Eurozone Sovereign Debt Crisis part 2 - Ireland

[deleted213967]

hey, I also said up to 2 years.

This just in from the Guardian:

The bust-up between Cameron and Sarkozy held up the conclusion of the EU-27 summit for almost two hours, with the French president expressing rage at the constant criticism and lectures from UK ministers.

Sarkozy bluntly told Cameron: "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."

Well. He certainly had a point there...

But it's all good. Merkel gave him a teddy bear for the birth of his baby girl. :wink:

 

[eurotop40]

...
Sarkozy bluntly told Cameron: "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."

Finally...

 

[deleted213967]

My personal view is that this is casino banking. However nation states have been very bad at regulating. A particular EZ problem has been that it needed EZ regulation, and without a fiscal union this was impractical - regulation remains poor. In defence of the bankers they had little choice. If all your competitors are going for casino banking and you don't then you go out of business. I think close on 100% of EZ banks have engaged in this practice to a greater or lesser extent.

It is not only your personal view: it should be any sane person's view that banks should take measured risks, which does not translate into "casino banking", and obscenely high 25:1 leverage.

Bankers did have the choice of making common sense decisions, including exiting the business. We would all be better off if some of them had.

 

[Jason]

It is not only your personal view: it should be any sane person's view that banks should take measured risks, which does not translate into "casino banking", and obscenely high 25:1 leverage.

Bankers did have the choice of making common sense decision, including exiting the business. We would all be better off if some of them had.

As an issue of personal morality from individual bankers this may be correct. Had I been in a senior position in a bank I hope I would have had the moral courage to leave. And of course some did. But the system was fundamentally wrong - banks simple shuffled their boards until they got a team prepared to go along with casino practices. We are not looking at a situation where one or two banks did this but where virtually ALL did this. While blame attaches to the individuals in the banks who actually did this, blame attaches also to the system, which in the end means to politicians throughout the EU over the last decade. And blame also attaches to the people who voted for these politicians.

Politicians can direct the process of getting us out of this mess, if they can actually provide a bit of leadership. But much of the hard work has to be done by banks, working in a properly regulated environment. The EZ lacks those regulations. The UK has problems with its regulations, but not to quite the same degree.

Just as banks came to be led by people with a dodgy moral compass because of a bad framework, so they can come to be led by people who know what is right if we can get the framework right. Our bankers are our best hope for the future. Go hug a banker - we need them.

 

[dandelion]

I imagine Cameron is concerned that if the EU fails to produce enough funds, britain will be forced to chip in. Which it will.

Perados, I cant give you any quoteable numbers on the real effects of ww2. However it is not nearly so simple as to consider just the marshall plan. There is the question of money and assets spent on the war and of loans taken out to conduct it. My real conclusion is that no one in europe came out of this in any condition short of disastrous. This current war is not so bad as that one, at least all the buildings will still be standing when it is over

Jase, you are still being self contradictory. You just outlined a scenario where bankers cannot but behave badly if they are allowed to. In fact, it is their legal DUTY to engage in the wildest of scams barely permissable. The obvious first requirement is to cut the leverage rate, and do so unilaterally if necessary. If you reckon this means all the banks will run for a pacific atol, then it also requires immediate measures to prevent them operating within europe unless they follow our rules. Then we need those transaction taxes, bonus limits and frankly wage limits. We dont need bankers, especially the current ones. We only need banks. My impression was that the EZ was rather better than the uk when it comes to current regulations. The Uk must follow suit with the EZ.

 

[Perados]

grml

 

[Perados]

your right after this "war" the buildings are still there... But china will own them :wink:

To europe... Merkel cant give more money atm or it would be the end of her coalition...

I guess at the end the efsf will get used to support all european banks and a cut of 60% for greece

And the end of the world is in dezember 2012 ask the maya kalender... :biggrin1:

I wait till wednesday and then i decite what i will do with my money

 

[Jason]

Dandelion - yes of course the UK will have to chip in if/when the euro fails, through the IMF. The other big contributor will be the USA. So yes Cameron has a responsibility to tell the EZ what to do.

And Dandelion, regulations of banks could be better than they are, but the area is so complex that there will always be ways around the regulations. For more than a century the regulation that has been effective has been the old school tie, the idea that gentlemen know how to behave, the idea of clubs and families and social groups, and that bankers had a fair measure of Christian morality and belief in judgement day knocked into them at a public school. Yes we have to improve the regulations, but in the UK we need the right type of chap running banks. Of course this is unsayable outside the anonymity of lpsg, but it is the reality. We need Lord something or other in charge of a bank, irrespective of whether he knows a great deal about banking, because he is a good egg, one of us, someone who can be trusted to do the right thing. And someone who perceives career in terms of generations of a family not their own few years in top position.

 

[Perados]

oh come... To say we need a lord something cause only old and "good" families can handle the markets but we cant regulate banks is soooo lame
When you see how many privatbanks arent any better than the big banks you have to admit that its a bad idea...
The only way is to regulate the market and this in a way bigger circle then the most people guess today. To make sure that ther isnt a way around

A good start would be take something like the german TÜV and every product that a bank creats has to get proofed by this organisation and some parts of the trading are forbidden for banks... And on some goods its forbidden to speculate without being part of buyer/seller

 

[deleted213967]

Dandelion - yes of course the UK will have to chip in if/when the euro fails, through the IMF. The other big contributor will be the USA. So yes Cameron has a responsibility to tell the EZ what to do.

...and why shouldn't the UK step up to the plate as well? It is still a member of the EU and (notwithstanding the opinion of older, less-educated Britons) has hugely benefited from membership therein.

Are Germany, France, and other better-behaving members of the EU any more responsible for Greece fudging its numbers and living in la-la-land?

So far, I have seen Merkel, Sarkozy et al at least try to identify solutions to the problem, but the UK seems content with back-seat driving.

 

[Jason]

your right after this "war" the buildings are still there... But china will own them :wink:

To europe... Merkel cant give more money atm or it would be the end of her coalition...

I guess at the end the efsf will get used to support all european banks and a cut of 60% for greece

And the end of the world is in dezember 2012 ask the maya kalender... :biggrin1:

I wait till wednesday and then i decite what i will do with my money

No fund can prop up all the EZ banks. If Soc Gen needs support France will have to pay up, and just that risk will lead to French downgrade.

Very many investors are deciding to put their money anywhere but the EZ. We are very close to a tipping point. We now have Italy failing to get its house in order, Sarkozy and Merkel arguing, a spat between Cameron and Sarkozy, the impossible demanded from Germany (more money), France facing a downgrade. All we need now is Vesuvius to erupt (about 16 years overdue) - there is absolutely no spare cash in the EZ to deal with any unexpected problem.

 

[Jason]

...and why shouldn't the UK step up to the plate as well? It is still a member of the EU and (notwithstanding the opinion of older, less-educated Britons) has hugely benefited from membership therein.

Are Germany, France, and other better-behaving members of the EU any more responsible for Greece fudging its numbers and living in la-la-land?

So far, I have seen Merkel, Sarkozy et al at least try to identify solutions to the problem, but the UK seems content with back-seat driving.

Since 1979 the UK has contributed more to the EEC/EU than it has got back every single year. This year it the UK expects to contribute €13bn and get back €6bn. The contention that the UK has profited is not easy to sustain.

The ECB had audit oversight over the national accounts that Greece submitted, and the ECB failed in this. The ECB is responsible to the EZ nations. Yes the EZ nations do have some responsibility for the Greek mess. They also have responsibility for the decision to create a single currency without a fiscal union, a policy whose failure was inevitable unless a single state was created very quickly.

Unfortunately the UK is going to be forced into a front seat role. The future is nations outside the EZ dictating to the EZ - just as the Troika is now dictating to Greece. Cameron will increasingly be telling the EZ what to do. On Monday he faces the biggest rebellion by Conservative MPs for at least 20 years, maybe even forever. The Conservatives will start following more EU-critical policies.

 

[deleted213967]

Since 1979 the UK has contributed more to the EEC/EU than it has got back every single year. This year it the UK expects to contribute €13bn and get back €6bn. The contention that the UK has profited is not easy to sustain.

You are confusing contributions to the bloated EU bureaucracy's budget with vastly more important macroeconomic benefits.

 

[deleted213967]

Since 1979 the UK has contributed more to the EEC/EU than it has got back every single year.

The UK is hardly the sole (and certainly not the largest) net contributor to the EU budget, which again is only part of the picture.

Which countries are net contributors to the EU budget? / EU-Oplysningen

 

[Drifterwood]

It is typical of the UK to find excuses regarding their post war economy (especially in comparison to Germany) rather than to have rolled their sleeves up and dealt with the challenges. Perhaps the French are worse at convincing themselves that they are special and owed a living, but the Brits aren't far behind.

Sarkozy it seems to me, is saying that the UK should pay its taxes, but have no vote on what is going on. I would have thought that that would have struck a nerve with the USA.

Europe faces a crisis on the back of a banking crisis that was not of its making. The Sub Prime Fraud is wholly Made in America and the plague infected European Banks through London. Had this not happened, there would be issues in Europe now, but not a crisis.

Perhaps we can sue the US Government to underwrite its derivatives.

 

[dandelion]

Dandelion - yes of course the UK will have to chip in if/when the euro fails, through the IMF. The other big contributor will be the USA. So yes Cameron has a responsibility to tell the EZ what to do.

yes, but in the uk national interest it may be necessary to chip in to defend the euro directly, as we did with ireland already.

And Dandelion, regulations of banks could be better than they are, but the area is so complex that there will always be ways around the regulations. For more than a century the regulation that has been effective has been the old school tie,

Barings!

"...shares are a penny and ever so many are taken by Rothschild and Baring..." What was that, 100 years ago? Sung by the Lord Chancellor? Its not as if we havnt had years of warning that this sort of thing can happen. Barings and the recent case were rogue traders, but the entire system has now gone rogue.

There is currently virtually no comeback on individuals working for banks if they do something with big negative consequences. Introduce some personal liability into banking. Slash wages. Fines and gaol for bankers losing the company money. Fines for the banks if they cause loss to third parties by their actions. Obviously the leverage has to fall because as things stand the banks, or their shareholders arent putting up nearly big enough a stake. They have negligible risk. This crisis is about bankers lending too much money to governments who could not afford to borrow this. They did this because they are legally obliged to have major holdings in government bonds (!), because governments have been perceived as guaranteed safe investments. Because in the end governments will take as much money as is necessary from their citizens to give to the banks. Stop bleating about big government damaging the economy and start thinking about banks bleeding citizens dry.

Not that governments are innocent. It has suited them to create a legal framework encouraging cheap lending to themselves. Like MPs voting to increase their own expenses! The principle has long been borrowing is good, more borrowing is better. This all has to stop. Or we carry on like this.

 

[dandelion]

Europe faces a crisis on the back of a banking crisis that was not of its making. The Sub Prime Fraud is wholly Made in America and the plague infected European Banks through London. Had this not happened, there would be issues in Europe now, but not a crisis.

It is rather unfortunate that the UK now has the unpalatable choice in the long term of maintaining the status quo with all its forseeable consequences for future crashes, or start dismantling its finance sector. Nothing wrong with a banking sector, indeed its indispensable. But how would we be if we decided the army was indispensable so generals ought to rule the country? Get ex-generals in as cabinet ministers? Certainly wouldn't let bankers do something like that, would we? This particular crisis began in the US because of dangerous banking activity but it was only because they dared more than the rest. We would have done it to ourselves soon enough. In fact we did. The Greek government hired bankers to get creative with their accounts... UK governments have been using bankers to run the PFI fraud for decades. The Uk is currently running the banking fraud that it is possible for a nation to save in bank operated pension plans for retirement rather than fund pensions from future revenue. It isnt.

Perhaps we can sue the US Government to underwrite its derivatives.

A nice idea but could they pay enough to set matters right?

 

[Drifterwood]

A nice idea but could they pay enough to set matters right?

The Sub Prime Fraud is a type of pollution, no? :wink:

Or do we live on a one way street?

 

[deleted213967]

The Sub Prime Fraud is wholly Made in America and the plague infected European Banks through London. Had this not happened, there would be issues in Europe now, but not a crisis.

Perhaps we can sue the US Government to underwrite its derivatives.

Ha! I just saw Margin Call and highly recommend it.

Yes, the Mortgage-Backed Securities debacle was Made With Pride In The USA, and was another export success story.

Still, why should the US be blamed for wholesale Greek corruption and profligacy, or for EZ members not following the simple EZ rules (say, public deficit <= 3% of GDP)?

 

[Drifterwood]

Ha! I just saw Margin Call and highly recommend it.

Yes, the Mortgage-Backed Securities debacle was Made With Pride In The USA, and was another export success story.

Still, why should the US be blamed for wholesale Greek corruption and profligacy, or for EZ members not following the simple EZ rules (say, public deficit <= 3% of GDP)?

They are two separate issues, I am not "blaming" the US for the situation in Greece, but the latter is amplified in effect by the former. European Banks can not take a double whammy, see Dexia. Had the Sub Prime Fraud not been foisted upon us, then we would have been able to deal with our local difficulties.