What Really Caused the Eurozone Crisis? - Article

[joea]

Interesting article-was it local or systemic?

http://streetlightblog.blogspot.com/2011/09/what-really-caused-eurozone-crisis-part.html

I personally agree with the conclusion:

The eurozone debt crisis is big enough that there's plenty of blame to go around, and some of it certainly should go to the crisis countries themselves. But it must also be recognized that as soon as those countries adopted the euro, powerful forces were set in motion that made a financial crisis likely, and very possibly unavoidable, no matter what the governments of the peripheral euro countries did. Irresponsible behavior by the periphery countries did not set the stage for the eurozone crisis; the common currency itself did.

Here is part 2.

http://streetlightblog.blogspot.com/2011/09/causes-of-eurozone-crisis-part-2-policy.html

Agree the solution may be this one:

3. Restrict the eurozone to the core.

[the_tyrant]

in before skybird:DL

I can understand why he is mad though,
http://www.wolframalpha.com/input/?i=211+billion+euros%2Fadult+population+of+germany

the bailout amount averages down to almost 4000 euros per german adult

[Skybird]

Main reasons to me:

1. The whole project never was for or by the people, but it was a pet-hobby, nursed and raised by some self-declared elites that were disconnected from reality in that they ignored profound economic wisdom and reason that both spoke out against implementing this currency.

2. It was a weapon in a fundamental ideologically moptvated clash between forces that duelled inside the EU since the erarly 60s. The one camp wanting to enforce a centralised, almost absolutistically run European superstate at all cost, this camp was led by post-de-Gaulle France, with heavy support from Belgian "elites". The other camp understood Europe not to be a monolithic one-state-solution, but an alliance of sovereign nations that cooperated on economic and fiscal issues.

3. France wanted to prevent Germany becoming strong a one-nation after unification, and made German agreement to premature implementation of the Euro a non-negotiable condition for the French acceptance of unification in Germany, for it knew that the obligations for the Germans would weaken them in the future. Mind you, the German D-Mark was a stable currency which was seen by many as the prime example of how a "good" currency should lok like, an d the German Central bank was an unwavering opponent of letting the indepednecne of central banks from poltics get corrupted by centralistic claism for power by especially French politicians - in france, centralist rule is very dominant, it seems to me. What made the German Central Bank a shining exmaple for most of the world to admire, was its sovereignity, and the stability of the currency it kepot indepedent. These principles have been successfully brought down by now. Also it was aimed at trying to weaken Germany as an indusatrial and economic rival that to equal or suproass by purely economic and industrial own potential neither France nor any other nation in Europe has the potential.

4. A decade-long history of making debts, debts, debts, and living beyond the means one could afford.

5. The in herent problem of democracy: that public assets get used by small elites to buy their own legitimation by the elecorate: Tax presents, in other words. This kind of corruption most likely will always relativise the value of a democratic system, it seems to me, since you cannot avoid it without accepoting major losses to the democratic principles themselves in order to prevent this inherent corruption.

6. The wake of the US decline in industrial competitiveness on the globalised market. Ironically, the US once was the inventor and biggest propagator of what casued it'S fall: this thing called globalisation.

7. The short-termed selling of key technology and knowhow to potential future rivals on the global markets - to make the quick profit and ignoring the long-termed consequences.

8. Points 5-7 together are the major cause why the basis of social system and communal adminstration in Europe have been pushed beyond braking point - by allowing a constant erosion of factors inevitably for their supporting for too long.

9. Misled migration policies and their increase in net-costs for the social systems. We would need qualified, educated, integration-willing m igrants, we should, must and do welcome these. But the majpoirty of migrants are not contributors to our social and financial security systems, but net-receivers. That can be compensated for some time, and in small qunities of such abuse. But not when it takes place over decades and forms the majority of migation.

10. The US-made crisis that broke out since 2008 and pulls all other nations on the globe down alongside with itself.

Have I left out something major?

Perspective for the Euro, the EU, European nations? Total collapse in the medium run, maybe followed by a braking-apart by the EU in the long run. Both will not tak eplace be3fore national states have completely exhausted themselves in their attempt of self-deception over the Euro. Which m eans when the EU has broken down, most national states, if not all, will be ion a very shabby, poor codnition as well. This fight is a struggle that wastes one'S own potentials over nothing. In the end, one will have gotten rid of the strangling sling around one'S neck - but possibly die of exhaustion. Civil rebellions, maybe even civil-war like conditions are possible in most European states, including France and Germany.

Perspective for the dollar, the US? Constantly progressing slow death, with intermittend outbursts of crisis when another buble is bursting. In a hundred years, the Us probably will be a periopohery state only.

Russia? Lives as long as it can sell enough oil and gas for high enough a price. Take both away, and it will do a long fall and impact very hard on the ground deep deep below.

China? Needs tpo play extremly clever, though it is strong and isd in the best position of all players, there are risks ahead that could seriously tackle it'S projected steep rise. But that is another thread.

BRISC without China? I think they will do best if they focus on becomign strong and dominant local powers, focussinmg on using their different, typical ressources. These may not be such that they would support global dominance. The bigest thread to Brasil and India is that they allow to overstretch their goals and spheres of influence.



P.S. Tyrant, you will pay for this. :D

[Betonov]

2 years ago when I started actively posting on this forum I dis-agreed with Sky 100%. The more time goes on the more I agree with him :cry:

[Betonov]

Have I left out something major?

Un-conditional bailing out countries that only have themselves to blame for the mess and not asking any questions afterwards ??

[Skybird]

Un-conditional bailing out countries that only have themselves to blame for the mess and not asking any questions afterwards ??

I did not single out this one, because it is a symptom of several of the other points that motivate it: the self-deception thing, and the drive for a centralist, democratically non-legitimised super state.

[joea]

Un-conditional bailing out countries that only have themselves to blame for the mess and not asking any questions afterwards ??
You did not read the article obviously it argues that is NOT the reason for the crisis and the countries concerned are not in trouble entirely of their own fault.

Same goes for The Tyrant. Read then comment.

Skybird makes some excellent points though I wonder if even he read it. :O:

[the_tyrant]

You did not read the article obviously it argues that is NOT the reason for the crisis and the countries concerned are not in trouble entirely of their own fault.

Same goes for The Tyrant. Read then comment.

Skybird makes some excellent points though I wonder if even he read it. :O:

:oops:true, i was so sure Skybird was typing away his essay on Europe that I had to say I'm here before him before him

[Betonov]

You did not read the article obviously it argues that is NOT the reason for the crisis and the countries concerned are not in trouble entirely of their own fault.

I disagree with the article.

Well, it may not be the reason, but it sure as hell makes diging ourselves out of this mess harder

[joea]

I disagree with the article.

Well, it may not be the reason, but it sure as hell makes diging ourselves out of this mess harder

True that. :dead:

[MothBalls]

2 years ago when I started actively posting on this forum I dis-agreed with Sky 100%. The more time goes on the more I agree with him :cry:I'm glad I'm not the only one. I actually had him on my ignore list once, and as time goes on, he starts to make sense. Don't know who changed, him or me, or if he changed me. Many of his writings would probably make for a high traffic intellectual blog.

[Skybird]

... except my many typos. :D

[Gerald]

But we do not care about them, because they are so "realistic" :O:

[Betonov]

I'm glad I'm not the only one. I actually had him on my ignore list once, and as time goes on, he starts to make sense. Don't know who changed, him or me, or if he changed me. Many of his writings would probably make for a high traffic intellectual blog.

Neither of you, or neither of us in this case. The world around us changed.
A long long time ago, I can still remember, we had it good in the EU. The euro brought to my country a new sense of stability. It was more stable than our prevoius tolar. Altough the prices went up, so did the salaries (if that rise was proportionate we will not discuss). There was a time when 100 000 SIT (tolar) was considered a decent wage, todays €500 (about same) is considered below poverty line. Traveling was easier, gone were the long lines at customs, exchange offices were visited only for the trips to Croatia. We were happy, Sky was pesimistic. Or was it we were blind, Sky was aware.
Now everything is going the way of the dodo. I didn't believe in Sky's evil EU overlord until myself got that strange feeling that Brussels is trying to tell us what to do. We went to war in 1991 to get Belgrade of our backs. Those subtle little ''laws'' that most people don't notice, but more alert ones think: what's next?? I wonder if Sky's pesimism was just pesimism or he saw it all in advance.
We can hardly keep ourselves afloat but we keep saving others, taxes go to people that their function is running a country, only there is no country, like havng two administrations to feed (another reason for 1991). Prices go up faster than wages. European prices, balkan wages is the saying here. And millions still pour over the border, millions we don't even have, it's all borrowed money.
I'm still in favor of the EU, but only as the open border, one currency entity. Not that political integration (khm 1991 khm). When I can drive from home to Paris without stopping and changing currency and then making a turn for Berlin and still get there with no hastle. But that dream would have to give in to reality if things get worse. A step back so we don't fall back.
The problem with todays world is that pesimists are realists

[Skybird]

The Euro deleted many economic and political options for states to compensate for economical dysbalances between states. That was the first big mistake. The second is that their is a widespread poropaganda claim, that is the memeber states of the EU would act reasonably, altruistic and responsibly. When you realsise these two things, it is easy to forsee something going right or wrong. Ten years ago, I was against the Euro but hoped against reason that it would turn out better.

The drama started earlier, though, with the German reunification.

First, the French demand for premature introduction of the Euro.

And second the massive change in the EEC's/EU's self-understanding and orientation. Before, it was more oriented according to de Gaulle'S old definition of a European community of "cooperating but independant fatherlands", as he called it (it is strange that it was a Frenchman saying so, since France pushes so hard for a centralist Europe with poltiically regulation adminitration and institutions).

As I said somewhere else, the conflict between those wanting a superstate, and those not wanting that, is as old as the founding date of the early EEC of the first six (founding) states, which was in 1957 (treaties of Rome). But the end of the cold war created a climate that the centralists saw as an opportunity to push forward their attempt. And so they did.

And so we are today where we are.

I often say that I am describing myself as spiritual, and thus I necessarily must eb against religions. In a comparable way I say I am for Europeans - and thus I necessarily must be against the EU. I do not think there is the one Europe. It never has been there, and probbaly never will be, and I wonder: should it even be there? If we coesxist peacefully and cooperate econiomically andf scientifically and allow peop,le to travel, that is good enough - any more uniforming I do not want, and consider to be not likely to go well - Europe is a place with many different traditions, people, national identiies, it is very very different in this starting condition than the Us has ever been - you cannot compare the way they did it in America, with European nations. The starting conditions are totally different.

Beyond this I live by the warning: power corrupts. Great power leads to great corruptiuon. Absolute powerr leads to absolute corruption. I have a very deep-rooted suspicion against people liking power for the mere sake of it, and that practically is the case with every politician making it above the low communal level. I also deeply mistrust authorities especially when they can evade the consequences of their own decisions. This all together makes me almost immune to the sweet talking and shining promises of politicians, it also immunises me against paying respect to somebody just becasue he holds an office or claims a title or wears a uniform. All that means nothing to me, I judge the person behind it by very different standards. Sometimes I nevertheless stumble over my good heart, and buy somebody's lies because he tweets so nicely. Well, but I'm working on it. :)

[joea]

Very eloquent Sky. :yeah:

[Skybird]

For those who can understand German:
http://www.spiegel.de/politik/deutschland/0,1518,789619,00.html

The doubts have been there from beginning on .

Wie schrieb Augstein knapp ein Jahr nach Ratifizierung des Euro-Vertrages: "Die Probleme, die jetzt nicht gelöst werden, müssen die Deutschen ausbaden, wenn all die Maastricht-Macher nicht mehr im Geschäft sind und in ihrer Gartenlaube sitzen."

[Tribesman]

2 years ago when I started actively posting on this forum I dis-agreed with Sky 100%. The more time goes on the more I agree with him
Many years ago I agreed with most of what he wrote, as time goes on I find some of what he writes is nonsense and some of what he writes is just simply false.
On the EU he is in the right direction, but far too frequently makes up the most ridiculous lies and insists again and again that they are really true.

[Skybird]

A German journalist (in English) with a piece readers of the Sunday Telegraph already might have read - about the Germans waking up to realising that the EU they once were so helpful to create has turned from a dream into a nightmare, and how much the people and the politicians are apart. Germany has accepted guarantees for the bailout now that exceed its yearly state budget. Rating agencies for the first time ever threaten Germany to decrease its rating. But the talk already is aboput boosting the bailout pool from hundreds of billions to beyond 1.2 trillion, while American voices demand it to be pushed even beyond the 2 trillion border.

I am living on a planet of lunatics. The German people always were for "Europe" - but not by the means the politicians have enforced on them especially in the past ten years, anmd not at the cost of beeing sold to an absolutistic rulership of bureaucrats without any legitimation by the people in the European nations, that run their powerbusiness in a neo-feudial fashion. And a majority of Germans - always was against the Euro.

http://flatworld.welt.de/2011/10/04/euro-crisis-shows-germans-that-there-fate-is-now-in-the-hand-of-others/


Euro crisis shows Germans that their fate is now in the hand of others (http://flatworld.welt.de/2011/10/04/euro-crisis-shows-germans-that-there-fate-is-now-in-the-hand-of-others/)

4. Oktober 2011

Till the Euro crisis most Germans thought that the united Europe was basically a good idea and that a pooling of national interests was good for everybody, while the fate of a people was still largely decided on a national level. But now they have to realize that they have bound their economic fate and future to people they hardly know, whose Byzantine political systems they don***8217;t understand and whose corrupt practices they disapprove of. A sobering experience. My piece in the ***8220;Sunday Telegraph***8221; about a fateful week for Greeks and Germans and a conflicted German public:

When George Papandreou addressed an audience of businessmen in Berlin on the painful subject of the euro crisis last week, he must have been surprised by the warmth of his welcome: far friendlier than anything the increasingly isolated Greek prime minister is used to back home.

Even more remarkable, given that Greece and its ever-expanding need for a bail-out is the cause of so much angst in Germany, the applause he received was louder than that for the Chancellor, Angela Merkel.

But the reason goes directly to the heart of the problem Germany faces. None of the industrialists ***8211; representatives of great German manufacturing companies like Siemens, BMW and Volkswagen ***8211; who gathered a 1960s conference centre in the former communist east ofBerlinto hear him speak, want the euro to fail. Most would rather gamble just a little bit more of Germany***8217;s hard-earned cash to help Greece get out of its mess. And all wanted to believe his message, that the tough reforms promised by Greece would not only be delivered, but would work.

***8220;We***8217;re not asking for applause, but we are simply asking for respect of the facts,***8221; he said. ***8220;Is there any hope? Will we ultimately succeed? My answer is yes, we can!***8221;

As it turned out, last week was a decisive one for Mrs Merkel. On Thursday, she saw off a rebellion in her own ruling coalition and got the plan for an expanded bail-out fund through the German parliament, the Bundestag, with enough votes not to have needed the strong support that also came from the opposition.

But the question for Germany is still unanswered. Are Germans right to continue, grudgingly, to help their southern European cousins out of the mess that their bad habits have got them into? Or are we simply pouring good money after bad?

Nations in need usually don***8217;t like the nations that rescue them. Germany was suspicious of America for decades after the Second World War; now the Greeks have mixed feelings towards Germany. They admire the stereotypical country of efficiency and fiscal prudence, but they resent what they perceive as a patronising and moralising attitude towards them.

One result is frequent allusions in the Greek press to the Nazi occupation in the Greek press: the arrival of an EU technical assistance team was greeted by Eleftherotypia newspaper with the headline: ***8220;30 Gauleiters sent into the ministries***8221;.

On a recent visit to Athens, however, I discovered a widespread hope among Greeks that Europe will rescue them from the state apparatus and a political class that they deeply mistrust.

But will we? Bailing out euro economies in need is highly unpopular in Germany***8211; which is why Chancellor Angela Merkel had to work the phones so hard to convince sceptical MPs to vote for the new EU crisis mechanism. That rescue package raises the direct risk taken on by German taxpayers from ***8364;123 billion to ***8364;211 billion ***8211; roughly two thirds of the annual German budget. Or more, according to the respected German Ifo institute, which calculates that accumulated German risk ***8211; including exposure of the European Central Bank and Deutsche Bundesbank ***8211; now totals ***8364;465 billion.

And even this is not sure to do the trick: already there is a discussion among the European partners about further increasing the leverage through the ECB. The rating agencies warned that this might endanger the hitherto rock-solid credit rating of Germany itself.

On top of that it***8217;s slowly dawning on the EU that what***8217;s needed inGreeceis not just a bail out, but nation building. ***8220;No adjustment programme ever had so many components; every sector of the economy is touched by it,***8221; said a senior EU expert inAthens.

Elias Mossialos, the Greek government spokesman and a former LSE professor, didn***8217;t mince words.Greecewas afflicted by ***8220;a dysfunctional state and dysfunctional politics***8221;, he said, and the governing PASOK socialist party was itself part of the problem.

And reforms are desperately needed. Greek bureaucracy is bloated and expensive;Greecehas the highest rate of regulation among OECD countries, the least flexible labour market in the EU and 150 closed professions ***8211; even taxi drivers have their guild. It has huge tax evasion and the black economy is around one third of GDP. No wonder that Germans are not amused to have to step in to fill the country***8217;s coffers.

Germans realise that they are throwing their money at a mess that nobody seems able to control, and their anger at having to bail out the wrongdoers is checked only by doom-laden warnings about the consequences of the eurozone***8217;s failure. ***8220;If the euro falls, Europe falls,***8221; is one of Angela Merkel***8217;s oft-repeated slogans.

This ignores the simple fact that 10 EU countries are still outside the euro ***8211; and happily so. But the doomsayers have created a conflicted citizenry inGermany. An overwhelming majority takes a principled stand against the bail out. But a good part is uneasy at what would happen if Greece fell and the contagion spread to Italy and Spain. It***8217;s a lose-lose proposition.
Now, the optimism that followed the successful reintegration ofEast Germanyhas gone. Germans can feel the large dark cloud of the euro crisis hanging over them. For decades they have been among the most pro-European people on the continent. Now they are waking up from their European dream to find that it is a nightmare.

They have bound their economic fate and future to people they hardly know, whose Byzantine political systems they don***8217;t understand and whose corrupt practices they disapprove of (although Germans like to forget that some big German firms reaped huge profits from them).

They would have preferred Greeks and Italians to remain the nice holiday acquaintances they always were. But now they and their inept politicians hold Germany***8217;s future in their hands.

This crisis has created enormous suspicion between governments and the governed throughout the eurozone. In some European countries, including Britain, you have always had Euro-sceptics who saw the whole European endeavour as a conspiracy of the elites that was forced on the people. In some countries this feeling was channelled into right wing or radical liberal (in the European sense of free market and free societies) parties.

Not so in Germany, but this kind of thinking is beginning to grow here now. You find it in blogs and in the long threads of angry and sometimes nasty comments beneath almost every online article on Greece published by the big news websites.

And the reaction of Germany***8217;s political and media elites nurtures this notion of a conspiracy. Anyone who opposes the bail-out is labelled as anti-European. And although polls show that an overwhelming majority of people oppose giving more money to insolvent countries, no political force is taking up that case. On the contrary: the opposition in the Bundestag, with the exception of the radical Left, is more supportive of the bail-out than the governing coalition, where at least some dissenting voices are now being heard.

In the end last week***8217;s vote was a complete reversal of the mood in the country: 523 MPs voted for, and only 85 against, the new bail-out fund that, if ever needed, might break the back of the strongest economy inEurope.
And in most of the German media, as well as among the country***8217;s Europe experts, it seems to be all the rage to advocate yet further European integration to get out of the mess of too much integration already. It is as if a doctor advised an alcoholic to drink more beer in order to get better.

I am not the only German asking himself: when is this nightmare going to end? And how?


As somebody in the German press put it some days ago: At first, states saved banks. Now some states save other states. - But who saves the rescuers?

[Betonov]

The German people always were for "Europe

Insert WWI/WWII joke in here :DL

[Skybird]

Insert WWI/WWII joke in here :DL

Okay, it goes like this:
http://www.welt.de/politik/ausland/article13641346/Kaczynski-wirft-Merkel-grossdeutsche-Ambitionen-vor.html

Translation here:
http://www.militaryphotos.net/forums/showthread.php?205130-Poland-s-Kaczynski-fuels-anti-German-sentiments-says-Stasi-brought-Merkel-to-power

Stupid bastard and repeat offender that little man is. Always the same hate-dripping propaganda by him.

[Betonov]

And soon Yugo... Slovenia falls :o

http://www.vlada.si/uploads/pics/090317_pahor-merkel_bobo-bor_03.jpg

[Respenus]

Just one small bone to throw to the "dogs" concerning the current crisis: We should not allow the Greek syndrome to become the European disease (no matter how it may already be ill).

@Betonov, welcome to the club. You're not the only one ever more convinced by Sky. That doesn't mean we still see eye to eye. I still firmly support the idea that we should first clean our national "democracies", before turning to the EU and blame it for what is merely the mirror of what we have back home. Don't forget, every law is voted in by the governments of elected representatives of member states, that is, the ministers.

[Betonov]

I still firmly support the idea that we should first clean our national "democracies", before turning to the EU and blame it for what is merely the mirror of what we have back home.

Oh absolutely. But the political apathy this nation suffers from prevents us from actually changing anything. The only people who actually vote are are the party sheep, doing their shepherds orders. While fresh faces stay in the dark because nobody votes for them. If there are any fresh faces :-?

[Skybird]

And news from Italy.

http://www.bbc.co.uk/news/business-15176947

Italian banks to feel the heat soon.

Bailing out Italy or Spain would be a completely new ballgame - we then talk about trillions for each of these two.

I cannot imagine the Bundestag to agree to anything like that.

[kraznyi_oktjabr]

I cannot imagine the Bundestag to agree to anything like that.Good to hear. I'm sure that current finnish government will be more than happy to pay - as long as there are "good guarantees" like current ones available. :roll:

[sidslotm]

Nothing clever about this, Europeans simply pay themselves far to much and have been doing so for many years.