Eurozone: Crisis or not?

[Alphadrop]

Adding in a mixed country like Italy makes it even worse. If only we could split Italy in two.

Considering Italy still isn't used to being a country and parts of it threaten civil war every other week I'm sure it wouldn't take much.

 

[incognito]

Euro is done all that is left is the dominoes to start falling, the crises can not have a solution since the compound interest will crush the marked in a energy constrained world. Only ting that can save the Euro is a global juble (declaring the dept void and deleted), which will not happen.

only thing left to happen is what happened in 2008 redux, so a credit freeze and inflation in such a epic scale never seen in the wold before.
some charts that shows the accumulated inflation in gold.

over 750% inflation compared gold vs dolar

same story for the euro. The sun king (lugvig the 4th) should be renumbered.

Gold do not change in value only the money available does. Unless you get your economic advise from professors that are intellectual fools. If you want to see what helicopter Ben has to say

http://economistsview.typepad.com/e...s-comments-on-bernankes-press-conference.html

If you really want real economic news go to Zerohege.com

To sum up: Euro will die and the union will die as fast the soviet did or even faster.

 

[Crni Vuk]

Greece should never have been allowed into the EU in the stage it was. It should never have been let into the Eurozone. It is a backwards-ass country whose economy would have been destroyed by the import/export deficit if not for heavy loans provided by European banks, which are now leading to a crisis.

I never said that greece was either a great nation (when it comes to finances) or that they never had any kind of problem.

But the question here is. Who allowed them to enter the Eurozone? And not just them. But all the others, like Italy, Spain and so on ...

Much of it can be actually given thanks to some of our politicians (Germany, like Helmut Kohl and his friends) which pushed the Euro trough like a sod trough the village without ever considering the issues. They didn't only overlooked many issues here they completely closed their eyes.

But who do you see people blaming today? Greece. Again. I never say they have not done their part to it. But seriously. If the people fail to check it no even ignore the issues then I blame those politicians which we "elected" more then greece.

Not to mention if you really want to be anal you can trace some of the issues today back to the time when the USA terminated the convertibility of the dollar to gold, the Nixon-Schock.

So if we want to start to blame anyone here, then maybe we should start with our own nations. France? Germany? Britain? USA? They all have huge depths. And I don't see any sign of them to decreasing.

But from the "usual" citizen you many times only hear "screw greece why do I have to pay for them!".

The real problem here is, that we have trouble to understand the problem here really and if you dont understand it (the common man), then there will be never a real change what ever if we help greece now or not. The issue which caused it all more or less still exists. And it is only a question of time untill some other huge financial crysis happens again. I dont claim to really understand it either nor that I know every detail. But I dont think there has been done enough or learned any lesson from the recent colapse with Lehman brothers and such.

*I am not aiming at you BN, I am just talking about the rage I sometimes hear from people I am talking with and all the "anger" about Greece as like that is going to help anything or change the situation.

 

[Alphadrop]

If you really want real economic news go to Zerohege.com

Ah, crazy nutjob conspiracy site that thinks Goldman Sachs is ruling the world. Wondered when we would start seeing this stuff and gold bugs on the thread.

 

[incognito]

I do not own gold or suspect that i ever will. Not that i want to draw you a strawman, but you say Blomberg or fox news telling the economic truth. Although it is a hyperbolic site, i must say zerohege is more trustworthy then the lot of them

 

[Sander]

http://economistsview.typepad.com/e...s-comments-on-bernankes-press-conference.html

So ehm, you do realise that link disproves each and every one of your ridiculous conspiracy theory theories, right?

 

[.Pixote.]

The weaker Eurozone economies need to pull out, re establish their own currencies - devalue those currencies (I'm sure the markets will do that for them), and rebuild their economies. It's a 10 year project, but staying in the Eurozone, and keeping the Euro as their currency will eventually bankrupt them - these are countries with poor trading histories. What the fuck does Greece make away? Olives? They can't be allowed to run high current account deficits year after year.

Also tax the rich. A lot. Otherwise -

 

[Jebus]

Also tax the rich. A lot.

I can't speak for the rest of the EU - I'm not really all that familiar with their tax systems - but at least in Belgium, it's reached a breaking point.
The Financial Times (IIRC) put Belgium just below Barbados in the countries where it's best living when you're rich, hell when you're working class. I'm currently still being paid a wage, which in my tax bracked (and I'm not in a particularly high one by far) 56% of my total wage costs go to the government, another 2% to municipal level. Which leaves 42% of my wage for me. 42%! 42! Can you imagine such a thing? When one takes stuff like VAT and 'indirect' taxes (car, taxes paid immediately on stuff like gasoline, cigarettes, insurance, etc.), my 'net' spending power drops to something like 30% of my gross income. It's ridiculous. And then they wonder why almost no-one under 35 can't buy a house without *substantial* help from their elder family members.

What this leads to is a society that doesn't spend its money. My g/f and I, and most people of my age I know, desperately try to spend as little as possible in order to save to buy a house someday. When? I dunno, perhaps when house prices aren't 50% overvalued (not my estimate, but the UESO and IMF).

Even with all those taxes, and an economy which is (in theory) one of the richest in the world, the governments budget falls incredibly short, and public service isn't even close to what it is in Scandinavia (where, contrary to popular belief, taxes on lower to middle class are lower than in Belgium). So they do tax reform in the most absurd way. Instead of cutting costs, they either raise taxes even more, or made them absurdly difficult to calculate on purpose so they can give out fines (I'm not making this up).

Does it work? No. In january, the government massively increased taxes on expensive comany cars. By massively I mean stuff like +400%. They estimated to net around 200 million € in extra taxes because of that. The result? A majority of company cars got swapped for less expensive ones, and companies like BMW and Mercedes paid about €80 million less in VAT and taxes because sales plummeted. Net profit for the government? And estimated 35 million € in total. Effect on the car industry, economy as a whole and employees with company cars? Wholly negative.

*sigh* I should probably shut up, I can keep on ranting like this forever.

 

[incognito]

http://economistsview.typepad.com/e...s-comments-on-bernankes-press-conference.html

So ehm, you do realise that link disproves each and every one of your ridiculous conspiracy theory theories, right?

See the dates on the charts on the fed presentation. And compare to the price today. He select data from 1980 to 2001 he do not show the money supply m3 or m2. rather disproving anything he choses the data he see fits (the range he shows is from 80-01 is 800 - 350 in $ the range from 2002 to 2012 350-1900 ). Although i am surprised that i am getting heat over things that has been proven last 6000 year of human history gold is usually money papar money is not. Ben is showing his distain fore the American people, in this presentation.

The conspiracy of euro is there are none, Euro is dead the ones using them now will go back to the old currency. it not a if it is a when.

 

[Sander]

See the dates on the charts on the fed presentation. And compare to the price today. He select data from 1980 to 2001 he do not show the money supply m3 or m2. rather disproving anything he choses the data he see fits (the range he shows is from 80-01 is 800 - 350 in $ the range from 2002 to 2012 350-1900 ). Although i am surprised that i am getting heat over things that has been proven last 6000 year of human history gold is usually money papar money is not. Ben is showing his distain fore the American people, in this presentation.

Neither the value nor the supply of gold is static over time. The only practical, efficient application of gold is to use it to scam audiophiles out of their money. There's nothing inherent about gold that makes it valuable.

What this leads to is a society that doesn't spend its money.

I'm still surprised that the idea of encouraging spending seems to be largely absent from current economic policy.

 

[incognito]

the intrinsic value of gold makes it the best store of value since dawn of the civilization, it is a value to it self can paper money make that clam. Gold backed currency do not fail as paper moneys does, Mr ben has pumped trillions of dollars to every bank on his friend list setting up USA to the road to hyperinflation.

The models they use at the fed, are nonsense. They base all there assumptions on constants that are not constants. do not take my word on it, take Robert Wenzel word fore it.

http://www.economicpolicyjournal.com/2012/04/my-speech-delivered-at-new-york-federal.html

 

[Sander]

the intrinsic value of gold

Gold has no intrinsic value. Like money, the only value it has is the value people give it.

makes it the best store of value since dawn of the civilization, it is a value to it self can paper money make that clam. Gold backed currency do not fail as paper moneys does

The 1920s would like to have their retarded, discredited economic ideas back.

http://www.economicpolicyjournal.com/2012/04/my-speech-delivered-at-new-york-federal.html

You keep linking stories that directly refute your stupid-ass theories. I mean, that dude is talking about there being no constants in economics. Your theory: gold is constant!

Also, Robert Wenzel isn't actually a credible authority on economics, he's just a dude with a website and some crackpot theories based on the idea that markets are inherently efficient (no, they are not).

 

[donperkan]

He's right i dont know what you are arguing about.

Many countries and banks use gold as reservs. I mean they could use other things hell they could even use tomatoes as a basis but then they would risk losses when the prices drop. The price of gold is relatively stable.

 

[Sander]

He's right i dont know what you are arguing about.

Many countries and banks use gold as reservs.

Using gold as reserves is not the same as implementing the gold standard. The gold standard is a favorite of Ron Paul adherents who seem to have missed the whole Great Depression.

 

[donperkan]

My engrish bad. I don't know the right name for this praxis.

Banks buy gold with currencies because they are suspectible to price oscillations which can leave the banks with less then they had.

This is a very popular method of storing your assets.

 

[Sander]

My engrish bad. I don't know the right name for this praxis.

Banks buy gold with currencies because they are suspectible to price oscillations which can leave the banks with less then they had.

This is a very popular method of storing your assets.

Gold is just one form of storing assets, one of many different forms used by every financial institution around the world. Having some gold reserves is not the same as backing your currency with gold.

If you don't even know what the Gold Standard is, look it up before discussing these things.

 

[TheWesDude]

problem is there is no commodity that holds its value over the long term.

gold prices fluctuate, and even greatly so when taken to terms of 10+ years.

logic would dictate that the price of gold would go up at least at the same rate as inflation as the intrinsic value does not change, only the intrinsic value of the currency.

the problem with that logic is that it is not logic, currency and gold have no intrinsic value. so exchanging one for another does not provide any kind of guarantees for anything other than the total collapse of one or the other. and if its gold that collapses, well you bet on the wrong horse didnt you.

everyone always thinks that "precious" metals prices do not fall or change. problem is the value of those metals does, and is in fact REQUIRED to change. at minimum for every ounce of gold that is mined or even found devalues every other ounce of gold.

you want to know what all these people who are buying gold and advocating you buying gold are trying to do? get ready, because its a doozy.

artificial price inflation/adjustment. the more people that buy/own gold, the less "available" there is. the more rare something is, the more value it has. if everyone starts buying the available gold, the price will go up. then the people who bought their gold before the price skyrocketed sell their gold supply and make a heavy profit.

the price and value of gold is NOT intrinsic. it is not fixed. it does not even follow inflation.

 

[Alphadrop]

I'm still surprised that the idea of encouraging spending seems to be largely absent from current economic policy.

It's not that surprising really, modern governments don't seem to understand how basic economics works.
On the plus side France might now challenge the current EU non-sensical austerity measures and actually start promoting growth and spending rather than worrying about debt that would be easier to pay back if countries made money.

 

[Edmond Dantès]

Oh god no, not this whole spiel here as well. Sander and TheWesDude are pretty much right on track with the problems you get when you start thinking that gold has intrinsic value, or tracks value or inflation as the sole commodity on earth. I'm pretty familiar with the whole 'end of the world!', 'crash jp morgan buy silver!' idea. Heck, I've made and lost money on it. I've actually bought some physical silver, then sold it when it went up a few euro's; I invested some in a derivative that tracks the price of silver, made some money there too, and then lost that same money again.

The problem with the whole gold/silver thing is mostly that the people who are in it, believe it to such a degree that it has become their faith. The whole argument of people who put their faith in precious metals is generally as follows:

1: Currencies that aren't backed by tangible assets and are only backed by faith are bound to fail. One major proponent of this idea, Michael Maloney, thinks he 'proves' this by pointing out, hilariously, that the Greek and Roman civilizations doomed themselves by devaluing their currencies. I've got a history degree, but you don't need one to also grasp how ludicrous this claim is. The irony runs deep, as Maloney, in fact, makes a living out of selling you precious metals. (edit: another example, of course, is Weimar)

2: Flowing forth from number one: we haven't got a gold standard, but we do, everywhere, have massive debt. Supposedly there is no way to fix this other than to print our way out of this mess, thus the assumption runs that all countries (because no currency, unless backed by gold, is supposedly save) just start to print the extra amounts of cash needed. This then leads to massive inflation, which the proponents will argue is simultaneously covered up, meaning that official numbers can't be trusted and one should, instead, trust random websites on the internet. Yes, our first round of tinfoil hats have just been handed out.

3: At some point, unexplained usually, the general populace is supposed to notice this, while simultaneously becoming aware of the fact that gold and silver have increased in value. The idea then is that an increasing number of people and countries flee into precious metals as the only, supposedly, safe haven left. To make things even more appealing, the argument then usually continues to list various new investment vehicles and reasons why more hands than ever will be demanding gold and silver. China and India are routinely mentioned, and stock ETF's are also often mentioned. (Exchange Traded Funds, derivatives that, in this case, buy precious metals, either through futures or in physical form).

4: Then it all goes absolutely crazy. Supposedly, the US federal bank hasn't got the gold it claims to have. Second, the ETF's mentioned above are then claimed to also not have a single ounce or to have already pledged this as collateral or some other similar argument. Yes there is an internal contradiction there with point 3, but generally people don't care to notice. Then it all culminates into the idea that only physical precious metals can protect you from your own inevitable financial doom.

What I found most annoying about all this is that the whole theory thrives on pseudo-science. Keynesian economics are generally the Big Bad Guy and discredited without any actual argument in favour for the Austrian school of economics. Actual economy theories are used, but only as long as they prove, and not falsify, the argument.

For those familiar with him, I'm more of a Jim Rogers guy. His theory, in short, is that commodities oscillate in price because of long-term inaccuracies in supply and demand. It begins with postulating a supply that is alright. Basically, there is money to be made, but not enough to get new investors. Growing population and globalization leads to an increased demand, but supply lags behind simply because a supply of commodities is not easily increased. For grains you need more acreage and good weather, but for something like lead, still used a lot, nowadays you first need a heck of a lot of government permissions to start a mine, a smelter, and so forth. Thus the price rises to make up for the lag, which then leads investors to actually invest in commodities because there finally is some money to be made. Once the new supply lines are up and running, we've gone full circle. One cycle takes pretty long, don't remember how much years though. More than 15 in any case.

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Now, on to Europe. I don't think we're in for doomsday any time soon. Bonds have been doing relatively well the last two months. Spain, Greece, Portugal, Italy; they've all subsided. They are performing worse the last week or so, and I do think things will turn even worse before they get better, but it'll take years, at least. Meanwhile, the EU and US economy as a whole really isn't doing that badly. People are still buying massive amounts of stuff, and any good company like Apple is still making idiotic amounts of money. But I've already written too much so I'll just shut up now.


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Edit 2: The rich are, actually, taxed more than ever nowadays. According to an economy 101 lecture by Prof. Timothy Taylor, in 1980 the top quintile of income paid 56.3% of all taxes in the US. In 1990 this was up to 57.9%, by 1995 the top quintile was paying 61.9% of all federal taxes. By 2000 the top quintile was paying 66.7% of all taxes. That dropped of a bit in 2002 after the tax cuts in 2001, when it was 64.8%.

If you look at the top 5% of income, they were paying 37.3% of all federal taxes as of 2002. I'm with Taylor here when he states that, he's not against the rich paying more, but compared to the 1980's and the Reagan years, they are paying a larger share of taxes. And it wouldn't be right to say that they're paying a historically low share of taxes.

 

[valcik]

Talking about gold deposits, Italy has fourth biggest gold reserves in the world. Its value is cca 105 000 000 000 USD.