5 ms·

In the EU poorer states get more funding too. One line explanations for a fictive problem are most likely wrong.

deleted 11y ago
[deleted]
RobertoG 11y ago
The grandparent is basically right. The Euro is flawed by design. Flow capitals works against the Euroarea. For instance: The interest rate convenient for Germany is not the interest rate convenient for Spain. What do you think are the rates chosen by the Central European Bank? (clue: the ECB is in Frankfurt) This shouldn't be more problem that the Fed rate affecting New York and Florida for instance, but there is not a common fiscal policy like in the States. What happens is that capital in the banks of the north search bigger returns in hot economies (south countries) and create bubbles (Florida again?). When the crisis arrive, we lend public money to (Greece for instance) so they can return the money to the (private) banks and, in a sleight of hand the fault is all of the lazy south Europeans.
- Tomte 11y ago
  (clue: the ECB is in Frankfurt) Sure, physical location is paramount... Let's count the members of the main decision-making group of the ECB, the Governing Council. Two Germans. Twenty-three non-Germans.
  - RobertoG 11y ago
    Sure, physical location in Germany is just by chance.. "Let's count the members of the main decision-making group of the ECB, the Governing Council. Two Germans. Twenty-three non-Germans." No, let's count hard data better. Here, from a nobel prize: http://krugman.blogs.nytimes.com/2011/06/15/one-size-fits-one-redux-wonkish/ http://krugman.blogs.nytimes.com/2011/06/15/one-size-fits-on... And here (a little dense maybe): "Overall, the concern that the ECB rate aligns more with the Taylor recommended rates of the core countries than with the peripheral countries appears to be supported by the data[..]" http://econ.berkeley.edu/sites/default/files/Srivangipuram.pdf http://econ.berkeley.edu/sites/default/files/Srivangipuram.p...

deleted 11y ago

[deleted]

The grandparent is basically right. The Euro is flawed by design. Flow capitals works against the Euroarea. For instance: The interest rate convenient for Germany is not the interest rate convenient for Spain. What do you think are the rates chosen by the Central European Bank? (clue: the ECB is in Frankfurt) This shouldn't be more problem that the Fed rate affecting New York and Florida for instance, but there is not a common fiscal policy like in the States. What happens is that capital in the banks of the north search bigger returns in hot economies (south countries) and create bubbles (Florida again?). When the crisis arrive, we lend public money to (Greece for instance) so they can return the money to the (private) banks and, in a sleight of hand the fault is all of the lazy south Europeans.

Tomte 11y ago
(clue: the ECB is in Frankfurt) Sure, physical location is paramount... Let's count the members of the main decision-making group of the ECB, the Governing Council. Two Germans. Twenty-three non-Germans.
- RobertoG 11y ago
  Sure, physical location in Germany is just by chance.. "Let's count the members of the main decision-making group of the ECB, the Governing Council. Two Germans. Twenty-three non-Germans." No, let's count hard data better. Here, from a nobel prize: http://krugman.blogs.nytimes.com/2011/06/15/one-size-fits-one-redux-wonkish/ http://krugman.blogs.nytimes.com/2011/06/15/one-size-fits-on... And here (a little dense maybe): "Overall, the concern that the ECB rate aligns more with the Taylor recommended rates of the core countries than with the peripheral countries appears to be supported by the data[..]" http://econ.berkeley.edu/sites/default/files/Srivangipuram.pdf http://econ.berkeley.edu/sites/default/files/Srivangipuram.p...