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Until I figure out how to un-close it, at least.

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So yeah.

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Total Members Voted: 0

Voting closed: May 01, 2014, 02:06:40 pm

[Xeron]

Either way, Owlbread as i said.Old rivalries exist in Eastern Europe, getting past them and working together is more important.

[smjjames]

The English and French got over their ages old rivalry (there is still a bit of a friendly rivalry, but they're friends now), so those in Eastern Europe can do it too.

[10ebbor10]

The entirety of Europe has an ages old rivalry. I mean, most of Europe's nations have been all over the continent, and about a hundred years we managed to collectively destroy much of our countries. (And then we did it again)

[smjjames]

My point is that if France and England can get over their rivalry (which is one of the more well known and one of the oldest), so can those in Eastern Europe.

[mainiac]

Greece: That country has massive structural problems: Corruption, a bloated administration, the rich not paying taxes...  Europe isn't the cause of all the pain experienced by the Greek. It might have been handled better, but I wouldn't say it's been handled badly - had the EU not gotten involved, it would likely have gotten worse - and the crisis spread to other countries.

You are missing the largest problem of all, Greece is in a monetary union without a fiscal union.

During the good times, the monetary union encouraged a boom in Greece.  They shared a currency with Germany but their wages were much lower so their wages rose.  This was good for Greece, economic growth, and good for Germany, yay exports.  Then the crash came and greece prices needed to adjust to it.  The problem was that adjustments happen through changes in currency prices vs. your trading partners (and the expectations of those changes).  But Greece couldn't adjust with it's neighbors because of the currency union.  Now there are two ways out of this and neither was considered, let alone tried.

The first is the American way.  The US is a monetary union but also a fiscal union.  If the economy of Michigan collapses it's economy will get worse then the US as a whole but not that much worse because there's a lot of shared fiscal responsibility with the Federal government that protects the state.  And because smart investors knows about this stuff they dont devalue the bonds of a distressed state too soon and there isn't a death spiral of debt interest rates exploding.  But while the residents of New York are okay for subsidizing Alabama for decades on end the Germans have stopped anything that would remotely resemble a real solution, allowing the problem to just grow worse.

The second way is the kludge way.  If you can't adjust your prices against your neighbors then you need to use inflation to do that instead.  Labor prices go downward more slowly then upward in nominal terms but if the value of a Euro falls and the wages stay in place, you solve the problem.  Now Greece doesn't control it's currency but the eurozone as a whole has a depressed economy so should want the European Central Bank to be supporting easy credit.  At the very least they should be hitting their inflation target of 2%, ideally they should be exceeding it because these aren't normal times.

Instead we have this:

Spoiler (click to show/hide)

Inflation has been substantially below the 2% target over the course of the crisis.  Massive, massive economic mismanagement.  This is the economic equivalent of a doctor in 2014 trying to treat a cold with blood letting.  And still being allowed to practice medicine.  And winning an award for it.

And it's because of this:

Spoiler (click to show/hide)

Even though this monetary policy is massively destructive for the union as a whole, it's good for Germany.  I don't mean to say it's all Germany's fault-.... oh wait yes I do.  It's all Germany's fault.

Germany is blaming the lazy greeks but it's actually the Germans who are being lazy slobs here.  During the good years, the currency union benefited Germany, the export boom and capital investment boom raised the German standard of living and was good for German prices.  The the bad times came and it was time for Germany to pay up.  They had gotten the benefits now they, as the big rich economy needed to do the big rich economies job.  And they shirked their responsibility, insisting that Greeks work to pay off an obligation that from a rational economic sense Germans should.  Then on top of that they made it impossible for Greeks to actually do that by insisting that monetary policy serve Germany, not European interests.

[XXSockXX]

-snip-

There are a few misconceptions here. German standard of living hasn't risen since the early 90s, despite the economic boom. The German economy is doing well because of some painful cutbacks in the welfare system, but wages haven't really risen which is why keeping inflation low is so important. Germany has had an export driven economy before the currency union. Roughly half of German exports go into the Eurozone, but Greece was never an important trading partner compared to other Euro countries. Credits are cheap right now, interest rates are at a low. Credits wouldn't help Greece much anymore, since they can't pay them back without making a few substantial changes.
The problem is, you can't have a fiscal union without a political union, which we don't have. Your US examples work only because New York and Alabama have roughly the same political and social systems. If Alabama would have structural problems like Greece has, New York would be much less happy to support it without having any say in Alabama's policies.

[mainiac]

There are a few misconceptions here. German standard of living hasn't risen since the early 90s, despite the economic boom.

Hey man, I feel sorry that you haven't solved your internal problems worked out but the trade situation for Germany was fantastic thanks to the Euro.  Don't take German failings out on Greece.

Credits are cheap right now, interest rates are at a low. Credits wouldn't help Greece much anymore, since they can't pay them back without making a few substantial changes.

THATS THE EXACT PROBLEM.  Germany keeps the interest rates good which seems good for Germany short term but leads to overall economic stagnation and hurts everyone, including Germany, long term because the depression continues.

The changes that Greece needs to make are long term problems, they are well and good but irrelevant as long as the german created situation persists.  You are discussing the patients diet while they are bleeding on the pavement.

Roughly half of German exports go into the Eurozone, but Greece was never an important trading partner compared to other Euro countries.

Of course Greece wasn't a major trade partner, Greece is a small economy.  But Greece was one of a number of countries that ran the trade deficits in face of German prosperity.

The problem here is that Germany doesn't seem to get that if they prop up their economy with a trade surplus through a HIGHLY artificial monetary situation then somebody has to run trade deficits.  You are benefiting from the suffering of the other nations of the EU and then turn around and insult them for it.

The German economy is doing well because of some painful cutbacks in the welfare system, but wages haven't really risen which is why keeping inflation low is so important.

So because the tight currency regime has led to economic suffering, we need to double down on the tight currency regime, and force other countries to triple down on it.

Seriously, you are complaining about bad growth but saying that low inflation has been the saving grace.  NO!  Low inflation has been the cause!  That's a hard one to call ahead of time but afterwards it's super duper easy to spot.

[XXSockXX]

There are a few misconceptions here. German standard of living hasn't risen since the early 90s, despite the economic boom.

Hey man, I feel sorry that you haven't solved your internal problems worked out but the trade situation for Germany was fantastic thanks to the Euro.  Don't take German failings out on Greece.

I'm not. It is however though to sell to German voters that they should bail out Greece when the average Greek household is according to the ECB twice as wealthy as the average German household. (I'm aware there are other things factoring into this, but that gives you an impression of the public opinion.)

Of course Greece wasn't a major trade partner, Greece is a small economy.  But Greece was one of a number of countries that ran the trade deficits in face of German prosperity.

The problem here is that Germany doesn't seem to get that if they prop up their economy with a trade surplus through a HIGHLY artificial monetary situation then somebody has to run trade deficits.  You are benefiting from the suffering of the other nations of the EU and then turn around and insult them for it.

Germany has always had an export based economy, before the Euro as now. That's not going to change, even if trade is shifting towards non-Eurozone countries right now. I don't see how you could change that either or why you would blame Germany for that. It's not like other countries are prevented from exporting stuff.

EDIT:
Looks like I screwed up some quotes...
Anyway, it's the ECB keeping interest rates low, not Germany. Low interest is bad for German savings, as they get eaten by inflation.
Structural changes in Greece are very important, otherwise Greece's finances will remain a bottomless pit. It's not like the EU will let Greece go bankrupt or leave the Euro.

[mainiac]

Germany has always had an export based economy, before the Euro as now. That's not going to change, even if trade is shifting towards non-Eurozone countries right now. I don't see how you could change that either or why you would blame Germany for that. It's not like other countries are prevented from exporting stuff.

Countries are always export oriented until they run trade deficits.

The reason that Germany should be running a trade deficit right now is because Germany has a relatively low unemployment rate while it's in a currency union with countries with much higher unemployment rates.  That's how trade balances are supposed to work within a currency union.  By engaging in monetary policies that make such a balance impossible, Germany is fucking over it's supposed partners for a TINY personal gain.

And you want German wages to appreciate in real terms, know what does that?  Cheap imports from your neighbors.  You'd be slightly increasing unemployment while significantly increasing consumer purchasing power, making the German people well off.

[XXSockXX]

The reason that Germany should be running a trade deficit right now is because Germany has a relatively low unemployment rate while it's in a currency union with countries with much higher unemployment rates.  That's how trade balances are supposed to work within a currency union.  By engaging in monetary policies that make such a balance impossible, Germany is fucking over it's supposed partners for a TINY personal gain.

And you want German wages to appreciate in real terms, know what does that?  Cheap imports from your neighbors.  You'd be slightly increasing unemployment while significantly increasing consumer purchasing power, making the German people well off.

It's not like Germany can import that much from it's neighbours and it doesn't really export mostly consumer goods either. The average German household has only use for so much Greek feta and German heavy machinery, you can't create a balance there easily.

Also you have to keep in mind that the Eurozone isn't really your normal currency union, it's a currency union without a fiscal and political union and that is not going to change anytime soon. It's a rather unusual experiment that might prove to be a huge failure (because we might have needed a political union first, not the other way round).
Of course most EU countries want to give up on austerity now, which is understandable, but it will only pile up debt and without social and political reforms, this will only delay the inevitable collapse.

[mainiac]

It's not like Germany can import that much from it's neighbours and it doesn't really export mostly consumer goods either. The average German household has only use for so much Greek feta and German heavy machinery, you can't create a balance there easily.

Reminds me of in the 1950 when an American CEO was asked what the Japanese could export and he suggested paper napkins and toothpicks.

Also you have to keep in mind that the Eurozone isn't really your normal currency union, it's a currency union without a fiscal and political union and that is not going to change anytime soon. It's a rather unusual experiment that might prove to be a huge failure (because we might have needed a political union first, not the other way round).

I understand it all too well.  That's why the magnitude of the failure of the EU leadership and the german politicians is so great.  This is a problem that could be fixed but they are making it worse and the German people cheer them on.

Of course most EU countries want to give up on austerity now, which is understandable, but it will only pile up debt and without social and political reforms, this will only delay the inevitable collapse.

Actually that is exactly the opposite conclusion of what mainstream economics tells us.

It's sort of like in the days when medicine was struggling to gain acceptance.  They would first ignore the doctors, then insist they were wrong and then when the patient died from doing the opposite of what the doctors said they would shrug and say "it was gods will."  There's nothing inevitable about this, it's the bad decisions of your leaders that are causing this and you are supporting that.

The EU is one of the greatest movements for peace in the history of the world and Germany is destroying it out of pettiness and closemindedness.  Others are too blame but none so much.

[XXSockXX]

Actually that is exactly the opposite conclusion of what mainstream economics tells us.

American mainstream economics that is. Of course you can just print money and pile up debt if you have the economy to eventually get out of debt at some point. (Though I don't know how well that is going to work for the US in the future either, with a debt per capita worse than Greece already). With the demographic changes in Europe however, going farther and farther into debt is going to make things far worse in the future, as our welfare systems become increasingly less sustainable, with less people having to pay for more (including the increasing debt and interest).

[Sergarr]

I get it, the Germany is The Ultimate Evil™. However, Germany is not an Eastern European country.

[Sheb]

Do we need a separate thread? Maybe we could just expand the scope of the European thread?

[XXSockXX]

I get it, the Germany is The Ultimate Evil™. However, Germany is not an Eastern European country.

Right. Though you did ask about Greece. Also [insert poor joke about Germany having occupied all of Eastern Europe at some point].

Do we need a separate thread? Maybe we could just expand the scope of the European thread?

Yeah, this would have been fitted better for the Eurothread, so any further discussion of the issue should probably go there.