This is Hans-Werner-Sinnesque propaganda. Italy didn't receive a single cent from Germany. Since you put it that way, Germany still owes Italian citizens war reparations and your government is refusing to pay. What the hell are you babbling about?? The mere thought of having to deal with people like you (and the whole German political spectrum, Die Linke ************** included) is in my view a good enough reason to dissolve the Euro and the European Union and get back to full national sovereignity. Even if it means getting poorer (which obviously isn't the case).
lol...Italy was way richer before the Euro was introduced (and, needless to say, receives no support whatsoever from 'Central and Northern Europe'....the only marginal support came from the ECB, which, last I checked, is Italy's central bank too...not Germany's only). The ignorance among Germans is astounding.
But German growth is exclusively based on the export bubble. And strict salary deflationistic policies were already being pursued by German capitalists long before the Euro was introduced (in addition to the wicked effects that an artifically strong currency creates on salaries, which would be even higher if the Mark was re-introduced). Your scenario would probably mean higher inflation which is seen like the plague by the German elite (and by you, last I checked...you posted an incredibly retarded article by Hans Werner Sinn which, in a decalogue, explicitely stated that widespread poverty is much preferrable to high inflation). Or high interest rates, which would mean the internal market would be depressed just as much as today with no external market to absorb the over-production. I mean, the easiest way to fix intra-Eurozone account imbalances would be by raising German salaries and 'stimulate' internal spending in Germany. There's a reason your government would rather protect the current system even if it meant potentially (if Greece defaults...the ESM program is a loan, and if it works the money will be paid back in full by beneficiary countries) losing a lot of money. Without the Euro any competitive advantage Germany currently holds over other Eurozone countries would be instantly lost. I don't see how one could argue about this fact. It is true that the German working class didn't profit nearly as much from the common currency as German capitalists (or banks...with the common currency international companies operating inside the Eurozone don't need to open up accounts in every country in order to offset currency exchange rate risk anymore, and most of them choose to set up shop in Germany)....but I doubt that would change with a new Mark.
Well you only have German banks to blame for being so poor at business That money was not lent by the german tax payer. As I said before, you are behaving like a poker player who lost his money and now wants to change the rules of the game. Suck it up!
Of course it were German banks but they worked with money saved by Germans. Yes if they would have been better or just more cautious they wouldn't have spent that money in dreck. Doesn't take anything away from the point that they wouldn't have spent it, too, if we still had the DMark. I also am very much for a transfer union. I'm just arguing against the point that Germany is a big Euro winner.
a) That's not true. b) To the degree that exports are excessive, my point is that they're harming Germany. Bubbles are never sustainable. That was my point. Again not true. There was a dent in wage growth afar reunification because East German wages were much higher than their productivity allowed for. But But wages only really stalled at the beginning of the 2000s. My point its that there wouldn't be anything artificial about it. A German currency that would increase in value compared to the other European countries would reflect its economy. The weak Euro is in fact what is artificial here. I'm dead set against inflation. But my scenario wouldn't mean inflation at all, I don't see where you got that from. Purchasing power would grow, but that is not the same as inflation. Wages and prices that would grow would do so in line with productivity gains, which again is not inflation. Just look at Germany's pre-Euro era. I'm certainly in favor of higher interest rates. But that wouldn't depress the internal market, it would only prohibit debt financed consumption on a large scale. I already hinted at that in one of my posts the other day in which I said that I shouldn't be getting zero percent financing deals. I buy the TV now instead of a couple of months from now. But I won't buy any more TV sets than I would buy anyway. So at best, all I achieve is to move consumption in time. At worst, I encourage people to purchase stuff they can't afford. How would that be easy? You can't just order wages to rise uniformly and you can't force people to spend either. Germans (like Italians btw) tend to save more money than Americans or Brits. You can't change that. Of course there are reasons for it. I just happen to think that they're bad. At this point, the only way these loans can possibly be repaid is if the ECB starts to print money like crazy...which has already begun. So to the same degree that Germany gets back its money, the value will be decreased. Wrong again, only the advantage it has through its artificially weak currency would be lost. The know-how would be unaffected. Again, just look at the past. Germany has always been able to compete despite having one of the strongest currencies in the world. It's easy. Just try to understand what I'm writing. I did lay out how that would work in the very post you replied to. And if you don't believe me, just look at the German post-war, pre-euro history, where a strong currency benefitted everybody. Again, why do you think the French were so keen on introducing the Euro in the first place? And why did everybody want to get in? They saw the benefits of a strong currency...unfortunately, they didn't realize that it requires hard work to achieve that, which is why the Euro is now more like the Italian lira than the D-Mark.
Well exactly, the banks should suck it up, not the taxpayers. And Germany's taxpayers are sucking it up, despite the Maastricht treaties banning exactly that. So what really happened was that the Southern countries lost out with their economic model and then tried to change the rules...successfully so...
As for your post...I agree with some of your points (the German working class didn't profit much from the export bubble...which makes it even more disheartening how the average German proletarian fell into nationalistic propaganda with both feet) but I just don't see the same 'rosey' scenario should Germany revert back to the Mark. I think you're underestimating the positive effects the Euro had on your country's economic policies (ECB decisions were tailored around German needs since day one and still are) and the negative effects it had on countries which didn't really share the same 'stability' culture or just had different needs. You can't blame the 'lazy Southerner' for Germany turning into a neo-merchantilistic economy depending on an artificially weak currency (which is the main reason why Greece and Portugal who, unlike Italy or even Spain, from an industrial standpoint pose no real threat are still in) and, more importantly, fierce internal salary deflation. That's a deliberate political decision which pre-dates the existance of the Euro (starts from at least the 1970s, but cheap imported labor was a pillar of West German economy already in the 1950s) and which I heavily doubt would in any way be modified even if the Euro stopped being Germany's currency. It's not like the Euro is the first attempt at sterilizing currency exchange rates across the continent. The so-called 'snake in the tunnel' was conceived in the early 1970s (and West Germany was an ardent supporter).
If the states on the periphery like Greece, Spain, Portugal, Ireland, (and DEFINITELY if you include Italy), suffer significant recessions because of the handling, (mishandling!), of the euro crisis, then there's no WAY Germany won't be adversely effected.
True, that´s why i said most of the southern Europeans. Yeah, yeah without the Euro we would suffer so much in Germany. I mean before the Euro we practically were non existent as an economical power...and had to be financially supported by the rest of Europe all the time. Seems you are a true expert... Btw I really wonder where this legend is coming from, that the Euro would be a German conspiracy to exploit the rest of Europe. Ridiculous really. Btw to your info, the Euro is mainly a French brain child and their intention was certainly not to make Germany stronger with it.
I said most of southern Europe and I didn´t mention Italy as a main beneficiary. That you feel like I was attacking especially Italy just shows your paranoid fear of everything a German says. Btw if you want to be specific, then I indeed would not count northern Italy to the parts which wouldn´t belong to the first world without support from the others. Southern Italy though, which from what I have heard quite a lot of northern Italians would like to get rid off, would be part of that.
In other news, Iceland got out of their recession by just not servicing all the debt their banks had piled up and their economy is now growing stronger than the EU average. Also, support for EU membership has dwindled...
Not sure this is really a practical solution for one reason. Iceland is tiny - yet hit UK investors hard (councils etc). Would a default by Italy be survivable?
Well, basically it shows that an economy similar to Ireland's (albeit smaller) for example got out better by just letting capitalism run its course on their banks. I don't think it shows us a solution towards Greece as you can't copy it, but at the same time I think an early Greek exit of the Euro and subsequent default would have made us avoid some of the problems we are seeing now.
"Despite being hailed as surprisingly painless by government parties, the budget bill is still marked by cutbacks and tax rises — something which opposition parties criticised strongly." Read more: http://www.icenews.is/index.php/2011/12/08/28464/#ixzz1n22vpmUR Iceland did not bail out the banks, but they still had debt, and IMF loans. They raised taxes and cut spending, Iceland also did not have the Euro so they could devaluate their currency.
The private bondholders of Greek debt still need to approve the deal. They're taking a 53% "haircut". I read 95% approval is needed, so the drama may not be over.
Italy is one unified country which receives no external support from anybody (let alone Northern Europe). Same goes for Spain. Alleged internal regional imbalances are none of your business and are resolved internally. Italy is also a net contributor in terms of EU development funds. Last I checked, these 2 nations make about 80% of Southern Europe. That's what 'most of' means in my dictionary.
Only that this is not true. The ECB bought large amounts of bonds in order to bring down interest rates. That's what one would call "external support".
Huh?? The ECB is Italy's and Spain's acting central bank. And those actions were aimed at protecting the common currency. I understand people in Germany tend to see the ECB as their own organ but that isn't the case. Duisenberg's era is over.
No matter how you define it, the ECB has given Italy money, which means that the taxpayers of other countries are on the hook. The ECB is backed by the Euro countries. That's the main difference between the FED buying American bonds and the ECB buying Italian bonds. In Europe we have sovereign countries that are forced (through the ECB) to be liable for each other. That's a major problem, because it gives the wrong incentives. Either these countries cannot be sovereign, or they cannot be held liable for one another. I'm a big supporter of the second alternative, but the worst option is the muddling through we have right now.
Well, Italy gave way more money to the EU than what it (temporarily) received from the ECB in exchange for long-term bonds (which I'm sure the ECB will offload at a profit as soon as the bond market is stabilized). But that's irrelevant. As I said, the ECB acted in its own exclusive interest, and after-market bond acquisitions are allowed by the treaties. The aim was keeping the currency stable and keeping the Eurozone's financial market solvent. This being said, I have issues with having a sovranational central bank too...it's one of the biggest reasons why I'm against the Euro (and have been long before the Greek fiasco).
A three-legged stool with only one leg (a common currency) supporting it. Until & unless there is ALSO fiscal and political union (ie full integration), then the Eurozone is completely stuffed. It will continue to fall over despite any temporary props being put up by the grossly deluded Eurozone politicians & bankers.