Europe and the Reccession

Discussion in 'Politics' started by B_nyvin, Jan 20, 2010.

  1. B_nyvin

    B_nyvin New Member

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    Does anyone else find it...well, funny that the very countries that were made out to be "doing better" "economic tigers" "models to follow" the very same countries who's economies basically fell apart in the 2008 economic crisis (the crisis of today)?

    Ireland, Spain, the UK, and the 3 baltic countries....look them up in any pre-2008 article and you'll see van-glorious writings of them being wonderful success stories on deregulated credit and massive financial growth and awe-inspiring economic models to look up to and envy.

    While "old europe" countries like Poland, Germany, and Particularly France are often scorned and shunned as "slow growth" "too regulated" "dinosaur economies" and just put down to no end.

    And then the ball hits, and what do you know? UK has to rescue countless banks, Ireland's economic tiger goes extinct, the pound falls, Spain and the UK's housing markets collapse, Baltic countries economies all but go bankrupt and unemployment swells everywhere but the UK (still rising in the UK however).

    Meanwhile, Poland is hardly affected by the reccession, France and Germany got out of reccession before the USA did and even when they were in reccession most certainly faired much better then those mentioned above.

    I think all this goes to show that immediate success and gratification aren't always what they seem and different approaches will have their benefits.
     
  2. shiznick90210

    shiznick90210 Member

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    Too bad Bush and Cheney had no desire to learn from history's lessons in the national and international comparative studies in the economics of stability and growth. It would have saved President Obama and the rest of the U.S. a hell of lot of trouble.

    Well, the wingnut, Tea Bag Party and their extremist agenda is taking over the Republican Party in the U.S.

    A nobel-prize winner in economics from two years ago put it this way, he was commenting about the agenda of new rise of the Tea Bag Party in the U.S.:

    This means that a solid 20 percent or so of this super-power's leaders will do everything they possibly can, to block recovery of the economy in this country, by blocking or reversing all policy attempts to re-regulate the banks and Wall Street. implementation of their irrational, emotions-based ideology of fear, their patriotic promotion of war against the Islamic World, their demand for armed, private militancy, obsession with national security and terrorism, their promotion of ultra-nationalism, race-consciousness, anti-minority, anti-immigrant attitudes, their demands to eliminate all social financial safety nets and their malicious ignorance to comply to non-profit government standards that benefit all, and the imposition of their religion-based morality legislated into law... will all have the cumulative effect of indirectly slowing down or worsen recovery efforts in any other country involved in trade, commerce and the flow of money and debts with the U.S.

    Tea Party leaders in power will intentionally place "poison pills" of wording into place, such as conterproductive, cynical policy and regulatory wording measures in "the fine print," to sour all financial deals in the U.S. and trade and commerce with our Allies, regarding activities that isn't in lockstep with their idealogy. For example, they plan to attach crippling strings to international deals, such as, if you want the money or if you want to trade with the U.S., your nation has to give up government-run health care, or stop all abortions, or promote their version of Christianity over your nation's own. It's basically the kinds of hard-line, arm-twisting, imperialistic tactics that Bush and Cheney did when they were in power... but the Tea Baggers now coming to control almost half of the U.S. Congress will go much, much further in their ultra-hard right neo-con demands how they want the rest of the world to behave, think, believe, act, etc.

    I feel sorry for half of Europe trying to recover from their recession. Soon, they can't expect any help from the U.S. Tea Party ideology is like that. They consider helping people, especially foreigners, a "liberal, socialist, leftist" activity they consider to be evil.

    Hell, one of their biggest spokesmen and a big, Tea Party admirer, Rush Limbaugh, was recently telling his world audience on his TV and radio program to not to help out any Haitians in their earthquake tragedy, because it might somehow help improve President Obama, and, Rush politically worded it like it was some kind of electoral racial issue in the U.S., for rationalization and justification for his twisted, Tea Party logic, to not help out our foreign allies in their hour of tragedy and desperate need.
     
  3. eurotop40

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    Are you surprised that in the past some countries became allies of the USSR?
     
  4. midlifebear

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    Despite Spain's investment debt, there is one thing that keeps this country chugging along. Unlike the USA, Spain actually produces stuff and exports it. And like most EU countries, (not all), Spain is heavily and successfully invested overseas. Check out Spain's aerospace businesses. Another good example is Telefonica SA of Spain, the biggest telecommunication monster in Central and South America (as well as its home base in Spain). The USA's mobil phone services are back woods operations compared to Europe, Central, and South American. The only real competitor in the cable TV/communication industry in Central and South America is Carlos Slim a Mexican billionaire entrepreneur who is currently bribing as many officials as fast as he can to consolidate his America Movil holdings. Think Rupert Murdoch when 'Mericuhns weren't paying attention.

    Anyway, the Iberian peninsula will most likely just show slow growth for the first part of this decade. No great economic collapses. After all, Zapatero cut the country's losses early in 2008-09 by overestimating the unemployment rate at 24% and girding up for it. It never (or at least hasn't) quite reached that, yet. And those who are unemployed are heavily encouraged, and underwritten by the government, to return to school for retraining in other sectors of the economy. Of course, I'm certain there are LPSG-ers who will insist this isn't true. It sort of depends upon which daily papers you read: The New York Post or Diario.

    The one country all of the EU is concerned about, however, is Greece. There's only so much tourism and olive oil that country can create. Even the Balkan States haven't the same level of corruption so deeply embedded in their government and businesses as Greece has. Currently, the general consensus among member states is that if Greece collapses, let it. The ministers of finance of the BIG FIVE EU countries are putting a Plan B into place that should insulate the majority of the EU from a Greek economic crisis. At least it will insulate almost everyone except Greece. (film at 11:00)

    It will be fun to watch. Still, have you checked the value of the Dollar against the Euro lately? Yeah, people are out of work in Europe. But a Euro has always bought a lot more than a Dollar -- at least since 2000.
     
    #4 midlifebear, Jan 21, 2010
    Last edited: Jan 21, 2010
  5. Jason

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    Europe's progress during the recession has shown different policies and different outcomes.

    TYPE ONE
    Norway has combined prudence with good, Keynsian economics. During the boom years it basically saved. When the downturn came it spent some of the savings. Top marks to Norway.

    TYPE TWO
    UK has combined years of financial imprudence with good, Keynsian economics. During the boom years the UK borrowed with the overt statement from the chancellor that boom and bust was over. When the bust came the UK had to borrow yet more. Nyvin is wrong to compare the UK economy with Ireland, the Baltics etcetera - it is not that bad. But it has serious problems which will result in poor growth for decades.

    TYPE THREE
    France, Germany, Poland and the like. They have followed reasonable policies both before and after the recession - unadventurous, slow, plodding but none the worse for that. Yes they have been hurt, but not all that badly, at least not yet. For France, Germany and Benelux their fate is linked with the Euro. The markets are now suggesting a prolonged downward slide for the Euro - if this is right they have a lot of problems ahead.

    TYPE FOUR
    The basket cases. Iceland has gone broke. Ireland has accepted painful austerity measures which might just work - let us hope! Greece has a need for the most extreme austerity measures ever along with endemic rioting. Italy, Spain and Portugal haven't woken up to just how bad it is going to get. Ditto the Baltic countries, Hungary, Romania, maybe some others.

    Leaving aside Norway and perhaps Switzerland Europe is in a mess.

    A contrarian approach to economics is often proved correct. Until recently people have argued that the Euro is the bright and shiny success story which has prevented so many problems. A contrarian view is that it is uniquely responsible for the problems now in type four and forthcoming for type three.
     
    #5 Jason, Jan 21, 2010
    Last edited: Jan 21, 2010
  6. mattflanders

    mattflanders Member

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    I don't think that's true. Norway and Switserland are economically embedded in the European Union's common market. If that market goes bad, the Norwegian and Swiss economy get hit hard as well. We're all (every European country) in a mess, but it's not all doom and gloom. It will get better and the EU, the Euro and the Lisbon Treaty are here to stay. Keep in mind that the economy of the Eurozone isn't in recession anymore.
     
    #6 mattflanders, Jan 21, 2010
    Last edited: Jan 21, 2010
  7. B_nyvin

    B_nyvin New Member

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    sigh...please note that this post has very very little to do with the usa for those mentioning it.
     
  8. Jason

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    MattFlanders I agree that all the economies are linked - let me repharse and say Norway and Switzerland are doing better than many but will certainly get the fallout from all problems. And (from another thread) I certainly don't want the Euro to fail - that would be a mess. But I do think it might fail. I don't want Vesuvius to erupt but I think it might.

    Right now events around Greece and the Euro are moving fast. It may well be that the markets will calm down and we will all live to fight another day. But there's a lot of risk out there, and right now the Euro is the problem not the solution. Plan A is that Greece stays in the Euro and nothing changes. Plan B is that the crisis hits Greece alone. Plan C is that the crisis leaves France, Germany and Benelux unscathed. Plan D is that Germany does its own thing.

    Lets face it the runes are cast now and we will see what happens in the days and weeks ahead.
     
  9. Joll

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    Sounds by far the most commonsense approach, followed perhaps by Germany?
     
  10. mattflanders

    mattflanders Member

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    That's where we disagree. It's not the Euro itself that has caused the problems, nor is it the problem. The problem is countries being too optimistic/downright lying about their budgets. (And I know, Belgium's not the best student of the class either, sadly enough.)
    I say: kick Greece out of the Euro, encourage the ECB to really buckle down on the Eurozone-members and enforce the rules to the letter from 2013. (Now I'm a little optimistic.)
    Anyway, the Euro won't fail because of Greece, the Greek economy is too small to cause that. The only thing that it can do is damage the confidence in the Euro. (But who says that a slightly weaker Euro isn't good for the export economy either.)
     
    #10 mattflanders, Jan 21, 2010
    Last edited: Jan 21, 2010
  11. Jason

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    Yes, but the Euro framework more or less guarantees that countries will be too optimistic and even lie about their budgets. Without a European state all we have is countries promising to be good, and they all tell fibs.

    I think Greece should be kicked out for the good of Greece. It would show leadership in what is fast becoming a major crisis. A tidy amputation might work.

    The problem is that if Greece leaves - for whatever reason - the pressure will shift almost instantly to Portugal (which is looking substantially weaker than a few weeks ago). Spain and Italy will also come under pressure,maybe Ireland. Politically this situation needs to be managed which means that Greece should be kicked out as part of a plan. The disaster would be if Greece is forced out by the markets.

    A slightly weaker Euro might indeed be no bad thing for many Eurozone countries. The problem is a much weaker Euro. Loss of confidence plus a downvaluing of the German and French stockmarkets could precipitate a negative spiral.

    My thought is that if the Euro gets through this crisis there will be another and another. I think I am right in saying that there are no examples whatsoever of currency unions which have endured without a political union. We don't have a political union - we don't have the proposed European constitution plus a subsequent constitution, which the federalists hoped we would have by now.
     
  12. socaldude28

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    There's an interesting blog to check out for those interested in these subjects (no personal connection to me)

    afoe | A Fistful of Euros | European Opinion

    Greece (debt) and Spain (unemployment + trade deficit) appear to be in the most trouble, with Italy not too far behind. If they still had their own currencies they could devalue and inflate as Italy used to do on a fairly regular basis but the euro straightjacket is proving a big problem.
     
  13. B_nyvin

    B_nyvin New Member

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    Euro Paranoia -

    In 1999 everyone was saying the Euro would fail. It didn't

    In 2004 everyone said the Euro would weaken, it strengthened

    In the beggining of 2009 everyone said the Euro would collapse, it gained against both the pound and dollar

    Now people are saying that the Euro will collapse because of a country with barely more then 10 million people....i'm sure THIS TIME it will happen huh?
     
  14. socaldude28

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    point taken. . . but surely it's the bad times that test optimal currency theory. we'll see. . .

    I agree - Greece, Ireland and probably Portugal are too small to spoil the party by themselves. It seems perhaps Spain is ground zero. the biggest housing bubble of them all, 20% unemployment and growing, a huge unwinding trade deficit. . . . all causing deflationary pressures that no population will tolerate for an extended period (unless you're Japan lol). Hopefully it all works out - somehow it usually does - but it is a worrisome brew.
     
  15. midlifebear

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    My personal barometer for Spain's ills are several luxo, fully furnished vacation rental apartments I own and rent in Barcelona. When my socio suggested we raise the price on each one another 1,000€ per month I balked. But I've have confirmed rentals on all of them -- with one month advance deposits -- booked into June, 2011. No booking is for less than three months.

    Sure, something could happen and those bookings could go away. But somewhere in the EU rich folks keep showing up and throwing money at me. I'm more than happy to accept it. Even if the Euro drops to pre 2001 levels, I'll still have one of the best cash cows I've ever invested in. However, associates who have smaller properties for rent are currently hurting. The one-room studio ultra modern/chic remodel jobs that rented for 1,200€ a week last December are being discounted 200€ and 300€.

    Taxes are a bitch, but nothing I'm willing to complain about. And the city infrastructure continues to improve. But Barcelona is a major shipping port. That's where the real commerce is in this part of the world. Once container shipping starts to slip Catalunyans will definitely feel the dent. However, Catalunyans, unlike other groups in Spain are real good at saving money. They are so good, in fact, that the Treasury still honors mattress loads of old pesetas, frequently discovered when a senior member of a family dies.

    But what do I know? I'm just an old expat faggot from Nevada. I grew up always knowing life is a gamble. You just have to man up and deal with the hard times when they happen.
     
    #15 midlifebear, Jan 21, 2010
    Last edited: Jan 21, 2010
  16. Drifterwood

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    Of course anti Europe people want Greece to fail. But in reality it is a convenient first line of defense, rather like a nightwatchman in cricket. I would guess that 35% of Greece's GDP is n their grey economy. If you add this back, then the figures are no worse than the UK will be soon.

    The issue is that Greece must face is to become less Greek if they wish to stay at the big party. It is a similar case for all the sub olive-line countries.
     
  17. Joll

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    I wonder if they'll keep Greece going as long as poss, partly in the hope it can be turned around, but also to keep the spotlight off Portugal, Italy, Ireland and Spain?
     
  18. Drifterwood

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    Jason comes at this from his anti europe stance, rather than sensible economics.

    The fact IS that it is far easier and politically more expedient for Greece to face it's fiscal difficulties from within the Euro rather than from outside, no matter how tempting that may be in the short term.

    Sorry, my anti-european friends. Tough times for Greece though and I don't mind admitting that other "economic sinners" need to get the message loud and clear.
     
  19. Joll

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    No probs, my euro-holic friend. :wink:
     
  20. Drifterwood

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    Yep. That's why I am in China :biggrin1:
     
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