The European Union News Thread

Discussion in 'International News' started by Nico Limmat, Nov 4, 2009.

  1. Naughtius Maximus

    Jul 10, 2001
    Shropshire
    Club:
    Chelsea FC
    Nat'l Team:
    England
    Iceland also stiffed a lot of the people they owed money to, including the UK government who had to pay back money invested in their banks.
     
  2. 96Squig

    96Squig Member

    Feb 4, 2004
    Hanover
    Club:
    Hannover 96
    Nat'l Team:
    Netherlands
    Isn't that how capitalism works, though? I mean look at all the 'good' saving the banks brought to Ireland. They basically socialized the risk of banking (in the case of money lent to Greece, to all Europeans... yay!)
     
  3. Matt Clark

    Matt Clark Member

    Dec 19, 1999
    Liverpool
    Club:
    Liverpool FC
    It's not how capitalism works, it's how the version of capitalism that our political and commercial class have developed in the past 30 years works.

    That's the nub of the long-overdue debate that is now taking place about capitalism and its role in a modern democratic society.

    Lloyds Banking Group this week introduced an interesting initiative: from now on, bankers will have to pay back received, or forego due, portions of their bonus if deals they were based on turn sour further down the line. It will be really instructive to see how that plays out - as a model for the whole banking industry, it is certainly an improvement on the status quo. It is also an example of the form of rebalancing, rather than rebuilding, of the capitalist machine that we require.
     
  4. benztown

    benztown Member+

    Jun 24, 2005
    Club:
    VfB Stuttgart
    The way capitalism should work is quite simple: I take the risk, I bear the consequences.

    Unfortunately, in the wake of the crisis these two parts have been decoupled.
     
  5. The Jitty Slitter

    The Jitty Slitter Moderator
    Staff Member

    Bayern München
    Germany
    Jul 23, 2004
    Fascist Hellscape
    Club:
    FC Sankt Pauli
    Nat'l Team:
    Belgium
    They have been decoupled since the 80s.

    The problem is fairly well illustrated by football

    I take massive risks with company money while taking massive pay.

    I isolate the losses into the company shell and pass them on to HMRC
     
  6. Matt Clark

    Matt Clark Member

    Dec 19, 1999
    Liverpool
    Club:
    Liverpool FC
    But capitalism has never worked that way. Look at the government interventions in the UK and the United Provinces in the aftermath of the South Sea bubble, or the way the East India Company did business off the back of the apparatus of the British state. Saying something "should" work in a given way is futile.

    One of the problems with capitalism is that its more fervent adherents still delude themselves, as communists did throughout the 20th Century, that their mechanism possesses a systemic purity which raises it above logical fault. That it is, by extension, only human foible that is problematic.

    Which is simultaneously true and meaningless. It is also the basis on which politicians and corporations and "free"-market ideologues of every hue can deflect attempts to change the system by branding them regressive in terms of prosperity, freedom and other high-blown and inappropriate factors.

    It's high time that we achieve the general shift of consciousness, at all levels of western society, required to accept that capitalism is just another half-workable mechanic. It's less broken than others, but it's not inherently useful to the future of humanity unless tethered by a collective, honest appraisal and management of the human factor.
     
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  7. The Jitty Slitter

    The Jitty Slitter Moderator
    Staff Member

    Bayern München
    Germany
    Jul 23, 2004
    Fascist Hellscape
    Club:
    FC Sankt Pauli
    Nat'l Team:
    Belgium
    Amen.
     
  8. The Jitty Slitter

    The Jitty Slitter Moderator
    Staff Member

    Bayern München
    Germany
    Jul 23, 2004
    Fascist Hellscape
    Club:
    FC Sankt Pauli
    Nat'l Team:
    Belgium
    Maybe one can only truly understand this if one experienced Thatcher or 'Rogernomics' or one of the other free market revolutions.

    Under the hood lurked extreme waste and ideologically driven stupidity.
     
  9. Matt Clark

    Matt Clark Member

    Dec 19, 1999
    Liverpool
    Club:
    Liverpool FC
    And - most pertinent now - short-termism.
     
  10. Naughtius Maximus

    Jul 10, 2001
    Shropshire
    Club:
    Chelsea FC
    Nat'l Team:
    England
    Not just on a macroeconomic scale either, but in individual businesses.

    I know you all love my anecdotes so I won't deprive you of this one ;).

    An old mate of mine worked at Ford Motor Company back in the late 60's when computers were first being introduced to the business world. They were using a system to keep stock records and maintain the 'correct' number of parts for the assembly lines.

    In the way of things, (particularly computer things ;)), the system didn't work but, due to the fact that only the programmers, (who often never discussed the matter with the users in those days), knew how it worked and they were FAR too busy to be bothered with the matter, they ended up simply amending the number of certain parts to ensure the delivery of others they needed to build cars. This meant that, at one point, they were down to the tune of around 8,000 tyres which they didn't actually have.

    So what does one do about it? Easy! They simply build a big pile of tyres and leave a 'hole' in the middle where the missing 7-8,000 tyres SHOULD be :D

    Point being that the best way to 'cure' people who think that private enterprise is always efficient is often to let them see it in operation at a high level for an extended period.

    Unfortunately there's a certain type of person that believes the banking crisis, for example, is an aberration of private enterprise. It's not... It's the norm.

    As the video I linked to earlier in this discussion shows, left to it's own devices business will quite happily create bubble after bubble with various parts periodically going belly up every 20-30 years. We need governments to manage things because, left to their own devices private enterprise is every BIT as capable of the same degree of incompetence, hubris and mendacity as governments of almost ANY persuasion.

    As I've repeatedly pointed out in this thread, the euro-crisis was largely caused by the banking crisis, not the other way round, and that was caused by the deregulation of banks which are private companies.

    If you factor in the other point I've raised, (that a lot of what business does doesn't improve 'the human condition' one iota), then they're probably neck and neck in levels of inefficiency and stupidity as most governments.
     
  11. jmartin1966

    jmartin1966 Member+

    Jun 13, 2004
    Chicago

    My prediction is top Lloyd's deal bankers move to different banks.
     
  12. lurking

    lurking Member+

    Feb 9, 2002
    Club:
    San Jose Earthquakes
    Nat'l Team:
    United States
    My prediction is if they do it doesnt hurt Lloyds bottom line much.
     
  13. Homa

    Homa Member

    Feb 4, 2008
    Aachen
    Club:
    FC Schalke 04
    Nat'l Team:
    Germany
    But, but they're the brightest and most bestest people on Earth ever. EVER!!!

    We lowly scum should be infinitely proud and happy that they are still here and haven't long long emigrated to Olympus to party with Aphrodite and Dionysos or making Zeus jealous with stories about their numerous female "conquests".

    Oh we poor that are so blessed standing under those shining examples of all that is good in humanity. Getting sprayed with all the goodness that comes trickling done to our unworthy selfs once our financial gods sifted out all the bad stuff that could warp our morals.

    Uncle Ruckus, no relation, has the right hunch but it isn't the White Man to whom our undying and unyielding fealty belongs but the Financial Priest, preferably but not necessarily white.

    The FPs are the only ones who can read and interpret the will of the GODS in indices, share prices, bond yields and all the other Financial Omens. Only through them can we reach salvation.

    Only they can save us from the terrible, allconsuming evil. The thing that makes even Titans and Olympians tremble. Dare you speak its name?

    SOCIALISM! With its helper the gruesome Government Ghouls who consume all the goodness in the world and the terrible Tax Terror who sucks dry our benevelont overlords so they can no longer save us.


    So pray and PAY! Pray and PAY!
     
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  14. Naughtius Maximus

    Jul 10, 2001
    Shropshire
    Club:
    Chelsea FC
    Nat'l Team:
    England
    It's all part of this idea that there are only a few people who understand the magic of the financial instruments that make the money when it's perfectly obvious now that NOBODY understands them, including the people that use them.

    In any event, as someone said on Newsnight the other night, the wage rates in places like Germany are about half what they are in the UK for the same job so, on that basis they would all give up their jobs and move to the UK and the states and they haven't.
     
  15. Matt Clark

    Matt Clark Member

    Dec 19, 1999
    Liverpool
    Club:
    Liverpool FC
    Oh, I do hope so. That is easily the most absurd and tiresome bluff the banking industry has. Our collective response should be "Go on then. Fuck off."

    That whole shtick only works because we let it.
     
  16. dmar

    dmar Member

    Jan 21, 2002
    Madrid, Spain
    Club:
    Real Madrid
    Nat'l Team:
    Spain
    Some observations from this part of the EuroRealm:

    -Spanish job market reform put enormous power in the hands of employers (yes, the same guys who have a incurred in debt amounting to 130+% of GDP). No measures taken to decrease the rotation and situation of young workers, just pure competitive deflation.

    -The newest iteration of the banking system reform from Banco Santander er... the Governmet is extremely timid, will help create an oligopoly, will avoid bankrupcies or nationalizations and the assumption of responsibilities by the corrupt and incompetent CEOs of savings bank while being done with covert public funding.

    -Budget for 2012 won't be known untile the elections in Andalusia are done with by the end of this month. Reason is widely speculated to be that Rajoy doesn't want to hinder his party's chances and want to make public the bulk of the cuts after they've won that region.

    -Torrelodones is a small but affluent town in North of the Madrid region. In the last elections a group of neighbours formed a political party and won the city council. They've increased the budget surplus from 0.6M€ to 5.4M€ by applying a mix honesty and common sense.
    Which shows that deficit reduction can be possible and relatively non-traumatic as long as it affects the para-public sector (advisors, contractors, the host of otherwise unemployable non-civil service public employees, semi-public corporations, etc...) that lives in symbiotic relationship with corrupt politicians.

    -Another one the bright side: Spain balanced its commerce with the EU and achieved a surplus for the first time since 1995 (+1660M€). Exports are sluggishly taking off, and have risen to a 20% of GDP: http://www.thecorner.eu/2012/02/sorpresa-spanish-exports-grows-faster-german/
     
  17. nicephoras

    nicephoras A very stable genius

    Fucklechester Rangers
    Jul 22, 2001
    Eastern Seaboard of Yo! Semite
    So, how's that austerity working out for you guys? I see Greece, Ireland and Spain are all doing well and......wait, what? They're in recession? As is the whole Eurozone? Which was only bailed out when the ECB finally got the balls to print some money? I'm shocked, I tell you, shocked. Anywhoo........

    :rolleyes: These have never been fully coupled. Capitalism in its purest form would potentially work that way, but in its purest form capitalism doesn't work for plenty of markets; why would anyone medically insure a person with a pre-existing condition? Who wants fire services provided at a market rate? (Your house is burning? Well, that'll be 7 times the fee!)
    Besides which, the whole point of the bailouts has been to save the system as a whole, not just the people who took risks. Plenty of people who took no risks would have been obliterated if we let everyone who took any risk completely fail.

    Finally, let's be clear - capitalism is not a risk assigning mechanism, it is a mechanism for allocating assets efficiently in response to supply and demand. Sometimes the overall allocation is improved by decoupling risk.

    Lloyds is a third tier bank that probably doesn't make money from its bankers; I'm not sure this will really matter.

    If Lloyd's had any, they would, yes. But then again, this is Lloyd's, not Goldman.

    See above.

    While I'm hardly going to extoll the virtues of all bankers or claim they need to make more money, I can tell you that working in finance is difficult, yes.

    I see that you've been converted to a football salary cap system - welcome, brother!
     
  18. The Jitty Slitter

    The Jitty Slitter Moderator
    Staff Member

    Bayern München
    Germany
    Jul 23, 2004
    Fascist Hellscape
    Club:
    FC Sankt Pauli
    Nat'l Team:
    Belgium
    I was at the Hotel Investment Forum Conference this week - basically the key get together for all the CEO's from the various brands

    Some themes:

    1. The banks are not functioning properly (not lending to support investment in new assets)

    2. Consumer confidence in the west is screwed

    3. Most countries are dependent on export to drive GDP - see next point

    4. 100 countries are doing or planning austerity - ROH ROH SHAGGY!

    5. Corporates continue to hoard cash - this is about protection versus future shocks rather than lack of opportunity - there is loads of opportunity.

    = Epic leadership failure.

    All that said, there was a general recognition that it isn't going to improve anytime soon so companies intend to get on with it as they have to show numbers to the shareholders.

    Overall I think it was interesting that where you take a global industry which is heavily interlinked and networked into the real economy and then shit on it - you get big trouble.

    Government needs to provide a functioning business environment.

    If you provide a negative environment, then corporates will continue to behave the same way.
     
  19. benztown

    benztown Member+

    Jun 24, 2005
    Club:
    VfB Stuttgart
    1) Nobody claimed that austerity will be a short term fix of the situation. It's not a cure, it's a preventive measure that is supposed to protect us from future crises.

    2) Of course less spending leads to a recession, GDP is after all defined as the money spent. That doesn't necessarily reflect the real economy. As I pointed out before, US GDP is the highest it has ever been, does that mean that the average American is better off, has a better, more secure job, more money to spend, more stuff to own? Obviously not.

    3) Who's supposed to pay for the spending programs anyway? Nobody gives these countries credit at reasonable conditions if they don't promise to be austere.

    I specifically said that there are areas like health care that should not be governed by the free market. But there we don't pretend it is. If banking should fall into that category, than banks can't be private corporations but need to be government controlled.

    I think banking can and should be private, but that means that the risks should also be private.
     
  20. laasan

    laasan Member

    Apr 12, 2010
    it also shows that far too many people in this country are far too passive and not constructive at all. most people are busy complaining about the corrupt politicians, and that no-one trusts them, are always happy to join the masses to be against something, but actually taking things into their hands and be constructive occurs to very few. I'm glad to learn that there are at least some.
     
  21. mattteo

    mattteo Member

    Jul 19, 2006
    Nat'l Team:
    Italy
    'Us' who??
     
  22. nicephoras

    nicephoras A very stable genius

    Fucklechester Rangers
    Jul 22, 2001
    Eastern Seaboard of Yo! Semite
    Except that taking preventative measures for future crisis while in a current crisis is stupid.

    This is a nonsense point, because it ignores the relationship between private and government spending. The reason why cutting government spending drastically was stupid is because private spending was massively down - this just causes a spiral or depression and deflation - witness Greece and Ireland, and, to a lesser extent, Spain and Portugal.

    I believe the United States is an excellent answer to your question. Meanwhile, your new talking point of "they have to be austere to get funding" is a reflection that (a) many other people share your poor analysis of the situation (cut now now now now!) and (b) the inability to realize that without the ability to inflate, the PIIGS can't recover competitiveness fast enough to grow out of this crisis. The reason why austerity has been imposed is due to the structural issues in the Euro, like the ridiculous imbalance of transfer payments. Issues that you claimed don't exist/matter.
    In addition, the ECB should have paid earlier and is now indirectly paying for it. Good on Mario!

    :confused: Of course we "pretend" it is. In nearly every capitalist country, England excluded, health care retains a lot of free market elements.

    Again, a nonsense point, because the risks of one bank can swamp 20. In that situation, one can stand athwart logic and behind principle while declaring no bailouts, and inaugurate the next Great Depression. Or one can suck down the bile that comes from saving those who took risks and bail out everyone to ensure the economy doesn't go out in flames. You can't eat principles of economic freedom, you can't sleep in them or warm yourself by them.
     
  23. Naughtius Maximus

    Jul 10, 2001
    Shropshire
    Club:
    Chelsea FC
    Nat'l Team:
    England
    Andrew Neil said on 'The Daily Politics' today that the next one to keep an eye on is Portugal. The idea that this ends with Greece, (which isn't even true in itself), is nonsense.
    It was only ever a 'quick and dirty' solution to a dirty, (albeit probably slow), problem.
    It's all part of this idea that capitalism works in a particular way, ('pure', as you describe it), when anyone who's had any real experience of it KNOWS that's not the case.
    As opposed to being a brain surgeon or a nuclear physicist y'mean?

    Look, I understand your point and I agree that a lot of the stuff we've heard saying that any schmuck could do it, (which begs the question as to why they don't), is claptrap but it's ALSO true to say that if wages in the field were halved then it would still be possible to fill the vacancies and, (as the banking crisis proved), the reduction in the quality of the work wouldn't reduce by a whole lot.

    One thing that's been illustrated by the various investigations that have occurred is that quite a few of the people in the field were people like sales staff getting paid commission on things that were, at the end of the day, entirely fictitious. People using complex mathematical modelling for asset valuations obviously did NOT understand what the thing was actually modelling or, if they DID, they, (or the people above them PAID to), didn't care if it was correct or not.

    IOW one thing we can be sure of is that the people paid to do some of the work obviously weren't doing it. Under those circumstances it's not really possible to argue that they all deserve to continue earning whatever squillions they were getting, is it.
    How? By making this crisis continue for ever? Because that's the only thing it's doing.
     
  24. nicephoras

    nicephoras A very stable genius

    Fucklechester Rangers
    Jul 22, 2001
    Eastern Seaboard of Yo! Semite
    That's obvious - Portugal has to pay @13% to borrow right now, it's traditional exports (shoes, textiles) are grossly uncompetitive due to Asia and the Euro and its economy is shrinking. They're not quite Greece, but it's not a happy situation. They're just not rioting, so no one pays attention to them.

    Right - and a quick and dirty solution is much better than a good solution that comes far too late. You cut corners in a crisis because you have to.

    Well, that generally gets back to the "people are the problem" view, which has a lot of merit.

    I haven't argued that people in finance need to be paid what they're getting paid now. I've just said that we're talking about difficult stuff here. Whether it's all stuff that's even societally useful, at the end of the day, is a different question. But it's not easy.
     
  25. Naughtius Maximus

    Jul 10, 2001
    Shropshire
    Club:
    Chelsea FC
    Nat'l Team:
    England
    Give us time mate, give us time :(
    Yeah, fair enough.

    Funnily enough the daughter of my old next door neighbour did applied mathematics at Cambridge and worked at one of the big analysis firms in the city. Some years ago I discussed with her how they modelled economies at a macro level and, as she said, it can seem a little flakey when you get into the detail of it because it all rather assumes everything in one area will continue pretty much the same if another area changes but the thing is, if another area changes radically enough it DOESN'T remain the same... quite the contrary.

    I'm going back 20+ years now and I'm not in touch with her any more. I've wondered many times over the past couple of years whether she saw this all coming and/or to what extent.

    BTW, don't know if I've mentioned it before but Nassim Nicholas Taleb: The Black Swan: The Impact of the Highly Improbable is an interesting read if you get the chance.

    Actually I think I have mentioned it :)
     

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