will germany continue to bailout eurozone?

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Ana_R

@LovelyPlanet

Voyager

Posted: 12 years ago

I am not going to describe the Eurozone sovereign debt crisis here assuming that even casual follower knows the problem.

Question is should Germany secede Eurozone rather than injecting billions of euros country after country? should France and Germany form a new alliance when they don't see eye to eye?

Would it be better euro to plummet after Germany's exit and weak currency for weak nations will help improve their growth rate? Argument is weak currency will make Greece, Spain, Italy, Ireland attractive to investors at least. All these nations trying to implement austerity measures isn't going to help any of them when they need to help each other in improving growth rates.

If the aforementioned are such obvious solutions why no one from European commission is even remotely suggesting this possibility?

Edited by lonely0planet - 12 years ago

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BirdieNumNum

@CuckooCutter7

Dazzler

Posted: 12 years ago

damned if they do, damned if the Germans don't bail out the PIGS and others.

first some history. The Germans were amongst the biggest beneficiaries of a common currency (ECU). They went from a deutsche mark (DM) that was north of 1.60 to a relatively cheaper ECU. It made their industries more competitive, drove up their exports, and allowed them to amass billions. They then turned around and started extending loans to the PIGS.Of course, the Greeks and the rest were only to happy to dodge taxes, lead a lazy mediterranean life, have off-shore money, and let the Germans invest into their countries.

It was going great till the US sneezed. That's when europe caught a cold, and banks such as Deutsche bank that were minting money started having a tough time (they currently fall way short of Basel III capital requirements).

so if you look at it from both an ethical and an economic standpoint, the Germans should/ will have to pony up.

meanwhile, Merkel is in a bind. If she doesnt bail out the eurozone, the german economy takes a dive too and she also exposes German banks such as DB to bad loans. If she forks over the cash, she's seen as spending it on the lazy Greeks and the Italian cheats.

as for France, dont even get me started. They are a socialist country, withe verything from education to health paid for by the state. They wont be able to compete ion their own.

bottom-line, let's not be naive in thinking that politicians and economic policy makers havent thought through much of this.Of course, their response has been plodding and it has made matters worse because of their indecisiveness. It has kept markets on edge for example and by introducing uncertainty, it has jacked up risk premiums. But If the Germans continue to bail out the euro-zone, it's not because they are trying to be good samaritans..That assumption would be the height of naivete. 😊

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Vintage.Wine

@Vintage.Wine

Voyager

Posted: 12 years ago

I guess the sham nature of those obligatory bail out efforts is pretty apparent by the lack of co relation between the Euro and the Rising bond yields there ...It must be fun for Angela Merkel and her French counterpart to run that hilarious puppet show of the PIIGS ...But I would say the Brits were smart to stay clear of the awful mess with their wits ..😆 ...

It ll take those PIIGS leaders 20 years to decide over the right set of austerity measures ..and 20 more to have em passed in the Senates that are so divided ...And just how many EU banks can really pass the stress test ? I think the tests are rigged to some extent to help a few nations retain her sovereign ratings ..I'm serious ...If Germany keeps buying those Junk Greek bonds and helping Ireland stay afloat ..it can lead to serious ramifications in the form of economic deterioration ...There is this lack of honesty and some kind of a sly agreement between those nations ..The lenders I guess must write off all their loans to the PIGS...and its only then their true drear state would be exposed and trust me it's baint ...😆

The only ray of hope I would see to have regressed ...with the kind of desperate Anti Deflationary efforts that are underway in Japan ...Would it mark an end to all carry trades ? ..What's your guess ?

Vintu ...😛

Edited by Vintage.Wine - 12 years ago

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BirdieNumNum

@CuckooCutter7

Dazzler

Posted: 12 years ago

i think the idea behind creating the euro-zone was a good one- it would have gotten the europeans a market and the economies of scale to rival the US. But trust the europeans to fcuk up. 😆They messed up by not tying in monetary union with fiscal union as well. Of course, that would have still left the problem of how to get a motley bunch of europeans into a room. Throw in a dime?😆

for the british, it was all about not wanting to lose sovereignty which is why they didn't join in. They had to maintain their separate identity. ... couldn't have their stiff upper lip get crushed under german boots, could they?😆

^Vintu: i know the carry trade is pretty big these days. What the japs and other countries are trying to do is weaken their currencies... it's the new version of countries pursuing the famous beggar thy neighbor policy. 😊

Edited by BirdieNumNum - 12 years ago

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Vintage.Wine

@Vintage.Wine

Voyager

Posted: 12 years ago

Originally posted by: BirdieNumNum

i think the idea behind creating the euro-zone was a good one- it would have gotten the europeans a market and the economies of scale to rival the US. But trust the europeans to fcuk up. 😆They messed up by not tying in monetary union with fiscal union as well. Of course, that would have still left the problem of how to get a motley bunch of europeans into a room. Throw in a dime?😆

for the british, it was all about not wanting to lose sovereignty which is why they didn't join in. They had to maintain their separate identity. ... couldn't have their stiff upper lip get crushed under german boots, could they?😆

^Vintu: i know the carry trade is pretty big these days. What the japs and other countries are trying to do is weaken their currencies... it's the new version of countries pursuing the famous beggar thy neighbor policy. 😊

@ Bold: Yehahaha ...😆 ..Exactly ...And this reminds me of Physics without the TOE ...😆 ...The problem that we can see right now I guess is the tip of the Iceberg ..I believe the entire economic framework of he Euro zone has been hampered badly. Bonds buyback, Stimulus and Austerity << Now this is the funniest of all. Are they gonna help the scruffy economies become virgil? The best solution according to me is the split. I mean just separate the rotten apples from the bunch and your good ones would start selling again. Bailing out those nations with printed money ( Especially when they know that austerity would further weaken their economies as the purchasing power would be forcefully abated ) is not gonna help. Its like You taking responsibility for someone else's sins ...

The greatest risks I apprehend here are A. The unwinding of Carry trade ( And we just know it's depth. Japs had gone haywire borrowing from their government and deploying that fortune in other nations and assets. ) The commodity prices may see an artificial collapse ..Lowering of the YEN and Renminbi might help their own exports but then they ain't taking into consideration the over picture. If the US bonds see a sell off ( And US banks are sunk as far deep into this Euro Mess as the banks there I bet ) it ll be a disaster leading to another Lehman like crisis ? ..😆 ..And then all that people could do would be to watch those MSNBC chics << Their only cute rays of hopes ...Erin Burnett ? Becky quick ? ...😆

and B. The delay in the US Fed policy decisions ..The way they procrastinate hoping for some magic to happen. Like they did in 08 ..You must be remembering ..Every one was wailing over the sub prime mess and then those policy makers still went ahead to raise the Def rates for 17 times ..<<<< 😆 ..How bloody funny ...😆

Hm ..So my overall view is dump the PIIGS and let the nightmare pass by ..Endure a decade of trouble than a Life Long paralysis...😆

Vintu...😛

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BirdieNumNum

@CuckooCutter7

Dazzler

Posted: 12 years ago

Originally posted by: Vintage.Wine

and B. The delay in the US Fed policy decisions ..The way they procrastinate hoping for some magic to happen. Like they did in 08 ..You must be remembering ..Every one was wailing over the sub prime mess and then those policy makers still went ahead to raise the Def rates for 17 times ..<<<< 😆 ..How bloody funny ...😆

Hm ..So my overall view is dump the PIIGS and let the nightmare pass by ..Endure a decade of trouble than a Life Long paralysis...😆

Vintu...😛

actually, the Fed started lowering rates sometime around Oct 2007, a full year before the crisis hit full steam. http://www.moneycafe.com/library/fedfundsrate.htm#graph charts that.

in fact, it was easy monetary policy in the early 2000s that helped create the bubble. Yes they tried to raise rates to cool down the economy but folks were so leveraged by then that a normal Fed response to an over-heated economy blew up...

but once the crisis struck, the Fed has been unprecedented in terms of it's response both with loosening monetary policy and with Quantitative Easing. The Fed has wracked up a 3 trillion USD balance sheet because of that.

by contrast, the response at the ECB and from european politicians has been muddling, woeful and dismally slow. They just cant stop bickering and deciding who has to pony up. As far as i am concerned, the only thing those guys are any good for is their snobbery, they are different banana republics in the making.😆

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Vintage.Wine

@Vintage.Wine

Voyager

Posted: 12 years ago

Originally posted by: BirdieNumNum

actually, the Fed started lowering rates sometime around Oct 2007, a full year before the crisis hit full steam. http://www.moneycafe.com/library/fedfundsrate.htm#graph charts that.

in fact, it was easy monetary policy in the early 2000s that helped create the bubble. Yes they tried to raise rates to cool down the economy but folks were so leveraged by then that a normal Fed response to an over-heated economy blew up...

but once the crisis struck, the Fed has been unprecedented in terms of it's response both with loosening monetary policy and with Quantitative Easing. The Fed has wracked up a 3 trillion USD balance sheet because of that.

by contrast, the response at the ECB and from european politicians has been muddling, woeful and dismally slow. They just cant stop bickering and deciding who has to pony up. As far as i am concerned, the only thing those guys are any good for is their snobbery, they are different banana republics in the making.😆

Oh! Yeah ...You are right ...The rates were raised earlier, but they didn't lower them quickly <<<< ( You remember what JIM Cramer had to say on Mad Money that time?...It was hilarious ..I mean his snarky way to display anguish ..It was laugh worthy..) and when they did they did that stupendously... .. 😛..I guess the history might repeat itself ..Can the Greeks renounce their lavish lifestyle ? Will they allow full fledged Austerity as suggested by the bounteous donor nations ? ... Would Angela Merkel be their Mary Antoinette...? 😆 ..I guess they won't slouch this time ..They ll rather topple the government or just move out ..Another Exodus in the offing? ...I bet ..I bet ..😆

Vintu...😛

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BirdieNumNum

@CuckooCutter7

Dazzler

Posted: 12 years ago

Originally posted by: Vintage.Wine
Oh! Yeah ...You are right ...The rates were raised earlier, but they didn't lower them quickly <<<< ( You remember what JIM Cramer had to say on Mad Money that time?...It was hilarious ..I mean his snarky way to display anguish ..It was laugh worthy..) and when they did they did that stupendously... .. 😛..I guess the history might repeat itself ..Can the Greeks renounce their lavish lifestyle ? Will they allow full fledged Austerity as suggested by the bounteous donor nations ? ... Would Angela Merkel be their Mary Antoinette...? 😆 ..I guess they won't slouch this time ..They ll rather topple the government or just move out ..Another Exodus in the offing? ...I bet ..I bet ..😆

Vintu...😛

i think any rich greek worth his trojan horse has by now bailed himself out. 😆 In fact they've been bailing themselves out for years with theirtax-dodging off-shore ways. That leaves the poor greek sops and the rest to bail each other out. But i dont have much sympathy for the germans either. They were the ones who benefitted the most from monetary union, so by all rights they should be the ones ponying up. And if they dont, they're the ones likely to also lose the most.😊

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Forever-KA

@Forever-KA

Rocker

+ 4

Posted: 12 years ago

looks like Miss Lonely0planet is busy solving world's economic problems. lol.

unfortunately i have no idea what this topic is about. however Mr. Num and Mr. Wine are on the task.

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Vintage.Wine

@Vintage.Wine

Voyager

Posted: 12 years ago

#10

Originally posted by: King-Anu
looks like Miss Lonely0planet is busy solving world's economic problems. lol.

unfortunately i have no idea what this topic is about. however Mr. Num and Mr. Wine are on the task.

Hahaha ...😆...Raam ...discussing such things are helping me in a great way ...in feeling Less pauper ..and not the only someone with huge debt ...😆 ...Can someone bail me out too ? Um ..You ? ...WTH ...😆

Vintu...😛

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will germany continue to bailout eurozone?

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