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Old 13.12.2011, 21:38
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Europe - No more bunga bunga time

I have been struggling to understand exactly what is going on in Euroland, so I sat down over the last few days and tried to make some sense of it.
This is what I have got, feel free to add detail and correct the inaccuracies.

History - The Euro
The Euro was created effectively to help out the countries that joined it, I don't really care about the ideological bollox and neither do countries, it is all I suspect about money.
Germany and France gained an artificial increase in their exports from Euro membership which stimulated their economies massively - effectively the Euro was valued down because of the smaller less powerful member economies like Greece for example.
http://www.indexmundi.com/g/g.aspx?c=gm&v=85
Notice the steep increase in exports after 2002.
Germany's exports really sky rocket with the introduction of the Euro, their inflation stayed low and generally their economy was safe guarded.

The other smaller economies gained access to increased and cheaper debt due to being tied to stronger economies, Greece for example mainly joined so it could carry on borrowing. I don't think any of this is in dispute.

Crisis
Then the economic bubble burst when it became clear that private debt had became unmanageable and the banks realised that they probably were not going to get the money back they had lent out - subprime mortgages.
Government's were forced to help pay the banks debts off which led to 2 problems.
1. Sovereign/ State debt increased massively
2. Banks stopped lending money

These 2 combined meant that the countries that had joined the Euro to gain access to cheap loans now couldn't get loans and were faced with a massive bill to bail out their banks.

Woops
Ireland, Greece, Cyprus, Portugal all went bust and could no longer keep up the payments on their loans, Italy, Spain, Belgium and to a lesser extent France started to look worriedly at their increasing debt interest payments.

This all happened in 2008 and since then the Euro zone has been spiralling downwards. If Italy or Spain default on their loans then the banks in Spain, Germany, UK, USA, China and anywhere else that leant those Governments money stand to lose a lot of money. This understandably has panicked the banks who still don't want to lend any of their capital, without capital to borrow at reasonable rates companies do not expand and economic growth doesn't happen. This is why the rest of the world keeps yelling at Europe and telling it to sort its self out. Until it can fix the debt problems of its member states an economic recovery is unlikely and in fact it looks like the rest of the world will also be sucked into a massive recession.
You will see the term Quantitative easing used a lot...this means printing money to try and inject some growth into the economy and is in direct response to the lack of credit being offered by the banks.

So what have the Euro zone countries done in 2 years
Well basically not much.
The major suggestions seems to be that the ECB, the European Central bank should pay the debts of the Euro zone countries, or at least buy Govt bonds to allow them to carry on borrowing and therefore hopefully to start growing again.
The problem with this is that the ECB gets money from it's member states, which effectively means Germany and France would need to bail out the other countries.
This is something Merkel and Sarkozy are not very keen on doing.

So what have they tried to do instead?
Firstly they tried to ignore it and imposed some big austerity measures on Greece, Ireland etc. to "help" them clear their debt. They hoped in time the problem would sort itself out. The big issue being that countries trying to save money and that can't borrow don't import very much from other countries. They therefore continued in recession and other countries that relied on them as export markets were also not helped. This made the recession longer.

So when Austerity didn't help they did what?
When it became clear that Greece was going to default again and that a lot of other countries were also in serious danger they decided to ask the IMF for help to pay the Euro zone debts. The IMF said no, go sort out your own problems Euro land.

They then rather embarrassingly went to Cannes for a G20 meeting where they asked China to help bail them out.

http://www.euromoney.com/Article/291...ina-wont-bail-
out-Greece.html

China said no, as did Japan, Brazil, the USA and my Mum.
That meeting was a bit of a failure especially as the rest of the world stood around pointing fingers at the Euro zone and saying "bloody fix it so we can get out of this recessions"
When Merkel said "Obama got a crash course in European politics"
http://www.guardian.co.uk/business/feedarticle/9931070
What she really meant was, he told us to bloody well pay the eurozone debt and we said, oooo, erm.....ahhhh, look the good year blimp!

O dear, so now what?
However it seems that at the Cannes meeting they heard about the Tobin or Robin Hood tax. This is a tiny tax that is levied against a financial transaction but because 100,000's of these transactions happen daily a lot of money could be raised. This tax could pay off the Euro debt.
http://www.guardian.co.uk/business/2...n-hood-tax-g20

I can imagine Merkel looking at Sarkozy and saying.
"Well this won't hurt German manufacturing exports so we won't pay very much"
and Sarkozy looking at Merkel and saying
"Well this won't affect French Argicultural profits, and those bankers are all wasters, so lets do it"

So they did it and we all lived happily ever after?
Well no because the country that would be affected the most by a tax imposed on financial transactions would be the country with the biggest Financial sector in Europe, Britain.
Effectively the Eurozone was now asking the UK to pay the Euro debt.
This is why Cameron has said no.

What did he say no too?
He vetoed changes to the existing Lisbon treaty and forced a new one, which Britain hasn't agreed too, to be created.
Now as I understand it this means that new laws will apply to Britain as a member of the EU but that the treaty which put in place the punishments for not following the new laws won't apply.
ie. the EU can make new fiscal regulation laws but Britain can ignore them.

This is the crucial quote,
Quote:
"I regret very much that the UK was not willing to join the new fiscal compact, as much for the sake of Europe and its crisis response as for the sake of British citizens and their perspectives," said Rehn [European Commissioner for Economic and Monetary Affairs]. "I would also like to remind you that the UK government has also supported and approved the six-pack of new rules tightening fiscal and economic surveillance, which enters into force tomorrow."The UK's excessive deficit and debt will be the subject of surveillance like other member states, even if the enforcement mechanism mostly applies to the euro area member states."
So...erm I am lost?
Well we are back to square 1. The Euro zone is still in a massive crisis and the latest scheme to avoid the ECB paying has failed.
The rest of the world is still sliding or is already back into recession and I am wondering who they will ask next.
If Merkel or Sarkozy had balls I would describe them as champion cuppers right about now, I can't see that they have done much else.
If I was Father Christmas I would be opening any letters from Frau Merkel or Herr (he is practically a German puppet) Sarkozy with a little bit of trepidation.

My opinion - this is a forum
I hate that Britain is so dominated by London and finance, I am pro-European, pro-A United States of Europe and pro-Tubin tax...however even I can understand why the UK has stuck 2 fingers up and told them to sod off.
I understand that maybe it is better to be inside at the table than outside throwing stones but the whole deal just seems like such a huge poo pile of domestic politics and vested German French interests with very little intention of actually rescuing the Euro that being outside looks pretty good.
I have no idea if it is a clever thing or not, nobody will for another 10, 20, 30 years but I am glad it has happened.

The German model of Austerity for Europe seems silly, I am pro-Keynesian so centralised budget control at this point in Europe's history just seems incredibly dumb and naive.
Trying to control spending in countries struggling with growth, I believe can only lead to resentment and unrest.
Although as UBS points out the alternative of a broken Europe could be civil war.
http://www.gfsnews.com/article/2917/1/

I also hate that Germany and France are now standing up and pointing the finger at the UK and claiming it is the UK's fault. It seems they have found a scape goat and will pile the blame on. I can't beleive that sarkozy and Merkel didn't know that the UK could never accept their treaty change...it had been in the papers for about 2 weeks previously. I can therefore only assume they are stupid or were deliberately side lining the UK.
To me it looks like they have lurched from crisis to crisis with no real idea of how to solve the problem or that they don't possess the will to take the bitter pill and sort it out themselves.

It also smacks a little bit of wounded pride. The UK stayed out of the Euro and now can do a bit of gloating.
This from Sarkozy
Quote:
"You have lost a good opportunity to shut up." He added: "We are sick of you criticizing us and telling us what to do. You say you hate the euro and now you want to interfere in our meetings."
http://articles.businessinsider.com/...sident-cameron

Just looks like a loss of face to me. Also how is this man a politician?

Basically I don't see a good solution to the problems. I see horrible solutions and someone needs to pick one and follow it through.
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Old 13.12.2011, 22:37
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Re: Europe - No more bunga bunga time

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I have been struggling to understand exactly what is going on in Euroland <snip>
You, me and the rest of us - and that includes Sarkozy and Merkel by what they are not doing.

This last year has seen 15 -20% wiped off my investments thanks to the euro and I don't a centime invested in it. Why doesn't the euro fall and the stock market stay steady, instead it's the other way round. There will be some long faces at the end of the year when the results of life insurance, pensions and other funds are added up for folk not even in euroland.

I can only see a total disintegration of the euro and the current politicians seem to be keeping the ball in the air so long to ensure it happens when they are out office...
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Old 13.12.2011, 22:54
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Re: Europe - No more bunga bunga time

Before you even try and fathom the Euro crisis or any other areas financial woes it is important first to ask the following 5 questions:

1. Who ultimately benefits from all this debt? Usury is only for gain...

2. As lenders (the real ultimate lenders) what ultimately is to gain on default?

3. It is only when you go back to source you start to release that these situations are entirely manipulated, when a debt can't be paid, the lender uses the law to recuperate his loses, if further debt cannot be negotiated then assets are seized, if those debts are sovereign then what are the assets?

4. As a lender, who lends long term, would you safeguard yourself somehow?

5. If you could swap paper for a nation and all that it owns, would you or would you not do everything in your power to make that swap happen?

When I see nations in Europe sign over bigger parts of their sovereignty for paper, in fact not even paper, digital pixels (even cheaper) I have to admire the audacity of it all, 100 years from now if history still exists and it is not 100% manipulated our children's children will ask

'How could they have been so fuc3king stupid' ?????

and the simple answer will be

'While they were watching Eastenders watching other people acting out problems they could relate too, distracted, THEY were busy paying off those that collaborated with THEM to legally STEAL the world and everything in it'...

There is a very simple answer and that is usually the answer to most of the world's problems

FOLLOW THE MONEY !
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Old 13.12.2011, 23:50
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Re: Europe - No more bunga bunga time

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I have been struggling to understand exactly what is going on in Euroland, so I sat down over the last few days and tried to make some sense of it.
Actually I'd say they are all in the same boat Euroland or no Euroland, it is just a question of degrees and timing...

At the end of the day, a currency is nothing more than a means of facilitation the exchange of goods and services, so in and of itself it can't be the cause of the problem... it is the underlying economies that are problem and even if the Euro was to disappear tomorrow, it still wouldn't alter the fact that we all over extended ourselves.

Although the catalysts are different in each case, the result is the same - as the market moves the spotlight from country to country problems are found in the financial sector, which the government are required to plug, which in turn raised questions about that countries sovereign debt. In this respect Ireland is probably the easiest to understand - failure by the government to adequately regulate the mortgage industry saw banks offering 100% mortgages over 30 to 35 years in multiples of more than 5 times the borrowers annual income!!! Of course once the bad times hit, the government had to step in and take over, it is suggested that Irish borrowing would only be about 64% of GDP had it not being for the requirement to bail out the banks. In this respect we should also remember that both the USA and the UK have also had to bail out various financial institutions in one form or another...

If you look at the risk assessments by the EBA (European Banking Authority), it is clear that pretty much all the European banks are in a weak position and it is only a matter of time before the market turns it's attention to them in domino fashion. Now the spotlight is on Italy, France and to a lesser extent Hungary is now entering the picture, it is only a matter of time before we get to the next non Euro country...

In many respects, the EU commission is right when it saying that failure to regulate is the cause of the problem - if the regulators in the US, UK, Ireland and so on were independent of politics, then the chances are that they would acted sooner and the mess would not be so big! But of course politics are involved and cheap money is what gets them elected so there you go....
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Old 13.12.2011, 23:52
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Re: Europe - No more bunga bunga time

One of the eurozone Prime ministers (no longer remember which one) said we know how to fix the problem but we do not know how to get re-elected afterwards.

Now the IMF are saying the Greek austerity measures are too harsh & are damaging any prospects of growth; without which growth Greece will never recover

Just gets worse doesn't it
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Old 13.12.2011, 23:59
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Re: Europe - No more bunga bunga time

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Actually I'd say they are all in the same boat Euroland or no Euroland, it is just a question of degrees and timing...

At the end of the day, a currency is nothing more than a means of facilitation the exchange of goods and services, so in and of itself it can't be the cause of the problem... it is the underlying economies that are problem and even if the Euro was to disappear tomorrow, it still wouldn't alter the fact that we all over extended ourselves.
It's a carrot and donkey scenario, no matter how big the carrot is the donkey will still go for it, you can't blame the donkey for taking what is on offer....
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Old 15.12.2011, 15:10
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Re: Europe - No more bunga bunga time

Quote:
In an interview with local newspaper Le Telegramme de Brest, Noyer, a member of the ECB's governing council, also questioned whether the use of ratings agencies to guide investors was still valid.
In the arguments they [ratings agencies] present, there are more political arguments than economic ones.
The downgrade does not appear to me to be justified when considering economic fundamentals. Otherwise, they should start by downgrading Britain which has more deficits, as much debt, more inflation, less growth than us and where credit is slumping.
This reads like a little boy throwing all his toys out of the pram. Seriously call the Waaaambulance, we have a man baby.

So the next step in what to do with all this debt in Euro land has happened.
http://www.ft.com/intl/cms/s/0/219b3...#axzz1gPdTpjdX

The Germans will pay more money into the IMF but only if other countries do too....
Quote:
The Bundesbank, which is supposed to provide €45bn of the €200bn, says that its loan is conditional on other large countries within the EU and outside also making significant contributions.
Ahh ok, so will they?
Quote:
On Tuesday Jun Azumi, Japanese finance minister, said that the EU needed to present a more convincing plan before Japan put more money into the IMF.
Ooops

Quote:
The UK and US have already said they will not contribute
well not surprising really,

Quote:
The US and Canada have sounded cool about the idea of the IMF leading a bail-out for the likes of Spain and Italy. US officials say that the eurozone must take the bulk of the credit risk of lending to governments within the single currency area.
ahhh go on and give us your cash...

Quote:
Jim Flaherty, the Canadian finance minister, said last week: “The IMF is there to help out poorer countries in the world, and the European countries are relatively well off.” Mr Flaherty added: “We want to see more use of their own resources before we get engaged there.”
So basically the same old...
Germany: yeah world give us your money to sort out the Euro debt
World: No, you made the mess you sort it and please do it now and stop asking us for more money.


China is now also suffering
http://www.guardian.co.uk/business/e...orld-nightmare
Quote:
China like Britain, is looking more hangdog than bulldog. The manufacturing monster of the east is expected to suffer a rapid slowdown following the collapse in demand across the eurozone, according to several analysts. Without a strong and growing European market, they say, China's export driven industrial and commercial sector must see its current 9% growth rate lose momentum.
I imagine China will now start to get very annoyed and finally join the finger pointing circle that is the rest of the world surrounding the Euro Zone.
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Old 16.12.2011, 10:04
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Re: Europe - No more bunga bunga time

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Continuing the war of words that began yesterday when French central bank governor Christian Noyer claimed the UK should lose its AAA rating rather than France, François Baroin told the Europe 1 radio station this morning that the economic situation in the UK as "now very worrying", so:
On préfère être français que britannique en ce moment sur le plan économique.
Which roughly translates as:
We'd rather be French than British now, economically.
Screw you Froggy.
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Old 22.12.2011, 09:32
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Re: Europe - No more bunga bunga time

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IThe rest of the world is still sliding or is already back into recession and I am wondering who they will ask next.
Ah yes the famous "rest of world is in a recession" scarecrow that has been waved at people relentlessly all this year.

Pity the figures don't add up.
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Old 22.12.2011, 09:58
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Re: Europe - No more bunga bunga time

Sooner or later our debt ridden, fear driven markets are going to collapse, it's not if, it's when, this has been planned for a very long time, it cannot be denied now as a conspiracy theory it is a conspiracy fact...

Many people have been warning the world of this for quite some time now and they have been ridiculed or dispatched (JFK for example)..



This is the time to make unusual plans, if you can join them, would you? If you can't would you want to....

The price is your soul !!!!
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Old 22.12.2011, 11:00
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Re: Europe - No more bunga bunga time

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Sooner or later our debt ridden, fear driven markets are going to collapse, it's not if, it's when, this has been planned for a very long time, it cannot be denied now as a conspiracy theory it is a conspiracy fact...
...
The price is your soul !!!!
Don't watch too much Zeitgeist and other brainwashing "propaganda", they also lie and use same manipulative techniques they "fight" against. The truth is, as usually, somewhere in between...
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Old 22.12.2011, 11:06
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Re: Europe - No more bunga bunga time

May be the only thread on EF identified with the tag "ball cupping by"

As always, life made simple in a good way by planthead.... thanks a lot!

Certainly made things clearer for me... for example I was unaware of his mothers status as a superpower.

Would most like to hear Shorricks views on what happens next, if he is in the mood to share?
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Old 22.12.2011, 11:26
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Re: Europe - No more bunga bunga time

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Don't watch too much Zeitgeist and other brainwashing "propaganda", they also lie and use same manipulative techniques they "fight" against. The truth is, as usually, somewhere in between...
You are correct-- 'They' are not amateurs, they control both sides of the argument. We are seeing a corporate take-over of sovereign states that is very clear, JFK knew it Woodrow Wilson knew it (in the end).

Mankind is blindly walking into a new era, you don't need to watch any propaganda to realise that, warning bells should have started to ring when the utilities such as water, gas, electricity and tele-communications started to be privatised but the allure of a few its of paper was just enough to distract attention from the masses as corporations plundered the nations birthrights and are now in a position to turn it on and off at will
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