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[MarcAFK]

It took the French seven decades to build the EU.  It took the Germans seven years to destroy it.

I can and will take that as a personal insult.

That's not fair. I mean, it took Germany 1000 years to make the Holy Roman Empire and the French only 10 to destroy it.

[mainiac]

And what do you propose? The rule of 'common sense'? The rule of what is 'objectively true'? That's how totalitarian ideologies start, you know. By knowing what's right, and brushing everything else aside because it's obviously either malicious (see above) or simply misled.

What do I propose?  You were the one who said "oh but the politics".  You are just doubling down on the fallacy now.  First you begged the question saying: the politics were unquestionably something that literally provokes riots it is so unpopular.  Now you want to shift the burden of proof expect me to rationalize my arguments with politics?

No thank you, sir.  My reason for thinking something is shitty economics is that it is shitty economics.  If my arguments relied on pretending I'm an expert in something I wasn't then they'd be crap arguments.  If you want to say that it's "good politics" then show it's good politics instead of expecting me to disprove your baseless assumption.

I can and will take that as a personal insult.

I can and will not care.

[Culise]

And, you know, not because of a massive housing bubble that popped, dropping the bottom from under the Spanish banking system that systematically masked internal deficiencies and the depletion of capital reserves, coupled with rising labor costs that disincentivized domestic investment.

You mean the rising labor costs that happened after the crisis when European solidarity took the form of the core saying "Fuck you, not only will we not help, we are going to actively promote deflation?"  Certainly a big part of why Spain hasn't recovered.

I was more talking about how the problem started in Spain though.

That was how the problem started in Spain; a huge demand in housing spurred by government (the national government, and very explicitly not the EU) pressure along the lines of ensuring a house (not just housing, mind you) for everyone, which the banks were more than eager to follow through on due to the potential profits for themselves.  When the bubble burst in 2007 and 2008, construction in Spain dropped like a rock, and sales of houses dropped by a quarter nationwide.  Government revenues based on this bubble also contracted, leaving many planned projects high and dry.  High labor costs predated the crisis, and while they weren't a major contributor to its start, they were definitely a contributor to the inflexibility of the economy and thus its difficult recovery.  A lot of comparisons can actually be drawn to the US housing bubble, which was spurred onward for much the same reasons. 

I don't even know which European-wide banks you're referring to that the EU offloaded on Spain, to be honest.  Dealings between specifically-Spanish banks and the EU have been conducted directly mostly because the Spanish government doesn't want to assume their debts any more than they have to.  Indeed, they still haven't assumed these debts directly as such via nationalization or any other means; most of such assumption has been indirect via the floating of loans from the government to the banks, which for a time (not sure if it still is) got caught in a perverse feedback loop where banks needed to use bailout money to buy Spanish government bonds which were floated to get bailout money for the banks.  Again, these are also just to Spanish banks; as for European banks in general, I have no idea why the EU would even do something like put, say, a Polish bank's debts on Madrid's shoulders.  I genuinely have no idea what you're referring to by your claim, and I'm curious if you have more information.

[Helgoland]

I can and will take that as a personal insult.

I can and will not care.

And that's why we should stop arguing already. Have I mentioned yet that it's bad for my blood pressure and leads to nothing? Have pity on this poor opressor and prolong his life, if only a little bit.

That was how the problem started in Spain; a huge demand in housing spurred by government (the national government, and very explicitly not the EU) pressure along the lines of ensuring a house (not just housing, mind you) for everyone, which the banks were more than eager to follow through on due to the potential profits for themselves.  When the bubble burst in 2007 and 2008 [...] sales of houses dropped by a quarter nationwide.  Government revenues based on this bubble also contracted, leaving many planned projects high and dry. [...] A lot of comparisons can actually be drawn to the US housing bubble, which was spurred onward for much the same reasons.

Yeah, this does sound suspiciously like what happened in the US.

[mainiac]

I don't even know which European-wide banks you're referring to that the EU offloaded on Spain, to be honest.

Because interbank lending is a thing and bonds sales happen internationally?  We got these nifty things called telegraph wires and central banks now.

The rest of it is like the rubbish we saw in the US 6 years ago...  So we were supposed to have faith in these liberalized markets but when the markets get it wrong it was the governments fault all along.  Yeah.

[Culise]

I don't even know which European-wide banks you're referring to that the EU offloaded on Spain, to be honest.

Because interbank lending is a thing and bonds sales happen internationally?  We got these nifty things called telegraph wires and central banks now.

The rest of it is like the rubbish we saw in the US 6 years ago...  So we were supposed to have faith in these liberalized markets but when the markets get it wrong it was the governments fault all along.  Yeah.

Just saying "interbank lending" and "bonds sales" doesn't tie it to...what was it you said?  Ah, yes, how the "EU transferred debts from banks throughout the Eurozone to the Spanish government", full stop.  There's nothing about the EU compelling such bond sales explicitly to the Spanish government in your elaboration; there isn't even anything about the EU compelling such bond sales to Spanish banks, which very much are not the Spanish government (the tin-foil brigade aside).  There's nothing about the EU's institutions or the European common market, and indeed, it'd be completely illogical to tie it to such, considering such interesting datums as the largest foreign holder of US treasury bonds being China, which certainly aren't in a common market with each other.  Heck, you didn't even show how the debts were transferred to the Spanish government were the key to the start of the crisis; the most you can say is that what happened as outlined in my post occurred *after* the crisis was already underway, and only indirectly, and only insofar as Spanish banks were concerned, and thus couldn't be tied to the start of the crisis.

((And to address your aside, I didn't say that, either.  A huge contributor to the US economic crisis was in fact that certain key government regulations were repealed; in other words, one could say it was over-liberalization of the markets, but there was a vested political interest in such.))

[FritzPL]

Just wanna pre-emptively warn you all - while this is a political discussion thread and whenever politics are involved in something it inevitably leads to a shitstorm - to watch your words and to not offend the person you're trading arguments back and forth with.

[mainiac]

There's nothing about the EU compelling such bond sales explicitly to the Spanish government in your elaboration.

1) Spanish banks make real estate investments
2) Other banks buy assets backed by Spanish banks
3) Spanish banks make more real estate investments with new money
4) Spanish real estate market tanks
5) Spanish banks are now insolvent because they have bad assets.  Other banks now have worthless investments in Spanish banks.  (aka counterparty risk)
6) Spanish government assumes responsibilities for Spanish banks.  Other banks that held worthless investments suddenly have investments backed by the Spanish government instead.  This represents hundreds of billions of euros of subsidy by the Spanish government of the debts of banks mostly outside Spain
7) Other countries in the EU are appropriately grateful to Spain for saving them from having bank runs in their own countries.  European solidarity at it's finest.

It wasn't compulsive.  It just would have been reasonable to expect that step 7 would follow step 6.

[Culise]

Just wanna pre-emptively warn you all - while this is a political discussion thread and whenever politics are involved in something it inevitably leads to a shitstorm - to watch your words and to not offend the person you're trading arguments back and forth with.

You're right.  I've edited my previous post to avoid anything that could be construed as speculating on anyone's motives.  The plain and simple facts, and I apologize for letting myself get side-tracked by my growing concerns.

EDIT:

There's nothing about the EU compelling such bond sales explicitly to the Spanish government in your elaboration.

1) Spanish banks make real estate investments
2) Other banks buy assets backed by Spanish banks
3) Spanish banks make more real estate investments with new money
4) Spanish real estate market tanks
5) Spanish banks are now insolvent because they have bad assets.  Other banks now have worthless investments in Spanish banks.  (aka counterparty risk)
6) Spanish government assumes responsibilities for Spanish banks.  Other banks that held worthless investments suddenly have investments backed by the Spanish government instead.  This represents hundreds of billions of euros of subsidy by the Spanish government of the debts of banks mostly outside Spain
7) Other countries in the EU are appropriately grateful to Spain for saving them from having bank runs in their own countries.  European solidarity at it's finest.

It wasn't compulsive.  It just would have been reasonable to expect that step 7 would follow step 6.

But that's *still* not the start of the crisis you claimed it to be.  The collapse of the cajas was after the fall of the real estate market that initiated the crisis at point 4.  Step 6 was after even that.  The way you worded your post, no, your explicit and repeated statements was that this was how the crisis began, that the EU caused the poor Spanish government and economy to collapse under the weight of crippling foreign debts.

[mainiac]

Step 6 meant that the debt situation of one of the most responsible governments in Europe suddenly became horrible.  Spain would have had a recession if they hadn't been in the Euro and had instead pursued a self centered national policy but they wouldn't have a depression.

Bubbles and recessions are gonna happen.  We can be careful about them but every once in a while you are gonna have a recession.  Economic malpractice doesn't need to happen.  That's what put Spain from a recession to the situation we see.

[Culise]

Step 6 meant that the debt situation of one of the most responsible governments in Europe suddenly became horrible.  Spain would have had a recession if they hadn't been in the Euro and had instead pursued a self centered national policy but they wouldn't have a depression.

I call doubt again, this time on the notion that they wouldn't have bailed out the banks if they had pursued a "self centered (sic) national policy".  They would have propped up the banks not because of foreign banks, but because the Spanish banking system is disproportionately large for its country, and one with a long history of government interventionism in both directions; that is, a combination of large and influential that's rather difficult to ignore.  You also entirely neglect that the collapse of the real estate bubble also significantly affected the finances available to the government directly via taxes, which was a significant contributor to the austerity measures that worsened the crisis.  Finally, you asserted the crisis was caused by this.  At the most, all you can say from this post is that it was worsened the crisis, once it had been caused by other conditions (i.e., the housing bubble). 

[mainiac]

I call doubt again, this time on the notion that they wouldn't have bailed out the banks if they had pursued a "self centered (sic) national policy".
...
because the Spanish banking system is disproportionately large for its country

Iceland.

[Culise]

I call doubt again, this time on the notion that they wouldn't have bailed out the banks if they had pursued a "self centered (sic) national policy".
...
because the Spanish banking system is disproportionately large for its country

Iceland.

America.

[smjjames]

Is there a banking system which ISN'T dispoportionally large for it's home country?

[Frumple]

More than one, even.