Warum Deutschland die Kontrolle

[archangel]

Listening to the Greek Government elections, It seems that all of German MPs are wading around saying that there is no negotiation of the deal that was put in place to bail out Greece.

I have asked my neighbour (who is german), why the Germans control the euro economy, his reply "Ich habe keinen blassen Schimmer guter Mann" or in his excellent English, "I do not have the foggiest idea my good man"

I have searched the interweb but there doesn't seem to be an answer as to why the German Government has such a huge say in other country economies.....

 

[neil_g]

is it too early to invoke godwin?

 

[Mag1cp2x]

The Germans have money and he who pays the piper calls the tune.

 

[Buck]

That'll be to do with the size of their economy.....

 

[archangel]

The Germans have money and he who pays the piper calls the tune.

They may have the most but France is close behind.....and I don't hear any french politicians crying "Sacre bleu ! nous ne négocierons jamais!" and surely all countries should have a say in the Euro ....not just who has the most

 

[Strapps]

The Germans (and the French to an extent) have a huge interest in how the euro performs. They pushed through the Greek bail-out rather than have a euro-using member state go tits up. Now that an anti-austerity party has power in Greece, the value of the euro has taken a big hit in foreign markets who fear that the Greeks will default instead of paying back the loans. The Germans are trying to reassure investors to prevent a run on the euro which could do almost as much damage as the Greeks defaulting.

 

[Alastair]

Germany tightened it's belt before the millennium and paid the costs of reunification, just as it's getting to the end of that debt the Euro imploded as the differences between the industrial north and the southern states became too much to hold them to the same policies. As the leading economy in the Euro they've invested a lot in holding it all together. But at the same time the policies that they need for their economy are very different to what the Greeks, Spanish, Italian, etc economies need. But as noted, he who paid the piper calls the tune.

Germany has an inbuilt fear of QE - they've done the printing money thing in the past and it didn't turn out so good (in the UK we tend to focus on European history 1914-18 and 1939-45 but the bit you need to know to understand Germany is 1918-39 and we tend to overlook that period). They also like to pay their debts and expected others to have the same attitude.

The problem.. Greece can't survive the imposed austerity. Normally a country would be free to devalue or default is way out of a situation like this, but tied to the Euro or can't.

Some interesting discussion on this blog (the usual suspects need not follow the link, they can just label it as "commie, pinko, guardian propaganda" and go back to the Daily Heil).. http://www.antipope.org/charlie/blog-static/

 

[arclight]

is it too early to invoke godwin?

Yes, or to give it it's longer title - Godwin's Rule of Nazi Analogies

 

[ghoti]

That'll be to do with the size of their economy.....

The Germans have money and he who pays the piper calls the tune.

These.

Germany has a large and relatively thriving economy. They've got cash to throw into bailouts and whatnot.

They're also heavily invested in the Euro. They really don't want it to collapse, hence throwing money at a wildcard like Greece to keep them in the club. However, obviously they can't just keep shovelling money into Greece without conditions for many complicated reasons, not least of which is that they don't want a precedent set where if you screw your economy Germany will fly to the rescue as a benevolent donor. The conditions in Greece were the austerity which the Greeks have just told Germany to ram up their backside.

It's all going to become very interesting.

 

[the black fox]

wonder if the holidays will drop in price again ,might even have some drachma notes in a drawer somewhere LOL i could do with a cheap week on a sunny greek beach

 

[JonathanRyan]

wonder if the holidays will drop in price again

They already did. "Europe" has got about 3% cheaper in the past week and about 7% cheaper since the start of December.

http://www.exchangerates.org.uk/GBP-EUR-exchange-rate-history.html

Almost time to drive to Calais and fill the boot

 

[big soft moose]

If greece defaults on its commitments it could be forced to leave the euro - that'd probably be the best thing for greece as it needs to be able to devalue , however it won't do the eurozone much good , especially if spain, portugal, italy etc decide to follow suit.

Hopefully Uk/american banks arent heavily invested in greek etc debt .. if they are we are looking at 2008/9 all over again

 

[Alastair]

Hopefully Uk/american banks arent heavily invested in greek etc debt .. if they are we are looking at 2008/9 all over again

There's a funky graphic of who's holding the Greek debt at http://demonocracy.info/infographics/eu/debt_greek/debt_greek.html

I can't help thinking that damage caused by the recovery measures has been possibly greater than the damage caused by the initial crisis. When measured across the population as a whole.

 

[JonathanRyan]

There's a funky graphic of who's holding the Greek debt at http://demonocracy.info/infographics/eu/debt_greek/debt_greek.html

I can't help thinking that damage caused by the recovery measures has been possibly greater than the damage caused by the initial crisis. When measured across the population as a whole.

So mostly, um, Greece, then With a scary chunk of France and hardly any Germany at all. Though there are huge tranches of "Europe" and I have my suspicions that Germany are basically at the back of those. Plus a smattering of UK money.

 

[big soft moose]

didnt a lot get transformed into bonds and traded - so which banks are holding what changes day to day, a bit like sticking a banger in a bottle and throeing it from hand to hand , its fine so long as you arent holiding it when it goes boom

 

[SFTPhotography]

The Greeks have lived high on German loans and cannot repay. Whilst you cannot draw blood from a stone I find it galling the Greek government thinks it can just carry on spending what it does not have.

It's delaying the inevitble, they are bankrupt, broke, poor, skint. Thats it. They should be ejected from the Eurozone and as for the debt, if they cannot repay, they cannot repay. Why lend something, when it is (and it was) pretty clear getting it back wouldn't be straight forward. The lack of fiscal prudence on the Eurofiles part is staggering.

The spineless Eurofiles in Brussels will cave in to the Greeks uncompromising demands and yet still allow them to be in the EU. Just boot them out and face the fact that letting them in wasn't the smartest idea and write off the money.

To me, this is a salutory tale. You cannot make a poor country keep up with a rich one in terms of public spending. When you do, this is what you get. This concept of world intergration is a bad one. When countries are fiscally and/or culturally incompatible this is what happens.

Greece should be treated like a Bankrupt person. The creditor ain't getting their money back, it's obvious, so why delay the inevitable bankruptcy. The punishment in this case ejection from the EU and Eurozone.

An analogy. I have this mate, works in oil and gas off shore, is on a £1000/day rate plus allowances etc for working on boats etc/danger this and that. I kid you not, the guy can make after tax around £150k/yr, me less than half that - he's a money making machine.

He is much weathier than me. But because he is my mate, he wants me to socialize with him and do what he does. Rather than freeload off him, or borrow money from him to go to do expensive things, I say sorry pal, I will give this a miss, its too expensive for me. If I borrowed money for the things he does, so I have what he has, I couldn't repay him so why would I borrow from him and him lend to me. Had I borrowed from him, I wouldn't be able to repay and what I could repay would detract from what I ought to be paying for, my own expenses. He's still my mate, but I wouldn't take a penny off him.

This is how I see the Greek situation.

 

[ghoti]

So mostly, um, Greece, then

This isn't all that surprising.

When it comes to countries, debt is complex. Which is why it's childish nonsense when George Osborne and his ilk justify their ideological spending cuts by making comparisons with an unbalanced household budget. Countries don't work like families.

For example: does anyone know (or want to guess) who owns most of the UK's national debt?

 

[big soft moose]

This isn't all that surprising.

When it comes to countries, debt is complex. Which is why it's childish nonsense when George Osborne and his ilk justify their ideological spending cuts by making comparisons with an unbalanced household budget. Countries don't work like families.

For example: does anyone know (or want to guess) who owns most of the UK's national debt?

Government saving bonds ? (ie UK savers and pension funds) - that'll be why i was a big deal when we were downgraded from AAA to AA+ last year

 

[ghoti]

Government saving bonds ? (ie UK savers and pension funds) - that'll be why i was a big deal when we were downgraded from AAA to AA+ last year

The Bank of England (so the UK government, essentially). With UK pension funds and banks second.

 

[big soft moose]

The Greeks have lived high on German loans and cannot repay. Whilst you cannot draw blood from a stone I find it galling the Greek government thinks it can just carry on spending what it does not have.

It's delaying the inevitble, they are bankrupt, broke, poor, skint. Thats it. They should be ejected from the Eurozone and as for the debt, if they cannot repay, they cannot repay. Why lend something, when it is (and it was) pretty clear getting it back wouldn't be straight forward. The lack of fiscal prudence on the Eurofiles part is staggering.

The spineless Eurofiles in Brussels will cave in to the Greeks uncompromising demands and yet still allow them to be in the EU. Just boot them out and face the fact that letting them in wasn't the smartest idea and write off the money.

To me, this is a salutory tale. You cannot make a poor country keep up with a rich one in terms of public spending. When you do, this is what you get. This concept of world intergration is a bad one. When countries are fiscally and/or culturally incompatible this is what happens.

Greece should be treated like a Bankrupt person. The creditor ain't getting their money back, it's obvious, so why delay the inevitable bankruptcy. The punishment in this case ejection from the EU and Eurozone.

An analogy. I have this mate, works in oil and gas off shore, is on a £1000/day rate plus allowances etc for working on boats etc/danger this and that. I kid you not, the guy can make after tax around £150k/yr, me less than half that - he's a money making machine.

He is much weathier than me. But because he is my mate, he wants me to socialize with him and do what he does. Rather than freeload off him, or borrow money from him to go to do expensive things, I say sorry pal, I will give this a miss, its too expensive for me. If I borrowed money for the things he does, so I have what he has, I couldn't repay him so why would I borrow from him and him lend to me. Had I borrowed from him, I wouldn't be able to repay and what I could repay would detract from what I ought to be paying for, my own expenses. He's still my mate, but I wouldn't take a penny off him.

This is how I see the Greek situation.

Ironically the greeks would be better off under your soltion - they need to bankrupt and devalue... trouble is those holding the debt bonds don't want to let them leave so they keep bailing them out instead... paying the interest on old loans with new ones

 

[JonathanRyan]

This isn't all that surprising.

When it comes to countries, debt is complex. Which is why it's childish nonsense when George Osborne and his ilk justify their ideological spending cuts by making comparisons with an unbalanced household budget. Countries don't work like families.

For example: does anyone know (or want to guess) who owns most of the UK's national debt?

Yeah, I'm just wondering what happens when/if Greece defaults on loans from Greek banks who are presumably backing them with the savings of, um, Greece.

Like you say, it's complex. I'm trying to think of an answer that doesn't involve the words "hyperinflation", "economic collapse" and "armageddon". And usually, that's how wars start....

 

[SFTPhotography]

Ironically the greeks would be better off under your soltion - they need to bankrupt and devalue... trouble is those holding the debt bonds don't want to let them leave so they keep bailing them out instead... paying the interest on old loans with new ones

And thats how those who are in debt become vulnerable and further in debt. It's a lose lose case this. You cannot make someone repay the debt if they cannot, and they cannot. However, lending them more or delaying the inevitble isn't kind either.

Let them default, ok, no-one will lend to them for a long time, but they'll have a chance of recovering to their "natural" state and well, we will be no worse off as they cannot repay anyway and it looks like they have very little intention of trying (rejecting austerity massively).

 

[SFTPhotography]

Yeah, I'm just wondering what happens when/if Greece defaults on loans from Greek banks who are presumably backing them with the savings of, um, Greece.

Like you say, it's complex. I'm trying to think of an answer that doesn't involve the words "hyperinflation", "economic collapse" and "armageddon". And usually, that's how wars start....

And that is our problem, how?

What wars can they start, they have no military capability and no-ones going to lend them anything to buy war machinery.

Bankrupt them, and leave them to it.

 

[big soft moose]

The germans lend them more money

 

[Alastair]

The Greeks have lived high on German loans and cannot repay. Whilst you cannot draw blood from a stone I find it galling the Greek government thinks it can just carry on spending what it does not have.

Umm.. . who's living the high life in Greece?

The reason that Syriza have been elected is a public rejection of the EU/ECB/IMF imposed slashing of public spending. Maybe you don't watch the news, or maybe you only watch the main BBC/ITN news. The public spending cuts in Greece have been massive with a commensurate loss of public services. There have been riots and protests for years so a rejection of the imposed solution shouldn't really surprise anyone.


Although I agree with you on the solution, investors have to realise that the value of their investments may go down as well as up. And so far the only ones not feeling the pain are the investment banks.

 

[Alastair]

What wars can they start, they have no military capability and no-ones going to lend them anything to buy war machinery.

They have less military capability this evening than they had this morning.

 

[big soft moose]

And that is our problem, how?
.

Its our problem because

a) that kind of turmoil in a eurozone country will trash the euro , and thats important because a lot of british finances have eurozone investments

b) it tends to spread , if we let greece default spain will be next, then itally, portugal, ireland and so on (pretty much everyone except Fance and Germany), then see a above

c) Its not our problem is what we said about the financial issues in the weimar republic - look how that turned out

d) That kind of financial turmoil will lead to civil unrest and that in turn will be exploited by extremists - look where greece has borders

e) Greece is a Nato partner - if they have a ukraine style civil war the rest of us will get dragged in to sort it out

f) all of the above will result in economic migrees from greece to the rest of the eurozone ... I'm sure you already realise why that would be a bad idea

 

[SFTPhotography]

Its our problem because

a) that kind of turmoil in a eurozone country will trash the euro , and thats important because a lot of british finances have eurozone investments

b) it tends to spread , if we let greece default spain will be next, then itally, portugal, ireland and so on (pretty much everyone except Fance and Germany), then see a above

c) Its not our problem is what we said about the financial issues in the weimar republic - look how that turned out

d) That kind of financial turmoil will lead to civil unrest and that in turn will be exploited by extremists - look where greece has borders

e) Greece is a Nato partner - if they have a ukraine style civil war the rest of us will get dragged in to sort it out

f) all of the above will result in economic migrees from greece to the rest of the eurozone ... I'm sure you already realise why that would be a bad idea

I get it.

To point a) eject from Eurzone and EU. It will be harder on us/them on the short term, but in the long term better for both parties

b) agree, execpt Ireland repaid. More or less anyway. Spain and Portugal are a worry. Again if the Eurofiles had been a bit more circumspect financially and kept the common market/currency (IMHO not the best idea but I can get it) to fiscally more compatible/similar counties we'd not be here just now.
c) Yes, but Greeks are not a militarily powerful nation. I doubt they'll have us by the balls.
d) Good point, already an extreme right/left party is in. However, even if they do go extreme that makes them incompatible centralist/left administration thats common in EU countries. France, Germany, Britain all survived when Franco was in power in Spain. Defend the borders effectively and a nutter in power there won't pose us issues. Even S.Korea prospers with Kim Jon next door, and he has nukes. The Greeks don't AFAIK.
e) Kick 'em out of nato (default has to have hard punishments, expulsion from the EU, Nato, Euro and anything that gives them a world platform needs removed). Then just leave 'em to it.
f). I see the logic here, however if they are not in the Eurozone just send them back. I expect in the very short term while we are being limp about it, a lot will leave en mass. As people go, culturally they are compatible with the western european countries and whilst I don't want tons more immigrants, this is the least of it. If we could control our borders better again this wouldn't be an issue.

 

[JonathanRyan]

And that is our problem, how?

It's basically what would happen if lots of your neighbours suddenly lost their jobs but couldn't be evicted from their houses. Imagine what that would do to your neighbourhood.

It's one of the many reasons we lent Ireland all that money (another was that IIRC we made a decent profit on it). If your neighbour's house is on fire, it's in your interests to put it out. Especially if your neighbour buys lots of stuff you make.

 

[SFTPhotography]

It's basically what would happen if lots of your neighbours suddenly lost their jobs but couldn't be evicted from their houses. Imagine what that would do to your neighbourhood.

It's one of the many reasons we lent Ireland all that money (another was that IIRC we made a decent profit on it). If your neighbour's house is on fire, it's in your interests to put it out. Especially if your neighbour buys lots of stuff you make.

Depends if your house is detached or not, so long as the people are out and alive, it doesn't matter whether it burns down if your properties are not ajoining.

Ireland repaid, but could. Greece is in a much much worse state. Ireland has a good financial services economy as its tax is quite lax, it has a sector of employment there. Greece has nothing, it never really did, its a poorish country and should have remained so rather than be let into an institution it cannot have hoped to keep up with. Greece cannot afford really to buy in en mass stuff we make, not without us paying them to buy in stuff we make. Given they make practically nothing, they have to import, they'll just have to import cheaper things.

I hope they write off the debts and let them start again and establish themselves, naturally.

 

[JonathanRyan]

Depends if your house is detached or not, so long as the people are out and alive, it doesn't matter whether it burns down if your properties are not ajoining.

Um, yes. If you're happy for your neighbours to die.

Don't we need Greece for something? Holidays, ouzo, bits of sculpture to nick? There's usually something....

 

[SFTPhotography]

Um, yes. If you're happy for your neighbours to die.

Did you not see where I said so long as the people are out and alive. I've put it in bold so its clearer, I genuinely think you missed it and the meaning behind what I said.

They'd be bankrupt, not living under a genocidal tyranny. If they were, it would be the right thing to intervene. If my neighbours house was burning down, and if I know I could carry them out and this would save them I'd go in and do that. However if they were out and alive, I wouldn't risk myself to go inside to rescue their family photo albums.

Don't we need Greece for something? Holidays, ouzo, bits of sculpture to nick? There's usually something....

Holidays, yes. So why if they are starting over (they have inftascture etc) and debt free, cannot people visit greece. Its under a leftist government that its people elected, not a military dictatorship that seized control. The will of the Greek people isn't to have this austerity imposed on them. If they can afford to repay the debt great, but they cannot. They know this, they've made their choice. Let them live with it. Actions have consquences, not repaying your debt makes you bankrupt, and choosing not to certainly does. Bankruptcy isn't an easy ticket otherwise everyone would borrow and not repay.

Doesn't mean you cannot visit a bankrupts house for dinner and bring round a box of chocolates. What are they going to do, turn away lots of money yielding tourists if we kick them out the Eurozone. In the long term, it will be the best thing for them. IMHO.