Greece and others????

[Makkin]

   Greece has done enough damage so far but out there lurks Spain and Portugal. The world economies will and are suffering for a time due to the EURO but only a miracle will save this money.

   Australia has dropped it's value of currency by about 10% in only a month or so and looks to fall farther due to European connection to the EURO.

   As stated here years ago I've advised about precious metals and now there are in vending machines available in Germany and Dubai. These machines are connected to the price fluctuation and change value at about every ten seconds. The amount of purchase is in grams at this point.

   I will predict that Europe will suffer devestation for many many years unless the EURO is dropped. With all these countries not taking orders from each other it simply makes it impossible to inforce a federal type system and due to the GDP of these countries being way lower than the debt unlike Canada who is number ONE in the G-8 and followed by the USA in second position. The fairy tale is over but the damage is not.


Makkin


  

[Shadow]

Removing the Euro will not remove the problems, but will likely increase them.

The cost for each country to reinstate a national currency and money exchange system will be much higher as any contribution to be made to a country with economic trouble.

Strange how people look at this time as the Euro being in trouble, while at the time it was introduced as currency the exchange rate between Euro and USD was similar, and there have even been ideas of Euro and USD getting a rate of 1 = 1 a little over 5 years ago,

I do not like the current panic in measures some states take, as many of them are counter prodctive to rising the economy.

Greece has always been on the limit, and in the past year every country in the world has had negative effects, making it nothing more than expected that some will show trouble.

[wiz]

Before making statements like the one you made, Robert, go back and have a look at the historical exchange rates between Euro V Dollar and V GBP. The EURO is a very strong and powerful currency, which is threatening and will overtake the supremacy of the US Dollar.

Don’t let’s forget that the USA has used its not inconsiderable influence with the UK (classic British understatement here) to try to get the EU to admit Turkey.

This I have always opposed strongly right from the start! I knew right away that it was a ploy by the USA to try to destabilise the EU which is the world’s #1 Economic Superpower, and which the USA perceives as a threat to its global supremacy consequently.

Historical note: if you’re a rival to the US’s economic supremacy that makes you, De facto, ‘the enemy’ immediately. The USA is always up to this kind of mischief in Europe and the USA’s Banking Sector (which now operates from The Strip in Las Vegas btw) has darn-near destroyed the global economy. Well done America!

Focusing on the external debt of countries presently, the USA is, of course, the world Olympic champion - with Obama adding a cool 3 Trillion bucks to Bush’s $10Trillion in little over a year!?) Followed by us (copycat Britain that would be), of course. Followed by Germany.

But at least Germany has the excuse that it had the cost of unification to bear which has so far soared to more than 25 times the anticipated cost. What comparable excuse does the USA or we in the UK have?

To its credit, Germany is now in the process of reducing its external debt, unlike the USA and the UK each of whom seems determined to drive their/our national debt up to infinity. With respect to the idea that the national debt is just something we pass on to our children who simply pass it on to their children, and so on indefinitely, I think that anyone thinking like this is a fan of the present thinking on Wall Street and in The City of London.

Personally I call this “Voodoo Economics sprinkled liberally with alchemy”. And I’m certain that if he were here with us, Adam Smith would agree wholeheartedly with me.

If you think the Euro is an inherently "weak" currency, then look at the U.S. Dollar, with its galaxy-sized mass of debt looming above it, currently suspended by Chinese silk threads but just waiting for the moment at which to drop down and crush it.

The Euro is a viable currency and with the current crisis, those underperforming economies will get a real kick in the bottom to sort them selves out, and hopefully learn the lesson and become stronger in the future.

Germany instituted a ban on the naked short sale of shares in the country’s top financial institutions (the casino financial products dreamed by the spivs on Wall street) and the bonds of Eurozone countries until March next year. It has also banned the purchase of credit default swaps (CDS) on Eurozone government bonds, other than for hedging purposes.

Naked shorts — when the person selling the asset does not own it and has not borrowed it from a third-party broker — had been blamed for exacerbating falls in the stock market. Ms Merkel also urged the European Union to speed up supervision of financial markets and to introduce a new tax on them, which is well overdue but the Brits and American’s resist!

She said that European leaders had to ensure that banks could not pressure the state any more and that the EU would introduce its own financial transaction tax or levy if the Group of 20 nations did not reach such an agreement in June.

Well done Angela Merkel.. Please follow-up with more of the same.

Measures like this are the only way to effectively regulate hedge funds. It is not market regulation as individual investors are still free to buy and sell as they please.

Why should a small number of individuals, “Investros = speculators”, be able to influence the market through leverage and a nod and a wink to the rest of the herd and destroy the stability of many countries?

Please give us some more Angela and I hope the bloody British Goverment join too!

[I/O]

a ploy by the USA to try to destabilise the EU which is the world’s #1 Economic Superpower, and which the USA perceives as a threat to its global supremacy consequently.

Huh? A little bit contradictory methinks. No more than 2 years ago I was hearing on these forums how the USD was finished and the Euro was "it". I thought "The Wheel of Fortune" was a TV quiz show.

[kievstar]

The Euro was introduced at .85 to 1 usd.  It is still ahead at .8 to 1.  It than hovered over 1 to 1 until the East of Europe was brought in and got stronger.  Euro is not the problem.  USD is not the problem.

The problem is Asia is getting more competitive and socialism, pension plans, and high taxes will not work in Europe and USA.  Asia is very attractive for investment and their population is getting highly educated.  People who can compete will do well.  People who do not will fall behind unless government jumps in to drag everybody down.  Europe and USA are under the model of not competing and helping the weak.

Economics do not work where everybody is on the same page and wins.  There are winners and losers.  USA and Western Europe got lazy and governments need to let 20% fall into poverty and get some tough love.  Governments are choosing to bring down the hard workers and destroy everybody.

One of the reasons I married a foreign women was that I want the flexibility of relocating when things get to bad in the USA.  Ex wife never would leave USA.  I also relocated to a state in the south that is not so damn liberal.   

[I/O]

I also relocated to a state in the south that is not so damn liberal. 

[daveyj]

I work in finance, which means both that I know what I'm talking about and also that I have no idea what I'm talking about.

Sovereign debt is the story of the next decade, and I think the following charts put things in perspective.
http://www.marketoracle.co.uk/images/2010/Mar/global-debt-crisis-country-bankruptcy-risk.gif

And national debt rollover in 2010 (ie re-issuing previously issues bonds which have matured)...
http://www.market-melange.com/wp-content/uploads/2010/03/Debt.jpg

And the avg duration of various sovereign debt (note the good news for the UK, as they have mostly long term debt- very smart at this point in time I think)
http://av.r.ftdata.co.uk/files/2010/03/ScreenShot393.jpg

There is a limited amount of liquid wealth in the world, and if governments can't refinance their debt, then they can't meet their ongoing obligations (both in running their country, and in servicing their remaining debt).  This is known as "bankruptcy", and Greece is only the first of many who will be staring this in the face.  In short, its easy to keep things going fine as long as governments can service their existing debt with increased debt.  But this is called a ponzi scheme, and eventually it must contract (crash?) when the pool of available capital is not sufficient to sustain continuous expansion in sovereign debt.

We are in uncharted waters, and I encourage everyone to consider that the "normal" of the past 30 years is not necessarily the normal for the next 30 years.  In this environment the best things to do are 1) reduce debt 2) stay liquid 3) diversify.
just my two cents (and as you can imagine, I'm not very popular at parties when I talk about this stuff )

[Gator]

Wiz,

Ahhhh, a defender of the EWU steps forward.  How sweet.  If your precious Euro is to be saved, the EU members have some serious unpopular work to do.  Is Germany willing to pay the bill for Le TARP?

I recall that you are Greek.  Thus, I was not surprised to see your unmistakable face among the demonstrators in Athens.  You were screaming that you wanted: your pension increased, 9 weeks of paid vacation, 100% free health care, and most important free unlimited Viagra.     Your son was also there protesting that he wanted to retire at 50.

Seriously, it seems that the protestors come mostly from the public sector, something that has taken a long time to develop to its burdensome size.  I fear that America is well along the same direction, especially with our liberal leadership.   Oddly, I understand that the Greek private workers receive low wages, yet must pay EU prices.  So they too will feel the pinch of austerity.

Question, where did Greece spend the $400 billion that they owe,

 

[Gator]

We are in uncharted waters, and I encourage everyone to consider that the "normal" of the past 30 years is not necessarily the normal for the next 30 years. 

That's the truth!

Last year with the economic downturn, the number of American men visiting RW declined.  Now it seems that EU men will not be venturing to the FSU as much.

The problem is Asia is getting more competitive and socialism, pension plans, and high taxes will not work in Europe and USA.  Asia is very attractive for investment and their population is getting highly educated. 

So the RW should stop English and German lessons and replace them with Chinese lessons.  The CM will be visiting them in a golden horde.

One of the reasons I married a foreign women was that I want the flexibility of relocating when things get to bad in the USA.  Ex wife never would leave USA.  I also relocated to a state in the south that is not so damn liberal.   

Where can you go to escape if the USA becomes so bad?  I suppose you are talking about escaping high taxes to pay for Obama's initiatives. 

[daveyj]

Question, where did Greece spend the $400 billion that they owe,

Tax dodging is a way of life in Greece.  Consider the following blog, which talks about wealthy neighbourhood where 300 people who declared ownership of a swimming pool to the taxman, when satellite photos showed 17000+ pools in the area.
http://www.taxresearch.org.uk/Blog/2010/05/03/when-tax-fails-so-does-the-economy-and-then-society-itself/

Elsewhere, reports say that only 3000 people (in a country of 11 million) declare an income greater than $200k.
http://www.irishtimes.com/newspaper/weekend/2010/0515/1224270452127.html

[Shadow]

Some Russian comedians hit the nail when making a graphic display of the differences.

They showed the Greek as eating an olive while enjoying the sun, with Germans shouting 'ARBEITEN'.
The nature of Greek people is to enjoy life more than enjoy wealth, meaning they wil get what they need to enjoy life, nothing more and nothing less.
This clashes with other nations where to gather money is seen as the highest good.

As for measures regarding pensions and similar things, you have to consider the economy as a whole, and here the Russian leaders have done a surpisingly good thing.
When confronted with the crisis and rising unemployment last year they did something that is reverse from many other governments. They raised the pensions 2.5 times.
This has made it possible for a large number of elder people who already passed the pension age to actually retire, thus creating a number of jobs.

Many governments are not looking further as today, and fail to realise 1000 Euro tomorrow is worth more as 10 Euro today (even with the current decline )

I recall last year some people bringing up that Russia and Gazprom were bound for failure because of the oil price, which would be low for a long time.
The same people will now point at the Eurozone and tell it will collapse because of debts. Somehow I guess they will be wrong again.
On the other hand, ifyou live every day as if its your last, one day you will be right.

[Makkin]

  I doubt the US wants the Euro to fail????



   The way of stability is the way of prosperity but who in their right mind would want to destroy the world economy in a ripple effect?


    I don't believe the EURO is or was the worlds strongest piece of paper but it may have been hyped a lot due to so many visitors from abroad to Europe.  Not as many other curriencies floating in as before.


    The problem is simple in that the EURO is not a country but a group of countries that do not have  federal law to mandate as does the USA. Greece can do whatever they want to right???


Makkin


  

[BillyB]

They showed the Greek as eating an olive while enjoying the sun, with Germans shouting 'ARBEITEN'.

Since Arbeiten tranlsates to "work" it reminds me of what a liberal German friend on mine once said 7 years ago. He said he didn't think the European Union would last long because many European nations and their peoples still don't get along and some nation's people are lazy.

Although the EU has a slightly bigger economic output compared to the USA, they need 50% more people to accomplish that. I would believe the average German worker works hard and puts out as much or more than the average American worker but the average German worker may begin to feel he's not only pulling their fair share of the load compared to other Europeans, but supporting others as well. Angry and hatred will start to brew.

[wiz]

Huh? A little bit contradictory methinks. No more than 2 years ago I was hearing on these forums how the USD was finished and the Euro was "it". I thought "The Wheel of Fortune" was a TV quiz show.

Do you think printing money to bail out bankrupt banks and industries will resolve the credit crunch liquidity problem?

Do you think that China will continue in perpetuity buying American Government bonds (Basically lending money to USA) and what it will happen to the Dollar if they decide to cash the bonds?

[BillyB]

Do you think that China will continue in perpetuity buying American Government bonds (Basically lending money to USA) and what it will happen to the Dollar if they decide to cash the bonds?

China will hurt themselves if they want to cash the bonds. Many countries in Asia need our business. The last thing they want to do is piss off their customers. If we go down, they go down. Economic success in Asia is due to the Western World being big consumers. Very little economic success of theirs is credited to their own doing.

I think debt between nations isn't all that bad. If China attacks Taiwan, then we keep their money. Debt may have prevented a few wars. It only takes two European countries debt to surpass America's. UK which has the second biggest debt in the World owes the USA the most out of all they are in debt to. Sure America owes somebody but a lot of somebodies owe us. I'm sure many countries owe the UK too since they'be done a lot in the World.

[SANDRO43]

Since Arbeiten tranlsates to "work" it reminds me of what a liberal German friend on mine once said 7 years ago. He said he didn't think the European Union would last long because many European nations and their peoples still don't get along and some nation's people are lazy.

Simple explanation: when you live in a filthy cold, dark, sunless environment, what else can you do but work ? It's the same attitude we Italian Northerners have towards our Southern compatriots, from Rome downwards in latitude .

[Blues Fairy]

Simple explanation: when you live in a filthy cold, dark, sunless environment, what else can you do but work ?

Take 30-day vacations on the Southern beaches, at the expense of those who live there? 

[SANDRO43]

Take 30-day vacations on the Southern beaches, at the expense of those who live there? 

If you can afford them, by all means . But it's a question of mentality/attitude. You'll find a similar situation in Germany with Hamburg vs. Bavaria or, I'm speculating, Seattle vs. Los Angeles/Miami in the USA.

People in warmer climates always have a more 'detached' attitude towards productivity . I already related some time ago how back in 1976 an Italian entrepreneur in Rio de Janeiro, on hearing that daily absenteeism in Naple's Alfa Romeo plant averaged 30% then, quipped: "Wish I had some Neapolitans working for me here, daily 30% is at least something I could figure into my work schedule, Cariocas are totally unpredictable in this respect ".

[I/O]

Do you think that China will continue in perpetuity buying American Government bonds (Basically lending money to USA)

Absolutely..!! China has no choice. If they don't, they lose their biggest single consumer market as it won't be able to buy their products. The debtor nation is holding all the aces here, the trick is to keep the debt big enough that it can't be foreclosed on until or if you are in a position to repay it in one silver bullet. Uncle Sam isn't in so bad position in this one. If China did foreclose on Uncle Sam, who'd buy? Greece using German money? Russia using money owed (But she hasn't got yet) to her by Ukraine? 

[Gylden]

Absolutely..!! China has no choice. If they don't, they lose their biggest single consumer market as it won't be able to buy their products. The debtor nation is holding all the aces here, the trick is to keep the debt big enough that it can't be foreclosed on until or if you are in a position to repay it in one silver bullet. Uncle Sam isn't in so bad position in this one. If China did foreclose on Uncle Sam, who'd buy? Greece using German money? Russia using money owed (But she hasn't got yet) to her by Ukraine? 

Absolutely correct! It's the too big to fail concept that has everyone bailing out everyone else!!!

INflation, inflation, inflation....after all of the ghosts are out of the closet!

 

[wiz]

Tax dodging is a way of life in Greece.  Consider the following blog, which talks about wealthy neighbourhood where 300 people who declared ownership of a swimming pool to the taxman, when satellite photos showed 17000+ pools in the area.
http://www.taxresearch.org.uk/Blog/2010/05/03/when-tax-fails-so-does-the-economy-and-then-society-itself/

Elsewhere, reports say that only 3000 people (in a country of 11 million) declare an income greater than $200k.
http://www.irishtimes.com/newspaper/weekend/2010/0515/1224270452127.html

To the Greeks nothing of what you read in the blog and the IT, it's new. We all know that the rich few in Greece don't pay any taxes and the burden of taxation falls on the shoulders of the many, so the Greeks have learned how to survive and tax avoidance is endemic in all levels.

Tax avoidance is not just a Greek local problem and you will find it everywhere on the world. Rich countries have created Tax heaven offshore places for that reason and the Rich Brits are more clever and have the Channel islands and the Island of Man for that purpose!

In Greece, we have a saying: Greece (the Nation) is very poor but the Greeks are rich .......and if you visit Greece, take a look around to see their life style and what cars they are driving!

Sandro is right when he says the Southern Mediterranean people work less and have a good life.

Between 1996 - 2004 under the then PM Kostas Simitis (Social Democrat) a huge modernization program took place, with the help of EU funds and many large-scale infrastructure projects were carried out or begun during the so-called 'era of modernization, such as the new "Eleftherios Venizelos" Athens International Airport, the Rio-Antirio bridge, the Athens Metro, the Egnatia Motorway (Odos), which runs from the west of Greece to the North East frontiers with Turkey and also he organised building the facilities for the Olympic games of 2004.

Unfortunately the Greeks didn't liked him modernising the Tax offices and installing computers everywhere, making more difficult the avoidance of tax and in 2004 voted him out and the New Right wind corrupt Government during the next 5 years increased the 180 billion debt to the tune of 320 Billion.

Of course now the Greeks will have to pay with the austere measures imposed to them by the new Government in compliance to the bail out agreements.

For now the "Hedge Funds" changed their attention to the Euro and also to Spain and Portugal but my guess is soon they will go after the British pound and later against the Dollar or anywhere else where they can take bets and make money on the back of the poor people! For that reason, as I said before I agree with Mrs Mercel actions.



 

[Shadow]

 I doubt the US wants the Euro to fail????



   The way of stability is the way of prosperity but who in their right mind would want to destroy the world economy in a ripple effect?


    I don't believe the EURO is or was the worlds strongest piece of paper but it may have been hyped a lot due to so many visitors from abroad to Europe.  Not as many other curriencies floating in as before.


    The problem is simple in that the EURO is not a country but a group of countries that do not have  federal law to mandate as does the USA. Greece can do whatever they want to right???


Makkin


  

Wrong. There is a federal law in place, and countries who want to remain in the system have to comply to it.

At this time the Rouble and Yuan look pretty good. 

[Shadow]

China will hurt themselves if they want to cash the bonds. Many countries in Asia need our business. The last thing they want to do is piss off their customers. If we go down, they go down. Economic success in Asia is due to the Western World being big consumers. Very little economic success of theirs is credited to their own doing.

I think debt between nations isn't all that bad. If China attacks Taiwan, then we keep their money. Debt may have prevented a few wars. It only takes two European countries debt to surpass America's. UK which has the second biggest debt in the World owes the USA the most out of all they are in debt to. Sure America owes somebody but a lot of somebodies owe us. I'm sure many countries owe the UK too since they'be done a lot in the World.

That is what the people who took those bad mortgages thought as well. The bank needs customers, they will never foreclose us.

[Makkin]

Shadow,


  Before you just pop up and say "WRONG"...lol.


   The money used for some members of the EU is the EURO right? Some members don't use it right?  Great Britain is a good example of not using the Euro if I'm correct here?


   Maybe I did not explain exactly what I meant in regards to federal system?


   All the EU countries for the most part are independent right?


   Maybe up until now due to problems the EU based monetary system is not like the US system right?


   Is there an oversight law or set of actual laws that requires each Euro using country to spend a certain way? If this is true then why does each country have freedom to be independent?


   We know all the answers to these questions but the one big question and possibly the big answer is that each independent country shares a currencey but they do not share laws that would in effect each country in a law bound manner. This group of countries shares the Euro but Greece has shown the oversight or law bridge is lacking????????


Makkin

[daveyj]

The money used for some members of the EU is the EURO right? Some members don't use it right?  Great Britain is a good example of not using the Euro if I'm correct here?

All the EU countries for the most part are independent right?

Is there an oversight law or set of actual laws that requires each Euro using country to spend a certain way? If this is true then why does each country have freedom to be independent?

This group of countries shares the Euro but Greece has shown the oversight or law bridge is lacking????????

There are 27 countries in the EU, but only 16 of them are in the "eurozone" and use the Euro.
http://en.wikipedia.org/wiki/Eurozone

Great Britain isn't in the eurozone and it still has its own currency (pounds).

Yes, there are "laws" requiring the member countries to keep their deficits within 3% of GDP.  However clearly those laws have been soundly ignored by many of the countries in the union.

More info on the EU here
http://en.wikipedia.org/wiki/European_Union