say that the IMF couldn't do far better, just not by using the formula of fail that they've stuck to for the last fifty years. Greece is going to be the proof point for me - all of the pain no gain at all. I give it eighteen months.
>That demagogic rhetoric comes up commonly and it makes the same fundamental mistake or perhaps not wanting to understand that serving your creditors serves you as long as you need credit. The consequence for defaulting is not getting any more loans.
Yeah, idk. How many times has Argentina defaulted in the past 100 years? How many times has the IMF swooped in for that basket case and others like it?
All this means is that their yields will go up, and make it super attractive vs holding stocks, esp if you can lock in fx rates with forwards contracts on the EURUSD.
Yeah, idk. How many times has Argentina defaulted in the past 100 years? How many times has the IMF swooped in for that basket case and others like it?
All this means is that their yields will go up, and make it super attractive vs holding stocks, esp if you can lock in fx rates with forwards contracts on the EURUSD.
>All this means is that their yields will go up
This isn't a small thing for Argentina.
This isn't a small thing for Argentina.
Ok fair, but the come down from the ZLB high isn't going to be pretty anywhere, except for those who managed to see past the smoke and mirrors in inflated asset prices in all markets and incredible mis-allocation of resources the world has been engaged in…
and even then, they will still have to deal with the fallout of those who took the bait (or "elected" people who took the bait on their behalf) and will be pissed… as we're seeing now all over the world today, and these were supposed to be the good times lol
/me sighs
and even then, they will still have to deal with the fallout of those who took the bait (or "elected" people who took the bait on their behalf) and will be pissed… as we're seeing now all over the world today, and these were supposed to be the good times lol
/me sighs
Italy is banking on the welfare Northern Europe is giving them. Not unlike how California and New York pay for the US.
If Italy can't lend money they are finished and they know it. Politicians don't believe their own words.
If Italy can't lend money they are finished and they know it. Politicians don't believe their own words.
What welfare are you talking about? Italy has been a net payer [0] in EU contributions from since I could remember
[0] https://www.cbs.nl/en-gb/news/2016/50/netherlands-largest-ne...
[0] https://www.cbs.nl/en-gb/news/2016/50/netherlands-largest-ne...
The biggest welfare is being in the same political Union as better functioning economies. I shudder to think how expensive it would be for Italy to raise money on the international bond market if it wasn't for the ECB.
More than offset by the ability to control their own currency and interest rates. They could immediately print away their external debts, for example.
You are factually wrong.
> The proposed budget has exposed the seams in Italy’s governing coalition, where one party favors small-business-friendly tax cuts and the other enormously expensive welfare programs.
this has not really happened, the choice by the government has been: "let's do both tax cuts and expand welfare, finance it with debt, growth in the next few years will fix everything".
This is the worrisome bit, not that there is any widening seam in the government; the governing coalition is granitic until now, even in the face of things that the electoral body thought would never be compatibile.
this has not really happened, the choice by the government has been: "let's do both tax cuts and expand welfare, finance it with debt, growth in the next few years will fix everything".
This is the worrisome bit, not that there is any widening seam in the government; the governing coalition is granitic until now, even in the face of things that the electoral body thought would never be compatibile.
I think that what the last financial crisis shown us is that "too big too fail" is the way to go. If you're big enough, you'll be saved and forgiven, because your fall could create too many problems.
This government, with all its shortcomings, is the first in some decades that tries to put italian people first, rather than finance, the euro, or banks.
That said, the bet is risky. Salvini started his activities by showing how the EU is inept at solving the issue with immigrants from Africa and Middle East (eu countries could not agree on an eu-wide solution, leaving border states to deal with it).
Now the government wants to transfer that ineptitude feeling to the economy.
Is Italy actually too big to fail? We'll see.
Disclaimer: I'm italian.
This government, with all its shortcomings, is the first in some decades that tries to put italian people first, rather than finance, the euro, or banks.
That said, the bet is risky. Salvini started his activities by showing how the EU is inept at solving the issue with immigrants from Africa and Middle East (eu countries could not agree on an eu-wide solution, leaving border states to deal with it).
Now the government wants to transfer that ineptitude feeling to the economy.
Is Italy actually too big to fail? We'll see.
Disclaimer: I'm italian.
> This government, with all its shortcomings, is the first in some decades that tries to put italian people first, rather than finance, the euro, or banks.
Sorry, but this is just false.
In which way they are trying to put the italian people first? The abolition of Fornero (pension reform) will not solve any issue but will only cause more problem down the road, similarly for the re-branding of the "unemployment benefits" into "citizenship income".
I am afraid that Italy is both too big to fail but also too big to be saved.
Sorry, but this is just false.
In which way they are trying to put the italian people first? The abolition of Fornero (pension reform) will not solve any issue but will only cause more problem down the road, similarly for the re-branding of the "unemployment benefits" into "citizenship income".
I am afraid that Italy is both too big to fail but also too big to be saved.
And what do you suggest?
This idea that if someone critics something MUST also propose a solution is destroying any kind of sensible political discussion.
Anyway I would suggest to focus on long term growth strategies, simplification of the business, incentive for companies growth. Our economic system is formed by too many small medium companies that simply cannot compete anymore in the global market.
Anyway I would suggest to focus on long term growth strategies, simplification of the business, incentive for companies growth. Our economic system is formed by too many small medium companies that simply cannot compete anymore in the global market.
> In which way they are trying to put the italian people first?
I'm not saying they are succeeding. I'm saying they're trying.
> The abolition of Fornero (pension reform) will not solve any issue but will only cause more problem down the road
It will solve the problem for people who are, right now, too old to stay at work. At least they're not saving pointless banks, aren't they? But, sure, it could be even worse for young people.
> re-branding of the "unemployment benefits" into "citizenship income".
Universal Basic Income is deemed necessary even by people like Elon Musk, do you know that? Sure, citizenship income won't work the same way. It's quite small in comparison with UBW.
What I agree is that, probably, Italy, like other countries, would need totally different and more drastic measures. It's hard to change things in a country where retired people earn large sums of money that they don't deserve (because they haven't saved for that).
But, I don't trust the markets, the finance sector or the economic system to change that; those "tools" are used by people who just want to extract the maximum rent, and they'll always use them to achieve that: extract the maximum rent. Unless we start aiming at a different target, which could be "a fair distribution of basic wealth and income", we won't reach a different outcome.
All of that, IMHO.
I'm not saying they are succeeding. I'm saying they're trying.
> The abolition of Fornero (pension reform) will not solve any issue but will only cause more problem down the road
It will solve the problem for people who are, right now, too old to stay at work. At least they're not saving pointless banks, aren't they? But, sure, it could be even worse for young people.
> re-branding of the "unemployment benefits" into "citizenship income".
Universal Basic Income is deemed necessary even by people like Elon Musk, do you know that? Sure, citizenship income won't work the same way. It's quite small in comparison with UBW.
What I agree is that, probably, Italy, like other countries, would need totally different and more drastic measures. It's hard to change things in a country where retired people earn large sums of money that they don't deserve (because they haven't saved for that).
But, I don't trust the markets, the finance sector or the economic system to change that; those "tools" are used by people who just want to extract the maximum rent, and they'll always use them to achieve that: extract the maximum rent. Unless we start aiming at a different target, which could be "a fair distribution of basic wealth and income", we won't reach a different outcome.
All of that, IMHO.
I agree on some things the current bunch of muppets is doing (as opposed to the previous bunch of muppets, I am not partisan), but some of the arguments put forward are very dangerous.
> At least they're not saving pointless banks
That would be the same pointless banks who allow people to take out pointless mortgages to live in pointless houses, or to finance pointless businesses who pay pointless salaries.
I did not like the way the world got out of the 2008 crisis (I would have nationalised the shit out of the EU/US banking sector, it was a golden opportunity to make history), but letting huge banks fail would have been world-ending.
> Universal Basic Income is deemed necessary [...] citizenship income won't work the same way
Then why do you mention it to justify a Blair-style "workfare" law that has nothing to do with UBI (for one thing, it won't be universal, which is kinda the point)? Beyond the propaganda, there will be no UBI - it's just a reshaping of unemployment benefits to make certain areas of the country electorally beholden to a certain party, like it happened in the "good old days".
Quoting a holy text, "you were supposed to bring balance to the Force, not leave it in darkness".
> I don't trust the markets, the finance sector or the economic system to change that
On that I agree, but the realities of the XXI century are that the system is bigger than any single country, and solutions must be co-operative or won't be. I trust demagogues even less than bankers.
> At least they're not saving pointless banks
That would be the same pointless banks who allow people to take out pointless mortgages to live in pointless houses, or to finance pointless businesses who pay pointless salaries.
I did not like the way the world got out of the 2008 crisis (I would have nationalised the shit out of the EU/US banking sector, it was a golden opportunity to make history), but letting huge banks fail would have been world-ending.
> Universal Basic Income is deemed necessary [...] citizenship income won't work the same way
Then why do you mention it to justify a Blair-style "workfare" law that has nothing to do with UBI (for one thing, it won't be universal, which is kinda the point)? Beyond the propaganda, there will be no UBI - it's just a reshaping of unemployment benefits to make certain areas of the country electorally beholden to a certain party, like it happened in the "good old days".
Quoting a holy text, "you were supposed to bring balance to the Force, not leave it in darkness".
> I don't trust the markets, the finance sector or the economic system to change that
On that I agree, but the realities of the XXI century are that the system is bigger than any single country, and solutions must be co-operative or won't be. I trust demagogues even less than bankers.
There were plenty of banks that were solvent and solid.
But the politically connected big banks were not. They could have been reorganized but they were not. In fact not even 1 of the senior management were punished.
But the politically connected big banks were not. They could have been reorganized but they were not. In fact not even 1 of the senior management were punished.
>Universal Basic Income is deemed necessary even by people like Elon Musk, do you know that?
I have no idea what you mean by this.
I have no idea what you mean by this.
> Universal Basic Income is deemed necessary even by people like Elon Musk, do you know that?
Providing UBI through debt financing is a recipe for disaster.
Someone, somewhere has to earn this "income" so you can't just magically produce it out of thin air, if the Italian tax base can't service the current debt then how is it supposed to service further debt to provide a "citizenship income"?
Providing UBI through debt financing is a recipe for disaster.
Someone, somewhere has to earn this "income" so you can't just magically produce it out of thin air, if the Italian tax base can't service the current debt then how is it supposed to service further debt to provide a "citizenship income"?
I am afraid that Italy is both too big to fail but also too big to be saved.
You mean the French and German banks and pension funds are too big to be saved? The Italian banks will be insolvent as soon as anything substantial happens, as was shown 3 years ago. The only reason to 'bail them out' would be to bail out forign banks, as was the case in Greece.
Having the perma-surplus countries of Europe enforce austerity and permanent contractionary policies on sovereign countries that share a currency (The Fiscal Compact) is an impossible combination, which we also know because we've tried it many times before.
You mean the French and German banks and pension funds are too big to be saved? The Italian banks will be insolvent as soon as anything substantial happens, as was shown 3 years ago. The only reason to 'bail them out' would be to bail out forign banks, as was the case in Greece.
Having the perma-surplus countries of Europe enforce austerity and permanent contractionary policies on sovereign countries that share a currency (The Fiscal Compact) is an impossible combination, which we also know because we've tried it many times before.
German pensions don’t work through funds, but through inter-generation transfer of money. Funding gaps with money from the household is not abnormal.
I hope they never abolish this system. Fund-based systems in the end work the same but add market inefficiencies and risks.
I hope they never abolish this system. Fund-based systems in the end work the same but add market inefficiencies and risks.
Doesn't this false dichotomy between "the Italian people" and "Financial institutions" bother you?
> Salvini started his activities by showing how the EU is inept at solving the issue with immigrants
Yes, an intercontinental large problem caused by poverty and wars could not be quickly solved by an institution that couldn't get a mandate to handle it.
> solving the issue with immigrants
Doesn't this bother you even more? I mean, there does exist an "easy fix" for the hard problem of immigration, but that doesn't transfer to having an easy fix available for all the other hard problems that any country will need to navigate.
> Salvini started his activities by showing how the EU is inept at solving the issue with immigrants
Yes, an intercontinental large problem caused by poverty and wars could not be quickly solved by an institution that couldn't get a mandate to handle it.
> solving the issue with immigrants
Doesn't this bother you even more? I mean, there does exist an "easy fix" for the hard problem of immigration, but that doesn't transfer to having an easy fix available for all the other hard problems that any country will need to navigate.
> Doesn't this false dichotomy between "the Italian people" and "Financial institutions" bother you?
If I thought it to be a false dichotomy, probably. But (I can't find the link right now as I'm in hurry) as far as I remember when some italian banks were saved some years ago, something like the 80% of the amount of non-performing loans for such bank was composed of loans of 1 million euros or more. So, money that was borrowed by large companies or for very large houses (Yes, one million EUR is a luxury apartment or house in Italy, even in Milan or Rome). A lot of issues for financial institutions were not caused by small companies or "normal" people, and yet those are to bear the burden of saving those institutions.
> solving the issue with immigrants > Doesn't this bother you even more?
I'm not saying it's correct. But this is a game they're playing.
As others have said, i think the EU by itself is interesting and should go on, but the euro seems an half-baked project. I think that each country should walk its way and have its liabilities. European countries are quite different from each others and would like to solve their problems in a different fashion, rather than following a path chosen by others.
My 2c.
If I thought it to be a false dichotomy, probably. But (I can't find the link right now as I'm in hurry) as far as I remember when some italian banks were saved some years ago, something like the 80% of the amount of non-performing loans for such bank was composed of loans of 1 million euros or more. So, money that was borrowed by large companies or for very large houses (Yes, one million EUR is a luxury apartment or house in Italy, even in Milan or Rome). A lot of issues for financial institutions were not caused by small companies or "normal" people, and yet those are to bear the burden of saving those institutions.
> solving the issue with immigrants > Doesn't this bother you even more?
I'm not saying it's correct. But this is a game they're playing.
As others have said, i think the EU by itself is interesting and should go on, but the euro seems an half-baked project. I think that each country should walk its way and have its liabilities. European countries are quite different from each others and would like to solve their problems in a different fashion, rather than following a path chosen by others.
My 2c.
Actually, immigration has a simple solution.
As the Australians have shown: if you have the testicular fortitude to house illegal immigrants on desolate islands where they are safe from the oppression and starvation they claim to be fleeing, then very, very soon the flow dindles to a trickle.
Since most of the country-shoppers aren't real refugees - they just wanted to live in Sydney with an Australian passport and a hard currency.
The same applies in Europe.
As the Australians have shown: if you have the testicular fortitude to house illegal immigrants on desolate islands where they are safe from the oppression and starvation they claim to be fleeing, then very, very soon the flow dindles to a trickle.
Since most of the country-shoppers aren't real refugees - they just wanted to live in Sydney with an Australian passport and a hard currency.
The same applies in Europe.
Ah yes, I want to live and love in a world without starvation and violence, so of course I should happy to be on a desolate island with no hope for growth, love or life. That’s a paradise!
While we are at work on these kinds of solutions, I propose we just put immigrants in cryogenic sleep. It’s probably better than I definitely holding people on desolate islands.
Also the irony is rich, given than Australia was the desolate place to dump criminals.
While we are at work on these kinds of solutions, I propose we just put immigrants in cryogenic sleep. It’s probably better than I definitely holding people on desolate islands.
Also the irony is rich, given than Australia was the desolate place to dump criminals.
Actually, the question to ask is - why did the immigrants risk their lives in dangerous boats whilst passing the sanctuary of Indonesia?
But we know why. Which is why mass immigration turned out to be so easy for the Australians to solve.
But we know why. Which is why mass immigration turned out to be so easy for the Australians to solve.
testicular thinking, indeed
If Italy falls, it would drag the EU with it. At the same time, Italy is too big to be kept alive with financial aids from the EU.
So the answer is No:
1.) Italy is not too big to fall. A state bankruptcy of Italy is possible. It would occur if e.g. another external crisis hits the EU.
2.) The EU would do anything in their power to prevent that, but in a real emergency it couldn't do much. Italy would have to be excluded from the Eurozone and default.
None of this is likely to happen, though.
As for the Italian government, it's just another proof of the fact that modern Western, Christian, humanist values are mostly a lip service and given up at the earliest sign of causing inconvenience. We already know from the war in former Yugoslavia how fragile modern culture is. We're basically just a bunch of stupid monkeys, and that definitely includes the Italian government. :(
So the answer is No:
1.) Italy is not too big to fall. A state bankruptcy of Italy is possible. It would occur if e.g. another external crisis hits the EU.
2.) The EU would do anything in their power to prevent that, but in a real emergency it couldn't do much. Italy would have to be excluded from the Eurozone and default.
None of this is likely to happen, though.
As for the Italian government, it's just another proof of the fact that modern Western, Christian, humanist values are mostly a lip service and given up at the earliest sign of causing inconvenience. We already know from the war in former Yugoslavia how fragile modern culture is. We're basically just a bunch of stupid monkeys, and that definitely includes the Italian government. :(
Populism is always hard to define, but for me it’s largely about treating symptoms directly without treating causes.
Socialism, communism, conservatism, liberalism, all the established political movements have a theory or philosophy of what goals they want to achieve, yes, but also what means they can use to achieve them. They have an economic or social theory.
Populism doesn’t, so all it tries to do is address the symptoms, not the causes. People are poor, let’s give them money. Problem solved! Foreign goods are cheaper than ours, let’s slap an import tax on them to make them more expensive. Problem solved!
The trouble is the reasons why people are trapped in poverty, or why local manufacturing isn’t competitive are not addressed, and populist tactics make those causes much harder to tackle.
The Italian governments policies will, if carried through, impoverish Italy for a generation. Just look at Greece to see what massive debt driven overspending can do to a country. The idea that growth will lift you out of the hole is a fantasy because the factors holding down growth aren’t being faced.
Socialism, communism, conservatism, liberalism, all the established political movements have a theory or philosophy of what goals they want to achieve, yes, but also what means they can use to achieve them. They have an economic or social theory.
Populism doesn’t, so all it tries to do is address the symptoms, not the causes. People are poor, let’s give them money. Problem solved! Foreign goods are cheaper than ours, let’s slap an import tax on them to make them more expensive. Problem solved!
The trouble is the reasons why people are trapped in poverty, or why local manufacturing isn’t competitive are not addressed, and populist tactics make those causes much harder to tackle.
The Italian governments policies will, if carried through, impoverish Italy for a generation. Just look at Greece to see what massive debt driven overspending can do to a country. The idea that growth will lift you out of the hole is a fantasy because the factors holding down growth aren’t being faced.
Populism is just the antipode to elitism. Too much elitism (e.g. pre-revolution France, gilded-age America or any kleptocracy of which there are numerous examples) is problematic too. A dose of populism can be a useful solution to that problem. For example, the New Deal seems to have worked out pretty well.
Just like anything else, populist policies need to be considered carefully and applied judiciously to work out well. To hold that all populist policies are simply to give out free money is a straw man argument.
A knee jerk response to any populist policy is a low-effort way to implicitly support elitist systems. These policies should at least be fairly considered on their own merits in the context of the actual economic system.
I'm not making an argument for any specific policy here, but I've seen far too many policy proposals waved away as "populist" and therefore not serious.
Just like anything else, populist policies need to be considered carefully and applied judiciously to work out well. To hold that all populist policies are simply to give out free money is a straw man argument.
A knee jerk response to any populist policy is a low-effort way to implicitly support elitist systems. These policies should at least be fairly considered on their own merits in the context of the actual economic system.
I'm not making an argument for any specific policy here, but I've seen far too many policy proposals waved away as "populist" and therefore not serious.
Populism is an appeal to popular opinion without contributing any leadership IMO - i.e. you basically just send the broadest possible opinions of the population back at them, without attempting to shape or direct them into actionable strategies.
It always looks simplistic, because it is - there's no attempt to capture a defined, practical policy, just do whatever people will in general like as a sentiment.
It always looks simplistic, because it is - there's no attempt to capture a defined, practical policy, just do whatever people will in general like as a sentiment.
I’m a 21 year old italian from Milan studying my last year of engineering and can’t see a future for myself in this country.
As soon as I finish my degree I’ll move somewhere else, most of my friends (that attend the best universities in the country) want to do the same. The only reason most of us stayed here for uni are the incredibly high quality universities that are super cheap.
Here are some of the problems we face in my point of view: https://ferrucc.io/italy-s-problems/
As soon as I finish my degree I’ll move somewhere else, most of my friends (that attend the best universities in the country) want to do the same. The only reason most of us stayed here for uni are the incredibly high quality universities that are super cheap.
Here are some of the problems we face in my point of view: https://ferrucc.io/italy-s-problems/
>The pension system is a Ponzi Scheme
I am now starting to discover not only pension, but lots and lots of financial systems and scheme, are not sustainable. Including what ever currency system we have in place.
I am now starting to discover not only pension, but lots and lots of financial systems and scheme, are not sustainable. Including what ever currency system we have in place.
The money we spend on the elderly is absolutely unsustainable - welfare and healthcare.
The taxes in Europe are insane - huge social security taxes (before you even get your paycheque) and sales taxes.
Yes, healthcare and education is paid for. But if you are middle-class, the extra taxes you will pay in Europe will far outweigh the gains your receive from that (compared to America - where you pay less in taxes, but have to pay for your own college education and healthcare).
Its unsurprising that Europeans have such low birthrates. The cost of living is mostly the same as the US, but the salaries are much lower/taxes are much higher.
This whole system needs to be unwound, and more money put into the hands of workers. If it means people no longer get a state pension, then so be it.
The taxes in Europe are insane - huge social security taxes (before you even get your paycheque) and sales taxes.
Yes, healthcare and education is paid for. But if you are middle-class, the extra taxes you will pay in Europe will far outweigh the gains your receive from that (compared to America - where you pay less in taxes, but have to pay for your own college education and healthcare).
Its unsurprising that Europeans have such low birthrates. The cost of living is mostly the same as the US, but the salaries are much lower/taxes are much higher.
This whole system needs to be unwound, and more money put into the hands of workers. If it means people no longer get a state pension, then so be it.
I'm you but 6 years later :)
I actually dropped out of Poli and moved to Helsinki, and most of my friends scattered around Europe.
Did you see this thread? https://news.ycombinator.com/item?id=18045294
Your post has a nice collection of issues, IMO there is one missing: there is absolutely zero interest in investing in research and technology (e.g. afaik there is still no fast internet outside of big cities) and young generations (this is related to the aging population, that makes it convenient for politicians to target retired people to get their votes. Convenient for them in the short term, but not as much for the future of the country)
I actually dropped out of Poli and moved to Helsinki, and most of my friends scattered around Europe.
Did you see this thread? https://news.ycombinator.com/item?id=18045294
Your post has a nice collection of issues, IMO there is one missing: there is absolutely zero interest in investing in research and technology (e.g. afaik there is still no fast internet outside of big cities) and young generations (this is related to the aging population, that makes it convenient for politicians to target retired people to get their votes. Convenient for them in the short term, but not as much for the future of the country)
Awesome to see other people from polimi :)
Thanks for sharing that thread!
Given how super fast your website is I think that you have a bright future in Italy helping businesses get their online presence up to speed.
I checked the Chrome dev tools 'Audit' for your site and I have not seen another website that ranks so highly for performance. Not hard when you just have a simple blog, but the rest of the world is struggling with this.
I checked the Chrome dev tools 'Audit' for your site and I have not seen another website that ranks so highly for performance. Not hard when you just have a simple blog, but the rest of the world is struggling with this.
A single page with no pictures, no analytics and no ads. Of course it loads fast but sadly it has no business value.
No business wants a site with no picture where they can't monitor what people where looking at.
No business wants a site with no picture where they can't monitor what people where looking at.
Most real businesses sell real products and they really do not want adverts for rival products showing on their website. Not having 'ads' is a bonus.
If you live in a Silicon Valley bubble where the 'customer is the product' and all you have to sell is advertising space then you might not understand this.
Adding images to this website does not necessarily undermine the 'audit' metrics. Clearly this has to be done with sensibly sized images otherwise those metrics will be affected negatively.
Small to medium sized real businesses do not necessarily need Google Analytics with people on the payroll to troll the rest of the company with petty 'SEO demands'. If a company has established relationships with distributors or if products are supplied on an 'OEM' basis to a handful of partners then the website need be no more than a glorified 'contact us' page.
Server side analytics are fine for such an internet presence. In some ways better as there is no need to have a silly 'cookie' notice.
You have a very narrow idea of business value if it is all about stalking your potential customers and ramming adverts that they did not want down their eyeballs, wasting their time and bandwidth in the process.
If you live in a Silicon Valley bubble where the 'customer is the product' and all you have to sell is advertising space then you might not understand this.
Adding images to this website does not necessarily undermine the 'audit' metrics. Clearly this has to be done with sensibly sized images otherwise those metrics will be affected negatively.
Small to medium sized real businesses do not necessarily need Google Analytics with people on the payroll to troll the rest of the company with petty 'SEO demands'. If a company has established relationships with distributors or if products are supplied on an 'OEM' basis to a handful of partners then the website need be no more than a glorified 'contact us' page.
Server side analytics are fine for such an internet presence. In some ways better as there is no need to have a silly 'cookie' notice.
You have a very narrow idea of business value if it is all about stalking your potential customers and ramming adverts that they did not want down their eyeballs, wasting their time and bandwidth in the process.
If Italy is not good for you, then no other place will be good for you.
I dont think the EU will want to sanction Italy over a budget that is, all things considered, within the usual 3% deficit limit. They are already in enough trouble picking more important fights with Poland and Hungary who have downgraded their democracies.
Having spent the last two months the in Italy it’s really sad to see what it is like. Some parts are beautiful but other parts are filthy and feel thirdworld like. I don’t understand how the worlds 10th largest economy is so dirty in such a poor state
10th largest? Last I checked we were the 7th and that was just a few years back. Go back another couple of decades and for a brief moment we held 4th place just after Germany. I believe this decline explains most of what you are seeing.
Yeah but how do you explain the decline?
Do the systemic problems that have always existed getting worse? New ones?
Do the systemic problems that have always existed getting worse? New ones?
I don't know what I'm talking about but I cannot resist the urge to tell you what I think. As a bit of a background I've been living outside of Italy for many years now, I was there last week for the first time in 8 months. I can think of several reason:
- Italy used to handle Europe's low end manufacturing, like textiles, thanks to our relatively inexpensive wages and nice location. This all disappeared in the last 15 years with production moving to Asia, you can say we got outcompeted at our own game. Here is one example of one such factories in ruin (https://it.wikipedia.org/wiki/File:Valdagno_Marzotto.jpg) I saw last week. That thing is massive.
- You heard this before, but taxation is huge. It's one of the reasons I left and it is especially depressing given the next to nothing we have to show for it. We do have a corrupted political class we can't seem to get rid of. I didn't really follow but it seems that in the process of replacing it we ended up with a worst evil, that is populism. I guess stealing a bit from everyone for your own profit is a thing, stealing from future generations for feel-better political manoeuvres is even worse.
- The huge divide from north to south. It's a long story, but if you ask the north they will tell you the south is spending all their taxes, if you ask the south they will tell you the north conquered them and stole all of their wealth 200 years ago. The region I'm from, Veneto, used to be one of the wealthiest in Europe until very recently. The big majority of our taxation ended up being redistributed in the south, again, with nothing to show for it thanks to corrupted politicians, mafia and I will add, a general disinterest in improving one's condition due to the very nice weather and the very little you have to do in life to live comfortably in the south. Which I hope doesn't sparkle any debate, it's something I believe you can observe in the whole of Europe taking a train from Sicily to Norway.
- English. We don't speak it. If we do it's just a notch above barely. With the internet and international commerce that is holding us back more than you would expect. I wish we had cartoons and movies with no dubbing on national TV.
On the positive side, one Indian friend of mine jokingly told me his parents still buy textile machines from Italian companies, which is a nice example of the kind of industries that managed to survive in Italy to this day.
- Italy used to handle Europe's low end manufacturing, like textiles, thanks to our relatively inexpensive wages and nice location. This all disappeared in the last 15 years with production moving to Asia, you can say we got outcompeted at our own game. Here is one example of one such factories in ruin (https://it.wikipedia.org/wiki/File:Valdagno_Marzotto.jpg) I saw last week. That thing is massive.
- You heard this before, but taxation is huge. It's one of the reasons I left and it is especially depressing given the next to nothing we have to show for it. We do have a corrupted political class we can't seem to get rid of. I didn't really follow but it seems that in the process of replacing it we ended up with a worst evil, that is populism. I guess stealing a bit from everyone for your own profit is a thing, stealing from future generations for feel-better political manoeuvres is even worse.
- The huge divide from north to south. It's a long story, but if you ask the north they will tell you the south is spending all their taxes, if you ask the south they will tell you the north conquered them and stole all of their wealth 200 years ago. The region I'm from, Veneto, used to be one of the wealthiest in Europe until very recently. The big majority of our taxation ended up being redistributed in the south, again, with nothing to show for it thanks to corrupted politicians, mafia and I will add, a general disinterest in improving one's condition due to the very nice weather and the very little you have to do in life to live comfortably in the south. Which I hope doesn't sparkle any debate, it's something I believe you can observe in the whole of Europe taking a train from Sicily to Norway.
- English. We don't speak it. If we do it's just a notch above barely. With the internet and international commerce that is holding us back more than you would expect. I wish we had cartoons and movies with no dubbing on national TV.
On the positive side, one Indian friend of mine jokingly told me his parents still buy textile machines from Italian companies, which is a nice example of the kind of industries that managed to survive in Italy to this day.
Regarding manufacturing, I think that the expansion of the E.U. has been where Italy's jobs have been going.
I have worked with a few Italian companies over the years and been disappointed to find that the premium products are not really Italian. You can have very expensive shoes that have 'Made in Italy' written on them but then you find out that the uppers are made on the other side of the Adriatic in the former Yugoslavia. These uppers then get glued on to the soles in Italy to get the coveted label.
Other luxury leather goods have fallen to the same fate. This is a bit of a con for the consumer as they can spend up to $2000 on a handbag, which is okay if you really are paying for craftsmen in Milan to make an exclusive product, not so okay if the hard work is done elsewhere with cheap labour.
Cars are also an area of concern to me. The Fiat cars that people actually buy, e.g. the '500', are made in places such as Poland. These are not 'cheap cars for the masses', they are designer luxury goods with allegedly Italian style. This is not good for people who are loyal to the brand.
There are some aspects of business culture that do not help. I wish the whole Northern Hemisphere closed factories during August so everyone can have a holiday. However, in Anglo-whitey-world that does not happen. So if you are trying to source product for Autumn/Winter and need to get orders in then it can be a struggle working with Italian suppliers. You might as well order from competitors in the Far East that do not have these problems (and also do a better job of sizing shoes to people's feet, not the 'last' that the shoes are made on).
Money is also difficult in Italy. In ecommerce when you need to get payment providers working it feels like going back to 1970's Britain, when banks had special opening hours and everything had to be done in a branch rather than online or over the phone.
The consequence of all of the above is very bad for Italy in export markets. You can't get legit Italian product and even if you can then paying has these extra hurdles that make things extremely difficult.
I have worked with a few Italian companies over the years and been disappointed to find that the premium products are not really Italian. You can have very expensive shoes that have 'Made in Italy' written on them but then you find out that the uppers are made on the other side of the Adriatic in the former Yugoslavia. These uppers then get glued on to the soles in Italy to get the coveted label.
Other luxury leather goods have fallen to the same fate. This is a bit of a con for the consumer as they can spend up to $2000 on a handbag, which is okay if you really are paying for craftsmen in Milan to make an exclusive product, not so okay if the hard work is done elsewhere with cheap labour.
Cars are also an area of concern to me. The Fiat cars that people actually buy, e.g. the '500', are made in places such as Poland. These are not 'cheap cars for the masses', they are designer luxury goods with allegedly Italian style. This is not good for people who are loyal to the brand.
There are some aspects of business culture that do not help. I wish the whole Northern Hemisphere closed factories during August so everyone can have a holiday. However, in Anglo-whitey-world that does not happen. So if you are trying to source product for Autumn/Winter and need to get orders in then it can be a struggle working with Italian suppliers. You might as well order from competitors in the Far East that do not have these problems (and also do a better job of sizing shoes to people's feet, not the 'last' that the shoes are made on).
Money is also difficult in Italy. In ecommerce when you need to get payment providers working it feels like going back to 1970's Britain, when banks had special opening hours and everything had to be done in a branch rather than online or over the phone.
The consequence of all of the above is very bad for Italy in export markets. You can't get legit Italian product and even if you can then paying has these extra hurdles that make things extremely difficult.
The Fiat 500 is a cheap car for the masses. It competes with the Ford Fiesta, Renault Clio and other B class hatchbacks. A Fiat 500 can be had from £10,900 to £15,000 in the U.K. while the Ford Fiesta starts at just over £13,000 and can be optioned up to £20,000.
The Abarth 595 is also competitive with B class hot hatches such as the Fiesta ST, Polo GTI, Renault Clio Sport, etc.
The Abarth 595 is also competitive with B class hot hatches such as the Fiesta ST, Polo GTI, Renault Clio Sport, etc.
The 500 is 'A class', the 500L is the 'B class'. The 500L is the one made in Serbia, again not brilliant for keeping Italian people gainfully employed on the production line. There are people selling the cars and fixing them in Italy so there is some economic utility there, however, manufacturing matters, just ask Donald Trump.
The 500 is designed with the female buyer in mind. The colours and retro-styling suits this audience and makes it a 'designer' car. If it looked like a Dacia Sandero and was priced accordingly then it would be a 'cheap car for the masses'.
The 500 is designed with the female buyer in mind. The colours and retro-styling suits this audience and makes it a 'designer' car. If it looked like a Dacia Sandero and was priced accordingly then it would be a 'cheap car for the masses'.
> Cars are also an area of concern to me.
Or maybe Fiat should build a better quality cars? Lancia was a go to car for many governments, but BMW, Audi and Mercedes outcompeted them.
Or maybe Fiat should build a better quality cars? Lancia was a go to car for many governments, but BMW, Audi and Mercedes outcompeted them.
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Same thing has been happening with outdoor footwear, brands that used to be made in Montebelluna are now made elsewhere in the EU.
> you can observe in the whole of Europe taking a train from Sicily to Norway.
This is a wonderful meme!!!! True or not..
For what's it worth, I think governance is even more important that work ethics.
Italy is rich enough, and with 70 years of peace time, can probably work 3-4 days a week and be fine.
This is a wonderful meme!!!! True or not..
For what's it worth, I think governance is even more important that work ethics.
Italy is rich enough, and with 70 years of peace time, can probably work 3-4 days a week and be fine.
Let's not forget that the 5th place we briefly held was financed by the enormous unproductive deficit spending which is the root cause of our last 20 years of almost-no-growth. That was just growth on drugs, spending the future earnings of young and not-yet-born Italians to satisfy the greediness of voters at that time.
"[..] spending the future earnings of young and not-yet-born Italians to satisfy the greediness of voters at that time."
If the Italy of the year 3000 is a wasteland without buildings or industries, never mind how much money have you saved, the not-yet-born Italians will be in problem.
If the Italy of the year 3000 is a highly developed country, with futuristic robots and star trek replicators, they will just have a good life.
Sometimes, with all this chat about debt and earnings we forget what is really important.
Do you want the future Italians have a good life? Invest in infrastructure, technology and knowledge and don't do the opposite trying to "save" not-yet-born people money. That should be obvious.
If the Italy of the year 3000 is a wasteland without buildings or industries, never mind how much money have you saved, the not-yet-born Italians will be in problem.
If the Italy of the year 3000 is a highly developed country, with futuristic robots and star trek replicators, they will just have a good life.
Sometimes, with all this chat about debt and earnings we forget what is really important.
Do you want the future Italians have a good life? Invest in infrastructure, technology and knowledge and don't do the opposite trying to "save" not-yet-born people money. That should be obvious.
Consumption is not investment. That's not to say consumption is bad or unnecessary, but they're not the same. Nobody's talking about increased investment, it's all consumption. Italy's government is not criticised for an investment push it can't afford, but rather unsustainable increases in welfare spending.
Anyway, whenever the Italian government invests, it seems to be into money-pit clusterfucks like Alitalia, so I wouldn't be too enthusiastic about Italian governmental investment. How hard could it possibly be to let that monster die and use the money on something useful?
Before the Italian government can invest properly it needs functioning politics and bureaucracy, which are the real problems anyway. Like in Greece, they're just so hard to fix it's not even an option people talk about. It's always magical solution X or Y ("policy"), never how to fix politics or improve the bureaucracy.
Anyway, whenever the Italian government invests, it seems to be into money-pit clusterfucks like Alitalia, so I wouldn't be too enthusiastic about Italian governmental investment. How hard could it possibly be to let that monster die and use the money on something useful?
Before the Italian government can invest properly it needs functioning politics and bureaucracy, which are the real problems anyway. Like in Greece, they're just so hard to fix it's not even an option people talk about. It's always magical solution X or Y ("policy"), never how to fix politics or improve the bureaucracy.
It's not about saving. It's about using your resources wisely. The opposite of what this government is going to do.
In 1999 Italy was 7th, in 2017 it was 9th (world bank placing)
India and Brazil overtook it thanks to massive growth. That's not a problem for Italy directly. The US has changed from 29% of the world economy to 24% over the same period.
Relative numbers are slightly more concerning though.
Since 1999, Italy's gone from 3.8% of the economy to 2.3%, a much larger drop than the U.S.
In 1999 Italy's GDP was 56% that of Germany. In 2017 it was 52%. France moves 81% to 75% US moved from 13% to 10%
Italy was 96% larger than Spain in 1999, now it's only 48%. It was 81% larger than Canada, now it's only 17%.
India and Brazil overtook it thanks to massive growth. That's not a problem for Italy directly. The US has changed from 29% of the world economy to 24% over the same period.
Relative numbers are slightly more concerning though.
Since 1999, Italy's gone from 3.8% of the economy to 2.3%, a much larger drop than the U.S.
In 1999 Italy's GDP was 56% that of Germany. In 2017 it was 52%. France moves 81% to 75% US moved from 13% to 10%
Italy was 96% larger than Spain in 1999, now it's only 48%. It was 81% larger than Canada, now it's only 17%.
>>Some parts are beautiful but other parts are filthy and feel thirdworld like.
That's like the very definition of inequality.
Why are you so surprised?
That's like the very definition of inequality.
Why are you so surprised?
Where are you from?
The EU is not working for people as it worked for peace and banks. There is nothing shameful in that, the process is difficult and has so many enemies within and outside Europe. Italy often acts as a politics lab, let’s see what happens in May 2019 with the general European election in the EU.
I think Italy’s issues are more to do with its government and corruption than the EU. The EU seems to be working for a lot of the other countries just fine economically.
Despite the shortcomings of the EU, national politicians are also using the EU for shifting the blame of their own failings. In the longer term, this undermines trust in the EU and gives rise to populism.
That’s not to say that people who vote populist don’t have a point. It’s hard to understand why companies are making billions in profits, while people are scrambling to make ends meet.
That’s not to say that people who vote populist don’t have a point. It’s hard to understand why companies are making billions in profits, while people are scrambling to make ends meet.
I would think that was very easy to understand.
Unless you are stuck on some axiom that what's good for the companies is good for… humans.
I think it's fairly self evident at this point that you've got people, you've got companies, you've got capitalism as a whole. It's a pecking order and they are somewhat to extremely antagonistic. People, as the most powerless entities in the equation, are very much on the way out.
Unless you are stuck on some axiom that what's good for the companies is good for… humans.
I think it's fairly self evident at this point that you've got people, you've got companies, you've got capitalism as a whole. It's a pecking order and they are somewhat to extremely antagonistic. People, as the most powerless entities in the equation, are very much on the way out.
You can downvote all you like, but all this is to be expected and is unsurprising.
Humans are to these large collective entities or even larger self-organizing entities like political systems, as cells are to humans. There is no reason to assume a humanocentric viewpoint here, and if assuming one leads to continuous dismay and surprise, you've got to widen your perspective and acknowledge higher-order organisms when they're this obvious.
It's like a sort of Singularity. Why would it be surprising if we fail to immediately recognize it for what it is?
Humans are to these large collective entities or even larger self-organizing entities like political systems, as cells are to humans. There is no reason to assume a humanocentric viewpoint here, and if assuming one leads to continuous dismay and surprise, you've got to widen your perspective and acknowledge higher-order organisms when they're this obvious.
It's like a sort of Singularity. Why would it be surprising if we fail to immediately recognize it for what it is?
The EU lured all the Mediterranean countries with sudden cheap credit and currency stability. But they didn't think of the consequences. Too cheap credit brings inefficiency and breeds corruption.
There was a reason those countries had bad rates before joining. And most of the causes of those issues were swept under the rug. Now who is going to pay for the consequences?
There was a reason those countries had bad rates before joining. And most of the causes of those issues were swept under the rug. Now who is going to pay for the consequences?
Okay ... but who is "they"? A few individual, grey-haired heads, filled with the history of similar fiascos, did think of consequences:
https://en.m.wikipedia.org/wiki/Latin_Monetary_Union
But the levers of political power were, then as now, in hands guided not by stale history, but by fresh opportunity for self-advancement.
https://en.m.wikipedia.org/wiki/Latin_Monetary_Union
But the levers of political power were, then as now, in hands guided not by stale history, but by fresh opportunity for self-advancement.
> but who is "they"?
Everyone involved.
Everyone involved.
If only we could wind the clock back ...
But we can't so have to deal with what is in front of us right now.
But we can't so have to deal with what is in front of us right now.
"The EU seems to be working for a lot of the other countries just fine economically."
I assume you mean the Euro here (not the EU)
What are those countries?
I assume you mean the Euro here (not the EU)
What are those countries?
The European Union works reasonably well, the problem is with the Euro.
Not currency union can work properly without a fiscal union.
Not currency union can work properly without a fiscal union.
The EU is still mostly a good thing.
The Euro is a disaster - swivel-eyed lunatic neoliberal orthodoxy enforced by a common currency.
The irony is that the so-called single market is a mess too. While it's possible to sell across country borders in the EU, the bureaucratic necessities - especially VAT accounting - make it a horror show. Eliminating customs bureaucracy is a good thing, but that's still a long way short of true friction-free trade.
The Euro is a disaster - swivel-eyed lunatic neoliberal orthodoxy enforced by a common currency.
The irony is that the so-called single market is a mess too. While it's possible to sell across country borders in the EU, the bureaucratic necessities - especially VAT accounting - make it a horror show. Eliminating customs bureaucracy is a good thing, but that's still a long way short of true friction-free trade.
> the bureaucratic necessities - especially VAT accounting - make it a horror show.
EU VAT accounting is actually fabulous for real goods: intra-union transactions are VAT-free, so each state can levy whichever rate they prefer on the final sale. Everyone is happy and there is less red tape.
They fucked up for digital goods and services because the model simply does not map well to that domain - the internet has no border. Politicians felt they had to make a choice between losing VAT income altogether (which is what was happening before, with companies tactically exploiting low-VAT countries) or creating some friction for digital businesses. They picked the most rational option.
In reality, it's a false dichotomy, and everyone knows it. The real way out is a simplification where that tax is centralized at federal level; but it requires a huge amount of political capital, that the current generation of European politicians is completely incapable of generating on their own. At some point, someone will run in France or Germany on this platform of simple, flat VAT rates on digital income across the EU, accumulating to an unified EU treasury that can then be used to further generate income; they will win, and it will come to pass.
EU VAT accounting is actually fabulous for real goods: intra-union transactions are VAT-free, so each state can levy whichever rate they prefer on the final sale. Everyone is happy and there is less red tape.
They fucked up for digital goods and services because the model simply does not map well to that domain - the internet has no border. Politicians felt they had to make a choice between losing VAT income altogether (which is what was happening before, with companies tactically exploiting low-VAT countries) or creating some friction for digital businesses. They picked the most rational option.
In reality, it's a false dichotomy, and everyone knows it. The real way out is a simplification where that tax is centralized at federal level; but it requires a huge amount of political capital, that the current generation of European politicians is completely incapable of generating on their own. At some point, someone will run in France or Germany on this platform of simple, flat VAT rates on digital income across the EU, accumulating to an unified EU treasury that can then be used to further generate income; they will win, and it will come to pass.
The EU is overgrown from mild benevolent rules unifying member countries on similar traits to a massive body of law and power that nobody knows.
I used to be quite against Brexit but after seeing on of the videos on the EU I am now skeptical. There are 3 big voting bodies: EU Council, EU Parliament, and EU comission. The majority of people don't know the difference and nobody knows the people in there. In the last decade they started micro-managing everything in the EU. Think of gdpr and the new copyright rules. It's starting to resemble a big authoritarian state.
Also they apply uniformly the same strategy for countries like Germany/Austria/Netherlands and Greece/Portugal/Italy when they are in very different situations. The former are quite happy with the arrangement, the latter are trapped in a death spiral.
I used to be quite against Brexit but after seeing on of the videos on the EU I am now skeptical. There are 3 big voting bodies: EU Council, EU Parliament, and EU comission. The majority of people don't know the difference and nobody knows the people in there. In the last decade they started micro-managing everything in the EU. Think of gdpr and the new copyright rules. It's starting to resemble a big authoritarian state.
Also they apply uniformly the same strategy for countries like Germany/Austria/Netherlands and Greece/Portugal/Italy when they are in very different situations. The former are quite happy with the arrangement, the latter are trapped in a death spiral.
>>The EU is overgrown from mild benevolent rules unifying member countries on similar traits to a massive body of law and power that nobody knows.
I'm not an US citizen. But one of things that Donald Trump said repeatedly during his campaign speeches, was that globalization largely looked like a unelected bureaucracy running the world economic affairs at their whim without accountability.
Transfer of jobs, factories and even small business based on economic centers en-masse across countries.
I'm not an US citizen. But one of things that Donald Trump said repeatedly during his campaign speeches, was that globalization largely looked like a unelected bureaucracy running the world economic affairs at their whim without accountability.
Transfer of jobs, factories and even small business based on economic centers en-masse across countries.
> ”There are 3 big voting bodies: EU Council, EU Parliament, and EU comission. The majority of people don't know the difference and nobody knows the people in there.”
As a pro-Brexit argument, this seems weak. I think most people can’t explain the difference between the House of Commons, the House of Lords and the Cabinet either.
The EU structure really isn’t that complex when you remember that its power is granted by the member states, so the highest authority is an oversight body consisting of each country’s elected governments — that’s the EU council. The Commission is the executive branch and the Parliament is legislative. That’s it.
As a pro-Brexit argument, this seems weak. I think most people can’t explain the difference between the House of Commons, the House of Lords and the Cabinet either.
The EU structure really isn’t that complex when you remember that its power is granted by the member states, so the highest authority is an oversight body consisting of each country’s elected governments — that’s the EU council. The Commission is the executive branch and the Parliament is legislative. That’s it.
> The Commission is the executive branch and the Parliament is legislative
Er, no. Commission and Council are both legislative and executive at the same time. The oversight organ is Parliament.
A lot of the of the ill-will against the EU setup comes from this non-traditional arrangement that betrays Montesquieu for the good of efficiency at scale: it's so hard and slow to write laws in national parliaments, that EU governments decided the model wouldn't work at continental level. You can look at the (in)efficiency of comparable bodies (US Congress and Indian parliament) to see the problem in action every day.
So multiple generations of EU politicians decided it would be easier to take hard decisions in a small room (Council), then leave it to the bureaucrats (Commission) to implement them. When the model was criticized for being undemocratic, they begrudgingly agreed to have a Parliament with veto powers. But democracy, once started, is a rolling boulder; so the role of EUParliament has grown with every election. The Commission cannot steamroll measures anymore, so EUP assumed a de-facto legislative role too. This is Good in historical terms and can only get better with time. Already the composition of the Commission has moved from a compromise brokered on purely-ethnic lines by national governments, to a body that also has to reflect the political inclinations of the sitting Parliament, lest they get rejected. Parliament will not rubber-stamp anymore.
The problem is that some elements of EU politics continue to be insulated from Parliament. Fiscal matters in particular, where states are completely unchecked, must be tied to Parliament in some way. Until that happens, demagogues will have an easy way to misdirect, talking of "Council" and "Troikas" as some unelected bodies when they are simple smokescreens for national governments to hide behind. It has to be corrected.
From a history-buff perspective, the current era is an exciting time: the continent is basically rewriting its constitutional asset in real-time. It's the sort of sea-change that happens once every 200 years; like a Vienna Congress or US Constitutional Convention, but spread over decades.
Er, no. Commission and Council are both legislative and executive at the same time. The oversight organ is Parliament.
A lot of the of the ill-will against the EU setup comes from this non-traditional arrangement that betrays Montesquieu for the good of efficiency at scale: it's so hard and slow to write laws in national parliaments, that EU governments decided the model wouldn't work at continental level. You can look at the (in)efficiency of comparable bodies (US Congress and Indian parliament) to see the problem in action every day.
So multiple generations of EU politicians decided it would be easier to take hard decisions in a small room (Council), then leave it to the bureaucrats (Commission) to implement them. When the model was criticized for being undemocratic, they begrudgingly agreed to have a Parliament with veto powers. But democracy, once started, is a rolling boulder; so the role of EUParliament has grown with every election. The Commission cannot steamroll measures anymore, so EUP assumed a de-facto legislative role too. This is Good in historical terms and can only get better with time. Already the composition of the Commission has moved from a compromise brokered on purely-ethnic lines by national governments, to a body that also has to reflect the political inclinations of the sitting Parliament, lest they get rejected. Parliament will not rubber-stamp anymore.
The problem is that some elements of EU politics continue to be insulated from Parliament. Fiscal matters in particular, where states are completely unchecked, must be tied to Parliament in some way. Until that happens, demagogues will have an easy way to misdirect, talking of "Council" and "Troikas" as some unelected bodies when they are simple smokescreens for national governments to hide behind. It has to be corrected.
From a history-buff perspective, the current era is an exciting time: the continent is basically rewriting its constitutional asset in real-time. It's the sort of sea-change that happens once every 200 years; like a Vienna Congress or US Constitutional Convention, but spread over decades.
The difference is that the House of Commons elects the Cabinet; not so in the EU (that's IMO where half of the problem is coming from).
In the future, when we're setting up even larger multinational organisations (even a world government), EU will be a good example of what not to do.
In the future, when we're setting up even larger multinational organisations (even a world government), EU will be a good example of what not to do.
Except that this is simply not true, the head of the european comission is elected through the EU parlement, and the rest is appointed by the council of ministers. (which are appointed by the national elections of each member state).
People should stop comparing the EU to any other national system, because it is inherently an supranational and intergovermental system.
People should stop comparing the EU to any other national system, because it is inherently an supranational and intergovermental system.
haha which part of my comment is "simply not true"?! the parliament doesn't elect the commission, we both seem to agree on that
That "House of Commons elects the Cabinet"
MPs in the house of commons elect the Prime Minister (typically this means the leader of the largest party). Technically it's the Queen appointing them, I believe on advice of the civil service on the basis that they will be able to command a vote of confidence, but in practice it's the MPs themselves.
The Prime Minister then appoints the cabinet, most of whom will be elected MPs by their local constituents (in practice at least half of the seats in the UK are "safe seats", meaning the MP is appointed by local party memebrs)
The Prime Minister also appoints one of the EU commissioners (and the PM's counterparts in the other EU states also appoint one).
The EU parliament elects the president of the commission from a pool suggested by the heads of government. That president then allocates each of the commissioners they've been sent by governments to various roles.
MPs in the house of commons elect the Prime Minister (typically this means the leader of the largest party). Technically it's the Queen appointing them, I believe on advice of the civil service on the basis that they will be able to command a vote of confidence, but in practice it's the MPs themselves.
The Prime Minister then appoints the cabinet, most of whom will be elected MPs by their local constituents (in practice at least half of the seats in the UK are "safe seats", meaning the MP is appointed by local party memebrs)
The Prime Minister also appoints one of the EU commissioners (and the PM's counterparts in the other EU states also appoint one).
The EU parliament elects the president of the commission from a pool suggested by the heads of government. That president then allocates each of the commissioners they've been sent by governments to various roles.
In the UK, voters elect MPs who choose the Cabinet.
In the EU, voters elect national governments who each appoint a member to the EU Commission. The EU Parliament also gets a say in the election of the Commission President.
Obviously it's a compromise because national governments don't want to give up their power. But it's not as undemocratic as is often claimed.
In the EU, voters elect national governments who each appoint a member to the EU Commission. The EU Parliament also gets a say in the election of the Commission President.
Obviously it's a compromise because national governments don't want to give up their power. But it's not as undemocratic as is often claimed.
I'm not saying it's undemocratic. Just that the purpose of the parliament, and EU parties, is much more limited than it should be; no wonder that people then don't really care about EU elections.
The trouble with their limited influence has mainly to do with the fact that the political capital to lead european parties take the lead (instead of national ones) is something which is currently political suicide among many politicians.
This is a chicken and egg problem, national politicians can always blame the EU for their problems, and the European political parties are not able to prove their worth because they are being held down by national politics of member states.
One solutions would be a completely seperate system, but that would require some form of federalisation, which is politically and culturally not feasable at the moment.
This is a chicken and egg problem, national politicians can always blame the EU for their problems, and the European political parties are not able to prove their worth because they are being held down by national politics of member states.
One solutions would be a completely seperate system, but that would require some form of federalisation, which is politically and culturally not feasable at the moment.
> after seeing on of the videos on the EU I am now skeptical
The EU is almost desperately transparent: http://europa.eu/
> There are 3 big voting bodies: EU Council, EU Parliament, and EU comission.
The Council are the elected heads of state of EU members. They decide on the course.
The EU commission is tasked with implementing that course, and producing legislation.
The EU parliament is tasked with correcting that legislation. Although they have little legislative power, they can dissolve the commission. In the grand scheme of things, the buck stops with them. They are elected directly by EU citizens.
> they started micro-managing everything in the EU.
The EU takes care of the things almost all members agree on (remember, the Council sets the course). They don't get to be involved in high-coverage contentious politics.
> Think of gdpr
Yes, a highly popular measure inside Europe, even by tech people who are affected by it.
> It's starting to resemble a big authoritarian state.
Yes, they will force members to do their bidding with fish-quota, clean beaches, and humane labour conditions.
The EU structure is a little complicated, but it's 400 million citizens we're talking about. Its powers are very limited and is derived from 27 countries wanting to interact to try and set a course that benefits everyone, instead of individual countries racing each other to the bottom with disastrous results.
The EU is almost desperately transparent: http://europa.eu/
> There are 3 big voting bodies: EU Council, EU Parliament, and EU comission.
The Council are the elected heads of state of EU members. They decide on the course.
The EU commission is tasked with implementing that course, and producing legislation.
The EU parliament is tasked with correcting that legislation. Although they have little legislative power, they can dissolve the commission. In the grand scheme of things, the buck stops with them. They are elected directly by EU citizens.
> they started micro-managing everything in the EU.
The EU takes care of the things almost all members agree on (remember, the Council sets the course). They don't get to be involved in high-coverage contentious politics.
> Think of gdpr
Yes, a highly popular measure inside Europe, even by tech people who are affected by it.
> It's starting to resemble a big authoritarian state.
Yes, they will force members to do their bidding with fish-quota, clean beaches, and humane labour conditions.
The EU structure is a little complicated, but it's 400 million citizens we're talking about. Its powers are very limited and is derived from 27 countries wanting to interact to try and set a course that benefits everyone, instead of individual countries racing each other to the bottom with disastrous results.
> > Think of gdpr
> Yes, a highly popular measure inside Europe, even by tech people who are affected by it.
I beg to differ. 'Controversial' is more like it. There are some who are in favour of GDPR but there are also those - myself included - who consider it well-intentioned but badly executed.
> Yes, a highly popular measure inside Europe, even by tech people who are affected by it.
I beg to differ. 'Controversial' is more like it. There are some who are in favour of GDPR but there are also those - myself included - who consider it well-intentioned but badly executed.
If how the Greek bailout was handled serves as a reference of how those 3 bodies work then I’m very skeptical of the EU as a viable political entity. I’ve always thought that the EU was a good idea, but the lack of transparency and the feeling of being driven by closed door politics and Germany having too much clout and disappointingly making very selfish decisions puts Brexit under a different light. I still think is a terrible idea but those are things to consider
Yes, I mentioned both gdpr and copyright as I'm not disingenuous to just paint the negative side only. And the point was them micro-managing law.
You conveniently kept out the copyright one.
You conveniently kept out the copyright one.
What you call micro-managing is really regulations. And those are almost synonymous with the single market. If regulations would not be the same, there could be no single market (that benefits everyone, including companies and workers), because national differences would distort that.
Do you really think the people want new draconian copyright rules?
No, but big lobbyists do, so there we go.
No, but big lobbyists do, so there we go.
This is simply not true. I know the MPs that I voted for as well as the leaders of the major blocks and those who regularly talk. I sure know who is the german member of the commission as well as the president. And I know the president of the council. This is comparable to what I know about national politics as well. I don‘t know most MPs and can‘t name all ministers. For most of my friends it is the same.
Furthermore if people wouldn‘t know that explains very little about the EU.
Furthermore if people wouldn‘t know that explains very little about the EU.
here's a better analysis https://www.ineteconomics.org/perspectives/blog/why-hysteria...
this is the usual monthly forecast that gets dropped in the hope that, maybe this time, it'll be true. we had the italy, france, greece, chinese, spanish, portoguese, greece again articles in the last six or so month.
at some point people should realize there's a pattern of just yelling loom hoping it sticks and that most of those "articles" when their forecasts are tested are worse than a coin toss, because their core goal is bringing views, not being accurate.
this is the usual monthly forecast that gets dropped in the hope that, maybe this time, it'll be true. we had the italy, france, greece, chinese, spanish, portoguese, greece again articles in the last six or so month.
at some point people should realize there's a pattern of just yelling loom hoping it sticks and that most of those "articles" when their forecasts are tested are worse than a coin toss, because their core goal is bringing views, not being accurate.
I watched EU debt crisis since 2012. In 2015, I watched this animation about EU debt crisis on Bloomberg:
https://www.youtube.com/watch?v=j4_tyEl84IQ
Since 2016, I spoke with many greeks, spanish and it looks to me that vast majority of them believe in wrong things. Therefore they will continue to vote for left or right populists no matter what. Their left and right are anti free market, anti fiscal conservatism, pro spending, pro welfare, against businesses.
In very long term, EU is unsustainable. Too many countries with different interests and huge moral hazard.
https://www.youtube.com/watch?v=j4_tyEl84IQ
Since 2016, I spoke with many greeks, spanish and it looks to me that vast majority of them believe in wrong things. Therefore they will continue to vote for left or right populists no matter what. Their left and right are anti free market, anti fiscal conservatism, pro spending, pro welfare, against businesses.
In very long term, EU is unsustainable. Too many countries with different interests and huge moral hazard.
Since 2001, I spoke with many Americans and they believe in wrong things. Therefore they will continue to vote for left or right populists no matter what. Their left and right are warmongers, anti-internationalists, anti-peace in the Middle East, anti-immigration, anti-poor people, against universal access to medicine.
In very long term, US is unsustainable. Too many states with different interests and huge moral hazard.
(Of course, I don't really believe this; I'm just showing you how your populistic generalizations can be equally applied to any federal state on the planet. Please try to see beyond the propaganda you are subjected to.)
In very long term, US is unsustainable. Too many states with different interests and huge moral hazard.
(Of course, I don't really believe this; I'm just showing you how your populistic generalizations can be equally applied to any federal state on the planet. Please try to see beyond the propaganda you are subjected to.)
Usually, people who trade smarter than those who vote. So stock market is constant voting machine for expected future earnings, it's fair to say that indexes provide pretty accurate overview of economy.
With that in mind, if you look at SPY (US) and compare it with EWI (Italy) and EWP (Spain), you will see that Italy and Spain are not going anywhere since 2008 and US at that time made huge progress.
https://www.marketwatch.com/investing/fund/spy
https://www.marketwatch.com/investing/fund/ewi
https://www.marketwatch.com/investing/fund/ewp
Now, take a look at GDP of US:
https://www.google.com/publicdata/explore?ds=d5bncppjof8f9_&...
And compare it with sad picture of Italy and Spain and Greece:
https://www.google.com/publicdata/explore?ds=d5bncppjof8f9_&...
US has populists but their debt denominated in their own currency and on top of that US economy is very diverse and strong. US is much more business friendly than Italy, Spain and Greece. And their debt denominated in currency they can't print.
If you are anti-business and pro-welfare, then your business won't flourish and at the same time you will accumulate huge debt.
With that in mind, if you look at SPY (US) and compare it with EWI (Italy) and EWP (Spain), you will see that Italy and Spain are not going anywhere since 2008 and US at that time made huge progress.
https://www.marketwatch.com/investing/fund/spy
https://www.marketwatch.com/investing/fund/ewi
https://www.marketwatch.com/investing/fund/ewp
Now, take a look at GDP of US:
https://www.google.com/publicdata/explore?ds=d5bncppjof8f9_&...
And compare it with sad picture of Italy and Spain and Greece:
https://www.google.com/publicdata/explore?ds=d5bncppjof8f9_&...
US has populists but their debt denominated in their own currency and on top of that US economy is very diverse and strong. US is much more business friendly than Italy, Spain and Greece. And their debt denominated in currency they can't print.
If you are anti-business and pro-welfare, then your business won't flourish and at the same time you will accumulate huge debt.
Apples to oranges; I can get the same results if I compare EU numbers to Nebraska or Louisiana. Please don’t insult your intelligence with these false equivalences.
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I just think politics has never generated employment.
Organization and the real economy do.
I think planning more debt is a mistake, especially when they have a clear (or smart) way to spend it. (see corruption, mafia, bureaucracy etc...)
Organization and the real economy do.
I think planning more debt is a mistake, especially when they have a clear (or smart) way to spend it. (see corruption, mafia, bureaucracy etc...)
Yesterday one of my friends said that the EU won't be anymore around 2040, 2050.
Sadly i was too drunk to ask why.
I don't think it would be the usual answer. Like credit, debt, economic fail etc.
He is a professor in cluster economics ( no idea how to translate that) basically he researched development of states, cities and clusters around certain thinks like how a city develops around a river or sea or what happens around a coal mine or easy cheap internet access (his last research)
So I kinda wonder now, why he thinks the EU won't exist after 2040/ 50..
Sadly i was too drunk to ask why.
I don't think it would be the usual answer. Like credit, debt, economic fail etc.
He is a professor in cluster economics ( no idea how to translate that) basically he researched development of states, cities and clusters around certain thinks like how a city develops around a river or sea or what happens around a coal mine or easy cheap internet access (his last research)
So I kinda wonder now, why he thinks the EU won't exist after 2040/ 50..
Please do ask him!
It certainly could cause a crisis
Or it could be the student loans bubble bursting. Or the deficit increasing tax cuts in the US
Or it could be the student loans bubble bursting. Or the deficit increasing tax cuts in the US
Those articles usually claim also that Italy is full of racism, I leave in Italy and that is completely wrong. Media play with information and can happen that media spread wrong information.
I love how, left or right, it always ends up being someones fault. Except Italy.
Same story as every thread discussing Greece.
Same story as every thread discussing Greece.
I couldn't agree more.
I am Italian and I think it is only Italian bad administration's fault.
All bad choices taken in the last 20 years are showing their effect now.
I am Italian and I think it is only Italian bad administration's fault.
All bad choices taken in the last 20 years are showing their effect now.
This is exagerated propaganda. Italy will do it well.
We should kick them, an all other questionable economies, out of the Euro, to tbe frank.
But what problem would that solve?
Of course it's easy to say "It's their own fault, let them stew in their misery", but that doesn't enhance stability.
The EU isn't about making everybody rich, but it is about preventing poverty to such a degree that people en masse would start to panic vote for the first strongman who promises to fix everything.
If your solution is the same as the anti-EU politicians from a country ("We should revert to sovereign currency so we can print our way to wealth") it's likely not the best solution for the long term interest of the bloc.
Of course it's easy to say "It's their own fault, let them stew in their misery", but that doesn't enhance stability.
The EU isn't about making everybody rich, but it is about preventing poverty to such a degree that people en masse would start to panic vote for the first strongman who promises to fix everything.
If your solution is the same as the anti-EU politicians from a country ("We should revert to sovereign currency so we can print our way to wealth") it's likely not the best solution for the long term interest of the bloc.
> Of course it's easy to say "It's their own fault, let them stew in their misery", but that doesn't enhance stability.
Neither does having a country have their economy fail every few years.
Neither does having a country have their economy fail every few years.
I don't recall Italian economy having failed in recent times.
There can be a middle ground. Keep the basics of a trading block and other small but essential concepts. But let them be adults and manage their debt and currency. Currently their populist government doesn't care about yields because pappa EU will guarantee that debt, like they did with Greece. They even own a good chunk of it!
That's why I said 'euro', not 'EU'.
Let me guess, you are german. Trading deficit parity when? Or laws you signed don't apply to you?
Many Germans would be happy to leave the EU or at least the Euro if the German presence is such a burden to other countries.
The Euro benefits the 1%, but not the "common" (i.e. actually working) population.
The Euro benefits the 1%, but not the "common" (i.e. actually working) population.
> benefits the 1%
That's an American slogan and approach, and maybe with their policies of wealth distribution, it's a legitimate target. In Europe the resentment against the very rich is usually reserved for those who dodge taxes.
> the "common" (i.e. actually working) population.
The common, actually working, population usually has pension build up and savings. Try asking those people who formerly had highly volatile currencies how they feel about having those in Euro.
That's an American slogan and approach, and maybe with their policies of wealth distribution, it's a legitimate target. In Europe the resentment against the very rich is usually reserved for those who dodge taxes.
> the "common" (i.e. actually working) population.
The common, actually working, population usually has pension build up and savings. Try asking those people who formerly had highly volatile currencies how they feel about having those in Euro.
The beneficiaries of wealth distribution in Germany are unproductive civil servants and stock holders.
Government money is being redirected to a) prevent revolts (social security) b) sustain the privileges of the civil servant class c) prop up the stock market and house prices for the wealthy.
The Euro facilitates this; giving public funds to country X so that part of it is spent back in Germany (prop up the stock market) is just one gambit of stealing money from the common population.
The working population in Germany does NOT have secure pensions in general. Please look up "Altersarmut" (old age poverty).
And the D-Mark wasn't volatile...
Government money is being redirected to a) prevent revolts (social security) b) sustain the privileges of the civil servant class c) prop up the stock market and house prices for the wealthy.
The Euro facilitates this; giving public funds to country X so that part of it is spent back in Germany (prop up the stock market) is just one gambit of stealing money from the common population.
The working population in Germany does NOT have secure pensions in general. Please look up "Altersarmut" (old age poverty).
And the D-Mark wasn't volatile...
> Let me guess, you are german
Swing and a miss.
Swing and a miss.
- Trade war
- Chinese growth faltering
- Chinese debt bubble
- Brazilian crisis
- Turkish crisis
- Italian populism / Italian debt
- US student loan bubble
- Real estate market slowing down in the US and the UK
- Brexit
- Over leveraged private companies because of the intense private equity deal making
- Tech companies reaching market saturation (internet access, smartphone or pc ownership, social medias, ecommerce), tech industry ceasing to be a high growth industry
I may forget some. Perhaps the next financial crisis will be the result of a combination of all of these rather than a single event (like the 2008 financial crisis was the result of a combination of a real estate market slowdown, a subprime debt bubble, and an over leveraged and complacent banking system, followed in 2011 by a sovereign debt crisis, of which Italy was already the most worrying elephant in the room).