6 ms·

I don't know where you get the "30%-35% real unemployment" figures, that to me seems absurd given that European economies are known to have large underground ec

by antr 12y ago

I don't know where you get the "30%-35% real unemployment" figures, that to me seems absurd given that European economies are known to have large underground economies in the region of 15% of GDP... and in the case of Spain somewhat larger[0]. Albeit, unofficial, the number of jobs created by a shadow economy of €253bn is too large to ignore. Now, 25% of GDP is underground economy, and 25% unemployment seem to have something in common, don't you think? The problem to me seems to be a budget balance issue: how can Governments pay for services that a large number of the population uses, but doesn't pay. This, in my opinion is what is causing a collapse: lack of funds to pay for services, and obligations (debt), and loose cost/investment policies. [0] http://www.theguardian.com/business/2014/jan/30/spain-black-economy-gdp-growth http://www.theguardian.com/business/2014/jan/30/spain-black-...

tomp 12y ago
> The problem to me seems to be a budget balance issue: how can Governments pay for services that a large number of the population uses, but doesn't pay. If the population doesn't pay, who does? The way taxes work, is that the population pays the taxes to the government, and the government in return pays for/provides certain services. Taxation is basically just like insurance, coupled with some sort of progressive redistribution or wealth.
- antr 12y ago
  > If the population doesn't pay, who does? Like in most countries, including the US, budget deficit is paid with debt, and increase in taxes. That is the problem. The solution here is to uncover the underground economy, make them pay taxes (at reasonable rates), although this is no silver bullet.
  - lazylizard 12y ago
    about collecting taxes to pay for stuff..isn't it far easier to print new money than to collect old money back?
    - antr 12y ago
      Not the best solution[0] but it's what happened[1]. [0] http://www.businessinsider.com/worst-hyperinflation-episodes-in-history-2014-4?op=1 http://www.businessinsider.com/worst-hyperinflation-episodes... [1] http://www.spiegel.de/international/europe/ecb-prints-money-for-greece-to-buy-time-for-athens-a-848989.html http://www.spiegel.de/international/europe/ecb-prints-money-...
      - lazylizard 12y ago
        thats printing plus taxing..and over doing the printing part? why not print as much as one would ordinarily tax? saves the trouble of employing 100s of 1000s of people to do the tax paperwork.. and inflation is in effect a wealth tax anyway...
JetSpiegel 12y ago
> how can Governments pay for services that a large number of the population uses, but doesn't pay What do you mean by "large number of the population"? Most of the wasted money that Spain, Portugal and Greece pay are the interest on the loans they had to take to bail out the banks. Including having billions sitting around waiting for the banks to fail. Of course the banks say they don't need it, but the interest is almost nil, so they all took loans from that money to borrow to the economy with giant profits. Those loans provided by the international institutions are simply wealth redistribution, from the poorer southern countries to the richer countries.
- antr 12y ago
  > Most of the wasted money that Spain, Portugal and Greece pay are the interest on the loans they had to take to bail out the banks. I don't know how you draw that conclusion. What source are you using? Interest expenditure in Spain is around 3.5% of GDP, just look at the Eurostat numbers. Then, mixing Spain's and Portugal's economic situation with Greece's is just comparing apple and oranges, as both suffer crisis for completely different reasons. Have a start here: http://epp.eurostat.ec.europa.eu/statistics_explained/index.php/Government_finance_statistics http://epp.eurostat.ec.europa.eu/statistics_explained/index.... Then, > Those loans provided by the international institutions are simply wealth redistribution, from the poorer southern countries to the richer countries. If no loans where provided the savings of millions of people would of been wiped out, literary. It seems you would of preferred that.
  - JetSpiegel 12y ago
    3.5% of GDP is a large part of the cuts being applied now. The main disagreement is that when the richer countries ignored the deficit limits to increase investment in their economies had no sanctions, while the smaller countries are forced into signing treaties that forbid public investment, in economies that are highly dependant on the public sector. Germany also benefits from being in the common market by having a larger market for their goods, but denies borrowing money for the entire EU as a whole, benefiting selfishly from their lower interest rates. They get the benefits of the EU with no downsides. > If no loans where provided the savings of millions of people would of been wiped out, literary. The amount of money in low risk investments and deposits it's a small fraction of the bailout. Not just that, the European Central Bank guarantees 100k€ for each person, no questions asked. It's the investment banking that creates massive losses.

by antr 12y ago

tomp 12y ago

> The problem to me seems to be a budget balance issue: how can Governments pay for services that a large number of the population uses, but doesn't pay. If the population doesn't pay, who does? The way taxes work, is that the population pays the taxes to the government, and the government in return pays for/provides certain services. Taxation is basically just like insurance, coupled with some sort of progressive redistribution or wealth.

antr 12y ago
> If the population doesn't pay, who does? Like in most countries, including the US, budget deficit is paid with debt, and increase in taxes. That is the problem. The solution here is to uncover the underground economy, make them pay taxes (at reasonable rates), although this is no silver bullet.
- lazylizard 12y ago
  about collecting taxes to pay for stuff..isn't it far easier to print new money than to collect old money back?
  - antr 12y ago
    Not the best solution[0] but it's what happened[1]. [0] http://www.businessinsider.com/worst-hyperinflation-episodes-in-history-2014-4?op=1 http://www.businessinsider.com/worst-hyperinflation-episodes... [1] http://www.spiegel.de/international/europe/ecb-prints-money-for-greece-to-buy-time-for-athens-a-848989.html http://www.spiegel.de/international/europe/ecb-prints-money-...
    - lazylizard 12y ago
      thats printing plus taxing..and over doing the printing part? why not print as much as one would ordinarily tax? saves the trouble of employing 100s of 1000s of people to do the tax paperwork.. and inflation is in effect a wealth tax anyway...

JetSpiegel 12y ago

> how can Governments pay for services that a large number of the population uses, but doesn't pay What do you mean by "large number of the population"? Most of the wasted money that Spain, Portugal and Greece pay are the interest on the loans they had to take to bail out the banks. Including having billions sitting around waiting for the banks to fail. Of course the banks say they don't need it, but the interest is almost nil, so they all took loans from that money to borrow to the economy with giant profits. Those loans provided by the international institutions are simply wealth redistribution, from the poorer southern countries to the richer countries.

antr 12y ago
> Most of the wasted money that Spain, Portugal and Greece pay are the interest on the loans they had to take to bail out the banks. I don't know how you draw that conclusion. What source are you using? Interest expenditure in Spain is around 3.5% of GDP, just look at the Eurostat numbers. Then, mixing Spain's and Portugal's economic situation with Greece's is just comparing apple and oranges, as both suffer crisis for completely different reasons. Have a start here: http://epp.eurostat.ec.europa.eu/statistics_explained/index.php/Government_finance_statistics http://epp.eurostat.ec.europa.eu/statistics_explained/index.... Then, > Those loans provided by the international institutions are simply wealth redistribution, from the poorer southern countries to the richer countries. If no loans where provided the savings of millions of people would of been wiped out, literary. It seems you would of preferred that.
- JetSpiegel 12y ago
  3.5% of GDP is a large part of the cuts being applied now. The main disagreement is that when the richer countries ignored the deficit limits to increase investment in their economies had no sanctions, while the smaller countries are forced into signing treaties that forbid public investment, in economies that are highly dependant on the public sector. Germany also benefits from being in the common market by having a larger market for their goods, but denies borrowing money for the entire EU as a whole, benefiting selfishly from their lower interest rates. They get the benefits of the EU with no downsides. > If no loans where provided the savings of millions of people would of been wiped out, literary. The amount of money in low risk investments and deposits it's a small fraction of the bailout. Not just that, the European Central Bank guarantees 100k€ for each person, no questions asked. It's the investment banking that creates massive losses.