4 ms·

People making the decision had no cost to themselves if they were wrong.

by muro 8y ago

RobertoG 8y ago
It's deeper than that. The adoption of the Euro without a fiscal capacity at the Euro-area level means that the Euro countries are basically working with a foreign currency. That means that monetary issues are beyond political control. That means beyond democratic control. Some people consider that is a good thing. Another issue is that the Euro is not a bad thing for all the countries in it. Germany, for instance, as a big exporter, get a currency devaluation for free an unencumbered access to a huge market. Interestingly, this success of the German economy have not reflected, for the best, in the quality of life of most of the Germans, but maybe, this is a discussion for other day (even if in my opinion is really the same issue, see first paragraph).
- TheOtherHobbes 8y ago
  Germany made €2.8bn from the Greek debt crisis - so not a bad deal for Germany.
  - cinquemb 8y ago
    They'll make even more in Frankfurt when holding defaulted PIIGS sovereign debt when the ECB exhausts its capability to be largest marginal counterparty bidder while also trying to target asset price stability…
  - matt4077 8y ago
    That's like €25 per person. It's basically meaningless. Meanwhile, Germany's annual net contribution to the EU is €220 per person. I'm not pointing this out to complain–the EU is worth far more than that, and seeing the giant improvements these transfers have supported in Eastern Europe, or Ireland, or Portugal makes their usefulness obvious. But suggesting that Germany (and the other countries involved) took on billions and billions in risk hoping to earn what are obviously below-market returns is laughable. Not everything is motivated by money.
    - RobertoG 8y ago
      You are forgetting that at the start of the Greek crisis, the debt was owned by private banks (mostly German and French), now it's owned by the Europeans. So, basically we saved those banks, make the life of the Greeks worse in the process, and now they owe even more money than before.
    - petre 8y ago
      It's actually €34 per German and €237 per Greek. Different countries, different people. The German contribiution to the EU is not guaranteed to make it's way back into the Greek economy. And Germans could perhaps use an unpaved country road to travel and move goods to and from Greece instead of a highway that passes through 5 different states, of which two are not even in the EU but have received money from the EU exactly for this kind of infrastructure. https://europa.rs/eu-assistance-to-serbia/?lang=en https://europa.rs/eu-assistance-to-serbia/?lang=en http://ec.europa.eu/regional_policy/en/funding/ipa/fyrom/ http://ec.europa.eu/regional_policy/en/funding/ipa/fyrom/
- matt4077 8y ago
  The European Central Bank is controlled by its board of directors, who are appointed by the European Council. The European Council is just the assembly of the EU's heads of governments. It's basically the same system as it is for the US' FED, or most other central banks for that matter. The only difference is that it's not a single head of state but the group of 18. But then again the US Senate also needs to consent for FED appointments, and it's a rather similar body of regional delegates. It's also doubtful that the ECB had any meaningful choices since 2008. The low-interest, quantitative-easing policy is common among all the relevant central banks, including not just the US but also Britain or Japan.
  - RobertoG 8y ago
    So, you are telling me, that the FED would allow something like what have happened to Greece, happen to a USA state? A crisis deeper and longer than the Great Depression? Or that they will thread to stop the payment systems if some state don't bend to their will like the ECB did [1]? Anyway, the problem is not the ECB, but the lack of a federal capacity. [1] https://www.yanisvaroufakis.eu/2017/03/14/the-campaign-goes-on-did-the-ecb-break-the-law-in-closing-greeces-banks-sign-the-petition-today/ https://www.yanisvaroufakis.eu/2017/03/14/the-campaign-goes-...
    - matt4077 8y ago
      They wouldn't allow it to happen to a state. But to Puerto Rico? Yes, very much so. To Detroit? Sure!

People making the decision had no cost to themselves if they were wrong.

by muro 8y ago

People making the decision had no cost to themselves if they were wrong.

It's deeper than that. The adoption of the Euro without a fiscal capacity at the Euro-area level means that the Euro countries are basically working with a foreign currency. That means that monetary issues are beyond political control. That means beyond democratic control. Some people consider that is a good thing. Another issue is that the Euro is not a bad thing for all the countries in it. Germany, for instance, as a big exporter, get a currency devaluation for free an unencumbered access to a huge market. Interestingly, this success of the German economy have not reflected, for the best, in the quality of life of most of the Germans, but maybe, this is a discussion for other day (even if in my opinion is really the same issue, see first paragraph).

TheOtherHobbes 8y ago
Germany made €2.8bn from the Greek debt crisis - so not a bad deal for Germany.
- cinquemb 8y ago
  They'll make even more in Frankfurt when holding defaulted PIIGS sovereign debt when the ECB exhausts its capability to be largest marginal counterparty bidder while also trying to target asset price stability…
- matt4077 8y ago
  That's like €25 per person. It's basically meaningless. Meanwhile, Germany's annual net contribution to the EU is €220 per person. I'm not pointing this out to complain–the EU is worth far more than that, and seeing the giant improvements these transfers have supported in Eastern Europe, or Ireland, or Portugal makes their usefulness obvious. But suggesting that Germany (and the other countries involved) took on billions and billions in risk hoping to earn what are obviously below-market returns is laughable. Not everything is motivated by money.
  - RobertoG 8y ago
    You are forgetting that at the start of the Greek crisis, the debt was owned by private banks (mostly German and French), now it's owned by the Europeans. So, basically we saved those banks, make the life of the Greeks worse in the process, and now they owe even more money than before.
  - petre 8y ago
    It's actually €34 per German and €237 per Greek. Different countries, different people. The German contribiution to the EU is not guaranteed to make it's way back into the Greek economy. And Germans could perhaps use an unpaved country road to travel and move goods to and from Greece instead of a highway that passes through 5 different states, of which two are not even in the EU but have received money from the EU exactly for this kind of infrastructure. https://europa.rs/eu-assistance-to-serbia/?lang=en https://europa.rs/eu-assistance-to-serbia/?lang=en http://ec.europa.eu/regional_policy/en/funding/ipa/fyrom/ http://ec.europa.eu/regional_policy/en/funding/ipa/fyrom/
matt4077 8y ago
The European Central Bank is controlled by its board of directors, who are appointed by the European Council. The European Council is just the assembly of the EU's heads of governments. It's basically the same system as it is for the US' FED, or most other central banks for that matter. The only difference is that it's not a single head of state but the group of 18. But then again the US Senate also needs to consent for FED appointments, and it's a rather similar body of regional delegates. It's also doubtful that the ECB had any meaningful choices since 2008. The low-interest, quantitative-easing policy is common among all the relevant central banks, including not just the US but also Britain or Japan.
- RobertoG 8y ago
  So, you are telling me, that the FED would allow something like what have happened to Greece, happen to a USA state? A crisis deeper and longer than the Great Depression? Or that they will thread to stop the payment systems if some state don't bend to their will like the ECB did [1]? Anyway, the problem is not the ECB, but the lack of a federal capacity. [1] https://www.yanisvaroufakis.eu/2017/03/14/the-campaign-goes-on-did-the-ecb-break-the-law-in-closing-greeces-banks-sign-the-petition-today/ https://www.yanisvaroufakis.eu/2017/03/14/the-campaign-goes-...
  - matt4077 8y ago
    They wouldn't allow it to happen to a state. But to Puerto Rico? Yes, very much so. To Detroit? Sure!