5 ms·

'at fault' may be too strong, but Germany surely benefited in the zero-sum game that resulted from the Euro fixing exchange rates within the eurozone: in the ol

by phreeza 11y ago

'at fault' may be too strong, but Germany surely benefited in the zero-sum game that resulted from the Euro fixing exchange rates within the eurozone: in the old system, Greece could have (and did) increase the exchange rate wrt the Mark to boost exports and keep the economy running. The inability to do this benefited Germany, at the cost of Greece.

mafribe 11y ago
(1) In what sense is loosing billions to Greece benefiting Germany? (2) Greece can change its exchange rate. Just declare bankruptcy and leave the Euro.
- Nimitz14 11y ago
  (1) Germany is profiting billions from the current exchange rate, that's why it isn't losing anything. (2) Which would fuck with the EU a lot more than it would bother Greece, which is why they're making the stand that they are, they know they have less to lose. There's a reason they haven't been kicked out already. ;)
  - mafribe 11y ago
    (1) I see no evidence of this. The ECB's flooding the world with Euros clearly inflates away net savers' wealth. (2) I agree that that's the game Greece has been playing. But it's perfectly compatible with what I said.
    - eli_gottlieb 11y ago
      > (1) I see no evidence of this. The ECB's flooding the world with Euros clearly inflates away net savers' wealth. Germany makes its money on manufactured-goods exports, though, so an artificially cheap currency helps them.
      - mafribe 11y ago
        But the artificially cheap currency comes about because savers' savings are being inflated away. Moreover it's unlikely that the money lent to Greece will ever come back. I don't see any evidence that in balance Germany benefits from this. Have you got any?
        eli_gottlieb 11y ago
        German workers trying to save lose. German capitalists making their money on exports and investing it by loaning it out win.
        mafribe 11y ago
        Given that the latter, unlike the former, is a very small number, you've not succeeded in explaining how Germany is benefitting.
        coldtea 11y ago
        In that Germany, as a state, could not give a fuck about Germans. As any other state, it's all about the national rich people making a killing.
        mafribe 11y ago
        How does resentment-fuelled classwar!-style rhetoric contribute to this discussion?
        coldtea 11y ago
        In that it's an accurate description of the state of the world. Knowing what we do about human history, why would you assume that kindness-filled all-classes-living-in-harmony! rhetoric has much descriptive power? With a king, a feudal lord or a pharaoh you can see the "class" thing and the exploitation immediately -- why think that with a modern man that has 1000x times the money and resources of his fellow citizens it's any different? Because democracy?
    - atmosx 11y ago
      Here: https://www.creditwritedowns.com/2012/07/germany-biggest-winner-euro-fixed-exchange-rates.html https://www.creditwritedowns.com/2012/07/germany-biggest-win...
      - mafribe 11y ago
        That's a dreadful article. "Germany is still exporting like gangbusters [to Greece] despite the poor country being in its fifth year of recession. In fact, Germany’s trade surplus per person with Greece is 3.6 times bigger than that with the U.S. (290 euro per Greek versus 81 euro per American)." Given that Greece is 'paying' for these imports with borrowed money, which is unlikely ever to be paid back, how is this setup benefitting? Exports deficits are benefitting the exporter only if eventually the importers pay. But we are seeing that the importers are unwilling/unable to pay. Moreover the article says Euro itself collapsed, resulting in Germany’s higher positive trade balance. Well, the Euro collapsed for everybody, so all other Euro members had exactly the same benefit.
        atmosx 11y ago
        You wrote: > Given that Greece is 'paying' for these imports with borrowed money, which is unlikely ever to be paid back, how is this setup benefitting? > Well, the Euro collapsed for everybody, so all other Euro members had exactly the same benefit. I don't know if you're trolling me or not. Maybe you should read a little bit about the context before engaging into similar discussions. A few good starting points: Macronomics: http://www.amazon.com/Macroeconomics-3rd-Edition-Paul-Krugman/dp/1429283432/ref=zg_bs_2596_1 http://www.amazon.com/Macroeconomics-3rd-Edition-Paul-Krugma... [2] http://www.amazon.com/Currency-Wars-Making-Global-Crisis-ebook/dp/B005GSYZRA/ref=sr_1_1?s=books&ie=UTF8&qid=1432284607&sr=1-1&keywords=currency+wars http://www.amazon.com/Currency-Wars-Making-Global-Crisis-ebo... Also read about public debts what they are and how they did evolve. Finally, you're looking financial answers to a political problem. Strictly financially speaking, debt restructuring is the only sensible solution to Greece AND everyone else. What you're watching, is a live show of poor justifications from failed politicians (all over the EU).
davidgerard 11y ago
The main problem with the ECB is that it's supposed to be for the Eurozone but operates like it's for Germany.
- mafribe 11y ago
  I recommend that inform yourself about the decision making process on the ECB board, and who's the majority there. Germany almost always votes against the ECBs decisions but is outvoted by other countries. several German ECB members have resigned because of that. This gives a pretty clear indication in whose interest the ECB works. Namely in the interest of the majority of the board members.
  - coldtea 11y ago
    For many years, the debate about whether the European Central Bank (ECB) was too heavily influenced by Germany was confined to academic papers. As of late, it has become the central policy question of the eurozone. Germany is more influential at the ECB than it should be. In fact, Mario Draghi’s penchant for seeking German approval has been his biggest mistake as head of the ECB. He should end it. (...) The ECB was modelled on the German Bundesbank. As a result, it is one of the world’s most politically independent central banks; its mandate is focused narrowly on price stability; it does not take broader economic goals like unemployment into account in the way other central banks, such as the Fed, do; and it is de facto more restricted than other central banks, since controversial measures can lead to complex political and legal struggles, involving 18 (soon to be 19) countries. Its setup and philosophy are therefore ‘German‘, that is, conservative and cautious. (...) A wide range of studies have so far failed to establish a firm consensus on the influence of various countries on the ECB during the euro’s first decade. However, most studies have found that the ECB behaved like a multinational central bank, in which each country has a weight proportional to the size of its economy. This gave Germany a higher weight than other countries because it is the largest economy in the eurozone. But it is hard to argue that there was a German bias at the ECB before the crisis. In the post-crisis period, the ECB has failed to stabilise the economy, and inflation has fallen to just 0.3 per cent. It is tempting to see this as the product of a German bias, because the German economy has suffered least from the ECB’s hesitation to do more. But it is hard to argue that German pressure prevented the ECB from lowering rates faster during the last two years, for example, or managing the inflation expectations of consumers and investors more aggressively. Rather, the ECB’s misjudgement of the economic dynamic in the eurozone prevented a more timely and aggressive stance. However, now that the ECB has to move further into unconventional territory to correct its previous errors – potentially by buying government bonds – Draghi has taken German resistance into account and delayed quantitative easing (QE). (...) In the governing council of the ECB, all relevant monetary policy decisions are taken by simple majority, with the smaller countries having one vote each, and the larger countries traditionally two (because of the additional votes of executive board members). Some of the more fundamental decisions, like recapitalising the ECB, need a two-thirds majority, based on the ECB’s capital shares, but even then Germany has no veto. What is more, there is currently a clear majority for more aggressive ECB action in the council, which Draghi can draw upon whenever he decides that the time is right. Formally, there is no need for German approval, either from Berlin or from the Bundesbank. Why, then, is Draghi waiting for German approval? There are two possible reasons. First, he might consider it unwise to conduct monetary policy in the face of opposition from the largest eurozone country. There is some merit to this view but it loses validity when the ECB is failing to fulfil its inflation mandate by a wide margin, as it is now. (...) Even the relatively cautious OECD has now come out in favour of further monetary stimulus, and the IMF has been urging the ECB to do more for a while. Given that the Fed and the Bank of England have bought government bonds on a massive scale, the ECB would be well in line with consensus views on monetary policy if it did the same. (...) The second reason why Draghi might want to get Germany’s backing is that he may fear losing the German government’s consent for the ECB’s other operations, which are not strictly monetary policy. The most important of these, of course, is the OMT programme, which was announced during a panic-driven run on eurozone government bonds in the summer of 2012. The ECB declared that it intended to buy unlimited quantities of these bonds if the panic did not subside – which it then duly did. This programme makes the ECB the implicit guardian of the eurozone as the lender of last resort to governments, but the OMT is in part a fiscal operation. Without the support of Germany, the country with the deepest pockets, the OMT might fail. Draghi therefore does not need the Bundesbank’s support but that of Merkel and the German government – which has backed him on the OMT. http://www.cer.org.uk/insights/ecb-not-german-central-bank#sthash.VY9jG4O3.dpuf http://www.cer.org.uk/insights/ecb-not-german-central-bank#s...
davidw 11y ago
> increase the exchange rate wrt the Mark Italy pulled this same stunt in the past; mostly as a way to avoid actually fixing the many problems with the economy here. Floating exchange rates are good in some ways, but those kinds of devaluations are problematic in many ways: you're basically stealing wealth from savers in order to goose export industries a bit, until your crappy economic policies come back to bite you yet again and you need to repeat the cycle.

by phreeza 11y ago

mafribe 11y ago

(1) In what sense is loosing billions to Greece benefiting Germany? (2) Greece can change its exchange rate. Just declare bankruptcy and leave the Euro.

Nimitz14 11y ago
(1) Germany is profiting billions from the current exchange rate, that's why it isn't losing anything. (2) Which would fuck with the EU a lot more than it would bother Greece, which is why they're making the stand that they are, they know they have less to lose. There's a reason they haven't been kicked out already. ;)
- mafribe 11y ago
  (1) I see no evidence of this. The ECB's flooding the world with Euros clearly inflates away net savers' wealth. (2) I agree that that's the game Greece has been playing. But it's perfectly compatible with what I said.
  - eli_gottlieb 11y ago
    > (1) I see no evidence of this. The ECB's flooding the world with Euros clearly inflates away net savers' wealth. Germany makes its money on manufactured-goods exports, though, so an artificially cheap currency helps them.
    - mafribe 11y ago
      But the artificially cheap currency comes about because savers' savings are being inflated away. Moreover it's unlikely that the money lent to Greece will ever come back. I don't see any evidence that in balance Germany benefits from this. Have you got any?
      - eli_gottlieb 11y ago
        German workers trying to save lose. German capitalists making their money on exports and investing it by loaning it out win.
        mafribe 11y ago
        Given that the latter, unlike the former, is a very small number, you've not succeeded in explaining how Germany is benefitting.
        coldtea 11y ago
        In that Germany, as a state, could not give a fuck about Germans. As any other state, it's all about the national rich people making a killing.
        mafribe 11y ago
        How does resentment-fuelled classwar!-style rhetoric contribute to this discussion?
        coldtea 11y ago
        In that it's an accurate description of the state of the world. Knowing what we do about human history, why would you assume that kindness-filled all-classes-living-in-harmony! rhetoric has much descriptive power? With a king, a feudal lord or a pharaoh you can see the "class" thing and the exploitation immediately -- why think that with a modern man that has 1000x times the money and resources of his fellow citizens it's any different? Because democracy?
  - atmosx 11y ago
    Here: https://www.creditwritedowns.com/2012/07/germany-biggest-winner-euro-fixed-exchange-rates.html https://www.creditwritedowns.com/2012/07/germany-biggest-win...
    - mafribe 11y ago
      That's a dreadful article. "Germany is still exporting like gangbusters [to Greece] despite the poor country being in its fifth year of recession. In fact, Germany’s trade surplus per person with Greece is 3.6 times bigger than that with the U.S. (290 euro per Greek versus 81 euro per American)." Given that Greece is 'paying' for these imports with borrowed money, which is unlikely ever to be paid back, how is this setup benefitting? Exports deficits are benefitting the exporter only if eventually the importers pay. But we are seeing that the importers are unwilling/unable to pay. Moreover the article says Euro itself collapsed, resulting in Germany’s higher positive trade balance. Well, the Euro collapsed for everybody, so all other Euro members had exactly the same benefit.
      - atmosx 11y ago
        You wrote: > Given that Greece is 'paying' for these imports with borrowed money, which is unlikely ever to be paid back, how is this setup benefitting? > Well, the Euro collapsed for everybody, so all other Euro members had exactly the same benefit. I don't know if you're trolling me or not. Maybe you should read a little bit about the context before engaging into similar discussions. A few good starting points: Macronomics: http://www.amazon.com/Macroeconomics-3rd-Edition-Paul-Krugman/dp/1429283432/ref=zg_bs_2596_1 http://www.amazon.com/Macroeconomics-3rd-Edition-Paul-Krugma... [2] http://www.amazon.com/Currency-Wars-Making-Global-Crisis-ebook/dp/B005GSYZRA/ref=sr_1_1?s=books&ie=UTF8&qid=1432284607&sr=1-1&keywords=currency+wars http://www.amazon.com/Currency-Wars-Making-Global-Crisis-ebo... Also read about public debts what they are and how they did evolve. Finally, you're looking financial answers to a political problem. Strictly financially speaking, debt restructuring is the only sensible solution to Greece AND everyone else. What you're watching, is a live show of poor justifications from failed politicians (all over the EU).

davidgerard 11y ago

The main problem with the ECB is that it's supposed to be for the Eurozone but operates like it's for Germany.

mafribe 11y ago
I recommend that inform yourself about the decision making process on the ECB board, and who's the majority there. Germany almost always votes against the ECBs decisions but is outvoted by other countries. several German ECB members have resigned because of that. This gives a pretty clear indication in whose interest the ECB works. Namely in the interest of the majority of the board members.
- coldtea 11y ago
  For many years, the debate about whether the European Central Bank (ECB) was too heavily influenced by Germany was confined to academic papers. As of late, it has become the central policy question of the eurozone. Germany is more influential at the ECB than it should be. In fact, Mario Draghi’s penchant for seeking German approval has been his biggest mistake as head of the ECB. He should end it. (...) The ECB was modelled on the German Bundesbank. As a result, it is one of the world’s most politically independent central banks; its mandate is focused narrowly on price stability; it does not take broader economic goals like unemployment into account in the way other central banks, such as the Fed, do; and it is de facto more restricted than other central banks, since controversial measures can lead to complex political and legal struggles, involving 18 (soon to be 19) countries. Its setup and philosophy are therefore ‘German‘, that is, conservative and cautious. (...) A wide range of studies have so far failed to establish a firm consensus on the influence of various countries on the ECB during the euro’s first decade. However, most studies have found that the ECB behaved like a multinational central bank, in which each country has a weight proportional to the size of its economy. This gave Germany a higher weight than other countries because it is the largest economy in the eurozone. But it is hard to argue that there was a German bias at the ECB before the crisis. In the post-crisis period, the ECB has failed to stabilise the economy, and inflation has fallen to just 0.3 per cent. It is tempting to see this as the product of a German bias, because the German economy has suffered least from the ECB’s hesitation to do more. But it is hard to argue that German pressure prevented the ECB from lowering rates faster during the last two years, for example, or managing the inflation expectations of consumers and investors more aggressively. Rather, the ECB’s misjudgement of the economic dynamic in the eurozone prevented a more timely and aggressive stance. However, now that the ECB has to move further into unconventional territory to correct its previous errors – potentially by buying government bonds – Draghi has taken German resistance into account and delayed quantitative easing (QE). (...) In the governing council of the ECB, all relevant monetary policy decisions are taken by simple majority, with the smaller countries having one vote each, and the larger countries traditionally two (because of the additional votes of executive board members). Some of the more fundamental decisions, like recapitalising the ECB, need a two-thirds majority, based on the ECB’s capital shares, but even then Germany has no veto. What is more, there is currently a clear majority for more aggressive ECB action in the council, which Draghi can draw upon whenever he decides that the time is right. Formally, there is no need for German approval, either from Berlin or from the Bundesbank. Why, then, is Draghi waiting for German approval? There are two possible reasons. First, he might consider it unwise to conduct monetary policy in the face of opposition from the largest eurozone country. There is some merit to this view but it loses validity when the ECB is failing to fulfil its inflation mandate by a wide margin, as it is now. (...) Even the relatively cautious OECD has now come out in favour of further monetary stimulus, and the IMF has been urging the ECB to do more for a while. Given that the Fed and the Bank of England have bought government bonds on a massive scale, the ECB would be well in line with consensus views on monetary policy if it did the same. (...) The second reason why Draghi might want to get Germany’s backing is that he may fear losing the German government’s consent for the ECB’s other operations, which are not strictly monetary policy. The most important of these, of course, is the OMT programme, which was announced during a panic-driven run on eurozone government bonds in the summer of 2012. The ECB declared that it intended to buy unlimited quantities of these bonds if the panic did not subside – which it then duly did. This programme makes the ECB the implicit guardian of the eurozone as the lender of last resort to governments, but the OMT is in part a fiscal operation. Without the support of Germany, the country with the deepest pockets, the OMT might fail. Draghi therefore does not need the Bundesbank’s support but that of Merkel and the German government – which has backed him on the OMT. http://www.cer.org.uk/insights/ecb-not-german-central-bank#sthash.VY9jG4O3.dpuf http://www.cer.org.uk/insights/ecb-not-german-central-bank#s...

davidw 11y ago

> increase the exchange rate wrt the Mark Italy pulled this same stunt in the past; mostly as a way to avoid actually fixing the many problems with the economy here. Floating exchange rates are good in some ways, but those kinds of devaluations are problematic in many ways: you're basically stealing wealth from savers in order to goose export industries a bit, until your crappy economic policies come back to bite you yet again and you need to repeat the cycle.