Germany uber alles
The only nation immune from the crisis of the euro is Germany. We’ll have to start to understand the reasons for this. If a nation like Greece, that is worth 2% of the GDP of the EU, risks making it collapse, we need to ask ourselves a few questions about the capacity of the current construction of Europe and on what basis we are placing our feet. The data on the “spread” of the last decade between any old country of the euro zone and Germany demonstrates the unsustainability of a single currency for European economies. The difference between the public bonds of the various States and the German bund has increased not just for Greece or for Italy, but also for Holland that has gone from 0.2% to 0.5%, for Spain from 0.3 to 4.1% or for France from 0.1 to 1.76% (*), all the figures are increasing. Basically the distance between Germany and the rest of Europe is increasing for everyone, at different rates. And we are all at risk of ending up like Greece in the long term. No State can stay hooked up to the German locomotive.
Germany is absorbing liquidity from the European States like a black hole. It’s the cash box of the continent. In fact anyone who sells Spanish or Italian bonds, is today buying “bund” that have a lower return, but that give greater guarantees. Germany, thanks to the euro, has increased its exports to other member countries. If the Italian were to pay for a German product in lira, or the Spanish person in peseta, exports from Germany would go down. The euro does not represent the national economies that have adopted it, the countries that are getting further away from each other, not getting closer together. The euro is the symptom, not the problem. The EU doesn’t have common fiscal policies, shared measures for constructed budgetary laws deciding expenditure policies and accounts of the different States. It’s the equivalent of a group of people who live in the same condominium in which some people throw money from the window, someone else cleans the stairs for everyone, doorstep recycling is done only by the tenants on the first floor who are also the only ones to pay the expenses of the condominium. It’s obvious that living together like that cannot last, just as it is equally obvious that the European Union has to follow and not anticipate a political union. You start with your head not your wallet. Unfortunately you see it’s morning by the “superpassera” in the government.
(*) source OECD date: 11 November 2011
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Posted by Beppe Grillo at 04:51 PM in Economics
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Heard the one about Italy, Greece and Europe now part of the Goldman Sachs group with the new board comprising ex Goldman Sachs people, Monti, Draghi and Papadamemas to look after us.
The future sounds promising
Posted by: peter fieldman | November 17, 2011 10:50 AM
Liberalization and social equity is a contradiction in terms. Marx's doctrine and Berlusconi's personality are not responsible for the crisis: greedy bankers are. The problem of youth unemployment is general unemployment. Monti's reforms: too little too late. The economy has to be overhauled not reformed. Jobs are the solution. Education and research leads to jobs. Tax evaders are criminals.
The euro was adopted to facilatate corporate and banks' transactions.
The euro benefited the rich.
I think euros are printed by the European Central Bank.
I don't know if it's privately owned like the American Federal Bank is privately owned by a group of oligarchs.
Posted by: Sirious3 | November 16, 2011 08:34 PM
Question to be asked: WHO PRINTS THE EURO NOTES IN THE UE???????????????
Posted by: Lili A. | November 16, 2011 07:39 PM
Question to be asked: WHO PRINTS THE EURO NOTES IN THE UE???????????????
Posted by: Lili A. | November 16, 2011 07:39 PM
Question to be asked: WHO PRINTS THE EURO NOTES IN THE UE???????????????
Posted by: Lili A. | November 16, 2011 07:38 PM
Finally somebody raises the ultimate question about why it was decided to adopt the single currency and who benefited, or "cui prodest" as the old romans said. This is the real question we should have asked even before the Euro came to life, when the financial markets globalization started in the eighties.
There was no major exchange rate risk even before the euro in Europe as there was a quasi fixed exchange rate system with the ECU, so the Euro was not done to help the companies exporting more and to spur the real economy.
When Prodi commented on the Euro coming into force he said it was "un grande momento per l'Europa", nothing to do with a real economic rationale for such a costly and impacting decision.
Right now we are defending the euro just to allow billionaire speculators to sell future so many Italian and Greek bonds that the prices drop, and they can reap enormous profits just by harvesting the difference. All this is done with credit openings by banks and by putting at stake very little of their personal money, but proves highly detrimental to all those average citizens that see social expenditure cut in their own countries.
There is no benefit whatsoever for the vast majority of world population from a global continuous and free currency and stock market. Let us stop favouring the rich and reintroduce financial market regulations and national currencies. And if some countries need to fail, let them fail in a controlled manner, so that resources freed from default, and from paying interests to the rich are finally invested in growth and redistribution measures.
Posted by: Francesco Trombetta | November 16, 2011 06:18 PM