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Any way you slice it Germany wins.
Comments
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What is worse is they have created a system where bankers gamble with other people's money to profit themselves, then when they lose it are bailed out by the taxpayer. This huge loss to the taxpayer does indeed stop and discourage other economic activities.London has been a global trading centre going back 100's of years, it's the one thing we have left that is truely world class. It doesn't stop or discurage other economic activities. Unfortunately most of the growth in the UK has been artificially created by the previous government by encourageing a consumer boom through borrowing and increasing government spending.“It is difficult to get a man to understand something, when his salary depends on his not understanding it.” --Upton Sinclair0 -
germany needs to ditch the euro.
they won't sanction eurobonds as it would devalue their currency too much - best solution - germany out of the euro
discuss..0 -
Not sure why you think it would devalue the Euro, it would have the opposite effect - the Euro would strengthen as it would take the pressure off the weak countries.germany needs to ditch the euro.
they won't sanction eurobonds as it would devalue their currency too much - best solution - germany out of the euro
discuss..
The reason they don't want to issue them is the cost of their own borrowing would rise.
As for leaving the Euro - as I said in post 7 that would be the best solution but will never happen. Germany's boom is largely due to the low value of the Euro. As the world's no 2 exporter (no 1 until very recently) a low exchange rate is important.0 -
I don't see how this is sustainable and support the German's refusal of Eurobonds. There's a reason people/markets aren't willing to lend to Greece, Spain et al. and manipulating access to capital markets for them via Germany's credit record won't address the underlying problems and remove incentives for reform. The ECB's bond buying is similar. It's like a Guarantor loan but at nation level.The reason they don't want to issue them is the cost of their own borrowing would rise.0 -
Exactly the argument Germany uses against Eurobonds.There's a reason people/markets aren't willing to lend to Greece, Spain et al. and manipulating access to capital markets for them via Germany's credit record won't address the underlying problems and remove incentives for reform.
The Euro was flawed when it was set up because governments were largely allowed to do whatever they wanted even if their actions (eg racking ups debts) affected other nations using the same currency.
Germany does not really want Eurobonds at all, but if it does agree to them it will only be if all the other countries agree to tight integration.
We are caught up in politics rather than economics. The German public feels their hard earned taxes are being handed over to irresponsible nations that have and will continue to waste it. Currently Angela Merkel could not agree to Eurobonds even she wanted to.
Her only chance of being able to sell Eurobonds to the German public it if she can convince them "this time it will be different, we have a permanent solution". To have any chance of that she needs the other countries to effectively hand over control of their economies.
Imagine how it would go down in this country if Brussels told us each year how much we were allowed to spend and how much we were allowed to borrow. It is not likely to go down much better in many Eurozone countries.
I see no solution in the short term. Expect a lot of brinkmanship in the months ahead, and a lot of futile bailouts to buy time.0 -
Eurobonds are quoted as the panacea, but if you look at countries GDP then Germany is only around thirty per cent of eurozone. Put the Dutch and the Finns in and that ups it a bit but still well under half, effectively therefore a guarantee from around forty per cent of the people you trust, a minority even if the northern Europeans agree to it.0
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The Germans will blink ...
I am sure if they held their nerve it would all be good for them..
But they will blink .. They have not the stomach for this.0 -
Which is why she has to be cut out of the loop. Europe can't work as 27 countries all vetoing anything they don't like.Currently Angela Merkel could not agree to Eurobonds even she wanted to.
As opposed to Moody's telling us?Imagine how it would go down in this country if Brussels told us each year how much we were allowed to spend and how much we were allowed to borrow.
But Brussels would do a lot of the spending directly. For instance, we could have EU-wide social security, education and healthcare schemes paid for by Brussels.
Otherwise, you only end up with a bigger version of "postcode lottery". "We have to pay to subsidise their onion-growers and their tuition fees are lower than ours" blah blah for ever.
The trick is to leave the national boundaries out of it and drop the Us and Them."It will take, five, 10, 15 years to get back to where we need to be. But it's no longer the individual banks that are in the wrong, it's the banking industry as a whole." - Steven Cooper, head of personal and business banking at Barclays, talking to Martin Lewis0 -
I agree with pretty much all your points. Aside from the German legal aspects, I think Merkel has been losing support in her coalition and amongst the voters and selling anything to the German people will only get harder.We are caught up in politics rather than economics....Her only chance of being able to sell Eurobonds to the German public...
Guess it comes down to quality, not quantity. IMF figures (via Wikipedia) show Germany projected to have higher debt as a % of GDP than Spain until 2016 but people trust Germany will pay its debts, hence bond yields dropping below 0%, while Spain's keep heading over the 6% barrier. Pretty much like mainstream lenders not lending to the unemployed....if you look at countries GDP then Germany is only around thirty per cent of eurozone...effectively therefore a guarantee from around forty per cent of the people you trust...
If that was to happen, she may be inclined to take her cheque book with her. Europe can't work either by the prolifigate expecting their undeserved living standards to be maintained by the frugal.Which is why she has to be cut out of the loop. Europe can't work as 27 countries all vetoing anything they don't like.
The underlying problem is, I believe, that the nations are far too different. For example, Sweden has a smaller population than Greece (approx 9.5 vs 11.5 million) yet Sweden is home to some major international companies such as SAAB, Volvo, ABB, Atlas-Copco, AstraZeneca, IKEA, H&M, etc while Greece has...well...I can't think of any.The trick is to leave the national boundaries out of it and drop the Us and Them.0 -
SAAB - car divison gone bust
Volvo - car division owned by China
ABB - headquartered in Zürich, Switzerland
AstraZeneca - half British owned
IKEA - Dutch owned
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