Just curious as to how the Germans here feel about bailing out Greece, so the Greeks can retire at 62 with a higher pension than Germans receive? I hear a paltry hundred billion euros ought to about cover the bill.

(29-04-2010 02:12 AM)Baltic Trader Wrote:  Just curious as to how the Germans here feel about bailing out Greece, so the Greeks can retire at 62 with a higher pension than Germans receive? I hear a paltry hundred billion euros ought to about cover the bill.

Wow, no thoughts I guess as long as its not readily seen affecting you who cares? I hear Spain maybe next. Do we have a domino train here ?

(29-04-2010 02:12 AM)Baltic Trader Wrote:  Just curious as to how the Germans here feel about bailing out Greece, so the Greeks can retire at 62 with a higher pension than Germans receive?

Well, if you phrase it like this, what do you expect for an answer? o.O

Tschüß, Imi. ;-)

I expected a firestorm of angry replies about how the German government does not listen to its citizens. After all, the Americans aren't afraid to give Obama a big rasberry about his handling of the oil mess, healthcare, or even his birth certificate explanations.

(08-05-2010 03:37 AM)Baltic Trader Wrote:  I expected a firestorm of angry replies about how the German government does not listen to its citizens.

They might if you had the numbers right. I'm afraid your sources have provided you with the wrong info.

Here's what we Dutch learned about the source of the Greek problems:

1) Retrirement age: 55
2) Goverment bureaucrats receive a 13th AND a 14th month of pay each year
3) 80% of the Greek receive about 900 Euro's a month. Goverment bureaucrats however easily get the double of it.
Considering the fixed costs for most Greek are around 600 Euro's a month, the problems aren't their fault.
4) Out standing loans of the Greek Goverment 110 BILLION Euro's. More as any other "Western" country in the world. Even Spain and Portugal - which are considered as the probably next two having problems - don't have that much of a national debt together.

And a personal note:

Even before the EU decided it is the EU who'd garantee the Greek would start saving money, the Dutch goverment had announced that to solve the Dutch debt problems caused by the financial crisis, each Dutchman had to save 1.750 Euro's the next couple of years. Main reasons for that increased debt: taking over of some national banks, guaranteeing that those who'd lost money of the IceSave-collaps get a part back and guaranteeing another bank; while having a third collapse.
Considering 1.750 Euro's is a month salery for a lot of Dutch workers, the Dutch are pissed.
Although there aren't any public protests, it's noted in the election polls. The current demissionary goverment is loosing their party seats quite fast.


Thorin

(08-05-2010 03:37 AM)Baltic Trader Wrote:  I expected a firestorm of angry replies about how the German government does not listen to its citizens.

You're right. I wouldn't give the Greeks money. In Germany we have enough problems whose we could solve with this money.

But if we don't help and the Euro breaks down, this would be no acceptable reason.

The only thing I am angry about is that the Greeks don't see any mistake on their own. When I see the people demonstrate because of higher taxes or a lower pension I could snap. If they want to solve this crisis they have to help their government.

German banks' exposure to Greece is huge, at 33 billion euros, but their exposure to Italy and Spain is far larger at 123.5 and 156.4 billion euros respectively. They also have almost as much exposure to Portugal as they do to Greece.

In the USA, the government bought up all the next to worthless paper from the banks, set interest rates for them at next to zero, and let the banks borrow and then buy government bonds. The bailout was enough to have paid off ninety percent of all of the mortgages in our country. It all went to Wall Street and the banks.

The big point is, that no matter how austere the Greeks become, they have no real chance of paying off their debt. Attempting to do so will only destroy growth and make it harder still. They are in a hopeless situation. Default is the only real option under ECB rules; it is illegal to leave the euro. Extending the loans only delays the problem, doesn't solve it. And, the crisis will move on to the other countries, destroying French and German banks. French exposure is as bad as Germany's.

The better option would be to just bite the bullet, and have the ECB print the euros and buy up the Greek bonds at face value and then burn them.

I don't feel very good about the fact that "my" government wants to bail out greece. After all, there is no way their debts will ever be paid off, and no one who lends them money (except some private lenders) expects that. It's all about investing and collecting interest. Now greece has come to a point, where it can't borrow any more money and can't pay the interest rates any longer. The collapse is ineviteable. The entire "bail out" thing is just about the interests of certain banks and lenders, who want to collect more interest for a couple of years, before they have to depreciate their outstanding debits (something that is ineviteable).
If Greece goes bankrupt, that wouldn't have a huge impact on the euro at all if people wouldn't expect it to have that impact. It's all about fear and psychology. If Greece goes bankrupt, it's in fact just a problem for everyone who lend money to them. What are they going to do? Send an army to collect what's theirs? Hardly! Still, no one will borrow Greece any money.

In my point of view, we made a huge mistake when we created "fiat money" and allowed banks to create money from nothing but a pledge of debt and collect interest on this money. It's just like Pandora's box, because it creates a steady need for more money, and the only way to create that money is more debt or print more. Either way will cause disaster in the long term, because it steadily devalueates money and it isn't based on any real value but belief in it.

The gold standard nearly strangled the world. It was too inelastic. The nations that abandoned gold quickest, did best in the depression. Greece, and the rest of the so-called PIIGS, are in effect on a gold standard that they cannot escape.

John Maudlin has some very interesting thoughts, especially on the velocity of money. http://www.businessinsider.com/john-maul...ity-2010-3 The velocity of money is slowing radically throughout Europe right now.

Highly indebted governments, banks, or corporations can seem to be merrily rolling along for an extended period, when bang! All confidence collapses, lenders disappear, and a crisis hits. It is clear that the entire eurozone is in for a double-dip recession, if it is not there already. And one country after another is going to have to convince foreigners to buy its debt. But if they make the cuts in their government spending, their GDP will fall, ironically increasing their debt-to-GDP ratio and making investors demand even higher rates, which becomes a very vicious spiral.

Greece has a large number of bonds coming due this year. It is not just the new debt; they have to find someone to buy the old debt. And that is why they need so much money. But it is not just a Greek problem. About 45% of Spain's debt is owned by non-Spanish, and they need to roll over old debt and new debt of 225 billion euros this year alone. That is bigger than the entire GDP of Portugal. Spain cannot finance this internally. But will foreigners buy 100 billion euros and, if so, at what price if they are not convinced that Spain will enact serious austerity measures?

There is really only one way out of the dilemma. That is a very, very massive printing of money, via direct purchases of debt from the ECB which will not be repaid, ever. Will Europe have the will to do it? I for one doubt it, and suspect the union will self destruct in a new Greater Depression.

There is an old joke: The dollar is "We owe you what?" and the euro is "Who owes you what?"

I end with a poem:

Turning and turning in the widening gyre
The falcon cannot hear the falconer;
Things fall apart; the center cannot hold;
Mere anarchy is loosed upon the world,
The blood-dimmed tide is loosed, and everywhere
The ceremony of innocence is drowned;
The best lack all conviction, while the worst
Are full of passionate intensity.

- William Butler Yeats

Sure the gold standard strangled the world. It sucks that not everyone who wants to borrow money can do so, because every mortage needs deposits. But it also provided a stable basis to build on and prevents the creation of money out of thin air (and that's what banking acutally does!). It also forces governments and people to work with what's actually there. You can't spend money today that you - or in the case of entire societies, your kids - might have in the future. Sure, the current money system made immense growth possible, but it came at a price we yet have to pay. And i'm afraid it will be unimagineably high. The suprime crisis gave us a little preview of what's to come i guess.

Neither the Euro nor the Dollar will be a stable currency in the long run. With the dollar, you can already see, that it has never been stable. Just take a look at its inflation rates and loss of buying power over the years:
1774 $1.00
1870 $0.62
1970 $0.20
1980 $0.10
1990 $0.06
2000 $0.05
2009 $0.04
All compared to 1774. That's a total loss of value of 96%! Inflation is not a natural thing, it's one of those nasty "side effects" when one puts more money into existence by loans (about 95%) and printing (5%):


One is reminded of an exponential curve. And as a mathematican i can tell these are never good when deployed to limited environments just like our planet.

That is one reason I have about half of my assets in gold at present, and my debt at a fixed interest rate.

But, hot off of the presses: EUROPEAN PRINTING PRESSES SPRING INTO ACTION! http://preview.bloomberg.com/news/2010-0...-open.html

Basically, it is what we did with TARP, but with nations instead. Will 500,000,000,000 euros be enough? Maybe not ...

No, definitely not enough. The ECB upped the ante considerably. Now it is up to 750,000,000,000 euros. The member governments pledged to make 440 billion euros available, with 60 billion euros more from the EU’s budget and as much as 250 billion euros from the International Monetary Fund.

Now, how much is that per European? And dare I ask, is it ENOUGH?

(10-05-2010 03:04 AM)Baltic Trader Wrote:  No, definitely not enough. The ECB upped the ante considerably. Now it is up to 750,000,000,000 euros. The member governments pledged to make 440 billion euros available, with 60 billion euros more from the EU’s budget and as much as 250 billion euros from the International Monetary Fund.

Now, how much is that per European? And dare I ask, is it ENOUGH?

At 500 Million Europeans in the EU it's about 1.500€ per capita. Yet, still another dimension than the $2.800 billions the subprime crisis costed. At the 200 mio US-Citiziens that was around $14.000 per capita.

I think in the long term, depending how hard this hits Europe that the states will give more of thier rights away forming a stronger central government. Just a matter of how fast not if it happens.

Not enough at all. Greece is now reporting government debt of 310 billion euros.

Ouch. That is nearly half the total rescue fund.

I wonder which German bank is going to fail tomorrow?

(21-05-2010 02:03 AM)Baltic Trader Wrote:  Not enough at all. Greece is now reporting government debt of 310 billion euros.

And peanuts compared to the US national debt. Which makes me wonder when that's goint to be solved. Since afaik no country at all is willing to support the USA by helping resolving that debt.

(21-05-2010 02:03 AM)Baltic Trader Wrote:  I wonder which German bank is going to fail tomorrow?

Just for the record: The EU is more than just Germany.
In fact, Germany isn't even one of the founders of the EU.
And thirdly, there not just German and American members at this board, so it'll be apreciated if you keep that in mind too.

As for faling banks:

No major financial crises of the last 100 years has started by a European bank going bankrupt.
However, the major financial crises of the last 100 years did have an US orrigin. Including the last one which started in 2001, as too many people keep denying.
More important question therefore is, which major US company or bank is going to pull down the rest of the world this time??


Thorin

Ah, the ignorance of the Dutch is seldom matched. http://en.wikipedia.org/wiki/Creditanstalt of course had nothing to do with the Great Depression. And of course, the second major crisis of the twentieth century came in 1997, and was not American, either; http://en.wikipedia.org/wiki/1997_Asian_...ial_Crisis

You need to compare the debt across the Eurozone to the USA. Yes, we are a large nation, but are well outnumbered by a billion Europeans. Here is the CIA data from 2009: https://www.cia.gov/library/publications...6rank.html Notably, the Netherlands is worse than the USA as a percentage of GDP.

Now, "Thorin" and I are old friends. Or adversaries ... and we have had some fun tweaking each other's nose in the past. Today, I count coup.

I had a big suspicion that the freeze unilaterally implemented by Germany was due to fear of a major financial firm failure. I suspected something nasty would happen today, but was wrong.

There are only three ways out of a financial crisis like this one: Cut, Print, or Default. Cutters are very rare, only Britain 1815 to 1914 belonged to that group. Defaulters are basically States with foreign currency debt and limited monetary sovereignty. That category today includes most of the nations using the euro. Printers are States with monetary sovereignty and "own currency" debt. I think the paths from here out are fairly clear.

Now, the lesson of history is that nations with world war sized debts NEVER do the following:
1. Slash expenditures on entitlements.
2. Reduce marginal tax rates on income and corporate profits to stimulate growth.
3. Raise taxes on consumption to reduce deficits.
4. Grow their way out without defaulting or depreciating their currencies.
The governments of nations USUALLY do the following:
1. Oblige central banks and commercial banks to hold government debt.
2. Restrict overseas investments by firms and citizens.
3. Default on commitments to politically weak groups and foreign creditors.
4. Condemn bond investors to negative real interest rates.

You're forgetting one option, my old friend. Though it's one the IMF never would approve for sure.

Since every nation at this globe is having a national debt, because of money they borrowed at other countries / banks, cancelling all national debts at once is a solution too. After all, unless hell freezes over all national debts are repaid sooner or later.

Another thing the IMF should do is disallowing to borrow more as the Netto National Income of that specific country. And to make sure a country doesn't borrow more, only one national loan is permitted.

Disadvantage: Life's getting an awful lot more expensive.


Thorin

I have to ask if it was the Greek government's mistake for borrowing too much, or the lender's mistake for loaning too much?

This is the blithering idiocy of unregulated private (or worse, state) bankers repeating the late 19th century scenario of making unlimited loans to newly created governments in the Western Hemisphere (and elsewhere) with the expectation of using "gunboat diplomacy" to seize custom houses to squeeze blood from the turnip of a poverty stricken people.

How long does it take to recognize that the lender has to take the loss when he screws up?

More importantly, how long will it take to make people to recognize that trusting their money to people who fanatically lie, cheat and steal in order to live a very high life-style is not an intelligent thing to do?

We have gone through nearly three (3) decades of one burst bubble after another -- each of them based on a fraudulently handled accumulation of money which in an Elizabethan times fair would have been labeled a pig in a poke.

Is it the result of the theological value our society places on something called "capitalism?"

When "capitalism" is mentioned in connection with "socialism" -- does it not sound like the conflict of Guilliver's Travels over the breaking of the shell of the breakfast egg (big-endian vs little-endian)?

The whole point of the egg controversy that has set Lilliput against Blefuscu is not merely a cultural difference but, instead, a religious and moral issue related to the proper interpretation of a passage in their holy book. This difference of opinion seems to justify, in their eyes at least, the warfare it has sparked.

So, Capitalism (Lilliput) has won over Socialism (Blefuscu) and therefore all handing of breakfast eggs must be done in one way -- no matter that thousands of eggs are wasted by crooked egg handlers who claim to know best which end is which.

I think the Greeks got carried away by confusion over which end of their home-grown eggs had anything to do with how many people get to eat breakfast.

Screw the creditors, issue the Greeks a rule book about loans - don't ask for a loan unless you can pay it off, and start over. BTW, paying the civil service well tends to promote honesty -- well look at the Mexican bribery system. It's coming soon to the US. Not because of the immigrants, but because making huge salaries and living high is the only mark of success held out to our kids. Make money any way you can and the more the better, the bible of capitalism tells you so.

You obviously need help with what socialism is, and what capitalism is. Here are some more basic examples for you:

Pure Socialism: You have two cows. The government takes them and puts them in a barn with everyone else's cows. You have to take care of all the cows. The government makes promises to give you as much milk as it thinks you could ever want.

Socialism: You have two cows. The government takes one of your cows and gives it to your neighbor. You're both forced to join a cooperative where you have to teach your neighbor how to take care of his cow.

Bureaucratic Socialism: You have two cows. The government takes them and puts them in a barn with everyone else's cows. They are cared for by ex-chicken farmers. You have to take care of the chickens the government took from the chicken farmers. The government gives you as much milk and as many eggs as its regulations say you should need.

European Common Market Socialism: You have two cows. You go on strike because you want another cow, more vacation and shorter work weeks. The national government announces that it will never agree to your demands. You go to lunch and eat fabulous food and drink wonderful wine. While you are at lunch, the airline pilots and flight controllers join your strike, shutting down all air traffic. The truckers block all the roads and the dock workers block all the ports. By dinner time the government announces it agrees with all your demands. Life is good.

Communistic Socialism: You have two cows. The government seizes both and provides you with milk. You wait in line for you share of the milk, but it takes so long that the milk is sour by the time you get it.

Lastly, Green Socialism: You have two cows. The government bans you from milking them or killing them.

Capitalism of course is having two cows, caring for them and milking them, and using profits to buy another cow, build a better barn, and then expanding into butter, yogurt, and cheese products.

(11-06-2010 02:11 AM)Baltic Trader Wrote:  You obviously need help with what socialism is, and what capitalism is. Here are some more basic examples for you:
...
Capitalism of course is having two cows, caring for them and milking them, and using profits to buy another cow, build a better barn, and then expanding into butter, yogurt, and cheese products.

Quite naturally, all you have to do to have profits is hang up a sign Capitalist Enterprise out in front and they will fall out of the sky by magic.

There never arises an adverse situation which causes you to need a loan; or if you do, to keep you from getting it, or to keep you from repaying it before you lose your cows. Mrs O'Leary had only one cow, but probably could have used a loan to replace the barn. Chicago, October 8, 1871 -
"One dark night, when people were in bed,
Mrs. O' Leary lit a lantern in her shed,
The cow kicked it over, winked its eye, and said,
There'll be a hot time in the old town tonight."


If you really tire of caring for two cows, you could collect all the tired old jokes about socialism & cows - and go into stand-up comedy.

Nah. I just milked the cow examples for all they were worth to make a point. But it probably went udderly over your head.

That was a capital joke.

Some more old jokes for you: http://news.bbc.co.uk/2/hi/7536918.stm

(22-05-2010 08:23 AM)Thorin Oakshield Wrote:  Since every nation at this globe is having a national debt, because of money they borrowed at other countries / banks, cancelling all national debts at once is a solution too.

What? That is.. ruthlessly speculative and never going to happen.

On the other hand, all the banks could simply declare bankruptcy just after their chief officers were paid their annual bonuses.

The officers then could carry their piles of currency to some tropical islands and settle into a comfortable retirement.

Meanwhile, the rest of the world have to blunder about wondering how to reconstruct a monetary system without bankers and their brilliant skills.

(25-05-2011 05:06 PM)CoconutKid Wrote:  On the other hand, all the banks could simply declare bankruptcy just after their chief officers were paid their annual bonuses.

The officers then could carry their piles of currency to some tropical islands and settle into a comfortable retirement.

Meanwhile, the rest of the world have to blunder about wondering how to reconstruct a monetary system without bankers and their brilliant skills.

We'd still have all the middle-managing bankers.

(26-05-2011 02:02 AM)IronFist Wrote:  We'd still have all the middle-managing bankers.

Pshaw! Mere bookkeepers who flunked Econ 101.

(09-05-2010 11:00 PM)Baltic Trader Wrote:  The gold standard nearly strangled the world. It was too inelastic. The nations that abandoned gold quickest, did best in the depression. Greece, and the rest of the so-called PIIGS, are in effect on a gold standard that they cannot escape.

John Maudlin has some very interesting thoughts, especially on the velocity of money. http://www.businessinsider.com/john-maul...ity-2010-3 The velocity of money is slowing radically throughout Europe right now.

Highly indebted governments, banks, or corporations can seem to be merrily rolling along for an extended period, when bang! All confidence collapses, lenders disappear, and a crisis hits. It is clear that the entire eurozone is in for a double-dip recession, if it is not there already. And one country after another is going to have to convince foreigners to buy its debt. But if they make the cuts in their government spending, their GDP will fall, ironically increasing their debt-to-GDP ratio and making investors demand even higher rates, which becomes a very vicious spiral.

Greece has a large number of bonds coming due this year. It is not just the new debt; they have to find someone to buy the old debt. And that is why they need so much money. But it is not just a Greek problem. About 45% of Spain's debt is owned by non-Spanish, and they need to roll over old debt and new debt of 225 billion euros this year alone. That is bigger than the entire GDP of Portugal. Spain cannot finance this internally. But will foreigners buy 100 billion euros and, if so, at what price if they are not convinced that Spain will enact serious austerity measures?

There is really only one way out of the dilemma. That is a very, very massive printing of money, via direct purchases of debt from the ECB which will not be repaid, ever. Will Europe have the will to do it? I for one doubt it, and suspect the union will self destruct in a new Greater Depression.

There is an old joke: The dollar is "We owe you what?" and the euro is "Who owes you what?"

I end with a poem:

Turning and turning in the widening gyre
The falcon cannot hear the falconer;
Things fall apart; the center cannot hold;
Mere anarchy is loosed upon the world,
The blood-dimmed tide is loosed, and everywhere
The ceremony of innocence is drowned;
The best lack all conviction, while the worst
Are full of passionate intensity.

- William Butler Yeats

Bumpity bump bump. Bloomberg

As I said before: There is really only one way out of the dilemma. That is a very, very massive printing of money, via direct purchases of debt by the the ECB which will not be repaid, ever. Will Europe have the will to do it? I for one still doubt it, and suspect the union will self destruct in a new Greater Depression. Deutsche Bank already threw the Greeks and Italians overboard.

(09-08-2011 01:28 AM)Baltic Trader Wrote:  *snip*

Oh my god this made me laugh. Ridiculously sad but true.

So, all I have to do is make billions to join the neo-aristocracy and I'll be set!

Now that we have all had our OT laughs ---

Quote on Cafe Tropico from: robo on November 23, 2005, 06:37:15
<<I found some interesting theoretic reading from a German think tank, who wants to transform authoritarian forms of government and centrally planned economic systems toward democracy and a market economy worldwide. ...>>

Time has passed, but the organization is still there ( Bertelsmann Stiftung | Carl-Bertelsmann-Str. 256 | 33311 Gütersloh ):
http://www.bertelsmann-transformation-index.de/en/

The basic prospect of the organization is: Neither inevitable nor a consequence of good fortune, the transition from authoritarian forms of government and centrally planned economic systems toward democracy and a market economy must be politically led and managed. The project "Shaping Change - Strategies of Development and Transformation" aims to help improve political management processes and optimize outside support by identifying and facilitating the transfer of best practices among a broad spectrum of countries in transition... »

To believe as this organization does means that one must equate authoritarian forms of government with centrally planned economic systems. These two systems must always be linked and may never be found in any other combination. One must also equate democracy as a form of government linked with a market economy as the essential combination accepted by Western, Christian Civilization. That means that the organization has reached conclusions about the logic that shows that these two systems are diametrically at odds with each other. Typically, the undemocratic wealth based market system overcomes and destroys the democratic political system.

One has to conclude that the organization could not accept that a democratic political system could truly, honestly establish a centrally planned economic system. That is to say, they could not believe that a political system could choose cooperation over competition as the primary focus of a society.

It is evident that Greece has problems in its society with acceptance of a standard of economic "law and order" which requires citizens to comply with tax laws on a voluntary basis. Everyone in Europe knows which countries have honest, voluntary compliance with simple bookkeeping rules; and which ones survive by passing a lot of financial transactions under the table. In the U.S. there is a fine line between cheating off the books and fiddling on the books. The problem is that the culture is accepting of the adversary relationship between the government (them) and us (not the government) even though we claim to be a democracy where the people are the government. When the super rich get to shirk their responsibilities to the government, soon the rest of the people feel their democratic equality and join in the cheating cycle.

Now we are expected to believe that the German people along with all the Northern Europeans are so fiscally holy that there is no "under the table" economy where the snow falls.

How the European Union is treating the Greeks shows its dedication to democratic government. The Greek government is now being subjected to "Gunboat Diplomacy" without the gunboats. Their national sovereignty is ripped off by "committees" from the European Union who dictate how they have to change their laws, reorganize their society, and conform to something imposed from "elsewhere" in order to be acceptable to the super bankers.

It's a tough deal to run a quasi-union where fiat money trumps political democracy. Germany occupies Europe after they lost the last war about who was to be in charge.

Looks like a nightmare coming on ... utterly horrible.