European Reality Check

ancona

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I am dumbfounded every time I hear someone in the mainstream media talk about this fund that's supposed to be the salvation for all of Europe. The damn thing hasn't even been ratified yet, the German Constitutional Court has yet to say whether or not it is even constitutional for Germany to participate in it, Holland and I believe Finland want collateral first, etc. etc.

How the hell does a fund that does not even exist yet help anything? To add to the hilarity, they're talking about applying leverage to these Euro's that don't exist yet.

Brilliant!
 
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pmbug

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The "Fixit" scenario in which Finland grows tired of German efforts to bail out other eurozone countries got a boost today from Finnish Finance Minister Jutta Urpilainen, who told a Finnish business paper in an interview that Finland "will not hang itself to the euro at any cost and we are prepared for all scenarios" and that Finland won't endorse mutualization of debts:
She also insisted that a proposed banking union would not work if it were based on joint liability.

"Collective responsibility for other countries' debt, economics and risks; this is not what we should be prepared for," Urpilainen said.
...

More: http://www.slate.com/blogs/moneybox...nister_says_finland_might_leave_the_euro.html
 

benjamen

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The problems in Greece are forcing it's youth to look beyond government employment and into starting their own businesses. Their biggest opposition? The Greek government!

http://www.cnn.com/2012/07/13/opinion/keen-greek-entreprenuers/index.html

"The irony of this nascent Greek digital renaissance is that it probably wouldn't have happened without the economic crisis. In pre-crisis Greece, most Greeks grew up wanting to be public servants. But now that the old clientist state cannot offer lifetime sinecures for university graduates, young Greeks coming out of university now have little else to do except invest their labor in start-ups."

"The biggest problem, of course, remains the oppressively bureaucratic Greek state that, in spite of the crisis, continues to be a major obstacle to entrepreneurial innovation. "Failure in Greece in penalized," John Doxaras told me about a system in which entrepreneurs can end up in jail if they bankrupt their companies. And every Greek start-up entrepreneur I met complained bitterly about arcane and ever-changing bureaucratic regulations that make setting up and running a company frustratingly complex and time-consuming."

:popcorn:
 

pmbug

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Yeah, that's going to work about as well as it always has (it never has).
 

DoChenRollingBearing

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Bad as things are here, they are worse in Europe. Yes, Greece, Spain aand Italy now get the most attention.

But, we were just visiting our travel agent just a little while ago. She said that one of her high-end customers (a couple) were just in PARIS and found it menacing, especially at night even in the Five Star Hotel district.

Keep an eye on Europe! They are perhaps a year or so ahead of us. I do not see a solution that avoids LOTS of pain. Some "solutions" will offer MORE pain than others.
 

bushi

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(...)In pre-crisis Greece, most Greeks grew up wanting to be public servants. But now that the old clientist state cannot offer lifetime sinecures for university graduates, young Greeks coming out of university now have little else to do except invest their labor in start-ups."
(...)
...thank you, I have nothing more to add. Get these fecking governments out of our lives, hose them all, useless pain in our necks paper pushers, so they would have NO OTHER CHOICE, than start doing something productive, that somebody would WILLINGLY pay for (or fecking DIE from starvation!), and bang - economy sorted!

...same for financial institutions. Just make them much less profitable, than "the real economy" (properly designed taxes...), and the situation will heal itself.
 

benjamen

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Things are getting very bad in Spain:
http://www.businessinsider.com/eurozone-danger-mounts-as-spain-spins-out-of-control-2012-7

“We can’t keep going like this for another 15 days,” said Prof Miguel Angel Bernal from Madrid’s Institute of Market Studies. “The European Central Bank has to bring out its heavy artillery.”

"There is deep shock in government circles that the €65bn austerity package passed by the Spanish parliament last week amid bitter protests across the country – and imposed by the EU – has failed to make any difference."

Really, they are shocked that they do the same thing over and over and still get the same result... odd

:noevil:
 

benjamen

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pmbug

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...
"If Greece become insolvent and quits the euro zone, Germany should expect a loss of up to 82 billion euros, while if an insolvent Greece remains within the single currency bloc it would cost Berlin 89 billion euros, Germany's Ifo economics institute estimates."



...
Should I stay or should I go now?
If I go there will be trouble
An' if I stay it will be double
So come on and let me know
...
 

pmbug

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Looks like someone isn't riding the gravy train. That's much too honest and populist a position to come from the captured political class.
 

pmbug

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Looks like Monday is going to be risk off for the headline chasers:

When day after day, for three days in a row last week, the ECB spread rumors that it would commence buying Spanish debt in what was in retrospect nothing but a massive bluff (just as we suggested yesterday), what passes for a market postulated that since there was no official German denial, and with Merkel on vacation that would mean a statement from her finance minister sidekick Wolfgang Schauble, that Germany was ok with the reactivation of Spanish bond buying and as a result ramped risk by over 4% in 3 days. All of that is about to wiped out as Schauble has finally spoken. Quote Spiegel: "For days, it is rumored that the ECB will buy Spanish government bonds in a big way. Now Finance Minister Wolfgang Schaeuble has rejected such reports - there was "no truth". And scene. Luckily all the momo chasers who bought stocks last week on hopes their prayer-based strategy will finally play out, will be able to sell ahead of all those other momo chasers who bought stocks last week on hope their prayer-based strategy will finally play out. Or maybe not.
...

http://www.zerohedge.com/news/schau...n-german-finmin-denies-rumors-ecb-bond-buying
 

ancona

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Sunday night should be fun to watch 'Bug. I hope these knuckleheads finally wake up to the reality of a Europe without a Euro. It is inevitable after all, since regular Germans now realize that their hard work is being used to repay the banksters, and not to truly bail anyone out. It is now and always has been about making the bankers whole. Nothing more and nothing less. The banksters must get their vig, irrespective of the damage it is doing to entire societies. When the people finally have had enough, I will take a deep and satisfying Shaudenfreude in watching the People hand the banksters from lamp-posts by their balls.
 

rblong2us

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The euro doesnt need to disappear.

What needs to happen is that all fiat currencies get revalued based on the gold held by the issuing CB, to back it.

The ECB holds a lot of geld and is not afraid to state its current market value on line 1 of its balance sheet.

How to get from the mad money printing to solid gold backed money though ?

Fiats are a fantastic means of exchange but clearly a poor store of value .....
 

rblong2us

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I was puzzled by this as there seems to be little evidence of a skulking yoof underclass

apparently there is a huge black economy and many work unofficially .......
 

bushi

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I was puzzled by this as there seems to be little evidence of a skulking yoof underclass

apparently there is a huge black economy and many work unofficially .......

..yep, it seems to be the way the dynamics goes everywhere: govts are tightening the screws - with more regulations, taxing and what nots. The more you have of it in the economy, the more "marginal businesses" are pushed into "gray economy" - not full-on criminals, just regular joe shmos, who just could not afford to be in order with all that government drag.

Secondly, many of them can only scrap together enough to make it to the next paycheck, if they still avail for the welfare paychecks (ie, they need X dollars a month to survive/be comfy, but since working illegally, they still qualify to Y dollars of welfare payments, ergo: they are willing to take on jobs that are paying X-Y. And this distortion is ONLY possible because of welfare. With the absence of it, these sub-minimal wages would not exists, since nobody would take on them) Been there, seen that.
 

benjamen

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Love them or hate them, Goldman Sachs usually has more information to make their decisions than we do...
http://finance.yahoo.com/news/goldman-sachs-cut-italy-debt-121410493.html

"Goldman Sachs discloses the firm's credit and market stance for Italy, Greece, Ireland, Portugal and Spain each quarter because those five countries are viewed by investors as Europe's riskiest. The filing today showed that the firm's total market exposure to the five countries also swung to a negative $977 million as of June from a positive $2.68 billion three months earlier as the bank reduced its position in bonds and stocks and purchased more credit derivatives."


What do they know that we do not?
:popcorn:
 

benjamen

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Odd, when you raise your top rate to 75%, the wealthy start to leave??
http://thenewamerican.com/world-news/europe/item/12408-rich-french-citizens-are-leaving-france

Apparently it is immoral to be wealthy...
"Well, it's quite interesting because he's been very clear that he doesn't expect to raise almost any revenue at all from the tax rate. He says what he wants to do is impose a sort of morality on high earners and on what he calls indecent wages."

The neighboring countries love this...
"It is a ridiculous proposal, but it’s great for us. It’s a huge loss for France because people and businesses come to Belgium [which shares its western border with France] and bring their wealth with them."

:popcorn:
 

benjamen

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Wow, talk about rats fleeing a sinking ship:
http://www.marketoracle.co.uk/Article36054.html

"Some veteran observers are claiming that this escalation of physical flight-of-capital out of the Eurozone peripheral nations is reminiscent of war time stories last heard of during the time of fascist dictators like Mussolini in Italy and General Franco in Spain in the 1930s and 1940s."

Watch the pretty flames as Europe burns...
:popcorn:


As an aside:
http://www.smh.com.au/world/nose-for-money--labradors-home-in-on-hidden-fortunes-20120813-244at.html
They used to use dogs to sniff out drugs. Now the new illegal contraband they are sniffing for is money?!
 
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benjamen

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http://www.telegraph.co.uk/finance/...nship-as-Spain-warns-over-bail-out-terms.html

"In an escalating game of brinkmanship, Spanish finance minister Luis de Guindos said his country is not yet willing to sign a Memorandum giving up fiscal sovereignty to EU inspectors."

Translation: We want free money, with no drawbacks.

"Capital flight has been running at an annual rate of 50pc of GDP, more than twice the rate in Indonesia during the Asian meltdown in the 1990s.

Foreigners have sold Spanish securities worth 19pc of GDP over the past quarter. Spanish residents have shipped funds worth 16.7pc of GDP into foreign bank accounts."

Translation: The rats are fleeing the sinking ship

:popcorn:
 

pmbug

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Pigs may not fly yet, but Euro capital certainly does!
 

benjamen

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rblong2us

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My lad generally spends a few weeks in Southern Spain during the winter so he can practise MX Freestyle riding.

Hes got fed up with me asking if he sees evidence of 50% youth unemployment or a general downturn, as he just didnt see anything except cheap apartments as evidence of any problem.

He recently had an email from a friend over there who owns a dirtbike business.
He has moved out of his premises and rented em to someone who supplies granite worktops ........ because in June-July it was like a switch got thrown and everything just stopped.
No one is spending money ( apart from the odd idiot 'needing' granite worktops ) and the local authouities, who grade, water and manage the many motocross practise tracks have run out of money.
It has all simply stopped and the effect on everyone is much like we have seen in Greece.

Anyone here able to correlate / confirm this ?
 

pmbug

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The Germans had a strong and painful (Weimar Republic) history with the consequences of Draghi's proposed solution. They have not forgotten.
 

benjamen

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It is amazing what you can run across while researching! As bad off as they are now, the Italians had to cheat just to get into the Euro in the first place.

http://www.economist.com/node/3490654/print?story_id=3490654

"In 1996 and 1997 Italy (yes, again) was desperate to reduce its public-sector deficit so that the country would qualify for entry into the euro. One unintended boost came from the sale of the postal bonds described above—bizarrely, because they matured after the euro deadline, they were not counted as current debt. But the stroke of genius by officials in Italy's finance ministry was to enter into a secret trade that simultaneously brought in cash, took some debt off the books and deferred the repayment of the cash and the debt until after the euro deadline had been successfully reached.

Many economists were amazed when Italy defied expectations to qualify for the euro. And its admission into the system has been worth an incalculable fortune. It has brought huge savings via systematically lower interest rates and greater economic efficiency. Had Italy not qualified, its economy might have crumbled. Certainly, its public-sector finances would be in dire straits.

The trade itself was fairly simple, though complicated enough to ensure that it came to light only in late 2001, when Gustavo Piga, an economics professor, stumbled across it while studying public-debt policies. Essentially, Italy used a swap to defer interest payments on an issue of $1.7 billion of yen-denominated bonds that it had made in 1995, at the same time taking an up-front payment for the swap that was later repaid with interest. Thus was Italy able to make it into the euro, merely at the price of a big repayment on the swap in 1998."

:noevil:
 

benjamen

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http://hat4uk.wordpress.com/2012/09/09/the-esms-articles-todays-must-read/

Quotes from the ESM Charter:

"Article 32, para 3: The ESM, its property, funding and assets, wherever located and by whomsoever held, shall enjoy immunity from every form of judicial process."

"para 4: The property, funding and assets of the ESM shall, wherever located and by whomsoever held, be immune from search, requisition, confiscation, expropriation or any other form of seizure, taking or foreclosure by executive, judicial, administrative or legislative action"

"Article 35, para 1: In the interest of the ESM, the Chairperson of the Board of Governors, Governors, alternate Governors, Directors, alternate Directors, as well as the Managing Director and other staff members shall be immune from legal proceedings with respect to acts performed by them in their official capacity and shall enjoy inviolability in respect of their official papers and documents."

‘The archives of the ESM and all documents belonging to the ESM or held by it, shall be inviolable. The premises of the ESM shall be inviolable.’

:noevil:
 

pmbug

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You need to explore job opportunities at the Securities and Exchange Commission and then you can watch all the porn youtube videos you like while at work.
 

benjamen

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http://www.24hgold.com/english/news...0049276G10020&redirect=false&contributor=Mish

Wow, this article made my head hurt! How are Italian companies supposed to get anything done?!

One important part of the article was regarding the expiring tax shield on the small businesses in Italy. Note that small businesses in Italy comprise almost half of all employment in that country (compared to ~30% Euro wide). What will happen in January if these small businesses have to pay even more taxes?

:popcorn:
 

benjamen

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pmbug

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