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Austerity measures around urozone

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  • Austerity measures around urozone

    Lean times ahead?

    (Reuters) - Italy joined Europe's austerity club late on Tuesday as its cabinet approved 24 billion euros of deficit-reducing cuts that could hit the popularity of Prime Minister Silvio Berlusconi.
    more from Reuters - http://www.reuters.com/article/idUSTRE64P2G020100526
    Any metaphor will tear if stretched over too much reality.

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  • #2
    Spending always makes politicians popular until the bill comes due.

    Coming to a United States near you soon.........

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    • #3
      I was called little Englander and xenphobe for years purely because I said this sysytem was flawed and would lead to economic strife.

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      • #4
        Not everybody is happy with the measures though.

        http://www.spiegel.de/international/...697132,00.html

        On a more fundamental level, however, Washington is concerned that, should Europe overreach in its rush to cut government spending, it could endanger the fragile economic recovery that has taken hold on the Continent and around the globe. In particular, the US would like to see countries like Germany and France continue efforts to stimulate their economies.
        Germany is atm in the unique historical situation of a devaluating currency and at the same time falling interest rates since people are seeing germany as a safe haven although the euro falls against the dollar, so this is a great chance for us.
        Ha, wie so stolz und hehr
        Wirft über Land und Meer
        Weithin der deutsche Aar
        Flammenden Blick.

        Comment


        • #5
          You should check out the mesures of the Romanian government. They are reducing the salaries with 25% and the country is on the brink of social collapse.
          Mortal danger is an effective antidote for fixed ideas.

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          • #6


            On a more fundamental level, however, Washington is concerned that, should Europe overreach in its rush to cut government spending, it could endanger the fragile economic recovery that has taken hold on the Continent and around the globe. In particular, the US would like to see countries like Germany and France continue efforts to stimulate their economies.
            Given that it is was the US mortgage market that largely caused this mess, I think it is very presumptuous for the US to tell anyone else how to run its economic house.

            Germany is atm in the unique historical situation of a devaluating currency and at the same time falling interest rates since people are seeing germany as a safe haven although the euro falls against the dollar, so this is a great chance for us.
            By definition falling interest rates mean devaluation. It is a sign of decreased demand for a currency and/or central bank increasing the money supply..... among other things. I am not sure what you mean.

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            • #7
              Originally posted by Kimi View Post
              Germany is atm in the unique historical situation of a devaluating currency and at the same time falling interest rates since people are seeing germany as a safe haven although the euro falls against the dollar, so this is a great chance for us.
              Yeah... Everyone in the Eurozone will have to move to Germany for work...

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              • #8
                Originally posted by Miss Saigon View Post

                By definition falling interest rates mean devaluation. It is a sign of decreased demand for a currency and/or central bank increasing the money supply..... among other things. I am not sure what you mean.
                Hm... i#m not sure what word >I used wrongly so I'l try to say what I meant differently.

                Germany is an export oriented country, so devaluation of the euro against major currencies is good for our economy.
                Normally this means higher interest rates and less money flowing into the economy because due to the inflation 5% interest is not really 5% because the worth of the currency devalutes.
                However, interestingly in germany this is not the case. We have a devaluating currency and at the same time we're getting money thrown at us with the interest that the german government has to pay for its debts also falling. So our interest falls double. Once because the euro devaluates and again because even though the euro devalutes people are willing to lend us money for even less interest than before.
                This is because germany is the "safe haven" of europe. Its a great chance to get rid of debt because with the fewer interest we have more money to use on paying back debt and with the devaluating currency we have "less" debt (relatively).

                Of course this is mainly true for germany but not for the rest of the euro zone where the money that we get now is drawn away from.

                Yeah... Everyone in the Eurozone will have to move to Germany for work...
                No fear, we're bailing out the french too. Germanys banks have agreed to hold their greek debt until 2013 because the german tax payer was unwilling to bail out the german banks that lend the greeks all the money. However the french ECB president now buys large amounts of bank debt enven though that is not needed since the EU has already done the 110bn bail out and the 750bn help.
                So what he in fact does is buying up the bad debt of french banks with the money of germans, portugese, spainiards and italians. That is because france is by far the largest holder of greece debt and the german banks, as said, are not allowed to sell their bad debt to the ECB.

                All hail Sarkozy, the saviour of european solidarity. Oh well, I guess he gets to buy his re-election on the backs of the european tax payers. Obviously this does not really sit well with people here and the EU and Merkel will feel that in the next elections, I'm sure.
                Ha, wie so stolz und hehr
                Wirft über Land und Meer
                Weithin der deutsche Aar
                Flammenden Blick.

                Comment


                • #9
                  Originally posted by Kimi View Post
                  No fear, we're bailing out the french too. Germanys banks have agreed to hold their greek debt until 2013 because the german tax payer was unwilling to bail out the german banks that lend the greeks all the money. However the french ECB president now buys large amounts of bank debt enven though that is not needed since the EU has already done the 110bn bail out and the 750bn help.
                  So what he in fact does is buying up the bad debt of french banks with the money of germans, portugese, spainiards and italians. That is because france is by far the largest holder of greece debt and the german banks, as said, are not allowed to sell their bad debt to the ECB.

                  All hail Sarkozy, the saviour of european solidarity. Oh well, I guess he gets to buy his re-election on the backs of the european tax payers. Obviously this does not really sit well with people here and the EU and Merkel will feel that in the next elections, I'm sure.
                  I figure the point of the Eurozone is to make it, and in extension the EU, better functioning and more competitive. It might not mean doing what's good for Germany, specifically. Economic integration will tend to mean redistribution within the Eurozone. Right now it seems the Eurozone needs policies that allows Spain, Portugal etc. enough projected growth in the coming years to help them pull out of the current deficit spending. Just slashing government spending won't do it alone (tends to bump the GDP downwards anyway, which might just be counterproductive here).

                  It's in Germany's interest as well for the EU, and not just Germany, to pick up again after all, since 85% of the trade building up that trade deficit is within the EU. In a way, even if the Greeks have been spending money on German good bought for borrowed German money, from a Eurozone perspective, it shouldn't matter too much, since it's all Eurozone money anyway. It's just redistribution. But the question has been raised: Is this a good way for the Eurozone to operate? Probably not. There's no actual point in having Germany build and export that much, since all it seems to do is require a later redistribution of the accumulated funds to make the Eurozone work — while making at least some Germans a tad snarky about it.

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                  • #10
                    Originally posted by Johan Banér View Post
                    I figure the point of the Eurozone is to make it, and in extension the EU, better functioning and more competitive. It might not mean doing what's good for Germany, specifically. Economic integration will tend to mean redistribution within the Eurozone. Right now it seems the Eurozone needs policies that allows Spain, Portugal etc. enough projected growth in the coming years to help them pull out of the current deficit spending. Just slashing government spending won't do it alone (tends to bump the GDP downwards anyway, which might just be counterproductive here).

                    It's in Germany's interest as well for the EU, and not just Germany, to pick up again after all, since 85% of the trade building up that trade deficit is within the EU. In a way, even if the Greeks have been spending money on German good bought for borrowed German money, from a Eurozone perspective, it shouldn't matter too much, since it's all Eurozone money anyway. It's just redistribution. But the question has been raised: Is this a good way for the Eurozone to operate? Probably not. There's no actual point in having Germany build and export that much, since all it seems to do is require a later redistribution of the accumulated funds to make the Eurozone work — while making at least some Germans a tad snarky about it.
                    Hmm... I dont really see the problem. German tax payers get to pay for french bankiers bonus payments. Its all good in euroland. Now, when the french finance minister gets her demand through and germany stops being so competative then the EU will become more competative against china, india and the US too.
                    Ha, wie so stolz und hehr
                    Wirft über Land und Meer
                    Weithin der deutsche Aar
                    Flammenden Blick.

                    Comment


                    • #11
                      Originally posted by Kolonelu View Post
                      You should check out the mesures of the Romanian government. They are reducing the salaries with 25% and the country is on the brink of social collapse.
                      If I were you I would to be very cherful. It could to be only good for Romanian . Yours companies without load socialism will be very fast grow.

                      Moreover I think that reduction of minimum earn wage is a very beneficial. Poorer regions of country will can faster grow.
                      Last edited by Camillus2; 03 Jun 10, 14:56.

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                      • #12
                        Im a take it on the chin and still smile sort but not very patient.

                        However hard our governments need to hit us I just wish they would bloody get on with it.
                        Sealion would have failed..............runs,

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                        • #13
                          you ain't see nothing yet

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                          • #14
                            Its OK Dave has removed chauffeur driven Limos from Ministers. They're gonna have to catch the Tube. Paying off 180 billion quid defecit? Done!!

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                            • #15
                              "Italy joined Europe's austerity club late on Tuesday as its cabinet approved 24 billion euros of deficit-reducing cuts that could hit the popularity of Prime Minister Silvio Berlusconi."

                              I thought only God could hit the popularity of Silvio...
                              A ME LE GUARDIE
                              "Di noi tremò la nostra vecchia gloria. Tre secoli di fede e una vittoria". Gabriele D'Annunzio

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