Liverpool FC Forum

by **JoeTerp** » Fri Feb 12, 2010 12:35 am

theoretically, it seems that this system would allow for more people not in the big parties to get elected because more and more people wouldn't feel that they are "wasting" their vote if they vote for the smaller guy, which is one of the biggest things holding them back. But none of it matters in the end.

In the words of Hoppe, Democracy is the God that Failed.

by **JoeTerp** » Fri Feb 12, 2010 11:32 am

made in UK wrote:Nothing to do with the referendum per say, but I hope all that hot air of exchanging the Pound for the Euro has stopped. Countries like Spain, Portugual and Greece and in debts of Billions and each individual country can do feck all with their interest rates as thats commanded buy some French banker for the Euro as a whole. The interest rate is the countries first line of defence in helping an economy all the countries who have the Euro don't have that anymore as its governed by some tw@t elsewhere. The Euro is feck! I read that it is so bad now, that it can drag the UK back into a recession with it because the Euro's are resisting buying our export at a high price in comparison. Also I read that some countries in the future may break away from the shackles of the Euro and go back to an independent currency.

Long live the Pound!

speaking of the PIGS and the Euro . . .

The Bailout of Greece and the End of the Euro
Thursday, February 11, 2010 by Philipp Bagus

"If the interest rate Greece has to pay for its debts keeps rising, the country may have to default on its obligations."
The euro has been sliding against the US dollar for weeks. Concerns about the public finances of eurozone countries Portugal, Ireland, Greece, and Spain, the so-called "PIGS," have emerged in financial markets. Greece is facing the severest crisis, with its 10-year bond yield approaching 7%. The Greek government estimates its budget deficit at 12.7% of GDP in 2009. Gross government debts amount to 113% of its GDP. If the interest rate Greece has to pay for its debts keeps rising, the country may have to default on its obligations.

In an attempt to recoup confidence in the future of the country, the Greek government has announced a freeze on public salaries, a reduction in the number of public servants, and an increase in taxes on gas, tobacco, alcohol, and big real-estate properties. This should help to reduce the deficit to 8% in 2010. However, the markets do not trust this solution.

While the increase in taxes will cause new problems for the Greeks, other problems remain unaddressed: The huge public sector has not been substantially reduced. Wage rates remain uncompetitive as a result of strong labor unions.

Moreover, it is not clear if the government can stick to these small spending cuts, as there will be a general strike in February. In December 2008, Greece experienced riots against comparatively minor political reforms. As the majority of the population seems to be against spending cuts, the government may not be able to prevent the bankruptcy of the country.

For years, the Greek government has demonstrated rather thriftless spending behavior. This was exacerbated when Greece started to pay lower interest rates on government bonds by virtue of having entered the European Economic and Monetary Union.

Greece's interest rates were subsidized due to an implicit guarantee from the strong members of the eurozone, who were expected to support weaker members in times of trouble. During the first years of the euro, interest rates on Greek bonds were thus reduced; they approached German bond yields. Greece spent wildly but paid interest rates like a much more conservative country. Meanwhile, the Greek economy and voting public adapted to government spending subsidized by low interest rates.

When the global financial crisis broke out, deficits of both strong and weak eurozone countries widened. Stronger countries had their own problems and people started to doubt that they would support the weaker countries in an emergency. Furthermore, the difference between the interest rate that Greece had to pay on its bonds and the rate Germany had to pay increased.

Today the question is, will Greece be bailed out by the rest of the countries? The officials of the weaker countries tend to emphasize the solidarity of the union, while the stronger countries make it clear that there will be no bailout.

Yet, the whole debate is misleading: Greece is already being bailed out by the rest of the union. The European Central Bank (ECB) accepts Greek government bonds as collateral for their lending operations.[1] European banks may buy Greek government bonds (now paying a premium in comparison to German bonds of more than 3%) and use these bonds to get a loan from the ECB at 1% interest — a highly profitable deal.

"The future of the euro is dark because there are such strong incentives for reckless fiscal behavior, not only for Greece but also for other countries."
The banks buy the Greek bonds because they know that the ECB will accept these bonds as collateral for new loans. As the interest rate paid to the ECB is lower than the interest received from Greece, there is a demand for these Greek bonds. Without the acceptance of Greek bonds by the ECB as collateral for its loans, Greece would have to pay much higher interest rates than it does now. Greece is, therefore, already being bailed out.

The other countries of the eurozone pay the bill. New euros are, effectively, created by the ECB accepting Greek government bonds as collateral. Greek debts are monetized, and the Greek government spends the money it receives from the bonds to secure support among its population.

Prices start to rise in Greece, and the money flows to other countries, bidding up prices throughout the eurozone. Abroad, people see their buying costs rising faster than their incomes. This is a redistribution in favor of Greece. The Greek government is being bailed out by a constant transfer of purchasing power from the rest of Europe.

The future of the euro is dark because there are such strong incentives for reckless fiscal behavior, not only for Greece but also for other countries. Some of them are in situations similar Greece's. In Spain, official unemployment is approaching 20% and public deficit is 11.4% of GDP. Portugal announced a plan to privatize national assets as its deficit is at 9.3% of GDP. Ireland's housing bubble burst with a deficit of 11.5% of GDP.

The incentives for irresponsible behavior for these and other countries are clear. Why pay for your expenditures by raising unpopular taxes? Why not issue bonds that will be purchased by the creation of new money, even if it finally increases prices in the whole eurozone? Why not externalize the costs of the government expenditures that are so vital to securing political power?

In our monetary system, property rights in money are not adequately defined or defended, giving rise to inflationary credit expansion. Our fiat fractional-reserve banking system produces a tragedy of the commons, leading to an overexploitation of resources.

A typical example of a tragedy of the commons is overfishing in the ocean. As fish swarms are not the property of anyone, the costs of fishing are externalized on all other fishers. If I do not fish as many fishes as fast as I possibly can, my competitor will fish them.

Similarly, the property rights in bank deposits are not clearly defined. Banks have the incentive to expand credit and externalize the costs onto society.

For the member states in the eurozone, the costs of reckless fiscal behavior can also, to some extent, be externalized. Any government whose bonds are accepted as collateral by the ECB can use this printing press to finance its expenditures.[2] The costs of this strategy are partly externalized to other countries when the newly created money bids up prices throughout the monetary union.

Each government has an incentive to accumulate higher deficits than the rest of the eurozone, because its costs can be externalized. Consequently, in the Eurosystem there is an inbuilt tendency toward continual losses in purchasing power. This overexploitation may finally result in the collapse of the euro.

Any tragedy of the commons can be solved by privatizing the specific resource. But instead of privatization, governments generally prefer regulation.

Such a regulation was installed for the European Monetary Union. It is called the Stability and Growth Pact, and it requires that each country's annual budget deficit is below 3% and its gross public debt not higher than 60% of its GDP. Sanctions were defined to enforce these rules.

Yet the sanctions have never been enacted and the pact is generally ignored. For 2010, all but one member state is expected to have a budget deficit higher than 3%; the general European debt ratio is 88%. Germany, the main country that urged these requirements, was among the first to refuse to fulfill them.

What is the future of the euro? As we have seen, the inherent incentives in the eurozone encourage destruction of the currency because deficit costs are externalized. Therefore, there are three main possibilities.

The Stability and Growth Pact is finally enforced. Unfortunately, strong political resistance makes this possibility unlikely.

The more conservative member states refuse to continue bailing out the more profligate ones. The economically stronger states force the weaker ones to enter bankruptcy and to leave the monetary union.

Countries continue to increase their deficits, attempting to externalize the costs. They yield to the incentives and participate in a spending race, leading to a hyperinflation; and the euro moves closer to collapse.

Philipp Bagus is an associate professor at Universidad Rey Juan Carlos, Madrid and a visiting professor at Prague University. Send him mail

Philipp.Bagus@web.de

by **heimdall** » Fri Feb 12, 2010 12:20 pm

The biggest mistake the EU ever made was letting these shaky (in terms of economy) countries in, it will be the death of it. They either need to boot these countries out or dissolve the whole bloody thing, I favour the latter as I have never liked the concept of the EU and now it's just become a bigger and bigger drain on resources for the wealthy countries.

by **JoeTerp** » Fri Feb 12, 2010 12:23 pm

heimdall wrote:The biggest mistake the EU ever made was letting these shaky (in terms of economy) countries in, it will be the death of it. They either need to boot these countries out or dissolve the whole bloody thing, I favour the latter as I have never liked the concept of the EU and now it's just become a bigger and bigger drain on resources for the wealthy countries.

down the right path, now why don't you extrapolate that idea to its natural conclusion. Why stop at the country level? why not take it to the county/province level or the city level? or the neighborhood level? or the individual level?

by **heimdall** » Fri Feb 12, 2010 12:29 pm

JoeTerp wrote:
heimdall wrote:The biggest mistake the EU ever made was letting these shaky (in terms of economy) countries in, it will be the death of it. They either need to boot these countries out or dissolve the whole bloody thing, I favour the latter as I have never liked the concept of the EU and now it's just become a bigger and bigger drain on resources for the wealthy countries.

down the right path, now why don't you extrapolate that idea to its natural conclusion. Why stop at the country level? why not take it to the county/province level or the city level? or the neighborhood level? or the individual level?

No I think that would be inefficient, you need to have some form of centralised control, in Europe that has worked for a long time at the country level until the EU started forcing ancient enemies together, ok I'm over-dramatising a bit but you see what I mean, e.g the Dutch and the Germans who fecking hate each other about as much as the Brits and the French.

Other than forming an economic block to counter China and the US I can see no need for the EU and in any case EFTA can provide that same economic block in a more efficient manner.

by **Bad Bob** » Fri Feb 12, 2010 12:32 pm

heimdall wrote:
JoeTerp wrote:
heimdall wrote:The biggest mistake the EU ever made was letting these shaky (in terms of economy) countries in, it will be the death of it. They either need to boot these countries out or dissolve the whole bloody thing, I favour the latter as I have never liked the concept of the EU and now it's just become a bigger and bigger drain on resources for the wealthy countries.

down the right path, now why don't you extrapolate that idea to its natural conclusion. Why stop at the country level? why not take it to the county/province level or the city level? or the neighborhood level? or the individual level?

No I think that would be inefficient, you need to have some form of centralised control, in Europe that has worked for a long time at the country level until the EU started forcing ancient enemies together, ok I'm over-dramatising a bit but you see what I mean, e.g the Dutch and the Germans who fecking hate each other about as much as the Brits and the French.

Other than forming an economic block to counter China and the US I can see no need for the EU and in any case EFTA can provide that same economic block in a more efficient manner.

I thought forcing ancient enemies together was a lot of the point of the EU? Make the main combatants of Europe economically and politically more integrated and maybe a 3rd world war could be averted. It sounds a little far-fetched now but the memories of WWI & WWII were surely on the architects' minds at the time?

by **heimdall** » Fri Feb 12, 2010 12:38 pm

Bad Bob wrote:
heimdall wrote:
JoeTerp wrote:
heimdall wrote:The biggest mistake the EU ever made was letting these shaky (in terms of economy) countries in, it will be the death of it. They either need to boot these countries out or dissolve the whole bloody thing, I favour the latter as I have never liked the concept of the EU and now it's just become a bigger and bigger drain on resources for the wealthy countries.

down the right path, now why don't you extrapolate that idea to its natural conclusion. Why stop at the country level? why not take it to the county/province level or the city level? or the neighborhood level? or the individual level?

No I think that would be inefficient, you need to have some form of centralised control, in Europe that has worked for a long time at the country level until the EU started forcing ancient enemies together, ok I'm over-dramatising a bit but you see what I mean, e.g the Dutch and the Germans who fecking hate each other about as much as the Brits and the French.

Other than forming an economic block to counter China and the US I can see no need for the EU and in any case EFTA can provide that same economic block in a more efficient manner.

I thought forcing ancient enemies together was a lot of the point of the EU? Make the main combatants of Europe economically and politically more integrated and maybe a 3rd world war could be averted. It sounds a little far-fetched now but the memories of WWI & WWII were surely on the architects' minds at the time?

Well that might have what they gave as a reason :shifty

In reality it's about control, after WW2 I don't think anybody had much stomach for another war and it's not as if Norway and Switzerland are champing at the bit to invade someone is it.

by **made in UK** » Fri Feb 12, 2010 12:40 pm

Bad Bob wrote:
heimdall wrote:
JoeTerp wrote:
heimdall wrote:The biggest mistake the EU ever made was letting these shaky (in terms of economy) countries in, it will be the death of it. They either need to boot these countries out or dissolve the whole bloody thing, I favour the latter as I have never liked the concept of the EU and now it's just become a bigger and bigger drain on resources for the wealthy countries.

down the right path, now why don't you extrapolate that idea to its natural conclusion. Why stop at the country level? why not take it to the county/province level or the city level? or the neighborhood level? or the individual level?

No I think that would be inefficient, you need to have some form of centralised control, in Europe that has worked for a long time at the country level until the EU started forcing ancient enemies together, ok I'm over-dramatising a bit but you see what I mean, e.g the Dutch and the Germans who fecking hate each other about as much as the Brits and the French.

Other than forming an economic block to counter China and the US I can see no need for the EU and in any case EFTA can provide that same economic block in a more efficient manner.

I thought forcing ancient enemies together was a lot of the point of the EU? Make the main combatants of Europe economically and politically more integrated and maybe a 3rd world war could be averted. It sounds a little far-fetched now but the memories of WWI & WWII were surely on the architects' minds at the time?

Thats wrong the EU was formed as a 'superstate' at the time to rival the stranglehold that America had on the economy.

I'm pretty sure it had feck all to do with averting WWIII and all that old folly. The world has seen that twice and I don't think independent (economically) European countries would dare to go down that route again.

by **Bad Bob** » Fri Feb 12, 2010 12:43 pm

heimdall wrote:
Bad Bob wrote:
heimdall wrote:
JoeTerp wrote:
heimdall wrote:The biggest mistake the EU ever made was letting these shaky (in terms of economy) countries in, it will be the death of it. They either need to boot these countries out or dissolve the whole bloody thing, I favour the latter as I have never liked the concept of the EU and now it's just become a bigger and bigger drain on resources for the wealthy countries.

down the right path, now why don't you extrapolate that idea to its natural conclusion. Why stop at the country level? why not take it to the county/province level or the city level? or the neighborhood level? or the individual level?

No I think that would be inefficient, you need to have some form of centralised control, in Europe that has worked for a long time at the country level until the EU started forcing ancient enemies together, ok I'm over-dramatising a bit but you see what I mean, e.g the Dutch and the Germans who fecking hate each other about as much as the Brits and the French.

Other than forming an economic block to counter China and the US I can see no need for the EU and in any case EFTA can provide that same economic block in a more efficient manner.

I thought forcing ancient enemies together was a lot of the point of the EU? Make the main combatants of Europe economically and politically more integrated and maybe a 3rd world war could be averted. It sounds a little far-fetched now but the memories of WWI & WWII were surely on the architects' minds at the time?

Well that might have what they gave as a reason
In reality it's about control, after WW2 I don't think anybody had much stomach for another war and it's not as if Norway and Switzerland are champing at the bit to invade someone is it.

Perhaps not right away but eventually there would have to be another throw down, right? Hundreds of years of fighting and resentment-stoking wasn't just going to come to an end forever after WWII.

Like the Olympics, the EU provides an important role as a social safety valve: let the main antagonists of Europe do battle in some assembly hall in Belgium rather than out in the countryside. :;):

by **Bad Bob** » Fri Feb 12, 2010 12:45 pm

made in UK wrote:
Bad Bob wrote:
heimdall wrote:
JoeTerp wrote:
heimdall wrote:The biggest mistake the EU ever made was letting these shaky (in terms of economy) countries in, it will be the death of it. They either need to boot these countries out or dissolve the whole bloody thing, I favour the latter as I have never liked the concept of the EU and now it's just become a bigger and bigger drain on resources for the wealthy countries.

down the right path, now why don't you extrapolate that idea to its natural conclusion. Why stop at the country level? why not take it to the county/province level or the city level? or the neighborhood level? or the individual level?

No I think that would be inefficient, you need to have some form of centralised control, in Europe that has worked for a long time at the country level until the EU started forcing ancient enemies together, ok I'm over-dramatising a bit but you see what I mean, e.g the Dutch and the Germans who fecking hate each other about as much as the Brits and the French.

Other than forming an economic block to counter China and the US I can see no need for the EU and in any case EFTA can provide that same economic block in a more efficient manner.

I thought forcing ancient enemies together was a lot of the point of the EU? Make the main combatants of Europe economically and politically more integrated and maybe a 3rd world war could be averted. It sounds a little far-fetched now but the memories of WWI & WWII were surely on the architects' minds at the time?

Thats wrong the EU was formed as a 'superstate' at the time to rival the stranglehold that America had on the economy.

I'm pretty sure it had feck all to do with averting WWIII and all that old folly. The world has seen that twice and I don't think independent (economically) European countries would dare to go down that route again.

Okay, okay...I'm not saying it was the only reason but from what I've read, it was a factor. But, I'll defer to you 'Europeans' on this one!

by **made in UK** » Fri Feb 12, 2010 12:47 pm

I don't think us Brits have ever considered ourselves as European's and I don't think the European's have ever considered us Brits as European's.

by **Bad Bob** » Fri Feb 12, 2010 12:53 pm

made in UK wrote:I don't think us Brits have ever considered ourselves as European's and I don't think the European's have ever considered us Brits as European's.

Hence my smiley. One of my favourite Yes Minister episodes is the one where they take the p!ss out of all the Europeans and their particular strengths and weaknesses.

by **Big Niall** » Fri Feb 12, 2010 2:00 pm

JoeTerp wrote:
heimdall wrote:The biggest mistake the EU ever made was letting these shaky (in terms of economy) countries in, it will be the death of it. They either need to boot these countries out or dissolve the whole bloody thing, I favour the latter as I have never liked the concept of the EU and now it's just become a bigger and bigger drain on resources for the wealthy countries.

down the right path, now why don't you extrapolate that idea to its natural conclusion. Why stop at the country level? why not take it to the county/province level or the city level? or the neighborhood level? or the individual level?

Would you prefer if the 50 states of USA went independent?

by **Big Niall** » Fri Feb 12, 2010 2:01 pm

Bad Bob wrote:
heimdall wrote:
JoeTerp wrote:
heimdall wrote:The biggest mistake the EU ever made was letting these shaky (in terms of economy) countries in, it will be the death of it. They either need to boot these countries out or dissolve the whole bloody thing, I favour the latter as I have never liked the concept of the EU and now it's just become a bigger and bigger drain on resources for the wealthy countries.

down the right path, now why don't you extrapolate that idea to its natural conclusion. Why stop at the country level? why not take it to the county/province level or the city level? or the neighborhood level? or the individual level?

No I think that would be inefficient, you need to have some form of centralised control, in Europe that has worked for a long time at the country level until the EU started forcing ancient enemies together, ok I'm over-dramatising a bit but you see what I mean, e.g the Dutch and the Germans who fecking hate each other about as much as the Brits and the French.

Other than forming an economic block to counter China and the US I can see no need for the EU and in any case EFTA can provide that same economic block in a more efficient manner.

I thought forcing ancient enemies together was a lot of the point of the EU? Make the main combatants of Europe economically and politically more integrated and maybe a 3rd world war could be averted. It sounds a little far-fetched now but the memories of WWI & WWII were surely on the architects' minds at the time?

Yes, for the odd argument between Germany,France, UK etc, it seems unlikely they'd ever go to war again.

by **Big Niall** » Fri Feb 12, 2010 2:04 pm

made in UK wrote:I don't think us Brits have ever considered ourselves as European's and I don't think the European's have ever considered us Brits as European's.

True.

Britain is more American orientated the European, and in fact the EU seems to be resented in Britain.

Ireland is a strange mix of pro Europe but yet close relationships (economically and socially) with UK and USA - maybe from the language (not that I can understand Geordie like!)

Liverpool FC Forum

Uk referendam on your whole system

Who is online