Derico
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What Is At The Heart Of The EU Economic Rift?

Mon Jan 18, 2010 9:02 pm

Every other week there is a constant stream of rumours or discussion about what is going on in the Eurozone. More specifically, about the situation in countries like Ireland, Greece, Portugal, Spain, and even Italy.

My knowledge on what is going on is very limited. I know that in Spain unemployment is off the charts and things are pretty rough. I also understand that they have a lot of immigrants and the boom years in Spain were in large measure many jobs in construction which are now gone. So basically Spain needs an economic jolt, but because they are in the Euro they are tied to continental interest rates in somewhat of a straightjacket.

I'm not familiar with Ireland or Portugal or why they are struggling.

And then there is Greece, which is seeing large protests.

Why is it that France and Germany are doing better? And also, why after so many years of integration is there such a divided in interest rate effects? Why is the current interest rate of the ECB apparently low enough for France to stimulate growth but not low enough for another country?
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petertenthije
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RE: What Is At The Heart Of The EU Economic Rift?

Mon Jan 18, 2010 11:18 pm



Quoting Derico (Thread starter):
Why is it that France and Germany are doing better?

France and Germany have an industry producing goods that can be sold (cars, planes, electronics etc).

As you already mentioned a large part of the Spanish economy came from construction. And for a large part construction of holiday resorts and 2nd homes for northern Europeans. When the economy tanks, the first thing someone will cut are second homes. So a lot of people in northern Europe stopped buying into the time-shares. This caused part of the collapse. There was also a lot of infrastructure constructions (roads, railroads etc). A lot of that was paid for by the EU, and thereby effectively paid by the northern Europeans. And just as how the northern European population had to cut costs, so did the governments and by default the EU and its instituations.

So these countries got a double hit. A very large hit on manufacturing, same as rest of Europe and the world, and a large hit on anything remotely tourism related.

It was in the news that the German economy is now growing again. The manufacturing of goods is rising. But a lot of people don't care about reports of growth in manufacturing. They won't book a holiday, let alone a timeshare, unless they see money coming into their own wallets. It takes a few months for the increase in manufacturing to trickle down to the people, as companies won´t start hiring immediately. They have become cautious as well.

Give it a few months and the retail and holiday economies will rise again.

BTW, that´s not even taking into consideration that the Euro zone has been expanded with several eastern European countries that offer even cheaper labour cost then Spain, Ireland etc. Spain, Ireland etc are no longer the cheapest within the EU and with it the jobs that are easily exported have gone as well to the likes of Poland.
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Klaus
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RE: What Is At The Heart Of The EU Economic Rift?

Mon Jan 18, 2010 11:34 pm

Quoting Petertenthije (Reply 1):
So these countries got a double hit. A very large hit on manufacturing, same as rest of Europe and the world, and a large hit on anything remotely tourism related.

And there had been completely unrealistic expectations about the construction boom, which - not least in the wake of the fake US housing boom - led to an unsustainable bubble economy which has since collapsed - again due to very similar reasons as the US one.

Britain has taken a somewhat similar path, unfortunately neglecting or even actively ditching productive industries and fully throwing themselves into the bubble economy instead.

Portugal had a really hard time overcoming the poverty brought about by the end of colonialism and their military dictatorship.

The eastern european countries are still scrambling to overcome decades of economic problems brought about by their longtime stalinist rule.

Germany just never fully bought into any of the hypes afflicting some of the other nations: Real estate has developed relatively steadily and mostly realistically, and german industry just keeps developing and selling actual products, which as it turns out is not as dumb an idea as some have thought.


In the end one needs to remember that the EU is a union of very different nations with very diverse histories, economic structures and economic policies.

The Euro is generally a stabilizing factor in these turbulent times, but countries like Greece have above all failed to develop a really sustainable economy. Paying very high wages to public servants to keep the electorate in line and financing all that with borrowed money is not really the smartest thing to do, and the new greek government (in some ways a re-incarnation of previous ones) really has its work cut out for it.

Without the Euro, the greek currency would right now be in a steep tailspin with massive repercussions. Even with the Euro somebody will have to help them out, and it will of course be Germany to a significant extent. But this is also one argument for more closely aligned economic policies (or at least responsible ones).

Cohesion is one of the main ideas of the European Union, which is in some ways a different term for solidarity. It means mutual support - but also obligations.

[Edited 2010-01-18 15:42:23]
 
L410Turbolet
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RE: What Is At The Heart Of The EU Economic Rift?

Mon Jan 18, 2010 11:50 pm



Quoting Klaus (Reply 2):
Without the Euro, the greek currency would right now be in a steep tailspin with massive repercussions.

Another scenario could be that if Greece was not allowed to "sneak" into the Eurozone thanks to fraud, they would have had harder time getting credit and maybe had an incentive to reform their finances in the past decade and last but not least they would have control over their currency now when the times are hard and the interest rates are set to suit France and Germany, not necessarily Portugal or Greece.

Quoting Klaus (Reply 2):
The eastern european countries are still scrambling to overcome decades of economic problems brought about by their longtime stalinist rule.

Communist rule.
 
eaa3
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RE: What Is At The Heart Of The EU Economic Rift?

Tue Jan 19, 2010 12:05 am



Quoting Derico (Thread starter):
And then there is Greece, which is seeing large protests.

I believe that the protests in Greece were not because of the economy but rather because of a Police shooting of a schoolboy.

Quoting Petertenthije (Reply 1):
As you already mentioned a large part of the Spanish economy came from construction. And for a large part construction of holiday resorts and 2nd homes for northern Europeans. When the economy tanks, the first thing someone will cut are second homes. So a lot of people in northern Europe stopped buying into the time-shares. This caused part of the collapse. There was also a lot of infrastructure constructions (roads, railroads etc). A lot of that was paid for by the EU, and thereby effectively paid by the northern Europeans. And just as how the northern European population had to cut costs, so did the governments and by default the EU and its instituations.

The fate of the construction industry depends on the availability of credit which is not very available as is.

Quoting Klaus (Reply 2):


Without the Euro, the greek currency would right now be in a steep tailspin with massive repercussions. Even with the Euro somebody will have to help them out, and it will of course be Germany to a significant extent. But this is also one argument for more closely aligned economic policies (or at least responsible ones).

Greece would have defaulted. They have government debt of about 120% of GDP and if they didn´t have the euro and that debt were in euro´s then it would be totally unsustainable.

The ECB bails them out. They accept any bond with a rating of BBB- or above in exchange for cash (from a private entity). Since Greece´s government bonds are currently rated BBB+ the ECB will keep financing their debt through private intermediaries. But if Greece were downgraded then they would be in serious trouble because they couldn´t refinance their debt. However in the end I doubt that the ECB will ever allow Greece to default as it would cause huge risk premiums on euro denominated bonds from Eurozone Governments, which is something that government bonds are not really supposed to have in their own currnecy i.e. if the U.S. sells a bond in U.S. dollars then there shouldn´t be a risk premium as the U.S. can always print dollars. This is not the explicit case however in Europe but perhaps it is nonetheless the implicit case.
 
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OA260
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RE: What Is At The Heart Of The EU Economic Rift?

Tue Jan 19, 2010 12:23 am



Quoting L410Turbolet (Reply 3):
Another scenario could be that if Greece was not allowed to "sneak" into the Eurozone thanks to fraud

We have something in common then  Wink  Yeah sure


Every 10th company in the Czech Republic suffered a loss of more than CZK 17,000,000 as a direct result of economic crime in the last 12 months

19 November 2009 - 24% of companies in the Czech Republic experienced one or more incidences of economic crime in the past 12 months, according to PricewaterhouseCoopers' 2009 Global Economic Crime Survey. As most fraud in the Czech Republic is detected by chance and tip-offs as opposed to via systematic anti-fraud systems, these numbers indicate that a lot of fraud remains undetected.

“60% of respondents in the Czech Republic rationalised the fraud by saying that others do it and so it’s okay – which is in line with the CEE response, but much higher than globally, where only 35% considered this was the rationale,” said Sirshar Qureshi. “This suggests that Czech companies also need to address cultural and psychological factors when combatting fraud.”

http://www.pwc.com/cz/en/tiskove-zpr...ustu-hospodarske-kriminality.jhtml

------

Now back to the real issue !!

Greece has major issues to solve and major steps have been taken. The previous Conservative government cooked the books and now the Pasok government has to try sort it out.

In some ways Greece will benefit in the long run as they will have the excuse to do things that were not easy before.

----------

ECOFIN: EU Almunia: Greek Budget Reforms Seem To Be Adequate


BRUSSELS -(Dow Jones)- Greece's budget plans "seem to be adequate" to reduce the country's growing deficit, but European Union policy makers still need to study these plans more closely, European Commissioner for Economic and Monetary Affairs Joaquin Almunia told a news conference Monday.

The Greek government last week said it would cut its budget deficit, estimated to be close to 13% of gross domestic product in 2009, to less than 3% of GDP in 2012

http://www.nasdaq.com/aspx/stock-mar...budget-reforms-seem-to-be-adequate
 
MD11Engineer
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RE: What Is At The Heart Of The EU Economic Rift?

Tue Jan 19, 2010 12:44 am

Quoting OA260 (Reply 5):
Greece has major issues to solve and major steps have been taken. The previous Conservative government cooked the books and now the Pasok government has to try sort it out.

In some ways Greece will benefit in the long run as they will have the excuse to do things that were not easy before.

----------

ECOFIN: EU Almunia: Greek Budget Reforms Seem To Be Adequate


BRUSSELS -(Dow Jones)- Greece's budget plans "seem to be adequate" to reduce the country's growing deficit, but European Union policy makers still need to study these plans more closely, European Commissioner for Economic and Monetary Affairs Joaquin Almunia told a news conference Monday.

The Greek government last week said it would cut its budget deficit, estimated to be close to 13% of gross domestic product in 2009, to less than 3% of GDP in 2012

http://www.nasdaq.com/aspx/stock-mar...budget-reforms-seem-to-be-adequate

And this is exactly what led to the riots and strikes:
The government has to run a strict austerity programme to get the budget back under control. Previous governments acted very populist and just paid everybody off, no matter how much the country had to borrow. As OA260 stated, the last government used accounting tricks to hide the deficit. It is now out in the open and the government can´t spend anymore, especially in the public sector, as people are used to. They don´t understand this and go rioting.

Jan

[Edited 2010-01-18 16:45:26]
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L410Turbolet
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RE: What Is At The Heart Of The EU Economic Rift?

Tue Jan 19, 2010 12:48 am



Quoting OA260 (Reply 5):

Every 10th company in the Czech Republic suffered a loss of more than CZK 17,000,000 as a direct result of economic crime in the last 12 months

Nice try. Although totally irrelevant to the topic.

I don't recall us reporting fraudulent and/or totally misleading figures year after year on budget deficit to fit within Maastricht criteria the way Greece has done since 1997 (1997 - reported 4%, actual 6.44%, 1998 - reported 2%, actual 4.13%, 1999, reported 1.18%, actual 3.38% and so on) .
The truth is our deficit is way too high to adopt Euro, no one is denying it and frankly I do not see any need for rush to join (and unfortunately any will to do something about it despite Hungary or Greece being a warning of things to come).
 
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OA260
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RE: What Is At The Heart Of The EU Economic Rift?

Tue Jan 19, 2010 12:55 am



Quoting MD11Engineer (Reply 6):
They don´t understand this and go rioting.

Although the huge riots seen just over a year ago were sparked and fueled by the shooting dead of an innocent child as stated by another poster. To be honest most Greeks realise the shit has hit the fan and are getting ready for tough times. Everything from inheritance tax of family properties to higher fuel,drink and cigarette taxes are going to go through. Tax evasion will be a major issue that Greece has never really tackled.

In some ways Greece has more leverage than other countries where taxes and prices are already very high.

As I said in the long run this will be good for Greece. Some years of pain will eventually lead to better decisions and learnt lessons.

Quoting Klaus (Reply 2):
Paying very high wages to public servants to keep the electorate in line

Also just curious to where you got that from and what kind of public servants do you class in that category?
 
Derico
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RE: What Is At The Heart Of The EU Economic Rift?

Tue Jan 19, 2010 1:13 am

Thanks for the replies. I remember that for the longest time Germany was the ''sick kid'' of the Eurozone with low or no growth. Was that the result of internal problems or because the growth in other parts of Europe (which became unsustainable), was exagerating Germany's weakeness??
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RE: What Is At The Heart Of The EU Economic Rift?

Tue Jan 19, 2010 1:21 am



Quoting L410Turbolet (Reply 7):
Nice try. Although totally irrelevant to the topic.

As was your post which was written to annoy and insult like most of your posts. It has been noted by many. Maybe try to add something to the thread rather than flaimbait and snide remarks.
 
MD11Engineer
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RE: What Is At The Heart Of The EU Economic Rift?

Tue Jan 19, 2010 1:27 am



Quoting Derico (Reply 9):
Thanks for the replies. I remember that for the longest time Germany was the ''sick kid'' of the Eurozone with low or no growth. Was that the result of internal problems or because the growth in other parts of Europe (which became unsustainable), was exagerating Germany's weakeness??

I think mostly the later. We had some issues in regions with obsolete industries (mainly the Ruhr area, which had to convert from a 19th century coal and steel based heavy industry culture into more modern industries and East Germany, where most of the old industries was obsolete by the time the wall fell). These times are now over, but it seems that we largely never fell for the financial industry trap as the Angle-Saxon countries. As much as it was ridiculed from e.g. London, Germany´s economical base are small to medium family owned high tech and engineering companies, which manufacture specialist machines of high quality. The owners of these companies often refuse to go public because they want to keep control over their companies.
Also most german banks are rather conservative, as most Germans don´t like to gamble on the stock market.
German banks generally refused to play the game I´ve seen e.g. in Ireland, where you could get a 100% financing on a house, with no proof of income. In Germany you´ll need at least 10% of the value of the house as capital of your own before a bank will even consider giving you a mortgage. Therefore housing prices in germany never explosed as e.g.- in the UK or Ireland.

Jan
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RE: What Is At The Heart Of The EU Economic Rift?

Tue Jan 19, 2010 1:52 am



Quoting OA260 (Reply 8):
Quoting Klaus (Reply 2):Paying very high wages to public servants to keep the electorate in line
Also just curious to where you got that from and what kind of public servants do you class in that category?

I'd be interested in that information as well because, in my experience, public servant wages in Greece are anything but very high.
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Klaus
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RE: What Is At The Heart Of The EU Economic Rift?

Tue Jan 19, 2010 8:39 am



Quoting OA260 (Reply 8):
Quoting Klaus (Reply 2):
Paying very high wages to public servants to keep the electorate in line

Also just curious to where you got that from and what kind of public servants do you class in that category?

I have to rely on usually trustworthy reporters making that claim.

So what is the ratio between greek public and private wages in total?
What are the average incomes in both sectors?
Would you say that public servants are underpaid in relation to private employees?

Quoting Derico (Reply 9):
Thanks for the replies. I remember that for the longest time Germany was the ''sick kid'' of the Eurozone with low or no growth. Was that the result of internal problems or because the growth in other parts of Europe (which became unsustainable), was exagerating Germany's weakeness??

As it turned out, Germany just had a reasonable amount of real growth while some of the others engaged in a fake bubble economy which has since collapsed again.

A few german banks (and a few people) did in fact gamble in the anglo-american finance casinos and were hit pretty hard by the collapse, but the real economy has always remained the backbone of our economy.
 
JJJ
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RE: What Is At The Heart Of The EU Economic Rift?

Tue Jan 19, 2010 8:56 am



Quoting Derico (Thread starter):
Ireland, Greece, Portugal, Spain, and even Italy

Spain had a construction-fuelled growth based on very unrealistic projections. That means Spain received a lot of unskilled labour that has suddenly found themselves unemployed in very large numbers.

Spain will have to fight huge unemployment numbers for many years to come, even if the economy as a whole recovers.
 
AverageUser
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RE: What Is At The Heart Of The EU Economic Rift?

Tue Jan 19, 2010 10:31 am

The Monetary Union is beginning to crumble at the edges. The 10-year public bond interest rates of selected EMU states in 2005-2010:
Blue=Germany
Green=Finland
Yellow=Spain
Red=Greece

I'd like to see those who wanted it so bad to pay for it as well.


 
baroque
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RE: What Is At The Heart Of The EU Economic Rift?

Tue Jan 19, 2010 10:54 am



Quoting OA260 (Reply 5):
Now back to the real issue !!

And just when it was getting interesting. Shame. Judging by the protests you must have been near some mark.  Wow!

Quoting AverageUser (Reply 15):
Blue=Germany
Green=Finland
Yellow=Spain
Red=Greece

You really struck home with that one, Finnish AND colours that send me reaching for my hand lens to up the perceived intensity. A "Korkoing" graph though nevertheless.  Big grin

I guess Germany and France must have been doing something right all along which must be vastly frustrating to their critics. Cannot help wondering if being founder members of the ECSC might have been a help. Less likely to:

Quoting Klaus (Reply 2):
Britain has taken a somewhat similar path, unfortunately neglecting or even actively ditching productive industries and fully throwing themselves into the bubble economy instead.

 checkmark 
 
AverageUser
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RE: What Is At The Heart Of The EU Economic Rift?

Tue Jan 19, 2010 11:17 am



Quoting AverageUser (Reply 15):
A "Korkoing" graph though nevertheless.

I can see the world is not fair for the R/G axis challenged. I wonder if a phone manufacturer could make an application that would highlight R/G items from a photo capture, there must be a ripe and steady market segment! Anyways, they stack up from the bottom as as Germany, Finn., Spain, Greece.
 
MD11Engineer
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RE: What Is At The Heart Of The EU Economic Rift?

Tue Jan 19, 2010 11:44 am



Quoting JJJ (Reply 14):
Quoting Derico (Thread starter):
Ireland, Greece, Portugal, Spain, and even Italy

Spain had a construction-fuelled growth based on very unrealistic projections. That means Spain received a lot of unskilled labour that has suddenly found themselves unemployed in very large numbers.

Same in Ireland. After the mortgage crisis, many half finished construction projects were stopped and the construction workers laid off. Up to three years ago housing prices in Irelasnd were among the highest in Europe and construction of fast built, shoddy houses was about 25% of the Irish economy. Over the last years housing prices have dropped dramatically, people can´t pay their mortgages and many houses are stan ding empty.

Jan
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luckyone
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RE: What Is At The Heart Of The EU Economic Rift?

Tue Jan 19, 2010 2:38 pm



Quoting Derico (Thread starter):
I know that in Spain unemployment is off the charts and things are pretty rough. I also understand that they have a lot of immigrants and the boom years in Spain were in large measure many jobs in construction which are now gone. So basically Spain needs an economic jolt, but because they are in the Euro they are tied to continental interest rates in somewhat of a straightjacket.

You answered part of your own questions. Spain stagnated in the aftermath of the Franco regime, and in all fairness they're still recovering from it. They also now have to pay for in essence rebuilding their entire infrastructure from roads, to communications, to healthcare.

Quoting Derico (Thread starter):
Why is it that France and Germany are doing better? And also, why after so many years of integration is there such a divided in interest rate effects? Why is the current interest rate of the ECB apparently low enough for France to stimulate growth but not low enough for another country?

This might light a small fire but IMHO France and Germany are doing better because much of the EU policy has (to date) favored their respective systems. They ARE and have been the powerhouses of the EU economy, and as such it has been built around them. What came first, though, the chicken or the egg, I'm not educated on the matter enough to say. Again, just my opinion.

Quoting Petertenthije (Reply 1):
BTW, that´s not even taking into consideration that the Euro zone has been expanded with several eastern European countries that offer even cheaper labour cost then Spain, Ireland etc. Spain, Ireland etc are no longer the cheapest within the EU and with it the jobs that are easily exported have gone as well to the likes of Poland.

Bingo.
 
MD11Engineer
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RE: What Is At The Heart Of The EU Economic Rift?

Tue Jan 19, 2010 2:50 pm



Quoting Luckyone (Reply 19):
Quoting Derico (Thread starter):
I know that in Spain unemployment is off the charts and things are pretty rough. I also understand that they have a lot of immigrants and the boom years in Spain were in large measure many jobs in construction which are now gone. So basically Spain needs an economic jolt, but because they are in the Euro they are tied to continental interest rates in somewhat of a straightjacket.

You answered part of your own questions. Spain stagnated in the aftermath of the Franco regime, and in all fairness they're still recovering from it. They also now have to pay for in essence rebuilding their entire infrastructure from roads, to communications, to healthcare.

The stagnation in Spain happened a long time before Franco, basically it was an economy based on feudal landownership and a large amount of landless peasants working like serfs for the feudal upper class. Only the Basque country and Catalonia had something like an industrial infrastructure (Asturias within limits as well due to the coal mines located there) This led to the various regional uprisings, mainly by peasants, during the late 19th and early 20th century and the chaos of the second repuvblic in the 1930s. The dictatorship of Franco preserved the old rule, but after his death Spain had to come to terms with European reality and started a rapid programme of reforms.
Spain entered the EU quite soon and received massive amounts of aid from the EU regional and infrastructure funds. These moneys have now for a large part been redirected to the new, and poorer, eastern European countries.

Jan
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OA260
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RE: What Is At The Heart Of The EU Economic Rift?

Tue Jan 19, 2010 7:48 pm



Quoting OA412 (Reply 12):
I'd be interested in that information as well because, in my experience, public servant wages in Greece are anything but very high.

Well two of my Aunts are high school teachers and they are not ''over paid'' thats for sure.

Quoting AverageUser (Reply 15):
The Monetary Union is beginning to crumble at the edges.

It will turn around like everything else. People who want something to fail will always predict doom and gloom. The Euro will crumble the day Finland gets reunified with mother Russia.  Wink

Quoting Baroque (Reply 16):
And just when it was getting interesting

LOL... I dont do riots anymore  Big grin
 
luckyone
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RE: What Is At The Heart Of The EU Economic Rift?

Tue Jan 19, 2010 8:38 pm



Quoting MD11Engineer (Reply 20):
The stagnation in Spain happened a long time before Franco, basically it was an economy based on feudal landownership and a large amount of landless peasants working like serfs for the feudal upper class. Only the Basque country and Catalonia had something like an industrial infrastructure (Asturias within limits as well due to the coal mines located there) This led to the various regional uprisings, mainly by peasants, during the late 19th and early 20th century and the chaos of the second repuvblic in the 1930s. The dictatorship of Franco preserved the old rule, but after his death Spain had to come to terms with European reality and started a rapid programme of reforms.
Spain entered the EU quite soon and received massive amounts of aid from the EU regional and infrastructure funds. These moneys have now for a large part been redirected to the new, and poorer, eastern European countries.

Thanks for clarification!
 
Klaus
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RE: What Is At The Heart Of The EU Economic Rift?

Tue Jan 19, 2010 9:41 pm



Quoting OA260 (Reply 21):
The Euro will crumble the day Finland gets reunified with mother Russia.

I don't think Russia is ready for accession to the EU yet...!
 
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RE: What Is At The Heart Of The EU Economic Rift?

Tue Jan 19, 2010 10:05 pm



Quoting Klaus (Reply 23):
I don't think Russia is ready for accession to the EU yet...!

Id love to go on those new AY IL96's though  Big grin
 
AverageUser
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RE: What Is At The Heart Of The EU Economic Rift?

Wed Jan 20, 2010 12:50 am



Quoting OA260 (Reply 21):
The Euro will crumble the day Finland gets reunified with mother Russia. Wink



Quoting Klaus (Reply 23):
I don't think Russia is ready for accession to the EU yet...!



Quoting OA260 (Reply 24):
Id love to go on those new AY IL96's though Big grin

Our past from 1809 to 1995 outside the EU? Discuss?
 
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RE: What Is At The Heart Of The EU Economic Rift?

Wed Jan 20, 2010 5:34 am



Quoting OA260 (Reply 21):
It will turn around like everything else. People who want something to fail will always predict doom and gloom. The Euro will crumble the day Finland gets reunified with mother Russia.  

Exactly. I remember A LOT of anti-EU folks here in the US predicting that the Euro would crumble within 5 years of its introduction thus talking the entire EU along with it. It hasn't happened yet. These things are cyclical and it happens to all currencies all of the time. A lot of people fail to realize that it was roughly 50 years after its introduction before the dollar fully ingrained itself as the American currency.
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RE: What Is At The Heart Of The EU Economic Rift?

Wed Jan 20, 2010 10:45 am



Quoting OA412 (Reply 26):
Exactly. I remember A LOT of anti-EU folks here in the US predicting that the Euro would crumble within 5 years of its introduction thus talking the entire EU along with it

Now dont get me wrong many will tell you that Im anti EU and there are many things I despise about it but I also know BS when I hear it. The Euro was a very good idea and its a strong currency.
 
baroque
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RE: What Is At The Heart Of The EU Economic Rift?

Wed Jan 20, 2010 11:32 am



Quoting OA260 (Reply 27):
The Euro was a very good idea and its a strong currency.

Apparently recent (relative and minor) weakness in the Euro against the USD has been due to worries about Greek debt. Wonder if EADS will be sending a letter of thanks (and a coupla bucks) to Greece!  duck 
 
JJJ
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RE: What Is At The Heart Of The EU Economic Rift?

Wed Jan 20, 2010 12:15 pm



Quoting MD11Engineer (Reply 20):
Spain entered the EU quite soon and received massive amounts of aid from the EU regional and infrastructure funds. These moneys have now for a large part been redirected to the new, and poorer, eastern European countries.

5 years later than Greece and at the same time as Portugal.

At least those funds were put to better use than in said countries.
 
AverageUser
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RE: What Is At The Heart Of The EU Economic Rift?

Wed Jan 20, 2010 12:33 pm



Quoting Baroque (Reply 28):
Apparently recent (relative and minor) weakness in the Euro against the USD has been due to worries about Greek debt.

It may seem minor, but there's a serious background to it. No less an issue than who has the say over government spending in the EMU, the national government itself, or the federal institutions. Is the central government going to install a puppet regime to curb spending, or is the central government standing ready to bail out any debts?

Quoting OA260 (Reply 27):
The Euro was a very good idea and its a strong currency.

No currency is intrinsically strong, but the markets define its value. If the Euro is too strong, national economies that depend heavily on export outside the EMU, like Finland, will suffer. One monetary size will suit everyone fine, however.
 
baroque
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RE: What Is At The Heart Of The EU Economic Rift?

Wed Jan 20, 2010 1:29 pm



Quoting AverageUser (Reply 30):
Quoting Baroque (Reply 28):
Apparently recent (relative and minor) weakness in the Euro against the USD has been due to worries about Greek debt.

It may seem minor, but there's a serious background to it. No less an issue than who has the say over government spending in the EMU, the national government itself, or the federal institutions. Is the central government going to install a puppet regime to curb spending, or is the central government standing ready to bail out any debts?

I was not aware of that part of the background, but the correction may still prove to be minor as it gets weighed against the next disaster wherever the next disaster happens to turn up!! So in writing minor I had in mind not the problem, but that the Euro might reverse, rotate on the spot or drop like a stone and none of it to do with Greece. Or then again Greece might write another epic in Greecian tragedy.

I find it amazing to meet a multi national group as I did last Sept and again in November and find out of 18 Nationalities in a group of 26, 9 have a common currency (the Euro) and another three nationalities wish to use it. Aus, Brazil, Canada, Egypt, Turkey and South Africa felt a bit left out when the conversation turned to money!!
 
AverageUser
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RE: What Is At The Heart Of The EU Economic Rift?

Wed Jan 20, 2010 2:05 pm

http://ec.europa.eu/public_opinion/flash/fl_251_en.pdf

Very revealing tables on pages 75-76.
 
MD11Engineer
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RE: What Is At The Heart Of The EU Economic Rift?

Wed Jan 20, 2010 4:42 pm

Quoting JJJ (Reply 29):
Quoting MD11Engineer (Reply 20):
Spain entered the EU quite soon and received massive amounts of aid from the EU regional and infrastructure funds. These moneys have now for a large part been redirected to the new, and poorer, eastern European countries.

5 years later than Greece and at the same time as Portugal.

At least those funds were put to better use than in said countries.

Having travelled extensively to Spain in the past I do not dispute this though I think that Portugal is not as bad as Greece with it´s institutionalised sleeze.
When Portugal entered the EU, it suffered from the fact that for almost 60 years it has been living under the illusion of it´s former colonial grandeur by the successive Salazar and Caetano dictatorships (until an unbloody military coup by young officers and soldiers, who were fed up of fighting a colonial was in Africa, kicked out the fascists in 1974). In fact, back then Portugal was even poorer than Spain at this time, so Spain had a headstart.

Spain made the mistake of making itself too dependent on the wealthy real estate speculators from mainly the UK and Ireland, who heated up a boom in second houses in Spain. The moment the British and Irish real estate bubbles burt, they took Spain with them.

Jan

[Edited 2010-01-20 09:36:12]
Je Suis Charlie et je suis Ahmet aussi
 
JJJ
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RE: What Is At The Heart Of The EU Economic Rift?

Wed Jan 20, 2010 5:31 pm



Quoting MD11Engineer (Reply 33):
Spain made the mistake of making itself too dependent on the wealthy real estate speculators from mainly the UK and Ireland, who heated up a boom in second houses in Spain. The moment the British and Irish real estate bubbles burt, they took Spain with them.

But, on a positive side it has put Spanish among the world leaders in renewable energy sources and infrastructure management and the rather conservative banking regulations allowed the financial sector to emerge almost intact from the crisis (except for a small regional bank that had invested too much in a white elephant airport project).

In any case Spain needs a huge structural change that will be painful for years to come.
 
baroque
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RE: What Is At The Heart Of The EU Economic Rift?

Wed Jan 20, 2010 5:41 pm



Quoting MD11Engineer (Reply 33):
Spain made the mistake of making itself too dependent on the wealthy real estate speculators from mainly the UK and Ireland, who heated up a boom in second houses in Spain. The moment the British and Irish real estate bubbles burst, they took Spain with them.

There should be a modern version of the Laocoon speech about the Trojan horse
"Whatever it is, I fear the Greeks even when they bring gifts".

For Spain it could be:

"Whatever they are, I fear the Brits especially when they flee taxes"

except that UK tax rates are lower than Spain. So someone else needs to find the right term!  ashamed 
 
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Braybuddy
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RE: What Is At The Heart Of The EU Economic Rift?

Wed Jan 20, 2010 9:27 pm

Quoting Derico (Thread starter):
I'm not familiar with Ireland or Portugal or why they are struggling.

I can't speak for Portugal, but take one massive property bubble and add an international credit crunch, some lax financial regulation, a banking crisis, a devalued UK pound on top of reckless government spending and you have pretty much an idea of what's happened here.

2009 is the year everyone wants to forget, and 2010 is going to be tough with some hard, but necessary decisions to be made. Whether the government actually has the bottle to take them remains to be seen, but there have been recent cuts in social welfare (currently generous by international standards) and public service pay (also high). I wouldn't have a lot of faith in the government on its own taking these decisions, but now that our banks are being baled-out with ECB money, thankfully that organisation and the EU will now be calling the shots, and the last budget in November won praise at EU level.

With the collapse of sterling over the last couple of years shoppers have flooded into Northern Ireland to take advantage of prices of up to a third to 50 per cent less. Yet there has been no move or talk of leaving the euro, which was predicted ten years ago if such a scenario arose. While shops and exporters have struggled, most have cut wages and costs, making them more competitive. We're glad we're not in the same situation as Iceland, which saw its currency drop by half, thereby doubling its foreign debt.

And the good news for the economy is that sterling has recently increased in value against the euro, and the UK has raised VAT, while the government here has reduced it slightly, all of which is starting to take pressure off exporters and shops.

While we're told that this is the worst recession for 70 years, there's absolutely no comparison to the 1930s. A lot of shops, restaurants and businesses have gone bust over the last 18 months, and the doom-and-gloom coming from the airwaves is endless, but we're surviving. In my own case we were down to a four-day week for three months at the end of last year, but are back full-time now. People are still going out, shopping, eating, drinking and going on holidays. Not in the numbers they did during the years of the Celtic Tiger, but there is still money out there. We completely lost the run of ourselves during those years, so a big reality-check is probably no harm. And we'll come out of it.

[Edited 2010-01-20 13:31:54]
 
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OA260
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RE: What Is At The Heart Of The EU Economic Rift?

Thu Jan 21, 2010 6:32 pm



Quoting JJJ (Reply 29):
At least those funds were put to better use than in said countries

No Spain ripped off their own fellow EU citizens with their corrupt dealings and many people lost their homes.
 
MD11Engineer
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RE: What Is At The Heart Of The EU Economic Rift?

Thu Jan 21, 2010 7:09 pm



Quoting OA260 (Reply 37):
Quoting JJJ (Reply 29):
At least those funds were put to better use than in said countries

No Spain ripped off their own fellow EU citizens with their corrupt dealings and many people lost their homes.

BS. If you don´t educate yourself on local rules (building code etc.) and don´t read the smallprint before you sign the contract and you trust the developer, it is your own fault.
If it looks too good to be true, it probably is.
The Spanish had some problems with corruption on community level, e.g. there exist a law in Spain, which prohibits building of houses within a certain distance from the water line at a beach.
Now despite the law some develops, with the help of corrupt community officials, got bogus building permits and built houses within the prohibited zone and sold them to foreigners (among them German pensioners). Now some day the Spanish centeal government and/or the provincial governments decided to look at the matter and to enforce the laws (at the same time arresting the corrupt civil servants). The owners of the houses got a letter stating that they had 4 weeks to tear down their houses, because they had not been built legally. So who´s fault is it? Obviously the crooked developer and the corrupt civil servant carry a huge part of it, but shouldn´t the foreigner, before buying the house, got himself informed on local laws and rules instead of gullibly signing the contract?
The same applies to buyers of listed buildings. At some time I´ve been considering to take a job in Girona and to move to Catalonia. I checked the availability of houses. There were quite a few lots availble for a decent price with an old farmhouse on them, but as a Spainsh colleague warned me, they were all listed buildings. This means that you couldn´t just tear them down or modify them, but, since they were listed as monuments due to some obscure historical signifacence, you´ll had to keep them in the original condition.
The same happed to a friernd of my father in northen Germany. He bought a 16th century water mill in Preetz and wanted to convert it into a modern home (at least from thr inside). But then the local building department interfered and demanded that he couldn´t replace the old draughty windows with new ones, he couldn´t alter the internal layout, they bitched about the installation of a central heating system, in fact they wanted him to convert the mill into a 16th century museum at his own expenses. Eventually he sold the place at a big loss.
If he had read before what owning a listed building entails, he would have saved a lot of money.

Jan
Je Suis Charlie et je suis Ahmet aussi
 
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OA260
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RE: What Is At The Heart Of The EU Economic Rift?

Thu Jan 21, 2010 7:15 pm



Quoting MD11Engineer (Reply 38):
The Spanish had some problems with corruption on community level,

Understatement.

Quoting MD11Engineer (Reply 38):
but shouldn´t the foreigner, before buying the house, got himself informed on local laws and rules instead of gullibly signing the contract?

Many thought they had and still got burnt. Various UK TV programs revealed the REAL truth about what went on and the total corruption on all levels of local and national government.
 
MD11Engineer
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RE: What Is At The Heart Of The EU Economic Rift?

Thu Jan 21, 2010 7:35 pm



Quoting OA260 (Reply 39):
Quoting MD11Engineer (Reply 38):
but shouldn´t the foreigner, before buying the house, got himself informed on local laws and rules instead of gullibly signing the contract?

Many thought they had and still got burnt. Various UK TV programs revealed the REAL truth about what went on and the total corruption on all levels of local and national government.

Biased Britidh programmes. I´ve seen too many people trying to make a killiong on the real estate market abroad after the British and Irish markets were saturated (some tried to get into the real estate market over here as well).
One hint: before you go to another country or do business there, inform yourself. Don´t trust anybody, especially not those who talk sweet. Don´t expect, just because something is done in a certain way back home, to have it been done the same way in another country.
I got burnt when I moved to Ireland. Germany has a "this is my price, take it or leave it" mentallity. Germans don´t haggle, in fact haggling and bargaining have traditionally been considered dishonourable. I went to Ireland and learned the hard way that usually the first price offered is outrageuosly exaggerrated and that you are expected to bargain.
I also had to repeatetely tell one German coworker in Shannon, that laws are different in Ireland from Germany.

Jan
Je Suis Charlie et je suis Ahmet aussi
 
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OA260
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RE: What Is At The Heart Of The EU Economic Rift?

Thu Jan 21, 2010 7:48 pm



Quoting MD11Engineer (Reply 40):
Biased Britidh programmes

They were not biased at all. I even believe that there were two on Spanish TV made by Spanish film crew and investigators.
 
Derico
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RE: What Is At The Heart Of The EU Economic Rift?

Fri Jan 22, 2010 2:07 am

Thanks for your replies everyone. I pretty much had all my questions answered.
My internet was not shut down, the internet has shut me down
 
JJJ
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RE: What Is At The Heart Of The EU Economic Rift?

Fri Jan 22, 2010 9:14 am



Quoting OA260 (Reply 37):
No Spain ripped off their own fellow EU citizens with their corrupt dealings and many people lost their homes.

If you have some knowledge that EU funds were used to build holiday homes I'd love to hear about that.

Many more Spanish citizens lost their homes than Brits, I'm sure the TV program overlooked that part.

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