Subpage under development, new version coming soon!
Subject: »PIIGS - economics problems
The moment interest rates went up, the illusion of the Greek welfare state was over.
in the 50s-70s and 80s throughout beginning of the 90s all those states had also comparable high interest rates, from time to time. But back then they were able to print money and increase inflation in their own countries alone.
I'm saying that that growth is not real to me as it's unsustainable to 'buy welfare' in the way the Greek government did.
growth is always real, but sometimes it comes back to haunt you.
The problem is that they did not invest the money they had. Investment meaning there will be some kind of a return some day. But if you take a look at the rest of Europe in most countries it is the same.
If you have no ressources, (following Adam Smith you need to concentrate on labour and capital stock obviously)
Furthermore nowadays with the new distinguished forms you need to concentrate investments on capital: preferably human capital, intellectual it is called I think; and technological progress.
That is basically it, if you do that you can overspend your state budget for 10 years, because there will be an ROI. If you don't do that you are screwed after about a decade. It is no rocket science.
in the 50s-70s and 80s throughout beginning of the 90s all those states had also comparable high interest rates, from time to time. But back then they were able to print money and increase inflation in their own countries alone.
I'm saying that that growth is not real to me as it's unsustainable to 'buy welfare' in the way the Greek government did.
growth is always real, but sometimes it comes back to haunt you.
The problem is that they did not invest the money they had. Investment meaning there will be some kind of a return some day. But if you take a look at the rest of Europe in most countries it is the same.
If you have no ressources, (following Adam Smith you need to concentrate on labour and capital stock obviously)
Furthermore nowadays with the new distinguished forms you need to concentrate investments on capital: preferably human capital, intellectual it is called I think; and technological progress.
That is basically it, if you do that you can overspend your state budget for 10 years, because there will be an ROI. If you don't do that you are screwed after about a decade. It is no rocket science.
in the 50s-70s and 80s throughout beginning of the 90s all those states had also comparable high interest rates, from time to time. But back then they were able to print money and increase inflation in their own countries alone.
Exactly.
That is basically it, if you do that you can overspend your state budget for 10 years, because there will be an ROI. If you don't do that you are screwed after about a decade.
Well, from a neutral POV, this is true. That's what I'm saying: debt itself is not that problematic. If you spent the money well, repayment will not be a big issue. The Greek government did not spent its money well. It chose for popular measures that were unsustainable.
(Although from my POV, public debt is plain wrong; but that doesn't matter here.)
Exactly.
That is basically it, if you do that you can overspend your state budget for 10 years, because there will be an ROI. If you don't do that you are screwed after about a decade.
Well, from a neutral POV, this is true. That's what I'm saying: debt itself is not that problematic. If you spent the money well, repayment will not be a big issue. The Greek government did not spent its money well. It chose for popular measures that were unsustainable.
(Although from my POV, public debt is plain wrong; but that doesn't matter here.)
the real problem we have is an German euro, ruled by a german central bank.
The role of monetary politic of EU central bank (to avoid inflation) is what germany (and it satellites) needs, but not what the rest of Europe need.
Data teel us more than words, look at balance of payments, or at gdp % growt
There are no need for other explanations, there were a lack of democracy, the strongest economy are eating the rest.
The role of monetary politic of EU central bank (to avoid inflation) is what germany (and it satellites) needs, but not what the rest of Europe need.
Data teel us more than words, look at balance of payments, or at gdp % growt
There are no need for other explanations, there were a lack of democracy, the strongest economy are eating the rest.
the real problem we have is an German euro, ruled by a german central bank.
Well, countries can chose:
1) follow a strict (conservative) fiscal policy and try to get your wagon on the rails behind the German locomotive (for Belgium, the German economy is of key importance) and keep the euro; or
2) do not follow that strict fiscal policy, but get out of the euro and get your own currency back so that you can have the monetary and fiscal policy you want.
Quite frankly, I don't care what countries chose. They just have to make a choice. For now, politicians don't seem to be willing to make that choice.
Well, countries can chose:
1) follow a strict (conservative) fiscal policy and try to get your wagon on the rails behind the German locomotive (for Belgium, the German economy is of key importance) and keep the euro; or
2) do not follow that strict fiscal policy, but get out of the euro and get your own currency back so that you can have the monetary and fiscal policy you want.
Quite frankly, I don't care what countries chose. They just have to make a choice. For now, politicians don't seem to be willing to make that choice.
For now, politicians don't seem to be willing to make that choice.
Yes,
our BIGGEST problem is politicians, we don't control them.
Our politicians respond to foreginers investiment banks.
Our prime minister is an evident example.
The only result they are really focusing is in to put in safe the money of the banks. At ANY cost.
Yes,
our BIGGEST problem is politicians, we don't control them.
Our politicians respond to foreginers investiment banks.
Our prime minister is an evident example.
The only result they are really focusing is in to put in safe the money of the banks. At ANY cost.
The banks did nothing wrong. It was government intervention that messed it up. If banks could go broke, they wouldn't take such huge risks. Regulation is not the solution, it's the problem.
our BIGGEST problem is politicians, we don't control them.
Which is why I want to give as little power to politicians as possible.
(edited)
our BIGGEST problem is politicians, we don't control them.
Which is why I want to give as little power to politicians as possible.
(edited)
The banks did nothing wrong. It was government intervention that messed it up. If banks could go broke, they wouldn't take such huge risks. Regulation is not the solution, it's the problem.
Maybe i'm wrong and if yes, can someone explain me with a link please, but during 2008, american banks were recapitalized by their government because of they went broke with very high risks investments... Then i think it is a bank problem who could take any risk because at the end, nations would have to recapitalized them to let the market survive.
Maybe i'm wrong and if yes, can someone explain me with a link please, but during 2008, american banks were recapitalized by their government because of they went broke with very high risks investments... Then i think it is a bank problem who could take any risk because at the end, nations would have to recapitalized them to let the market survive.
Maybe i'm wrong and if yes, can someone explain me with a link please, but during 2008, american banks were recapitalized by their government because of they went broke with very high risks investments... Then i think it is a bank problem who could take any risk because at the end, nations would have to recapitalized them to let the market survive.
And why do those banks take such risks? Because they know the government will recapitalize them when they're in trouble.
So basically, two things could have happened:
- the investments made huge profits to the banks
- the investments made huge deficits after which the government saves them
So the government - unaware of this - motivated the banks to take big risks.
Don't blame the bank for trying to make profits, blame the government for saying "You know what, we'll take the risks, you take the profit".
And why do those banks take such risks? Because they know the government will recapitalize them when they're in trouble.
So basically, two things could have happened:
- the investments made huge profits to the banks
- the investments made huge deficits after which the government saves them
So the government - unaware of this - motivated the banks to take big risks.
Don't blame the bank for trying to make profits, blame the government for saying "You know what, we'll take the risks, you take the profit".
There is here a vicious circle...
Banks take high risks... They know govs will help them... Why ? Because otherwise it will be the ed of the free market... Banks got the power and we now can see why (2008 bubble, piigs problems)... Govs have to keep the whole economy (macro but lso micro) safe otherwise some big riots would happen really fast...
Banks take high risks... They know govs will help them... Why ? Because otherwise it will be the ed of the free market... Banks got the power and we now can see why (2008 bubble, piigs problems)... Govs have to keep the whole economy (macro but lso micro) safe otherwise some big riots would happen really fast...
The banks did nothing wrong. It was government intervention that messed it up. If banks could go broke, they wouldn't take such huge risks. Regulation is not the solution, it's the problem.
the problem is that banks MAKE regulation on their interests.
Regulation itself is necessary, but who are going to be regulated can't write the rules for himself..
the problem is that banks MAKE regulation on their interests.
Regulation itself is necessary, but who are going to be regulated can't write the rules for himself..
the problem is that banks MAKE regulation on their interests.
What do you mean by this?
Regulation itself is necessary, but who are going to be regulated can't write the rules for himself..
Only (general) anti fraud regulation is necessary, the rest is unnecessary government intervention that ruins the market.
What do you mean by this?
Regulation itself is necessary, but who are going to be regulated can't write the rules for himself..
Only (general) anti fraud regulation is necessary, the rest is unnecessary government intervention that ruins the market.
Only (general) anti fraud regulation is necessary, the rest is unnecessary government intervention that ruins the market.
I strongly disagree (and reality and history with me..)
we did this discussion a lot of times, here it's out of topic.
What do you mean by this?
that our democracies are smoke, when the time comes the real ruler shows his strenght.
Banks boards decides for our countries.
I strongly disagree (and reality and history with me..)
we did this discussion a lot of times, here it's out of topic.
What do you mean by this?
that our democracies are smoke, when the time comes the real ruler shows his strenght.
Banks boards decides for our countries.
so, we have same opinion some things.
But you can not feel hurt or surprised, cos as I told you, we raise our own debt for EFSF and we are really poor country, no such huge pensions or salaries that you had past years.
This is true. And this true makes our people very angry about Greek case and this debate started by my post that next greek politicians is cheating. That is sad fact, that's all. You have a lot of riots in greece but I dont think that anything changed there. You know it better, but I dont see it.
I dont know how will this case end but I dont want hear again that EFSF need new limits and new guarantees.
And one more thing, greeks are still rich, huge state property and so, just your current economy is in bad condition. So you can just sell a lot of state properties or maybe few islands and start again also with €. Slovakia sold most of its state companies, also some strategic !! to make our bank sector health, to make some investments and so. Without selling property, you dont have chance alive just with your economy.
But you can not feel hurt or surprised, cos as I told you, we raise our own debt for EFSF and we are really poor country, no such huge pensions or salaries that you had past years.
This is true. And this true makes our people very angry about Greek case and this debate started by my post that next greek politicians is cheating. That is sad fact, that's all. You have a lot of riots in greece but I dont think that anything changed there. You know it better, but I dont see it.
I dont know how will this case end but I dont want hear again that EFSF need new limits and new guarantees.
And one more thing, greeks are still rich, huge state property and so, just your current economy is in bad condition. So you can just sell a lot of state properties or maybe few islands and start again also with €. Slovakia sold most of its state companies, also some strategic !! to make our bank sector health, to make some investments and so. Without selling property, you dont have chance alive just with your economy.
"PIIGS" isn´t a little (too much) pejorative?
who changed the title?
who changed the title?