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JJJ
Posts: 3733
Joined: Wed May 31, 2006 5:12 pm

Re: Eu budget of 1.82 T Euro agreed

Mon Aug 03, 2020 11:06 am

Sokes wrote:
JJJ wrote:
Sokes wrote:
I wonder how Southern Europeans who have a much higher proportion of own housing would like it if housing markets in their countries become unaffordable.


That's exactly what happened in the years leading to 2008. The policy of zero interest rate ...

After 9/11 interest rate of ECB went from 4.75 to 2%, but then later up again. I believe close to 0% is after financial crisis.

What did the Spanish do with all this housing? Were old houses too uncomfortable, was it a movement to cities or did the flats remain empty as an investment only?

Was there a similar expansion in industry? Was it already overheated before 2001? When did the excesses start?


It was a bubble, and as with all bubbles people bought to sell, not to occupy. You would remortgage your house to buy another one, you would buy a house still in planning stage and sell it once completed for a handy profit. A lot of those new developments were never actually occupied because tenants would get in the way once you wanted to flip it to the next moron.

People who could only afford their own house just paid more for it but for the most part just hoped that they were making it up because their home was increasing in value (even today home ownership in Spain is almost 80%, at the time it was around 90%)

Business owners of all kinds would invest in land and/or properties because it would give much better returns than their own business. You were an idiot if you didn't put your investment in property and other industries became neglected because it made absolutely no sense to invest in anything other than property.

The profits from building were so high and local budgets so dependent on property taxes and building permits that corruption skyrocketed to never seen before levels.

Older houses became the home for the hundreds of thousands of unskilled migrants that were needed for construction jobs.

And then in a record time it all came down. All those fancy developments remained empty or unfinished, and millions ended up without a job and with negative equity in their mortgage.
 
olle
Topic Author
Posts: 2264
Joined: Tue Feb 06, 2007 3:38 am

Re: Eu budget of 1.82 T Euro agreed

Mon Aug 03, 2020 12:10 pm

In spain, portugal and London property market partly an export industry.

Many people in Asia and Russia purchases property in for example London for rental and has as a pension fund.

In the tourist areas of Spain the construction are driven not by spanish people but by Scandinavians, Germans and until Brexit UK. Bigger cities like Madrid was for local people.

I have many friends from Stockholm area purchasing properties in spain including me. I purchased using cash but most people take another loan on their property in Sweden or sell it when becoming pensioners. So the market in the coastal areas are much more connected to property markets in the north then local markets.
 
Sokes
Posts: 1646
Joined: Sat Mar 09, 2019 4:48 pm

Re: Eu budget of 1.82 T Euro agreed

Mon Aug 03, 2020 12:21 pm

JJJ wrote:
It was a bubble, and as with all bubbles people bought to sell, not to occupy. You would remortgage your house to buy another one, you would buy a house still in planning stage and sell it once completed for a handy profit. A lot of those new developments were never actually occupied because tenants would get in the way once you wanted to flip it to the next moron.
...
Business owners of all kinds would invest in land and/or properties because it would give much better returns than their own business. You were an idiot if you didn't put your investment in property and other industries became neglected because it made absolutely no sense to invest in anything other than property.

In Goa also there are a lot of unoccupied flats. Somebody from Bombay would first buy a flat in Goa. Once the credit is paid back he sells it to have equity to buy in Bombay. No tenants, too risky.
However in big cities rent is so attractive that landlords risk the potential trouble. The Indian legal system isn't so bad that one can't enforce the law. But time, effort and stress is too much. Plus there are too many lawyers. They have to delay everything, otherwise what will they live from?

I know a businessman who still rents his workshop after being over ten years in business. He may have around four laborers. I asked him what he did with his profit of all those years. He bought agricultural land and grows fruits. Smart move. One never knows what politicians will do and he is first generation businessman, no wealth to fall back on.

Anyway your post reminds me of India today.
Thanks a lot for the answer. That was a very informative post.
Why can't the world be a little bit more autistic?
 
flyguy89
Posts: 2985
Joined: Tue Feb 24, 2009 6:43 pm

Re: Eu budget of 1.82 T Euro agreed

Wed Aug 05, 2020 8:18 am

JJJ wrote:
flyguy89 wrote:
sabenapilot wrote:
A Google tax is paid by Google, a Facebook tax is paid by Facebook, etc..
Users don't pay for their services, they are "for free" and make their money from advertisements, so how on earth would this be an indirect tax on EU consumers then?

Increased ad serving costs for EU based advertisers for one. These companies also offer a lot of consumer-purchased products and services that could certainly see increased costs to be born by EU consumers.


That's one way to look at it, but since companies generally have a fixed advertisement budget that they allocate to different media depending on return, etc. it's quite likely that the overall costs of advertising for consumer companies remain flat.

In such a scenario it's also quite probable that newly increased costs in one area (social media/search marketing in this case) could then be taking spend away from native European media. Hard to predict, but certainly not as simple as getting "free money."
 
tommy1808
Posts: 13254
Joined: Thu Nov 21, 2013 3:24 pm

Re: Eu budget of 1.82 T Euro agreed

Wed Aug 05, 2020 8:38 am

flyguy89 wrote:
JJJ wrote:
flyguy89 wrote:
Increased ad serving costs for EU based advertisers for one. These companies also offer a lot of consumer-purchased products and services that could certainly see increased costs to be born by EU consumers.


That's one way to look at it, but since companies generally have a fixed advertisement budget that they allocate to different media depending on return, etc. it's quite likely that the overall costs of advertising for consumer companies remain flat.

In such a scenario it's also quite probable that newly increased costs in one area (social media/search marketing in this case) could then be taking spend away from native European media. Hard to predict, but certainly not as simple as getting "free money."


I would assume many companies are very dynamic about marketing spending. My company is not even 100 people, and its always bang-for-bug kinda decision making. Our google spending fell of a cliff after linkedin got serious about ad-support, trade show budgets went into conferences and association work once the return got marginal.

best regards
Thomas
Well, there is prophecy in the bible after all: 2 Timothy 3:1-6
 
Olddog
Posts: 1519
Joined: Sat Jun 25, 2016 4:41 pm

Re: Eu budget of 1.82 T Euro agreed

Wed Aug 05, 2020 8:40 am

It is strange that so many people seem concerned with the 2 trillions debt the EU will create but way less with the 26 trillions debt the US already has.
Sentence from Belgian PM at press conference forbidden due to new rules
 
JJJ
Posts: 3733
Joined: Wed May 31, 2006 5:12 pm

Re: Eu budget of 1.82 T Euro agreed

Wed Aug 05, 2020 8:47 am

flyguy89 wrote:
JJJ wrote:
flyguy89 wrote:
Increased ad serving costs for EU based advertisers for one. These companies also offer a lot of consumer-purchased products and services that could certainly see increased costs to be born by EU consumers.


That's one way to look at it, but since companies generally have a fixed advertisement budget that they allocate to different media depending on return, etc. it's quite likely that the overall costs of advertising for consumer companies remain flat.

In such a scenario it's also quite probable that newly increased costs in one area (social media/search marketing in this case) could then be taking spend away from native European media. Hard to predict, but certainly not as simple as getting "free money."


My point remains. Whether ad money is paid to Facebook or the Daily Mirror it's very unlikely companies will spend more so that they have to pass on that extra cost to consumers.
 
AeroVega
Posts: 290
Joined: Tue Nov 20, 2007 4:32 pm

Re: Eu budget of 1.82 T Euro agreed

Wed Aug 05, 2020 3:53 pm

Olddog wrote:
It is strange that so many people seem concerned with the 2 trillions debt the EU will create but way less with the 26 trillions debt the US already has.


Total government debt in the Eurozone exceeds 10 trillion. Eurozone debt/GDP ratio is higher than US. But you are right that people in the US should be worried that their debt/GDP ratio is starting to reach European levels.
 
olle
Topic Author
Posts: 2264
Joined: Tue Feb 06, 2007 3:38 am

Re: Eu budget of 1.82 T Euro agreed

Wed Aug 05, 2020 4:06 pm

AeroVega wrote:
Olddog wrote:
It is strange that so many people seem concerned with the 2 trillions debt the EU will create but way less with the 26 trillions debt the US already has.


Total government debt in the Eurozone exceeds 10 trillion. Eurozone debt/GDP ratio is higher than US. But you are right that people in the US should be worried that their debt/GDP ratio is starting to reach European levels.



Do the states in USA carry debt as well?
 
flyguy89
Posts: 2985
Joined: Tue Feb 24, 2009 6:43 pm

Re: Eu budget of 1.82 T Euro agreed

Wed Aug 05, 2020 4:09 pm

JJJ wrote:
flyguy89 wrote:
JJJ wrote:

That's one way to look at it, but since companies generally have a fixed advertisement budget that they allocate to different media depending on return, etc. it's quite likely that the overall costs of advertising for consumer companies remain flat.

In such a scenario it's also quite probable that newly increased costs in one area (social media/search marketing in this case) could then be taking spend away from native European media. Hard to predict, but certainly not as simple as getting "free money."


My point remains. Whether ad money is paid to Facebook or the Daily Mirror it's very unlikely companies will spend more so that they have to pass on that extra cost to consumers.

As does mine. There are so many potential unforeseen overflow effects from such maneuvers that could negatively impact European companies and consumers. And as I said, a major component of FAANG business is not just base "free" social media platform but direct-to-consumer products...many of which Europeans are already paying a premium for compared to their American counterparts.
 
JJJ
Posts: 3733
Joined: Wed May 31, 2006 5:12 pm

Re: Eu budget of 1.82 T Euro agreed

Wed Aug 05, 2020 4:17 pm

flyguy89 wrote:
JJJ wrote:
flyguy89 wrote:
In such a scenario it's also quite probable that newly increased costs in one area (social media/search marketing in this case) could then be taking spend away from native European media. Hard to predict, but certainly not as simple as getting "free money."


My point remains. Whether ad money is paid to Facebook or the Daily Mirror it's very unlikely companies will spend more so that they have to pass on that extra cost to consumers.

As does mine. There are so many potential unforeseen overflow effects from such maneuvers that could negatively impact European companies and consumers. And as I said, a major component of FAANG business is not just base "free" social media platform but direct-to-consumer products...many of which Europeans are already paying a premium for compared to their American counterparts.


If there is one area of business where you can quickly adapt and change your strategy, that's advertising.

Plus, if there's anything the Chinese have proven is that they can live without the western FAANG and make their own versions. Or VK/Yandex in Russia.
 
flyguy89
Posts: 2985
Joined: Tue Feb 24, 2009 6:43 pm

Re: Eu budget of 1.82 T Euro agreed

Wed Aug 05, 2020 4:24 pm

JJJ wrote:
Plus, if there's anything the Chinese have proven is that they can live without the western FAANG and make their own versions. Or VK/Yandex in Russia.

Of course you can technically "live" without it, but then consumers are still paying bearing the costs by being disallowed from purchasing the products they want and forced to purchase a likely sub-optimal, weak sauce, and/or compromised substitute.
 
JJJ
Posts: 3733
Joined: Wed May 31, 2006 5:12 pm

Re: Eu budget of 1.82 T Euro agreed

Wed Aug 05, 2020 4:33 pm

flyguy89 wrote:
JJJ wrote:
Plus, if there's anything the Chinese have proven is that they can live without the western FAANG and make their own versions. Or VK/Yandex in Russia.

Of course you can technically "live" without it, but then consumers are still paying bearing the costs by being disallowed from purchasing the products they want and forced to purchase a likely sub-optimal, weak sauce, and/or compromised substitute.


The only thing optimal about social media is the user base. Whoever has it is in the optimal spot.

That's why Russian businesses spend their ad money in VK and not facebook and Chinese people make their purchases in taobao.
 
AeroVega
Posts: 290
Joined: Tue Nov 20, 2007 4:32 pm

Re: Eu budget of 1.82 T Euro agreed

Wed Aug 05, 2020 8:05 pm

olle wrote:
AeroVega wrote:
Olddog wrote:
It is strange that so many people seem concerned with the 2 trillions debt the EU will create but way less with the 26 trillions debt the US already has.


Total government debt in the Eurozone exceeds 10 trillion. Eurozone debt/GDP ratio is higher than US. But you are right that people in the US should be worried that their debt/GDP ratio is starting to reach European levels.



Do the states in USA carry debt as well?


According to https://www.usgovernmentspending.com/state_debt, yes. About 1.2 trillion in total.
 
flyguy89
Posts: 2985
Joined: Tue Feb 24, 2009 6:43 pm

Re: Eu budget of 1.82 T Euro agreed

Wed Aug 05, 2020 8:26 pm

JJJ wrote:
flyguy89 wrote:
JJJ wrote:
Plus, if there's anything the Chinese have proven is that they can live without the western FAANG and make their own versions. Or VK/Yandex in Russia.

Of course you can technically "live" without it, but then consumers are still paying bearing the costs by being disallowed from purchasing the products they want and forced to purchase a likely sub-optimal, weak sauce, and/or compromised substitute.


The only thing optimal about social media is the user base. Whoever has it is in the optimal spot.

For software platforms, perhaps, but again all these companies are also big players in hardware products.
 
tommy1808
Posts: 13254
Joined: Thu Nov 21, 2013 3:24 pm

Re: Eu budget of 1.82 T Euro agreed

Thu Aug 06, 2020 5:33 am

AeroVega wrote:
Olddog wrote:
It is strange that so many people seem concerned with the 2 trillions debt the EU will create but way less with the 26 trillions debt the US already has.


Total government debt in the Eurozone exceeds 10 trillion. Eurozone debt/GDP ratio is higher than US. But you are right that people in the US should be worried that their debt/GDP ratio is starting to reach European levels.


Debt/GDP Level EU: 84.2%
Debt/GDP Level Eurozone: 86.1%
Debt/GDP Level USA:106.9%

Source:
https://www.statista.com/statistics/269 ... oduct-gdp/
https://tradingeconomics.com/united-sta ... ebt-to-gdp

Seems there are some 3 to 4 trillion before the EU/Eurozone gets to US debt levels.

best regards
Thomas
Well, there is prophecy in the bible after all: 2 Timothy 3:1-6
 
JJJ
Posts: 3733
Joined: Wed May 31, 2006 5:12 pm

Re: Eu budget of 1.82 T Euro agreed

Thu Aug 06, 2020 7:52 am

flyguy89 wrote:
JJJ wrote:
flyguy89 wrote:
Of course you can technically "live" without it, but then consumers are still paying bearing the costs by being disallowed from purchasing the products they want and forced to purchase a likely sub-optimal, weak sauce, and/or compromised substitute.


The only thing optimal about social media is the user base. Whoever has it is in the optimal spot.

For software platforms, perhaps, but again all these companies are also big players in hardware products.


We're basically talking about software here. I don't see Apple having any problem selling in China or Russia. Physical goods are much easier to put rules to.
 
flyguy89
Posts: 2985
Joined: Tue Feb 24, 2009 6:43 pm

Re: Eu budget of 1.82 T Euro agreed

Thu Aug 06, 2020 3:57 pm

JJJ wrote:
flyguy89 wrote:
JJJ wrote:

The only thing optimal about social media is the user base. Whoever has it is in the optimal spot.

For software platforms, perhaps, but again all these companies are also big players in hardware products.


We're basically talking about software here. I don't see Apple having any problem selling in China or Russia. Physical goods are much easier to put rules to.

Not really though since they're talking about placing a discriminatory tax on these companies specifically. There's no reason to think they won't just build that into their overall cost-of-doing-business for Europe to factor into their pricing for their various for-purchase products and services.
 
Olddog
Posts: 1519
Joined: Sat Jun 25, 2016 4:41 pm

Re: Eu budget of 1.82 T Euro agreed

Thu Aug 06, 2020 4:47 pm

They can try and see if the sales say at same level. And if they sell less who cares? Competition will fulfill this void.
Sentence from Belgian PM at press conference forbidden due to new rules
 
AeroVega
Posts: 290
Joined: Tue Nov 20, 2007 4:32 pm

Re: Eu budget of 1.82 T Euro agreed

Thu Aug 06, 2020 5:33 pm

tommy1808 wrote:
AeroVega wrote:
Olddog wrote:
It is strange that so many people seem concerned with the 2 trillions debt the EU will create but way less with the 26 trillions debt the US already has.


Total government debt in the Eurozone exceeds 10 trillion. Eurozone debt/GDP ratio is higher than US. But you are right that people in the US should be worried that their debt/GDP ratio is starting to reach European levels.


Debt/GDP Level EU: 84.2%
Debt/GDP Level Eurozone: 86.1%
Debt/GDP Level USA:106.9%

Source:
https://www.statista.com/statistics/269 ... oduct-gdp/
https://tradingeconomics.com/united-sta ... ebt-to-gdp

Seems there are some 3 to 4 trillion before the EU/Eurozone gets to US debt levels.

best regards
Thomas


The numbers you are comparing do not mean the same thing.

The US figure you quoted is non-consolidated gross debt which includes intragovernmental debt (debt which it owes to itself).

The EU/Eurozone figures you quoted are consolidated gross debt which excludes intragovernmental debt.

Consolidated gross debt of the US was 79.2% of GDP in May 2020 according to https://en.wikipedia.org/wiki/National_ ... ted_States.
 
JJJ
Posts: 3733
Joined: Wed May 31, 2006 5:12 pm

Re: Eu budget of 1.82 T Euro agreed

Thu Aug 06, 2020 5:37 pm

Olddog wrote:
They can try and see if the sales say at same level. And if they sell less who cares? Competition will fulfill this void.


Pretty much. Margins are there.
 
flyguy89
Posts: 2985
Joined: Tue Feb 24, 2009 6:43 pm

Re: Eu budget of 1.82 T Euro agreed

Thu Aug 06, 2020 5:48 pm

Olddog wrote:
They can try and see if the sales say at same level. And if they sell less who cares? Competition will fulfill this void.

Trumpian economics hasn't worked out yet...no reason to think Europeans will have any more success with it.
 
olle
Topic Author
Posts: 2264
Joined: Tue Feb 06, 2007 3:38 am

Re: Eu budget of 1.82 T Euro agreed

Thu Aug 06, 2020 8:04 pm

The more important then debt is trade balance and currency flows. In japan it is locals that handels the debt. In usa it seems to be forreign actors holding the debt.
 
tommy1808
Posts: 13254
Joined: Thu Nov 21, 2013 3:24 pm

Re: Eu budget of 1.82 T Euro agreed

Fri Aug 07, 2020 4:36 am

AeroVega wrote:
Consolidated gross debt of the US was 79.2% of GDP in May 2020 according to https://en.wikipedia.org/wiki/National_ ... ted_States.


that is essentially the same.... especially if you include how much money governments actually have to pay that back.

For the US that is 3.25 years of all tax revenue
For the EU its a little more than 2 years worth of taxes.

best regards
Thomas
Well, there is prophecy in the bible after all: 2 Timothy 3:1-6
 
AeroVega
Posts: 290
Joined: Tue Nov 20, 2007 4:32 pm

Re: Eu budget of 1.82 T Euro agreed

Fri Aug 07, 2020 2:28 pm

tommy1808 wrote:
AeroVega wrote:
Consolidated gross debt of the US was 79.2% of GDP in May 2020 according to https://en.wikipedia.org/wiki/National_ ... ted_States.


that is essentially the same.... especially if you include how much money governments actually have to pay that back.

For the US that is 3.25 years of all tax revenue
For the EU its a little more than 2 years worth of taxes.

best regards
Thomas


Not really a surprise given that tax revenue is 24.3% of GDP in the US and 35.7% in the EU. I personally rather pay less tax than more tax, but that's just me.

Anyway, it is silly to compare EU debt favorably against US debt. Not only because the US actually has less debt than the EU, but also because the US has a much larger reserve of natural resources while not aging quite as fast as the EU.

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