Can someone please explain the eurodeal?

bendix

TruckerT wrote: »

How much does that cost me on a weekly basis?

TruckerT

Trucker, sometimes it's better to be quiet and be thought a fool, than to speak and remove all possible doubt.

Generali

TruckerT wrote: »

How much does that cost me on a weekly basis?

TruckerT

Assuming you're a UK taxpayer, nothing as you're not contributing to that part of the bailout.

CLAPTON

grizzly1911 wrote: »

No guarantee the State Banks will be sold off for a decent return. Certainly not in the short term.

The Banks are largely at fault for chasing profit and taking unnecessary risks. Allowing credit too freely and using complex tools to bundle up poor debt and pass it off as good to each other. They overlent their capital too many times.

Accept the Government needs positive cashflow but raising taxes in themselves won't do much good if there isn't anything to tax. What we need is a greater volume of tax paid on growing earnings. We need a positive flow of trade into this country, from a mixed portfolio of exports.

For all too many years we have lost our manufacturing base and we are predominately a "service" (parasite) economy. Yes we do buy in large amounts from China, and we have sold off our utilities to foreign investors so less funds are available in the UK to give the multiplier effect needed, from the import revenue, as they go straight back out again.

Whilst the public sector is a drain and has become bloated and unnecessary in parts - that is an aggrivated symptom and not the cause of our illness. We have a growing population so it isn't surprising that the public sector may need to grow in proportion.

we are the 6th largest manufacturing country in the world

why do you consider 'services' as parasites
don't you think they addd value
-insurance - your house burns down and they replace it (but do can choose not to insurance
-medical service- you get ill and they help make you better (maybe we should let everyone die and reduce the population that way)
-teachers e.g. maths, chemistry physics etc - we can get rid of those as we dont do engineering or science anymore
-universities - huge money spinners but with no maths/science teachers we can close them down soon
-fashion, films, music : make lots of (export) money but obviously not as 'good money' as making a polluting car


so if we work hard as destroying our parasitic economy we could build your dream economy - £2 an hour jobs competing with china in a race to the bottom

HAMISH_MCTAVISH

Generali wrote: »

what happens if the Chinese say, 'No'?

They won't.

The Chinese need a healthy European economy almost as much as the Europeans do.

The real problem with this "deal" is that it's very possibly not big enough, and that fault can be laid firmly at the door of the Germans.

The whole point of leveraging up the rescue fund is to provide so much financial firepower that the markets settle down and accept there is simply no way any Eurozone country can fail to be rescued if the need arises.

What they should have done is provide authority and a mandate to the ECB to print unlimited funds as a buyer of last resort for all Eurozone sovereign debt.

What they've done instead is provide a limited bailout fund that just isn't big enough to maintain stability in the event that the markets lose confidence wit a country the size of Italy or Spain. Hence vastly increasing the chances that the markets will lose confidence in a country like Italy or Spain. In which case we go right back to square one.

IMO this thing will not end until central banks make it abundantly clear to all concerned that they will use the nuclear option if need be.

What we have now is politicians repeating the mistakes of the 30's, with interventions that are too little, too late.

CLAPTON

now so far all the talk is about debt

but Greece has a budget deficit i.e. the government is spending more than it's raising in taxation
now I've read (but anyone knows for sure please add) that they run out of money in November /early Dec
realisticaly no-one believes that the greek government will raise any significant money from selling off state industries or in raising taxes

the debt haircuts etc don't address the imminent greek cash flow crisis

so whats happens in November
germany /eu gives greece money or buy greece newly minted bonds?

Generali

HAMISH_MCTAVISH wrote: »

They won't.

The Chinese need a healthy European economy almost as much as the Europeans do.

The real problem with this "deal" is that it's very possibly not big enough, and that fault can be laid firmly at the door of the Germans.

The whole point of leveraging up the rescue fund is to provide so much financial firepower that the markets settle down and accept there is simply no way any Eurozone country can fail to be rescued if the need arises.

What they should have done is provide authority and a mandate to the ECB to print unlimited funds as a buyer of last resort for all Eurozone sovereign debt.

What they've done instead is provide a limited bailout fund that just isn't big enough to maintain stability in the event that the markets lose confidence wit a country the size of Italy or Spain. Hence vastly increasing the chances that the markets will lose confidence in a country like Italy or Spain. In which case we go right back to square one.

IMO this thing will not end until central banks make it abundantly clear to all concerned that they will use the nuclear option if need be.

What we have now is politicians repeating the mistakes of the 30's, with interventions that are too little, too late.

Even the Chinese have finite amounts of money. If the Chinese are going to buy EUR500,000,000,000 then that's $750,000,000,000 of US debt that they're not going to buy.

The problem is that you can't bail out Spain and Italy. They're too big to fail but also too big to save. Italy for example has a national (Government) debt of about EUR1,900,000,000,000 (link). Spain has a national (Government) debt of EUR640,000,000,000 (link).

If Spain and Italy were to rely on France and Germany to guarantee say 30% of their debt that would be about EUR850,000,000,000. That's about 20% of the combined GDP of France and Germany. That would push both France and Germany's debt to well over 100% of GDP. If you add the EFSF to that, you've got 40% of GDP being stacked on to their debt levels pushing them up to the debt:GDP ratio of Italy, 120% of GDP.

I was listening to an interesting World Service program on the ABC today that was talking about strategy. The bloke that was talking said that the problem is, people look at what they want to happen and call it a strategy rather than looking at the problem and seeking solutions from there.

In that spirit, what do you think the problem is with Eurozone debt? Is it too much debt or not enough lenders for example?

Generali

CLAPTON wrote: »

now so far all the talk is about debt

but Greece has a budget deficit i.e. the government is spending more than it's raising in taxation
now I've read (but anyone knows for sure please add) that they run out of money in November /early Dec
realisticaly no-one believes that the greek government will raise any significant money from selling off state industries or in raising taxes

the debt haircuts etc don't address the imminent greek cash flow crisis

so whats happens in November
germany /eu gives greece money or buy greece newly minted bonds?

AIUI, Germany issues debt on behalf of the EFSF* and the EFSF buys Greek debt if the market won't.



*EFSF = European Financial Stability Fund. It's a fund run by the European Central Bank, guaranteed by the Eurozone members whose debt is issued by the German Debt Management Office.

bendix

Part of the deal is around Greek showing the rest of the EU clear signs that is is addressing the structural issues to deal with the deficit: if they don't show progress, they don't get the payments.

That is why they are looking at raising pension ages, cutting public sector salaries, looking at privatisations etc. These are very tangible conditions on getting continued existence, and they are quite appropriate.

homelessskilledworker

Interesting that you should be bring this up on a property board, I have always found the European union(euro) and the housing market to be very similar in so many ways.

1. Its foundations are built on huge debt

2. It's survival to date has been purely being rigged through throwing more bad money after more bad money at it.

3. Amazingly it has held up it's value even though everything on paper says it should fall like a stone.

4. A few bad apples(Italy, Spain, Greece) have milked it for all it is worth, with housing BTL, HB, banking system.

5. And most importantly, you cannot buck the markets, both will fail and the longer we leave it and the more money we throw at it the worse it will be.

FTBFun

bendix wrote: »

Part of the deal is around Greek showing the rest of the EU clear signs that is is addressing the structural issues to deal with the deficit: if they don't show progress, they don't get the payments.

That is why they are looking at raising pension ages, cutting public sector salaries, looking at privatisations etc. These are very tangible conditions on getting continued existence, and they are quite appropriate.

It might help if they had a crackdown on tax evasion also...