6 ms·

Yeah but ECB creates incentives for ballooning current expenditure. At least in Spain, the government chooses helicoptering money over investment every single

Yeah but ECB creates incentives for ballooning current expenditure. At least in Spain, the government chooses helicoptering money over investment every single time. Or prestige projects (High Speed Rail) over practical ones (freight corridors with no so fast trains for people?), higher salaries for public employees (already high compared to private economy), public pensions, etc. The only demands seems to be higher taxes every year for everyone else. No optimization, just raising and raising taxes every time. This is not sustainable. Savings and income are taking a nosedive for everyone who's not sucking into the public budget. This situation is going to explode, and it's going to be ugly, not only for us. I'm pretty worried about it, honestly. Meanwhile half the country is cheering because the government is very good at selling their narratives and cooking the stats. The reality is we're getting poorer pretty fast. Maybe germans have some fucking great plan because in 10 years they won't sell many cars here.

turbinerneiter 4y ago
> Maybe germans have some fucking great plan because in 10 years they won't sell many cars here. They are trying to build cars there. Germany's trade surplus also leads to German companies investing more money abroad than at home. Also, what is Germany supposed to do? What are they doing wrong? EZB is not controlled by Germany, Germany in fact always complained about the low interest rates.
- RobertoG 4y ago
  What Germany could have done is to accept a change in the treaties for a real fiscal capacity at the European level. But, instead of that, Germany preferred to enjoy access to a common market and devaluated Mark (that is basically what the Euro is) while pontificating from a high horse. Instead of a functional monetary union we get this mess. And now we all have to be solidary with Germany energy problems. We will see.
  - petre 4y ago
    > And now we all have to be solidary with Germany energy problems I this it's still better than Germany importing Russian gas. Their whole decarbonization strategy was based on Russian gas. This is how we ended up with gas labelled as "green". If you don't like'em, don't buy German cars, buy Seat. Technically also a German car built in Spain. At least you keep the factory workers employed.
    - RobertoG 4y ago
      That's your proposed solution? I shouldn't drive a BMW? I think I will aim for a political solution if you don't mind. There are two possibilities, a functional monetary union and a really democratic union or every country goes its way. Both work for me.
      - petre 4y ago
        Yeah, that's one way to put pressure on Germany in order to obtain a political solution. If you go to Greece, almost every food product is labelled with ελληνικό προϊόν = greek product, because they do not buy food from Lidl or German beer. Cars? They usually buy Toyotas, French cars (PSA) or Italian FCA.
  - deleted 4y ago
    [deleted]
  - turbinerneiter 4y ago
    > What Germany could have done is to accept a change in the treaties for a real fiscal capacity at the European level. Can you elaborate on that? What are the ideas that Germany opposed? A lot of this reads like Germany is the boogie man and every other European country is their poor victim. That's a little bit to one-sided for me.
    - RobertoG 4y ago
      It's not about boogie men, it's about economic realities. Very different countries can't be in a functional monetary and banking union without a common fiscal capacity. In terms of the USA it would be like there was a Fed without a treasure. Or another way to see it, it's like the countries in the Euro use a foreign currency that they don't control. If you are interested I recommend this prescient article by Wynne Godley (1). So, if the design of the Euro is bad, why don't change it? Because for some countries is very advantageous. Germany being the best example, they are an export powerhouse that now have unrestricted access to the common market and, because is a common currency, it will no appreciate or devaluate following the commercial balance. Of course, this is sell like they don't want to finance the lazy pigs in the south. (1) - https://www.lrb.co.uk/the-paper/v14/n19/wynne-godley/maastricht-and-all-that https://www.lrb.co.uk/the-paper/v14/n19/wynne-godley/maastri...
      - turbinerneiter 4y ago
        And Germany is stopping the EU from further integration? If we do this fiscal union, are all countries willing to adopt German fiscal discipline? Are all countries ok with levelling out retirement age? Social benefits? Also, why are you not mentioning that Germany already agreed to the EU taking on common debt during the corona crisis? That the new government is very much pro further integration? I hear a lot about what Germany is doing wrong. What are the others doing wrong? Germany was desolat themselves after the reunification, they were called the sick man of Europe. They then did harsh and brutal labour market reforms, and a bunch of luck probably as well. Now they are an economic powerhouse. With 0 natural resources, they are all imported. It's not the Germans fault that Italy has loads of debt. It's not the Germans fault that Spain built useless ghosttowns in the middle of nowhere. They can only export what others are willing to import. And they are not exactly exporting cheap cars at dumping prices, are they? Sure, Germany is far from perfect and they do lots of things in their own self interest. But maybe the other countries can also try to do better? How long did the Italians keep Berlusconi in power? Draghi threw the towel today, again, because the parties in parliament are unwilling to cooperate to better Italy. Maybe try to copy what Germany is doing well, instead of feeling like a victim of German evilness.
- origin_path 4y ago
  Germany's former trade surplus: https://tradingeconomics.com/germany/balance-of-trade https://tradingeconomics.com/germany/balance-of-trade
RobertoG 4y ago
Some obvious (or should be obvious) realities of our beloved currency area: -All countries can't be net exporters at the same time. If Germany want to be a net exporter, somebody have to be a net importer. -High public debt in your own currency supported by your central bank it's not problematic. High private debt is very problematic. -For the same import/export ratio, if you reduce public expenditure, or the GDP will fall, or the private debt will grow. That's mathematics. -The current agreements of the Euro-Area forbid investment in industrial policies. If Spain wanted to spend money in creating some kind of industry that compete with Germany and protect it until is competitive, it would not be allow to do that. -Government spending in Spain could be better (if it was allowed, that it's not), but it's better than nothing, at least that you want the economy to collapse after a high grow of private debt. -The program of support of the PIGS(1) public debt of the ECB is not to help the PIGS, is for protecting the Euro. The moment they stop doing it, the Euro is done. That's how well this currency union was designed, that if follows its rules it disintegrate. (1) -By the way, it seems that we can call 120 million person PIGS and nobody think is a bad thing.
- legulere 4y ago
  There’s a lot of subsidies for chip production in eastern Germany. So it seems like you can do something like that under the EU rules.
  - RobertoG 4y ago
    -Public subsidies come from public expenses. If you are already importing more than exporting, you will have a public deficit. Public deficit are not allowed beyond a limit. So, if you are already a successful export economy, you have the resources to invest, otherwise you don't. -It's a common market, so not import taxes are allowed. That means that any new industry will have to compete with developed companies already established. -Public companies are encourage to be privatized, so, you can't keep an industrial base that it's not, for now, competitive. -The result is desindustrialization. Then those desindustrialized countries are accused of not being competitive. -In some cases, at the European level they realize that they are losing the strategic edge to other blocks, and some kind of program at the federal level is created. Like the current thing with the chips. Of course this programs never will result of giving the edge to one of the PIGS.
weatherlite 4y ago
> The reality is we're getting poorer pretty fast I think this will happen in most places for many reasons - the enormous debt is not just a European problem it's also an American and Chinese problem. Also declining demography, ESG investing and scarce energy resources and bunch of other problems it's not looking great. If we all just peacefully accept that standards of living have to go down for everyone (climate change is also a hint that we've pushed too far) maybe we can find some path forward.
- Kon-Peki 4y ago
  > If we all just peacefully accept that standards of living have to go down for everyone Alternatively, we could all just agree that "standard of living" != "GDP". In the old days, measuring GDP was a lot easier than measuring the standard of living. They were highly correlated, so we used it as a proxy. But now, it's outdated, and it has been for 50+ years.
deleted 4y ago
[deleted]

turbinerneiter 4y ago

> Maybe germans have some fucking great plan because in 10 years they won't sell many cars here. They are trying to build cars there. Germany's trade surplus also leads to German companies investing more money abroad than at home. Also, what is Germany supposed to do? What are they doing wrong? EZB is not controlled by Germany, Germany in fact always complained about the low interest rates.

RobertoG 4y ago
What Germany could have done is to accept a change in the treaties for a real fiscal capacity at the European level. But, instead of that, Germany preferred to enjoy access to a common market and devaluated Mark (that is basically what the Euro is) while pontificating from a high horse. Instead of a functional monetary union we get this mess. And now we all have to be solidary with Germany energy problems. We will see.
- petre 4y ago
  > And now we all have to be solidary with Germany energy problems I this it's still better than Germany importing Russian gas. Their whole decarbonization strategy was based on Russian gas. This is how we ended up with gas labelled as "green". If you don't like'em, don't buy German cars, buy Seat. Technically also a German car built in Spain. At least you keep the factory workers employed.
  - RobertoG 4y ago
    That's your proposed solution? I shouldn't drive a BMW? I think I will aim for a political solution if you don't mind. There are two possibilities, a functional monetary union and a really democratic union or every country goes its way. Both work for me.
    - petre 4y ago
      Yeah, that's one way to put pressure on Germany in order to obtain a political solution. If you go to Greece, almost every food product is labelled with ελληνικό προϊόν = greek product, because they do not buy food from Lidl or German beer. Cars? They usually buy Toyotas, French cars (PSA) or Italian FCA.
- deleted 4y ago
  [deleted]
- turbinerneiter 4y ago
  > What Germany could have done is to accept a change in the treaties for a real fiscal capacity at the European level. Can you elaborate on that? What are the ideas that Germany opposed? A lot of this reads like Germany is the boogie man and every other European country is their poor victim. That's a little bit to one-sided for me.
  - RobertoG 4y ago
    It's not about boogie men, it's about economic realities. Very different countries can't be in a functional monetary and banking union without a common fiscal capacity. In terms of the USA it would be like there was a Fed without a treasure. Or another way to see it, it's like the countries in the Euro use a foreign currency that they don't control. If you are interested I recommend this prescient article by Wynne Godley (1). So, if the design of the Euro is bad, why don't change it? Because for some countries is very advantageous. Germany being the best example, they are an export powerhouse that now have unrestricted access to the common market and, because is a common currency, it will no appreciate or devaluate following the commercial balance. Of course, this is sell like they don't want to finance the lazy pigs in the south. (1) - https://www.lrb.co.uk/the-paper/v14/n19/wynne-godley/maastricht-and-all-that https://www.lrb.co.uk/the-paper/v14/n19/wynne-godley/maastri...
    - turbinerneiter 4y ago
      And Germany is stopping the EU from further integration? If we do this fiscal union, are all countries willing to adopt German fiscal discipline? Are all countries ok with levelling out retirement age? Social benefits? Also, why are you not mentioning that Germany already agreed to the EU taking on common debt during the corona crisis? That the new government is very much pro further integration? I hear a lot about what Germany is doing wrong. What are the others doing wrong? Germany was desolat themselves after the reunification, they were called the sick man of Europe. They then did harsh and brutal labour market reforms, and a bunch of luck probably as well. Now they are an economic powerhouse. With 0 natural resources, they are all imported. It's not the Germans fault that Italy has loads of debt. It's not the Germans fault that Spain built useless ghosttowns in the middle of nowhere. They can only export what others are willing to import. And they are not exactly exporting cheap cars at dumping prices, are they? Sure, Germany is far from perfect and they do lots of things in their own self interest. But maybe the other countries can also try to do better? How long did the Italians keep Berlusconi in power? Draghi threw the towel today, again, because the parties in parliament are unwilling to cooperate to better Italy. Maybe try to copy what Germany is doing well, instead of feeling like a victim of German evilness.
origin_path 4y ago
Germany's former trade surplus: https://tradingeconomics.com/germany/balance-of-trade https://tradingeconomics.com/germany/balance-of-trade

RobertoG 4y ago

Some obvious (or should be obvious) realities of our beloved currency area: -All countries can't be net exporters at the same time. If Germany want to be a net exporter, somebody have to be a net importer. -High public debt in your own currency supported by your central bank it's not problematic. High private debt is very problematic. -For the same import/export ratio, if you reduce public expenditure, or the GDP will fall, or the private debt will grow. That's mathematics. -The current agreements of the Euro-Area forbid investment in industrial policies. If Spain wanted to spend money in creating some kind of industry that compete with Germany and protect it until is competitive, it would not be allow to do that. -Government spending in Spain could be better (if it was allowed, that it's not), but it's better than nothing, at least that you want the economy to collapse after a high grow of private debt. -The program of support of the PIGS(1) public debt of the ECB is not to help the PIGS, is for protecting the Euro. The moment they stop doing it, the Euro is done. That's how well this currency union was designed, that if follows its rules it disintegrate. (1) -By the way, it seems that we can call 120 million person PIGS and nobody think is a bad thing.

legulere 4y ago
There’s a lot of subsidies for chip production in eastern Germany. So it seems like you can do something like that under the EU rules.
- RobertoG 4y ago
  -Public subsidies come from public expenses. If you are already importing more than exporting, you will have a public deficit. Public deficit are not allowed beyond a limit. So, if you are already a successful export economy, you have the resources to invest, otherwise you don't. -It's a common market, so not import taxes are allowed. That means that any new industry will have to compete with developed companies already established. -Public companies are encourage to be privatized, so, you can't keep an industrial base that it's not, for now, competitive. -The result is desindustrialization. Then those desindustrialized countries are accused of not being competitive. -In some cases, at the European level they realize that they are losing the strategic edge to other blocks, and some kind of program at the federal level is created. Like the current thing with the chips. Of course this programs never will result of giving the edge to one of the PIGS.

weatherlite 4y ago

> The reality is we're getting poorer pretty fast I think this will happen in most places for many reasons - the enormous debt is not just a European problem it's also an American and Chinese problem. Also declining demography, ESG investing and scarce energy resources and bunch of other problems it's not looking great. If we all just peacefully accept that standards of living have to go down for everyone (climate change is also a hint that we've pushed too far) maybe we can find some path forward.

Kon-Peki 4y ago
> If we all just peacefully accept that standards of living have to go down for everyone Alternatively, we could all just agree that "standard of living" != "GDP". In the old days, measuring GDP was a lot easier than measuring the standard of living. They were highly correlated, so we used it as a proxy. But now, it's outdated, and it has been for 50+ years.

deleted 4y ago

[deleted]