How do those on the Right explain this?

[BiggieScooby]

With respect to Euro austerity, keep in mind the core principles of the Euro creation at the Masstricht Treaty that: inflation rates (are to be no more than 1.5 percentage points higher than avg of top 3 EU member states). And government debt to GDP must not exceed 60% at the end of the preceding fiscal year. Again the core idea here is the Euro currency was developed to avoid a post WWI hyper inflation. In doing so the Euro has prevented individual member states from leveraging inflation to offset falling GDPs and asset prices. The ECB is reliant upon 1500 banks to bid on a few weeks to months repo contracts. The U.S. Federal Reserve simply goes to the Treasury and buys treasuries to create money. The ECB is reliant upon the private sector banks. Understand the problem? That the private financial sector is already over leveraged. Here's a great article on what's on the ECB & Fed's balance sheet: http://www.moneyshow.com/investing/article/37/Jubak_Journa-27819/Can-the-Central-Banks-Keep-Us-Safe?/

 

In short German & French private sector banks are the ECBs financier. The large EU members benefit from lower inflation and over speculation on rising asset prices. No matter what happened the EU big banks were going to win so long as the ECB could keep the system from imploding and getting the poor suckers to agree to austerity. German private sector banks benefit from the austerity of smaller european member states.

Edited May 15, 2012 by BiggieScooby

[GG]

Europe is sinking thanks not to social welfare but deflation with respect to private sector debt. As Paul Krugman points out "you have no idea what you're talking about." Stop regurgitating the right wing talking points and do some reading.

http://www.nytimes.com/2012/02/27/opinion/krugman-what-ails-europe.html

This is the hilarity that ensues when economists explain real life events. So when banks don't want to roll over their holdings of Greek debt as it matures because they don't think that Greece has enough cash to pay the debt, we're told it's debt deflation.

 

Same reason as in looking at US private sector debt relative to 50 years ago. No argument that credit got out of hand in the last decade, but that doesn't mean that increased availability of credit across a wider scope of individuals and businesses is a bad thing, and functioning credit markets are absolutely critical to the eventual recovery.

[BiggieScooby]

This is the hilarity that ensues when economists explain real life events. So when banks don't want to roll over their holdings of Greek debt as it matures because they don't think that Greece has enough cash to pay the debt, we're told it's debt deflation.

 

Same reason as in looking at US private sector debt relative to 50 years ago. No argument that credit got out of hand in the last decade, but that doesn't mean that increased availability of credit across a wider scope of individuals and businesses is a bad thing, and functioning credit markets are absolutely critical to the eventual recovery.

[/

 

I understand their present financing issues. My argument is put forth in my last post. Greece is a debtor state in the EU. The German banks are the real winners. They were able to get the Greeks the loans and low interest rates. So while the Germans banks get bailed out by the ECB for their "risky" lending to the Greek government the real losers are the Greek people who get austerity.

 

Increased availability of credit is one thing, but banks betting $50 to make a $1 is insane. The finance sector drove debt to record levels. What killed our economy was their was no foresight, that record debt could cripple our economy. The housing sector is one small component. What I'm talking about is the ponzi scheme that was mortgage backed securities, credit default swaps and derivatives.

[GG]

 

 

I understand their present financing issues. My argument is put forth in my last post. Greece is a debtor state in the EU. The German banks are the real winners. They were able to get the Greeks the loans and low interest rates. So while the Germans banks get bailed out by the ECB for their "risky" lending to the Greek government the real losers are the Greek people who get austerity.

 

Increased availability of credit is one thing, but banks betting $50 to make a $1 is insane. The finance sector drove debt to record levels. What killed our economy was their was no foresight, that record debt could cripple our economy. The housing sector is one small component. What I'm talking about is the ponzi scheme that was mortgage backed securities, credit default swaps and derivatives.

 

Well it's almost that. Except it's not German banks but French ones. And they're not getting bailouts,but are told not to call a mandated 50% haircut on Greek debt as a loss.

 

Otherwise you got the right continent.

[IDBillzFan]

Well it's almost that. Except it's not German banks but French ones. And they're not getting bailouts,but are told not to call a mandated 50% haircut on Greek debt as a loss.

 

Otherwise you got the right continent.

You're not known for your comedy, but that was funny as hell.

[WorldTraveller]

Dear scooby,

 

You really shouldn't be speaking finance.

Edited May 16, 2012 by WorldTraveller

[DC Tom]

Dear scooby,

 

You really shouldn't be speaking finance.

[BiggieScooby]

Well it's almost that. Except it's not German banks but French ones. And they're not getting bailouts,but are told not to call a mandated 50% haircut on Greek debt as a loss.

 

Otherwise you got the right continent.

Opps I forgot that Germany as the EU's largest economy has no private banks. Blame the French, and while your at it blame Canada.

[BiggieScooby]

Dear scooby,

 

You really shouldn't be speaking finance.

Dear world traveller,

 

When you come up with your own original thought post it and start a new thread. I'd be glad to provide feedback.

[GG]

Opps I forgot that Germany as the EU's largest economy has no private banks. Blame the French, and while your at it blame Canada.

Maybe when you're discussing the Greek debt crisis, the French banks are more germane to the topic, since that's where the concern lies?

[/dev/null]

Dear scooby,

 

You really shouldn't be speaking finance.

 

 

Dear world traveller,

 

When you come up with your own original thought post it and start a new thread. I'd be glad to provide feedback.

 

Dear scooby

 

You got pwnd. Sometimes you have to just accept it. In your case more frequently than others