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| for Klaus; Greek crisis and German bailout speculation | |
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| Tweet Topic Started: Sep 23 2011, 05:29 PM (505 Views) | |
| Axtremus | Sep 23 2011, 05:29 PM Post #1 |
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HOLY CARP!!!
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On the Greek financial crisis and the impending bail-out by Germany: http://www.colbertnation.com/the-colbert-report-videos/397647/september-21-2011/solutions-to-america-s-financial-worries---chrystia-freeland |
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| Klaus | Sep 24 2011, 05:46 AM Post #2 |
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HOLY CARP!!!
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I must say that the American coverage of the European financial crisis is rather oversimplifying and in part plain wrong. For instance, the video mentions that Germans had planned to force a political union by the currency union. In fact it was mostly France and to some degree the UK who had that agenda. Germany agreed to that only because the deal was that they would agree to the German reunion then. Germany was, across the political spectrum, always against a strong political union. American news also rarely reports on some of the crucial problems in the EU, such as the democracy deficit, or the battle between the EU parliament, the individual governments, and the EU commission. I also don't understand the reasoning why more centralization would be needed to deal with the financial crisis or with the common currency in general. If the Europeans would have just obeyed their own contracts (so-called Maastricht criteria) which set strict limits on deficits, had an explicit "no bailout" clause, and forbid the ECB to buy public bonds, then we would maybe see a country go bankrupt sometimes (actually probably we would not, because they'd know they would not be bailed out), but overall we would be much better off than now, and no further centralization of political competences is needed. More political integration won't happen anyway, at least not in Germany, because the courts have already said that what we have now is at the limit of what the constitution allows. I believe that the EU as it is now must be teared down and a new integration process with a much smaller set of countries must be started. The purpose of the new entity is to provide a framework for a trade union with a common currency (but with 100% no bailout guarantees), common foreign politics, but not more. The governments must have no say; rather, the full power should reside with a parliament. There is no other way, really, because the EU as it is now is almost unable to move. Some people object that the Europeans will loose political influence, or that the US would like to have "a single phonenumber" (also mentioned in the video), but the EU does not have any political influence anyway, so there is little to loose, and what the rest of the world thinks about how Europe should organize itself is not of primary importance to us. |
| Trifonov Fleisher Klaus Sokolov Zimmerman | |
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| jon-nyc | Sep 24 2011, 10:53 AM Post #3 |
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Cheers
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The guest on that show is an acquaintance of a former poster here - maybe MusicMagellan? Anyway she wrote a good book on Russia back when she was the FT correspondent covering it. |
| In my defense, I was left unsupervised. | |
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| jon-nyc | Sep 24 2011, 10:54 AM Post #4 |
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Cheers
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Klaus - I was about to disagree with you, but then all the counterexamples I could come up with were British press (FT, the Economist). Having said that, keep in mind the clip Ax posted is from a Comedy show. |
| In my defense, I was left unsupervised. | |
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| ivorythumper | Sep 24 2011, 10:57 AM Post #5 |
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I am so adjective that I verb nouns!
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Jon: Is there any reason to be concerned about US market shifts over the next few weeks? I have a number of mutual/ indexed funds in foreign sectors. It costs me nothing to transfer everything to a money market as a holding tank for my retirement accounts. Is there any possible upside to this? |
| The dogma lives loudly within me. | |
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| jon-nyc | Sep 24 2011, 11:06 AM Post #6 |
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Cheers
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I don't have an answer - despite what I see written, I don't see a huge potential contagion problem a la Lehman, because at the end of the day the Europeans won't let their banks fail. Even if there is no Europe-wide (German) bail out of Greece, there will be a French bailout of French banks. And while the argument of a European recession hurting our economy is legitimate, I don't think that justifies too much of a market selloff. That's just my view, however the markets have been pretty spooked by it so maybe I'm missing something. FWIW I topped up my Europe equities fund (VEUSX) just yesterday, since it dropped below my rebalancing band (10% off its target allocation). |
| In my defense, I was left unsupervised. | |
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| jon-nyc | Sep 24 2011, 11:10 AM Post #7 |
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Cheers
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To add to that, we might be better off getting out of the way of Europe for a while, but timing like that is hard - you have to get it right twice. My approach is to have an asset allocation that is consistent with your risk tolerance, then stay the course. |
| In my defense, I was left unsupervised. | |
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| ivorythumper | Sep 24 2011, 11:13 AM Post #8 |
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I am so adjective that I verb nouns!
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Thanks, Jon. I appreciate it. |
| The dogma lives loudly within me. | |
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| jon-nyc | Oct 27 2011, 07:50 AM Post #9 |
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Cheers
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So the market is up 12% in October, and is now above where it started the year. Who would have guessed? Not me. It goes to my point about not trying to time the market, its a game you're bound to lose. |
| In my defense, I was left unsupervised. | |
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| Kincaid | Oct 27 2011, 10:12 AM Post #10 |
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HOLY CARP!!!
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Hmmm...I need to go check my one international index fund in my daughter's college 529 plan. I put $1000 into it about 2-3 years ago and ever since then it has languished between $800-950 (the one stock I bought - everything else has been just money market at 0% or more lately, a bond fund trying to beat inflation - which has worked nicely so far). |
| Kincaid - disgusted Republican Partisan since 2006. | |
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| Klaus | Oct 27 2011, 12:11 PM Post #11 |
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HOLY CARP!!!
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DAX +5.3% today. My portfolio has mostly recovered from the crash. I wonder whether I should sell everything now to prepare for the presumably upcoming next crash. But then again, what should I do with the money instead? |
| Trifonov Fleisher Klaus Sokolov Zimmerman | |
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| Axtremus | Oct 27 2011, 12:15 PM Post #12 |
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HOLY CARP!!!
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You have to ask? Help the Greeks, of course! |
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| jon-nyc | Oct 27 2011, 12:23 PM Post #13 |
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Cheers
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Lol, Ax. |
| In my defense, I was left unsupervised. | |
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| Klaus | Oct 27 2011, 01:54 PM Post #14 |
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HOLY CARP!!!
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| Trifonov Fleisher Klaus Sokolov Zimmerman | |
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| Axtremus | Oct 31 2011, 10:34 AM Post #15 |
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HOLY CARP!!!
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From http://www.nationalpost.com/opinion/columnists/Europe+last+options/5626473/story.htmlFirst block of yellow-highlighted passages talks about Germany's place in all this. Would like to hear a German perspective on this if I can. (Klaus?) Second block of yellow-highlighted passages talks about a plan to "save the Euro" that seems to retread the American experience. Personally, I think marrying taxing authority with currency issuance authority is an unavoidable eventuality (and I've held this opinion since the creation of the Euro was being discussed). Would love to hear others' opinions on this as well. |
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| ivorythumper | Oct 31 2011, 10:46 AM Post #16 |
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I am so adjective that I verb nouns!
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Interesting, Ax -- I suspected this sort of political and economic centralization was the goal of the founders of the European Union from the inception. What would happen if Italy, Greece, Spain, etc all just walked away? An economic blood bath, or a real war? |
| The dogma lives loudly within me. | |
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| Axtremus | Oct 31 2011, 11:03 AM Post #17 |
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HOLY CARP!!!
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If we look at this as a retread of the American experience, "the South" tried to walk away ("secede"), and see what happened. ![]() Of course, that's just a very American-centric way of looking at things ... probably not very useful to grasp European affairs. I should probably go read the BBC or the FT more (may also check out Le Monde, but my French may have atrophied past the competency necessary to comprehend Le Monde), and perhaps you can skim over some Italian newspapers and see how the Italians are reacting to this ... then we can compare notes. Hopefully Klaus or wim or our other European posters would have chimed in by then. |
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| jon-nyc | Oct 31 2011, 11:08 AM Post #18 |
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Cheers
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My god, Ax. That seems like a poor analogy. I can't say I given the idea too much thought, but it seems to me that the closest analogy we have for (say) Greece to leave the Euro would be Argentina in 2001 when it dropped dollar convertibility. It seems much harder, though, since Argentina at least had a currency of its own, so it was just abandoning a peg. |
| In my defense, I was left unsupervised. | |
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| Axtremus | Oct 31 2011, 11:14 AM Post #19 |
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HOLY CARP!!!
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I agree it's a poor analogy, pretty much panned it myself ("American-centric way of looking at things [that is] not useful to grasp European affairs) in the next sentence. I cannot yet think of another currency union experiment where the power to issue currency is not coupled with the power to tax, so the Euro seems unique and I can find no good analogy to draw from.
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| Klaus | Oct 31 2011, 11:21 AM Post #20 |
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HOLY CARP!!!
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This myth that Germany profits from the Euro like no other country does not get more true if it is repeated time and again. Fact is: 1) Since the introduction of the Euro, German exports to other Euro countries have decreased relative to exports in the rest of the world. 2) Germany's GDP growth since the Euro introduction was much slower than most other Euro countries - the average growth rate is less than 13 other Euro countries, including Greece and Spain. 3) Germany's economy did pretty well while we had the Mark. 4) see picture ![]() Hence this whole "Germany profited so much from the Euro" story which gets repeated over and over again is just plain wrong. |
| Trifonov Fleisher Klaus Sokolov Zimmerman | |
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| jon-nyc | Oct 31 2011, 11:24 AM Post #21 |
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Cheers
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Ax - Well, one example would be when the Soviet Republics dropped the rouble. But there are a lot of differences that make the analogy a poor one too. There are other examples of countries that don't control their own currency (Panama, for example) but they've not tried to reintroduce their own currency. |
| In my defense, I was left unsupervised. | |
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| ivorythumper | Oct 31 2011, 11:29 AM Post #22 |
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I am so adjective that I verb nouns!
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How have German exports performed globally since the shift to the Euro? How have other Euro nations' exports performed globally since the shift to the Euro? It seems those two questions are key to understanding whether the statement in the article is true or not. |
| The dogma lives loudly within me. | |
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| Klaus | Oct 31 2011, 11:33 AM Post #23 |
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HOLY CARP!!!
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Here is what I think should happen: Every country should keep their own house in order. No bailouts, no ECB intervention etc. If a country goes bankrupt, so be it - that will teach them and other countries relying on others a lesson. If banks go bankrupt, so be it - that will keep the other banks a lesson to prepare properly for crisis situations instead of maximizing bonus payments. The whole partial reserve system as we have it today is foul anyway. However, this is most likely not what will actually happen. It is hard to predict these things, but I say that this crisis is not over at all. Eventually Greece and Portugal will go bankrupt anyway. I for one hope that Italy will fold as well, because then the politicians, which make decisions against 80+% of their people, will finally be screwed with their attempts to create a super state that nobody wants. |
| Trifonov Fleisher Klaus Sokolov Zimmerman | |
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| ivorythumper | Oct 31 2011, 11:35 AM Post #24 |
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I am so adjective that I verb nouns!
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I agree. We are told time and again that these banks, let alone countries, are "too big to fail". |
| The dogma lives loudly within me. | |
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| jon-nyc | Oct 31 2011, 12:02 PM Post #25 |
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Cheers
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Yeah, I'm more or less in agreement. |
| In my defense, I was left unsupervised. | |
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4:15 PM Jul 10