Democracy dies ?

[Youngblood]

@Youngblood
Wait, the rest of them are overhere!! that means their countries must be empty!!

Honestly Its maddness that they can come over to another country to work when we dont have enough jobs for the people here I wouldnt mind it if we had the jobs to go around but we dont, on top of this I watched a programe on BBC about people from eastern europe coming over to work and can you belive they moaned that jobs and houses were going to Veterans and not them makes me mad.

 

[Aginor]

The situation here in Germany (where a lot of people from other countries work, especially those from eastern Europe) shows us that most of the jobs that are done by foreign workers wouldn't have been done by German workers anyway.
The reason for that is that our social system allows people to stay unemployed a bit longer so they can find a job they actually like. So of course everyone working as a harvester for apples or asparagus in Germany is a foreigner. Almost no German will work for that money. The same applies to people working in house cleaning or garbage removal. There are almost no Germans doing those jobs.
So although it is a popular topic for right wing politicians foreigners "stealing our jobs" isn't that much of a problem in Germany. There are examples when foreign workers stayed away. There are lots of people needed and there are way too less people ready to do that job. Even with the foreign workers there are vacant jobs enough for all. Qualifiations and wages are the more important problems here.

I admit I don't know how it works in the UK though.

 

[Mace]

What Aginor says mostly applies here in the Netherlands too.. But uneducated (dutch) people are now forced to take these jobs or they will loose their wellfair status. Also since eastern europe is becoming an emerging market more people are returning to there now...

"stealing our jobs"

"Durka Dur!!" (Southpark)

 

[Aginor]

But uneducated (dutch) people are now forced to take these jobs or they will loose their wellfair status.

Yeah, it is the same thing in Germany, it has just become too expensive for the tax payer in the last few years.

EDIT:
Also: Southpark is funny, I totally thought about that when posting

 

[Zelvik]

One of the big problems about Greece but Spain and Portugal too is that there is no perspective with the EU rescue plan. Even with the 50 % dept cut that was agreed on Greeces dept will still only be reduced to 120 % of its GDP - this is due to the fact that the Greek GDP wont grow and probably will just shrink as it has for the last two years. Without economic stimuli Greece has not chance to outgrow its dept like most other countries have done up to now. And all the IMF and EU call for will very probable stiffle any economic growth. So Greece even if it stays politically stable will plunge into a long term economic catastrophy. That said its no wonder that Greeks arent exactly happy about what is going on, there is no perspective that things will get better.

On the other side its as understandable that tax payers in Germany and other countries that did relativly well during the past two years dont see why they should pour ever more money into Greece. Our tabloid media feeds us venom on the Greek situation every day. Today one of the free newspapers on Viennas commuter lines jubilated about the Greek referendum beeing called off. Many people that have hardly a grasp about economics probably will fall into that jubilation, not realising that they are lead into a dead end by our political leaders with the way they handle the dept crisis.

The problem though is that the whole situation already is beyond the event horizon. In 2009 had they reacted apropriatly things could have turned out differently - if anybody actually had listened before the Euro was installed in 1992/1997/1999/2001 things might never have come that far (the Euro itself was a good decision, but you cant have a monetary union without a common economic and financial policy, North and South European wage and economic cultures are just too different to get them under one hat if you just let them medle along seperatly - in that Greece, Italy, Spain and Portugal shoveled their own economic grave with their national economic policies with the Euro installed, while the northern countries actually did the same when they ignored that fact on the creation of the Euro).

What we see now is that its just not enough to have 17 nationstates trying to sort it out without a structural frame that they could rely on in the case of emergency. Our national governments are no fit group to sort out problems that have different efects on their respective constituencies. But I guess its too late now, we are on our way towards the black hole, wheter its a peaceful evolution of our Democracies, or a complete breakup of the peaceful European project we have seen for the past 60 years, is probably up to us citizens.

 

[Ijuin]

One of the big problems about Greece but Spain and Portugal too is that there is no perspective with the EU rescue plan. Even with the 50 % dept cut that was agreed on Greeces dept will still only be reduced to 120 % of its GDP - this is due to the fact that the Greek GDP wont grow and probably will just shrink as it has for the last two years. Without economic stimuli Greece has not chance to outgrow its dept like most other countries have done up to now.

This is why I believe that what Greece really needs is a guarantee of a market for exports. If there is a guarantee that its exports can be sold, then that translates into incentive to produce more (and hence hire more workers and grow the economy). That would lean towards the "teach a man to fish" as opposed to the "give a man a fish" approach that is happening with the bailouts.

 

[Zelvik]

Simply put you cant have that type of guarantee as we have a free market, and Greeces problem is that its companies just arent competitive enough. Before the Euro they could have devalued their currency to make their products cheaper - today thats not possible. Even if the Euro devalues, the more competitive economies in the Euro Zone just gain the same edge and hardly anything changes for Greece. The problem is that Greece would have to take a devastating cut to its wage level and at the same time acquire foreign captial to modernize their production to become competitive enough to compete with other economies.

What hurt Greece, Spain, Italy and Portugal was their wage policies. Wages just went up since the introduction of the Euro as they did before when they still had national currencies - but productivity did not keep up with that development and the productivity development of the other EU countries. You just have to take a look on the trade balance of Greece between 2000 and 2008. The deficit grew ever greater - the financial and housing bubbles like in Spain kept their job markets afloat, but when that bubble burst - well we know the story.

IMHO its just the beginning. Everyone might point their fingers at Greece but behind the doors everybody knows that even countires like Germany are to their neck in debt, that their old age retirment schemes will drag them down too within the next two or three decades.

 

[Ilanin]

What hurt Greece, Spain, Italy, Portugal and Ireland was being in the Euro, and therefore being forced to subordinate their monetary and fiscal policies to the ECB, which set interest rates and so on to cater for Europe's most productive economies - Germany and its satellites (Austria, Switzerland, Benelux, Denmark etc.)- while ignoring the periphery. For Ireland in particular the ECB's policy was catastrophically pro-cyclical, with low interest rates while the boom was overheating then rising ones as the country entered a recession. The Euro has a fundamental structural problem as it relates to states on the edges of Europe (which is why Britain never seriously considered joining - which is just as well because if we *had*, Britain would be a much bigger problem than Italy is right now, but having our own currency makes our level of government debt less catastrophic), which is that their economies are sufficiently out of sync with Germany's that it isn't possible for any single monetary and fiscal policy to make sense for both of them, and the ECB is always going to set policy for Germany because it's the only state the EU can't do without and German popular opinion is extremely twitchy about loose fiscal policy. What the EU is currently trying to do is something akin to attempting German reunification without massive capital transfer and support to the former east zone, and it will work about that well.

Realistically we need two Euros - one for the North and one for the South. But the Euro was created for political rather than economic reasons so it'd be a bit silly to expect it to make economic sense.

 

[TCSTigersClaw]

Well Ive read everything carefully. I agree with a lot of you.As I said before Greece suffers from corruption more than a decade now.Now its ready to explode.
I did not want to start a thread about Greece`s fate or role in the EU or who`s fault was this.
I just wanted to share with you my feelings. The situation here is critical,and who knows as Quarto said it
maybe out of control soon.
I didnt want this to be a political/economical discussion.
Anyway all points taken ,thank you all for sharing your thoughts too

 

[Flashpoint]

I think that one of the problems with the way the Euro zone is set up is that even though the system takes away some of the economic policy tools that a nation can use to shore up its economy (e.g. devaluing its currency internationally or "quantitative easing" at home by flooding the domestic market with fiat currency), there is not much of a counterbalance on the other end--bailouts and such can not compensate completely for this loss of monetary policy latitude. Instead, we see a hybrid that is something of the "worst of both worlds".

In short, if the European Union is to run a common currency, there must be more integration between the economies of its member nations. Merely transferring cash between them (bailouts and loans and write-downs of loans) is insufficient. What Greece needs is not a fat wad of cash so much as assurance that Greek products will find a market if employers in Greece hire more people to work for them. Who after all would build a factory to build Widgets and hire people to make them if nobody is going to buy any Widgets? That would stimulate employment, which would mean that Greeks would be earning wages and would have money to pay taxes to pay off Greek debt. Rather than offering X billion Euros in outright bailout funds, there should be an agreement to purchase X billion Euros worth of Greek exports. Bank bailout funds tend to just be sat upon by the banks because having more cash-on-hand does little to make lending more attractive when nothing has been done to improve the borrowers' ability to repay loans.

While this seems like a great idea, it is actually just the same thing.
If the other EU nations agree to buy billions worth of greek products (lets stick with your terminology and call them widgets), it stands to reason that in the free market these widgets are not an excluslively Greek product and if there is demand for them, then they must be being produced elsewhere in the EU, possibly in all member states. Lets say that Widgets are produced in 10 states, each state producing 10 billion worht of widgets. Now the EU decide to buy 100 billion euros worth of Greek widgets to stimulate that economy. This could cause the market for widgets to be flooded and so deflate the price of each widget. This would not only cause the minimal stimulation of the Greek economy, but also cause a downturn in th economy of the other 9 member states who may rely on the sale of widgets.

 

[Aginor]

Since I don't think this is meant to be a thread about the Euro itself I just want to answer shortly to the points raised by Ilanin and Flashpoint:

I think you are right with most of what you write, I just want to add some things:
- Please don't call Austria, Switzerland, Benelux, Denmark etc. "satellites" of Germany, they don't like that a lot because of historical reasons. Also: Switzerland is neither a member of the EU nor does is have the Euro of course. Denmark is in the EU but does not have the Euro. They would qualify though, their economy is quite stable.
- Don't underestimate France's economical power in the EU, they are similarly interested in a common currency as the Germans are.
- Of course exporting countries (Germany being the biggest one of those in the EU) are the ones most interested in such things as common currencies, but with a stable economy the smaller ones can profit quite a lot from it. The Benelux countries certainly did, even though Belgium isn't exactly the most stable economy.
- Ireland is another problem I think. It was some sort of bridgehead for (mostly American) companies and banks in the 90s. They wanted to have their factories inside the EU to profit from the cheap trade environment in the EU. They built up one of the "bubbles" I mentioned in an earlier post. When they left the country it became unstable because they left a vacuum. That's the main reason why Ireland was hit so severely when the banks had their problems in 2007. So the reason for the Irish crisis was before the Euro, it just caused the biggest problems 10 years later.

@Flashpoint: I don't think it is that easy, there are other variables in it. But I don't have a solution either, it is complex.

I think I covered most points without digging too deep, I think I'll conclude with my best wishes for our Greek friends and hope that Greece will recover from this soon. We just have to find a way to ensure the EU becomes more resistant against such situations. (I'm optimistic here, because there are far too much pessimistic people dragging us down here. That's how we roll here in Germany )

 

[Atekimogus]

Since I don't think this is meant to be a thread about the Euro itself I just want to answer shortly to the points raised by Ilanin and Flashpoint:

I think you are right with most of what you write, I just want to add some things:
- Please don't call Austria, Switzerland, Benelux, Denmark etc. "satellites" of Germany, they don't like that a lot because of historical reasons

Being Austrian myself I can assure you that in this context it is no problem at all because quite true. The Austrian currency was quite closely pegged to the Deutsche Mark long before the Euro and we always had have a similar macroeconomical policy. And given their respective economical impact it is quite true to speak of us as satellites I think. None taken, as far as I am concerned.

That being said states like Italy, Portugal and Greece never should have joined the Euro zone in the first place. First because Greece never met the convergence criteria and was only able to do so because they cooked their books (which is something, altough most Austrians would quite agree that our politicians are also corrupt as hell, that seems still quite unthinkable here and just goes to show how bad the government was/is in Greece)

(Which is basically the point we Austrians have the most problem with probably. Not with the Greek or Italian people but with their corrupt and incompetent politicians who resemble more mafiosi and crooks then serious folks and professionals. Considering how they ran their countries into the ground and now either blame the EU or look to them for salvation it is high time that folks in those countries go home and fetch their pitchforks!)

Another point is that they all handle debt very differently than Germany/Austria. We cut our spending. They traditionally just pump up inflation and suddenly having debt of 1000 billion lire seems not so bad when the lire isn't worth a dime. On joining the Euro zone they suddenly were robbed of this traditional tool of managing their economy and obviously they couldn't cope with it. Here the EU is to blame because obviously you cannot erase the macroeconomical behavior of a whole region within a few years of working towards convergence criteria.

Another fault of the EU is that they never specified an effective punishment if someone screws up those criteria (mostly because of a too high deficit). What was the plan if a state has to much debt? Give them a fine to pay. That is almost stupid, certainly counterproductive.

So there is a whole list of blame on every side and most of it is probably indeed the failure of the EU to effectively manage their member states (if there where effective control mechanism regarding national debt Greece would have been forced to do something about it long before the shit hit the fan) by giving and effectively enforcing it's economical policy.

However, as dramatic as this all seems, one cannot help to get the impression that the hole problem is completely blown out of proportion by the media. One month all banks need huge bailouts. The other month they report record-earnings. The next month the whole European civilization is about to collapse because GDP growth is down half a percent. etc. etc. etc. . The next month it's the end of the world because a PRIVATE rating firm thinks that country XY isn't worth their best rating anymore. It's hysterical.......

I get the impression that they just spread fear and panic to push through unpopular reforms which enable them to further cut spending and serve their corporate overlords.

So I am not so much worried about specifically Greece or Italy, but more about how the distribution of wealth in the whole western world runs amok since the 1980s. There are quite nice statistics from the USA showing that in the time between 1950 and 1980 all social classes benefited more or less equally from the expanding economy. Since 1980 all the additional wealth was pumped towards the richest 1% while the poorest 5% even lost wealth. (And Obama is called a communist for proposing social reforms....lol)

In Europe it's similar (having only seen the statistics from germany, the development started about 10 years later but is similar to the US one) and that is what has me worried. That is why we have an OCCUPY movement, and riots in London, Greece etc. and that is imho the problem which needs sovling more than anything. The fair and equal distribution of wealth. If the EU doesn't manage to solve this, sooner or later they will have another french revolution on their hands. (A time where also 1% of the people lorded over 99% of the wealth.)

So yeah....I can only advise every government to solve their debt-problems for once by not cutting the social system but , for a change, go to the people who have the money!