Will Europe Survive?

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Re: Will Europe Survive?

Postby Shapley » Fri Dec 09, 2011 11:59 am

Giant Communist Robot wrote:I think this is wrong. Buying and selling securities--Open Market Operations--are meant to moderate the economy by targeting price stability (inflation) and sustaining economic growth. Typically bonds would be issued to match the deficit, but they don't need to be.


To a large extent, I suppose, it's an accounting gimmick. Maybe it's a legal requirement imposed by a Congress that does not comprehend the complexities of fiat money, or doesn't believe in it. I'm not sure.

I do know that the largely-fictional Social Security 'trust fund' comprises of bonds whch the government buys and sells among itself. This is an accounting gimmick to comply with the Supreme Court requirement (Steward Machine Co. vs. Davis) that all Social Security funds go into the Treasury as taxes in general, and are not 'earmarked' for the purpose of providing old-age insurance. Thus, the funds go into the Treasury, but the special-issue bonds keep track of the value of the 'trust fund' for purposes of record-keeping. While politicians often campaign upon and propose issues to take Social Security 'out of the budget', they know, or they learn, that they can't legally do so and keep the programme compliant with the letter of the law.

I suppose with issues such as the Social Security 'trust fund', the debt, the deficit, and so on, it is easier to maintain the illusion than to explain the reality.
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Re: Will Europe Survive?

Postby Giant Communist Robot » Fri Dec 09, 2011 1:09 pm

it is easier to maintain the illusion than to explain the reality


There's a kind of strange "other worldliness" about it. Those illusions are based on a concept.
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Re: Will Europe Survive?

Postby BigJon » Sat Dec 10, 2011 12:10 am

Selma in Sandy Eggo wrote: I have no idea what sort of zero is needed for economic theory - I don't understand it. I suspect nobody does, and that the people who theorize about it are confuseder than I am.

The grounding wire of economics is this: I value something you have, you value something I have, how do we exchange them? From there is goes all wonky.
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Re: Will Europe Survive?

Postby Giant Communist Robot » Sat Dec 10, 2011 11:25 pm

I still say that even fiat money has to be backed by something


No it doesn't, that's the definition of fiat money.

Ultimately, it only has value because the government collects taxes with it. In everyday transactions, it has value because we belieeeeeeve it does.
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Re: Will Europe Survive?

Postby Giant Communist Robot » Sat Dec 10, 2011 11:31 pm

Logic and reason are dandy tools but some kind of real-world testing is needed to keep the tools calibrated


No wonder they call it the dismal science. This is why I prefer MMT, a bookkeeping style of economics, rather than those that use un-testable ideas.
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Re: Will Europe Survive?

Postby Giant Communist Robot » Wed Dec 14, 2011 1:21 pm

From there is goes all wonky.


The lack of direct evidence or conclusive indirect evidence is always going to be the burden for theory-heavy economics.
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Re: Will Europe Survive?

Postby Giant Communist Robot » Wed Dec 14, 2011 1:23 pm

I see three ways for Europe to go:

1)More centralized political control. Sort of like a United States of Europe.

2)Dissolution, or at least losing a few problem members.

3)Continued bailouts
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Re: Will Europe Survive?

Postby Haggis@wk » Sat Dec 17, 2011 5:59 pm

Sent to me by a friend in England:

This one’s doing the rounds. It’s kinda cute, and not that much of an exaggeration.

It is a slow day in a little Greek Village. The rain is beating down and the streets are deserted. Times are tough. Everybody is in debt. Everybody lives on credit.

On this particular day a rich German tourist is driving through the village. He stops at the local hotel and lays a €100 note on the desk, telling the hotel owner he wants to inspect the rooms upstairs in order to pick one to spend the night.

The owner gives him some keys and, as soon as the visitor has walked upstairs, the hotelier grabs the €100 note and runs next door to pay his debt to the butcher.

The butcher takes the €100 note and runs down the street to repay his debt to the pig farmer.

The pig farmer takes the €100 note and heads off to pay his bill at the supplier of feed and fuel.

The guy at the Farmers’ Co-op takes the €100 note and runs to pay his drinks bill at the taverna.

The publican slips the money along to the local prostitute drinking at the bar, who has also been facing hard times and has had to offer him “services” on credit.

The hooker then rushes to the hotel and pays off her room bill to the hotel owner with the €100 note.

The hotel proprietor then places the €100 note back on the counter so the rich traveller will not suspect anything.

At that moment the traveller comes down the stairs, picks up the €100 note, states that the rooms are not satisfactory, pockets the money, and leaves town.

No one produced anything. No one earned anything. However, the whole village is now out of debt and looking to the future with a lot more optimism. And that, Ladies and Gentlemen, is how the bailout package works!
The American Republic will endure until the day Congress discovers that it can bribe the public with the public’s money.” Alexis De Tocqueville 1835
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Re: Will Europe Survive?

Postby Haggis@wk » Mon Jan 02, 2012 1:30 pm

The American Republic will endure until the day Congress discovers that it can bribe the public with the public’s money.” Alexis De Tocqueville 1835
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Re: Will Europe Survive?

Postby Giant Communist Robot » Tue Jan 03, 2012 2:42 pm

Haggis@wk wrote:Sent to me by a friend in England:

This one’s doing the rounds. It’s kinda cute, and not that much of an exaggeration...


No one produced anything. No one earned anything. However, the whole village is now out of debt and looking to the future with a lot more optimism. And that, Ladies and Gentlemen, is how the bailout package works!


This is an example of how the multiplier effect works. We went over this some time ago and Shapley pointed out the increase in GDP is the profit each makes. Anyway, substitute government spending for the German tourist and that's how that works.
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Re: Will Europe Survive?

Postby Giant Communist Robot » Tue Jan 03, 2012 2:44 pm

I watched a BBC app a couple of days ago and the commentator said Germany is looking for a way to get Greece out of the EU. I haven't seen this anywhere else, though.
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Re: Will Europe Survive?

Postby Giant Communist Robot » Wed Jan 04, 2012 10:51 am

I see today Greece is warning it may leave by April. It seems unlikely, as it only substitutes a whole new set of problems for the ones they have now.
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Re: Will Europe Survive?

Postby Haggis@wk » Wed Jan 04, 2012 11:19 am

Giant Communist Robot wrote:I see today Greece is warning it may leave by April. It seems unlikely, as it only substitutes a whole new set of problems for the ones they have now.



As I've posted numerous times, Greece has defaulted on its debts every two years since it was founded and yet still survives and attracts creditors. Based on that I would have to say that one, a zero credit worthiness doesn't appear to be any sort of deterrence and two, history is very forgiving of any actions the Greeks undertake.

Oh, and three, foresight doesn't seem to be an afflicition for modern Greece.
The American Republic will endure until the day Congress discovers that it can bribe the public with the public’s money.” Alexis De Tocqueville 1835
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Re: Will Europe Survive?

Postby Giant Communist Robot » Fri Jan 06, 2012 2:56 am

Well then, maybe Greece will get a bailout. But even those Draconian austerity measures won't help. Wages and benefits are just too high to sustain the economy.
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Re: Will Europe Survive?

Postby Giant Communist Robot » Sun Jan 08, 2012 3:39 pm

Europe is beginning to look like a burning building with no exits. Clearly these people misunderstood what it meant to give up their monetary independence. I'm not sure they even understand it now.
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Re: Will Europe Survive?

Postby Haggis@wk » Wed Jan 11, 2012 2:55 pm

Bankrupt Greece proposing disability benefits to pedophiles, exhibitionists, kleptomaniacs, pyromaniacs, compulsive gamblers, fetishists and sadomasochists

You truly can’t make this stuff up….. :roll:

Although, having been married to the MRHYN for 13,851 days I probably qualify for at least a masochist… :lol: :lol: :lol: :lol:
Last edited by Haggis@wk on Thu Jan 12, 2012 4:27 pm, edited 1 time in total.
The American Republic will endure until the day Congress discovers that it can bribe the public with the public’s money.” Alexis De Tocqueville 1835
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Re: Will Europe Survive?

Postby Giant Communist Robot » Wed Jan 11, 2012 4:21 pm

The German economy is rumored to be contracting.
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Re: Will Europe Survive?

Postby Haggis@wk » Thu Jan 12, 2012 4:55 pm

Giant Communist Robot wrote:The German economy is rumored to be contracting.



According to this it's more than a rumor although the prospect of another recession isn't set in concrete...yet.

In my lifetime it seems the various countries of Europe stumble from one minor crisis to a major crisis because they ignored or didn't do enough to solve the minor crisis in time.

Eventually the major crisis essentially subsumes whichever country it's in and simply becomes part of the culture.

Germany’s Gastarbeiters, "guest workers," of the 50s/60s today represents a serious problem to Germany's future. I should clarify, the immigrants (Vietnamese in particular) represent a "serious" problem to "traditional" Germans, personally, I think the Vietnamese represents a positive counter balance to the radicalized Muslim populations.

In France, what began as a minor crisis, Algerian refugees, has essentially transformed a divided country that no one in France will discuss. That's an evolving problem that does not currently seem to be "resolvable" in any sense absent violence on a national level (my opinion) In Italy we've seen ample evidence that a country can exist, marginally, without a government for decades at a time, as for Greece, well. And so, country by country, although many of the problems are similar, across Europe they struggle mightily to ignore the "bleedin' obvious."

I think that life experience is what's on display here, although to be fair I'm not sure this was ever a "minor crisis" before it became a full blown "major crisis"

I personally believe the eventual "result" (I don't think there will be a 'solution" in the conventional sense) will contain unintended consequences that are not apparent now. One major consequence I do see will be a US/UK bond not seen since WWII as the UK prudently disengages with "Europe;" for simple survival if for no other reason.
The American Republic will endure until the day Congress discovers that it can bribe the public with the public’s money.” Alexis De Tocqueville 1835
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Re: Will Europe Survive?

Postby Haggis@wk » Tue Jan 24, 2012 11:59 am

Via the EUObserver:

Former EU commission chief Jacques Santer, who in 1999 resigned together with the entire college amid accusations of corruption, was appointed on Monday as head of a fundraising mechanism for the eurozone bail-out fund. “Santer served his country and Europe the best he could,” Eurogroup chief Jean-Claude Juncker told media.


Well, you know they are serious when they bring back the crooks back to run the bailout. :lol:
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Re: Will Europe Survive?

Postby Giant Communist Robot » Sat Jan 28, 2012 1:45 pm

Here comes the Greek default.
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