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back to article Eurozone crisis: We're all dooomed! Here's why

Quite what is actually happening over the Eurozone I can't actually tell you: it's not that things change too fast to write about them, it's that things change to fast to read about them. Berlusconi still PM? Italian bond yields over or under 7 per cent? That changes as often and as fast as Berlusconi does condoms. France to go …

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Last person out, please turn out the lights....

I'm just peeved that I lived a quiet life of simple virtue, never got into debt, and now have no chance to get all those wonderful consumer durables, and then default on the repayments.

Any chance we'll start a new credit bubble so I can play this time?

Silly question of course, it's not if, but when....

George Santayana would love it.

(PS Great article, but I still think that some way will be found to sort things, but it will be one that accidentally cedes even greater powers to the Financial Sector... OTOH, if the corporations take over, we may get Rollerball...it's not all bad)

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or running man!

watch out for the pseudotrons tho

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Trollface

"I'm just peeved that I lived a quiet life of simple virtue"

Let this be a terrible, terrible warning to all the rest of you considering frugality, virtue or a so-called "quiet life". You're all still doomed, but the rest of us will be having much more fun.

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I am presuming that you live in a western first world nation. If that is true you cannot help be be in the top 5% of the worlds wealthy and profligate. Your 'quite life of simple virtue' is living like a king to most of the worlds population. The roof over your head and the food on your table is subsidised by a cruel and bloody history that set up the favoured institutions that support your nation.

Yes there are those who have taken and wasted far more that was their fair share and I don't expect you to do penance for those that came before you but to pretend that history didn't happen and that everything you have you would have no matter where you happened to be born is just crass.

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Boffin

@Magnus_Pym

The number of people oppressed in history is comparatively very small to number of people living today.

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Greece "should default, pay back a bit but not all of what they owe, and start again"

Comparison to personal default situations are off --- you cannot get the repo men in and cart off all their physical stuff (parthenon, leccy pylons) like normally (plasma, lawnmower).

I suppose it's the same injustice -- your children losing their home because their parents can't count, or your land losing its historical possessions because someone the others voted for ran it badly.

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I'll put it bluntly...

In brutal, Darwinian terms - to the victor, the spoils.

History is full of empires rising and falling. Look at Rome, Egypt, China and Britain. All had dark aspects, but all pushed the human race forward.

Let's face it, the third world has never been an icon of virtue, and while the left leaning liberals blame it all on imperialism, it's certainly not the case. Slavery in Africa started long before Rome and still goes on today (child soldiers etc).

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@Tomato42

That depends on your definition of history.

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Anonymous Coward

Actually, the difference goes deeper

If you default on your loans you get marked not to run a company, your credit rating is tarnished for a decade, you can no longer get a mortgage, etc. If you do so by fraud you also go to jail.

If you are the greek politician and banker who participated in orchestrating the entire affair while being in charge of the central bank of Greece you get to be the prime minister and the rest of the EU gets to give you money (anyone who will try to tell you that the ex-president of the central bank of Greece was not involved should really have their brains examined).

Screw that for a laugh.

First of all, until the Parthenon is carted off in crates to the British Museum, Metheora and Athon to Moscow and all of the Islands given away to Germans as real estate property development the Greeks must not get _ANY_ money period. Even if these are not taken as payment they are worthy collateral. If they want them back they _WILL_ _PAY_.

Second, the people who orchestrated the fraud (as it was an accounting fraud all right) should first go to jail (and not a Greek one, I suggest this is outsourced to Turkey or Macedonia to ensure that no preferential treatment takes place) as a precondition for them getting any money.

Now after that they are welcome to proceed to an orderly default and have some money from my pocket.

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@ Magnus_Pym

I usually agree with much of what you write, but this time I feel that you sound unbearably pompous. I have absolutely *no* responsibility for what anyone that came before me did, nor do I have to feel embarrassed by any such actions.

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@Intactable Potsherd

a) I am unbearably pompous IRL.

b) I did say that no blame should be passed down from generation to generation*.

c) I was just pointing out that an economical life style in most western countries is not so much from a global perspective.

*excepting where reparation of stolen assets is possible but not conceded , although I feel the Greeks claim to their marbles may be reduced of late.

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replying to thread to appear on front page

Greece defaulting will not give Greece much of a come-uppance. Argentina defaulted a while ago and it was very painful for them at the time, but they're doing relatively well now on high mineral values and meat exports. I'm sure if Greece defaults it will be painful while they try to get new debt arranged, but they'll bounce back eventually (if they can minimise corruption). After all, Greece has sun, history and olives, all things that can make them money. The real pain will be for all the banks (in Germany, France, UK, etc) who bought Greek debt in euros. If the Greeks (or anyone else) want to punish the bankers they should campaign for a default.

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Time to thank Goerge Soros

For costing us so much in the ERM that we never joined the Euro.

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Anonymous Coward

Re: Time to thank Goerge Soros

Yes, it's like realising in the nick of time that you're not cut out for high-stakes poker after all.

Sadly, Britain and other nations close to the Eurozone will have to take a hit from all this. It's all very well talking about UKIP, but even brushing aside the closet fascists and imperialists undergoing withdrawal symptoms, that party isn't really offering very many solutions.

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Anonymous Coward

D'you know ..

.. I was buying it right up to the last line where you admitted to being a facist crackpot. I'd keep that bit quiet next time ..

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Steady now....

It's this very analysis that made me a crackpot in the first place. That it would never work but they were going to go ahead anyway.

As to the fascist, I plead the O'Rourke defence. No one has ever fantasised about being tied up by a liberal.

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I'm not sure that's fair

UKIP may say some very peculiar and some outright offensive things but I think the majority of UKIP's voters don't spot that stuff and are primarily interested in smaller government by whatever means. Most people don't read manifestos, they just vote on the general message and the general message that UKIP are perceived to push is "let's remove a tier of government and a source of bureaucracy". The BNP are who you vote for if you're looking for fascism.

Since the article's author was good enough to state his bias, I'll state mine: I would never, ever vote UKIP as I think their policies are reactionary, often absurd and sometimes racist, and that they would be detrimental to the country as a whole.

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FAIL

!!! F A I L !!! How NOT to judge an idea !!! F A I L !!!

How should we judge an idea or an intellectual argument?

A ) On the basis of the content?

B ) On the basis of who the author is?

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WTF?

Count me as a crackpot too...

Ah, so wanting to elect your own government, wanting your country to be run for the benefit of its inhabitants, and not haemorrhaging cash to be a member of a (bankrupt and corrupt) political club where we are forever fighting our corner/for crumbs/to be heard/to have meagre influence = crackpot, eh?

Perhaps the truly crackpot are the ones who in spite of all evidence over many years *still* think that the solution to our woes is more of what caused them.

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Anonymous Coward

Re: !!! F A I L !!! How NOT to judge an idea !!! F A I L !!!

Aha, now an argument may be perfectly good, but I think it will always give pause, if the author at the ends proclaims themselves to be an associate of some dodgy people - even if those dodgy people themselves have a good argument (I'm not saying this bunch do or do not).

It will give more pause still if the latter repeatedly come across as a shower of delta-moron Human-Rights-Act-despising, queer-hating, white-power xenophobe refugees from what they perceive as the unacceptably socialist and woman-tolerating Tory party.

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Anonymous Coward

Curious.

I'm a UKIP member and ran a local branch for a couple of years. I never met any member with the views you describe.

UKIP members are very aware of how they're viewed by extreme left-wingers and their tame TV broadcaster, and anyone with such views is rapidly turfed out. Of course, if you're a supporter of brutal dictatorships, or you support terrorists such as Hamas or the IRA, or if you believe that we should all freeze to death to save the planet from pretend global warming, then you're rapidly embraced by the parties on the Left. You can even become mayor of London.

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idiot

^ obviously has no idea what fascism is. ^

and deserves to be ignored on the godwin principle alone.

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Re: Count me as a crackpot too...

So, you're saying you're in favour of Scottish independence, then?

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Anonymous Coward

bit of both - "He would say that, would n't he!"

No matter how persuasive or otherwise is the message, always note the source. Some of Goebbels's messages (to take an extreme example) were great on content; when one looks at the source and context, it gives a new slant, a new evaluation of the basic premise.

Much depends upon the credibility and standpoint of the author and the context of the message.

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thanks for adhereing to stereotypes

See, that's why I could never vote UKIP.

None of our members are right-wing nutjobs, but we regard the BBC as extreme left-wing (cluetrain: most left-wingers regard the BBC as right-wing). None of our members are rascist, but in the extremely complex and sensitive issue of Israel/Palestine, we could never side with the a-rabs. We think its OK to say that you are a supporter of brutal dictatorships and terrorists if you are anything other than howling and frothing about the iniquities of the (democratically elected) Hamas group. Unlike Netanyahu of course, who is a paragon of truth and virtue no matter what other world leaders say. He would never kill and maim and slaughter in the defence of his side of the argument.

Thank you, Anonymous Coward, for having the courage to stand up and be counted for what you believe in. And for confirming that you *do* hold the same views that make so much of the rest of the world regard you as nutjobs.

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Stop

What a good decision strategy.

"Judge argument:

A ) On the basis of the content? or

B ) On the basis of who the author is?"

So you'd take a grinning wild-eyed man's word for it that he's not going to use that bloody axe on you? The content states he won't.

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Stop

W.T.F.

Jesus.

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Re. most left-wingers regard the BBC as right-wing

I wouldn't agree that the BBC is extreme left, but it certainly has a centre-left, liberal agenda, roughly on a par with the Guardian and the "Independent" I'd say.

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Go

Not quite though...

I was gonna call Godwin's on this one, but he only mentioned fascism, so fair's fair.

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Anonymous Coward

yes but....

the irony is the BNP actually have some good ideas, as does the UKIP conservatives etc the problem is that almost all parties have a bunch of crap that goes with them.

I would hazzard an assumption that any person who 100% agrees with any party doesnt actually have a clue what they are talking about.

Personally i believe there is no reason what so ever for any country of the world not to be able to share some of the good points of the EU without all the EU crap. Lets face it, travel is great in europe, the original idea of trade with the EC was great, but politics got in the way and made it much more confusing, the idea that we cant sell something because some other country is crap at making it is beyond belief and beyond most of the UK population as well. Farming being the big one, lets NOT use land to make food to help feed not only us the the rest of the world, instead we'll leave it an pay the farmer NOT to use it, that money of course comes from the EU which is paid for by the member states who take the money off the people (farmers) sounds like a great idea until you look at it like that. We pay more in to the EU then we get out of it, would it not make sense to deal with the issue in house without the added layer of shite in the form of the EU?

to bring this back to an IT related article, you could liken it to a bad piece of software, you can patch it, you can add on to it, but if the core idea / concept / programming of it is shite, its still going to be a bad piece of software, only now its bad an bloated and the good ideas that were levered in to it get lost in the FUD. thats my opinion of the EU. if it were not for the fact that france and germany would flatly refuse most changes id suggest the best thing the EU could do is sit down, discuss what is good, and start from the ground up. After all, the EU has absolutely no legal hold over anyone, its only because we passed laws in our countries that we have to deal with the crap thats shoved down our necks

as i said, there is no reason what so ever that member states couldnt agree on trade terms that keep the benifits of the EU, without the added layer of crap.

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Anonymous Coward

err ...

you kind of undermined your own argument there.

While I am sure you are a sane and sensible fellow, and UKIP have some points worth listening to, your post quickly deteriorated into "the whole world is run by lefties and they are out to get me".

Not the best way to garner support

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FAIL

!!! F A I L !!! How NOT to judge an idea !!! F A I L !!! #

He was talking about the party, not the article, your reactionary reply proved his point IMHO.

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Only useful thing that UKIP have done is split the BNP vote

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Flame

Yes, but...

Isn't the BBC supposed to be non-biased, by it's charter?

If so the British public are being seriously misled by the organisation that they are forced to pay over £100 a year for.

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Anonymous Coward

re: curious

Per your observing how you think "extreme left-wingers" view UKIP, may I say, I'm not one, indeed, I may run for the Conservatives if the local association ever lets me.

You write of the BBC it is the "tame broadcaster [of the extreme left]", something which indicates to me powerfully, how your idea of the centre must be very far over to the right.

You write "anyone with such [profoundly right wing] views is rapidly turfed out" of the BBC. I think that is as it should be.

You write "if you're a supporter of brutal dictatorships...or Hamas or the IRA.. then you're ..embraced by the parties of the left". Even were that the case, such as with Ken Livingstone, would that somehow excuse UKIP's advocating repeal of race, sex, and homosexuality discrimination laws, such as I initially took issue with? Perhaps you feel that if one or two left-wing nutjobs are sympathetic to one or another brutes (students do tend to support anyone who is on the side of the Palestinians - yet they're hardly the political mainstream), it's therefore OK politically to take Britain back to the C19th. Well I'm sorry but it's not.

You say you never met any members with the views I described - perhaps you should read your own manifesto! With what you've written, you've painted yourself as a comic-book version of what I described.

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Trollface

BAN FACEBOOK

Facist? I don't recall seeing anything in their election manifesto about taking a dislike to faces.

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The Germans

I don't want to bash the Germans, but the fact that ECB can't print money is entirely down to them. The Germans have a painful history with "QE" (as it is now called), they are absolutely terrified that allowing the ECB to do its job is the slippery slope to hyper inflation. They will point out the consequences of that to anyone that argues with them (Hitler and WWII), arguing that the EU was specifically setup to prevent that sort of thing from happening again.

The Germans were only prepared to join the Euro if a) they (effectively) controlled the ECB and b) it could not print money.

Unfortunately they are now hoist on their own petard because the third alternative would be for Germany to either guarantee the debts of, or buy bonds from, the indebted nations. The population, egged on by the newspapers, won't wear it.

Pity really...

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Coat

Careful what you wish for!

If the ECB could buy up all the crap debt, what does people think would happen?

Well, That is easy: Everyone would be issuing more of it, as fast as they could get their computers to write it up, and then stick the ECB with the default. The banksters especially would just looove to dump their OTC manure on that Sucker of Last Resort and even get new money in exchange - to do the same all over again with, but bigger and with more leverage this time, with unlimited above-government guarantee ... well, 500:1 is just not rich enough.

The solution? Let people borrow directly by selling bonds on the regulated exchanges causing the interest rate they pay to be set immediately on actual risk and performance instead of some Sovjet-style central planning committee inside central banks.

If the purpose of the central bank was really the "lender of last resort" then the ECB rates should be higher than the market rate - they are the lowest. It is therefore just a special bank providing cheap financing to it's crony friends so they can buy everyone's assets and extract rent forever.

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Boffin

Two ways to run the economy

You can pretend that there is no problem, just print more money and make everybody poorer by it without officially declaring it. Or you can keep the money supply stable and tell the perpetrators of financial shenanigans that they will have to clean up their act, and yes, they'll get the pain to make up for the borrowed pleasures of earlier times.

The former always looks easy in the short term, but provides a somewhat diluted message on how to behave in the future. So the current fight is really about who should inherit the blame and the pain.

Full disclosure: I live in Germany and I support the idea of bailing out the Greece using some of the daily Euros I pay in taxes. But make sure they work for it every bit as hard as I do.

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The answer?

Rather than thinking about mechanisms for throwing the weakest to the wolves (markets), wouldn't the best fix be for Germany to leave the Euro and go back to the D-Mark?

This wouldn't cause currency flight out of Germany and a banking crisis there. Their biggest problem would be preventing currency flight INTO their country. A problem which they'd probably have to solve the same way the Swiss recently did - a currency peg to the Euro, which amounts to buying the weaker countries debt. Isn't this just what the weaker countries need?

Also with the Germans outside the Euro (perhaps along with a few other smallish strong Northern European countries that want to be part of the DM blok and don't mind doing what they are told to do by the Germans), there won't be any opposition to a proposal to allow the ECB to be the lender of last resort to the remaining Eurozone. Of course the Euro will plummet, but better that than the alternative of no longer having a working economy at all?

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Facepalm

Printing more and more money to buy more and more (bad) debt is just kicking the can down the road. The problem isn't that Italian (& greek, spanish etc) bonds are now at 7%+ yields, it's that because they were Euro members, they were allowed to borrow at close to German bond yields simply because they had the same currency, while in reality their economies were not so healthy. And their governments, seeing that they could borrow cheaply, went on a borrowing spree. Printing more money by the ECB will simply guarantee more of the same.

The politicians are much to blame for this one, many nations including Greece did not have the economic criteria to join the Euro, but they were show horned in for political reasons. Greece was lying in it's reports to the EU, and the EU knew and didn't care, because the more countries in the Euro, the better the EU looked.

Last final rant at democracy and stupid voters. If a door-to-door salesman tells me he'll sell me a genuine Rolex for £100, I would slam the door in his face. So why should I believe a politician who is telling me he/she will reduce my taxes while at the same time getting the government to offer me more and more free services and pensions etc? Yet the majority of voters apparently believe that, and the politicians oblige in this financial idiocy, and then make up the difference by borrowing (with no doubt a few bob falling the way of their chums and old boy network as the cash merry-go-round spins around)

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Go

aha

the chinese method. Works fine for them! Indeed print more euros and buy dollars with it...

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Pint

@Schultz

In principle you are right, but the problem is timing. Yields tend to go up in minutes, days maybe. And then they stay up for weeks or months with no force to push them down, if there is no lender of last resort. There is positive feedback in one direction only. In practice this turns "little" problem of illiquidity into big problem of insolvency, and the latter tends to go viral.

I think you would agree that this is a big problem. Yes nations have to work hard, pay taxes etc. BTW one cannot fail to notice that Slovaks where *average* wages are *lower* than minimum wages in Greece, all in same currency, are also contributing to bail Greeks out. The trouble with this is that systematic changes are needed to increase tax income, cut public sector, cut dole etc. . This takes years (months at best), which is just enough time to push not just one nation, but everyone into insolvency.

All due to lack of balancing force (lender of last resort) on the bond market. I really think it's time to put ideology aside, no matter how righteous it is.

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@James Micallef

It's not entirely true that Italy has borrowed loads of money since joining the Euro. In fact, when Italy fixed the Lira against the Euro on 31st December 1998, its debt level was 114.9% of GDP - it had been falling steadily since 1995, when it was 121.5% GDP. It fell prettly steadily from that point to a low in 2007 of 103.1%, from whence it has risen steadily to 118.4%.

The problem with Italy is that its government services a larger than average debt/GDP based on its productivity. That, like the rest of the Europe and, indeed, much of the world, has taken a tumble since the US mortgage lenders poisoned the world financial system by finding a way to package up bad debts in a way that no-one would understand the risks they were taking by buying them.

Greece's debt/GDP was also pretty steady until 2007, when it also started climbing quite sharply, from 107.4% to 144.9%. Not as sharply, it should be pointed out, as the UK - which has gone, in the same period from 44.4% to 79.9%.

The main problem is that running such large deficits works to give the government bond markets an utterly undemcratic hold over the politics of your country. Since Germany does not want to allow the ECB to be lender of last resort, there is no way to combat that in the Eurozone.

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Well it isn't the germans fault in that way, but more evidence of the fundamental fault of the project. The germans not wanting to print money without limit is fine, that they knew they didn't trust the other eu countries with this power meant they should have known better than to go forward with the project in the first place.

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@Soros

It will be interesting if the truth ever comes out as to why Britain didn't join.

Did Brown have the 'real' figures for Greece/Portugal/etc - and if he did why didn't Kohl?

Was it just domestic politics - he would have lost the NF vote if he had introduced foreign money?

Was he afraid of the house price boom if interest rates suddenly halved to German levels.

Did the city fear losing it's currency trading?

Did the Americans 'persuade' Blair to stay out to keep the Euro cap under the $ and stop it become the default oil currency?

Since British banks are still on the hook for euro debt anyway it's not necessarily such a blessing.

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Per some of the sources, it was simply a side effect of the decade long Blair v Brown spat. Brown found a lever over a crucial national policy that was unambiguously Chancellor stuff and dedicated himself to being contrary. Meanwhile the public position became entrenched of its own accord.

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Anonymous Coward

One obvious thing.

Just think how much money is made out of gambling on exchange rates, manipulating them and then creaming off a fat commission everytime one sells money for money. Despite the cost to every private citizen and the tax on every import and export thus imposed on trade and industry, the financial powers-that-be know which side their bread is buttered and b-g-r the rest of us.

Clever and not-so-clever newspaper propaganda easily persuades the rest of us to support the corrupt policy with spurious reasoning.

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Give Brown some credit where it's due

He was an idiot in political terms, but not so intellectually. I'm willing to believe that he simply knew where the Euro project would end up, and decided that we'd be part of that shipwreck only over his (politically) dead body. I think history may be kinder to him than his comtemporaries. Blair was the worst PM we've ever had. Gordon was by no means the worst chancellor. If Blair had had his man (boot-licker) as chancellor, it would be the UK at the centre of the Euro crisis, not Italy.

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Non-euro solution

For Britain thenm is to "do a Lira" - just print more and more pounds.

So the pound goes from $2 to $1 to a fraction of a euro.

It does mean that a lot of British brick layers will be hired in Poland as cheap labour and Dutchy-Original biscuits will look like a bargain in France. Good job we don't have to import any raw materials for our non-existent industry though.

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