1. #11881
    Quote Originally Posted by alexw View Post
    There is no issue with crowding out, that would only apply if there was a shortage of economic resources such that the governmental sector was taking them away from the private sector. Crowding them out as you say.

    Given the absurd levels of unemployment and underemployment across Europe (workers are your basic economic resource which all others derive from) there is absolutely no issue whatsoever with the availability of economic resources.

    Rather what is needed is large scale fiscal expansion across the northern European block with a particular focus on Germany. Workers need substantial pay rises to make up for the two to three decades where wage growth was suppressed and kept lower than productivity growth. That would in turn raise consumption in those nations rebalancing them away from running such huge trade surpluses which is exporting deflation across the rest of Europe with such ruinous effects.

    The losers from this would be the corporate sector which would see lower profits and executive pay, and the richest members of those societies which have taken for themselves the pay rises that could have been and didn't happen.

    The overall boost to consumption would also correct the trade imbalances between Germany and southern Europe as southern Europe would now be competitive on unit labor costs. That in turn would fix their unemployment problems as being competitive with Germany and with German consumption rising they could start exporting to Germany to meet its increased demand.

    All that increase in economic activity would then lead to higher tax revenues across the board fixing the governmental debt crisis's are seeing (though it is likely some debt forgiveness would be needed too).

    Now none of what I have said here is surprising to economists. They know that this is what needs to happen (at least in the short term in the long term there needs to be fiscal transfers between regions with a proper central government). But Germany simply does not want to do this. Its elites would have to give up the gains they have made by impoverishing their own citizens by convincing them its a good thing (Germans are proud of their nations trade surplus which is mind boggingly stupid since its basically the same as saying we are screwing you over by paying you less than you are worth)
    Two problems: 1. Raising wages is something that the private industry decides, not the German Government. So you can wish for it all you like, but it ain't just "going to happen". 2. The effects you want from this are not short term, they're long term effects. Greece will either be bust or healed by the time this takes effect.

    But let's talk about how this would boost the employment market in southern countries. You seem to assume that a) Germany's export income would sink, presumably because cost is too high, prices rise and people buy less German stuff. and b) southern countries manage to somehow balance this by producing the deficit that Germany can't sell on the market.

    What will happen is that you get cheap ass trash on the market that's low quality. Nothing stops you from doing that. People don't buy German stuff because it's cheap. They buy German stuff because it's a) high quality (cars, etc.) or b) highly specialised and you can't get it elsewhere (biotech, environmental tech, industry mechanical stuff).

    That's a lot of assumptions you're basing your entire argument around. And no, most economists don't necessarily agree with you. Otherwise Germany and the EU wouldn't be doing what they're doing. And here comes the whole conspiracy spiel into play where you say this is on purpose to keep the southern states down... and this is the point where I lose interest, because you clearly haven't thought this through with all the implications your idea has. It's not a bad one, I'll give you that. But it won't work. Not in this situation under these conditions. And certainly not within a week or two while banks are closed and people run out of money to buy food.
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  2. #11882
    Deleted
    Quote Originally Posted by alexw View Post

    Rather what is needed is large scale fiscal expansion across the northern European block with a particular focus on Germany. Workers need substantial pay rises to make up for the two to three decades where wage growth was suppressed and kept lower than productivity growth. That would in turn raise consumption in those nations rebalancing them away from running such huge trade surpluses which is exporting deflation across the rest of Europe with such ruinous effects.
    Actually The south's wages need to go down to bring them in relation to productivity - They all rose out of order with productivity, something most 'blame Germany' people overlook.
    Now none of what I have said here is surprising to economists. They know that this is what needs to happen (at least in the short term in the long term there needs to be fiscal transfers between regions with a proper central government). But Germany simply does not want to do this. Its elites would have to give up the gains they have made by impoverishing their own citizens by convincing them its a good thing (Germans are proud of their nations trade surplus which is mind boggingly stupid since its basically the same as saying we are screwing you over by paying you less than you are worth)
    No they are proud of a well functioning economy - Keeping Wages in line with productivity is very good thing - If you don't you either have inflationary boom and bust cycles, (that benefit the rich) or you get stuck in low wage land, because the sectors driving the wage gains are not subject to external pressures.

    Also the reason the Germans don't want to send money down south with no input over how its spent is because the last time they did that, things went to shit.
    But there will be fiscal transfers, when the south will hand over control over its books to the EZ and (maybe) everyone will surrender borrowing power to the EZ.

  3. #11883
    Quote Originally Posted by tollshot View Post
    Who knows how all this will pan out, but maybe we should just be thankful to be living in interesting times.
    Pretty sure that's a curse in China lol.

  4. #11884
    Quote Originally Posted by alexw View Post
    Now none of what I have said here is surprising to economists. They know that this is what needs to happen (at least in the short term in the long term there needs to be fiscal transfers between regions with a proper central government). But Germany simply does not want to do this.
    That's Krugman's take on it all, right?.
    I imagine the German expectation is that every EU member became net exporters.
    But alas, I don't see how it's a long/short term thing. If Germany is the one pulling the strings, they don't need to have any interest in the rest of the member states beyond their self-interest; that is: they'll "help", and consider themselves a piggy bank, so long as it fits their goals and sets well with their population. Non of the policy can change if the policy makers (Germany, in a sense) are not invested in those states beyond their self-interest. Intra-state that happens because elections: the policy makers are accountable to the electorate, and can be punished, whereas Greece can't punish Germany in such a way.

    Any such proposal, as I see it, needs the fiscal union, or some fiscal transfer mechanism in place for anything to actually function.
    Or maybe I'm just too ignorant on these maters. I don't know.

  5. #11885
    Quote Originally Posted by tollshot View Post
    I don't really get why the tories would force a GE, unless its simply to legitimise the triggering of Art50.
    They'll have to because people remember Brown's premiership. He essentially lost all public support because as he became PM the media pushed for a General election, didn't happen and the public in the UK (Mostly swept up by the 2008 election fever in the US) felt betrayed by it.

    Now we're about to have a new PM in late summer/early autumn. A US Election but with less fever and a media that still thinks it runs the country. It'll be political suicide not to have a General Election before March.

  6. #11886
    Deleted
    Quote Originally Posted by nextormento View Post

    Any such proposal, as I see it, needs the fiscal union, or some fiscal transfer mechanism in place for anything to actually function.
    Or maybe I'm just too ignorant on these maters. I don't know.
    No a state requires (absent it being a micro state or just very even) some form of internal redistribution to maintain social cohesion - Even without a joint currency there would be pressures (in the EU) - with a joint currency there is a need for fiscal transfers.
    However, that simply wont happen until the north is satisfied the Souths economical problems are unrelated to corruption and crappy policy - or not, they are trying for something, details TBD.

  7. #11887
    Quote Originally Posted by Slant View Post
    Two problems: 1. Raising wages is something that the private industry decides, not the German Government. So you can wish for it all you like, but it ain't just "going to happen". 2. The effects you want from this are not short term, they're long term effects. Greece will either be bust or healed by the time this takes effect.

    But let's talk about how this would boost the employment market in southern countries. You seem to assume that a) Germany's export income would sink, presumably because cost is too high, prices rise and people buy less German stuff. and b) southern countries manage to somehow balance this by producing the deficit that Germany can't sell on the market.

    What will happen is that you get cheap ass trash on the market that's low quality. Nothing stops you from doing that. People don't buy German stuff because it's cheap. They buy German stuff because it's a) high quality (cars, etc.) or b) highly specialised and you can't get it elsewhere (biotech, environmental tech, industry mechanical stuff).

    That's a lot of assumptions you're basing your entire argument around. And no, most economists don't necessarily agree with you. Otherwise Germany and the EU wouldn't be doing what they're doing. And here comes the whole conspiracy spiel into play where you say this is on purpose to keep the southern states down... and this is the point where I lose interest, because you clearly haven't thought this through with all the implications your idea has. It's not a bad one, I'll give you that. But it won't work. Not in this situation under these conditions. And certainly not within a week or two while banks are closed and people run out of money to buy food.
    1) Governments have a huge role in setting wages via the way they shape the system. Just like the German gov played a huge role in keeping wages low which caused the problem in the first place (see Hartz IV for example). So if the gov wants wages to rise they will rise. Period.

    2) Any boost to wages would have immediate effect. It is true it cannot all be done at once but substantial real pay rises of 6-7% would do it, and if it started to happen the positive trend changes in the PIIGS economies it would bring about, would end a lot of the anger in those nations as they would see their economies gradually improve.

    3) Of course German export income would shrink. To say the opposite is like saying water is not wet, or the earth is not round. I have heard that "we are special" nonsense many times but none of it holds. It is simple basic economics that substitution effects will kick in if German wages rise.

    4) Oh please I never said it was to keep the southern nations down. It isn't. It's because German elites benefit from it. They benefit from keeping wages down. Or are you going to argue that isn't true?

    5) Yeah I was waiting for a dismissal of what I have said. Newsflash for you. Its not an "idea". It is simply the only way to rebalance the european economy. Everyone in economic circles is saying this except Germany refuses to listen.
    For example here - http://www.brookings.edu/blogs/ben-b...urplus-problem
    Here - https://www.cer.org.uk/sites/default...icle2-8164.pdf
    Here - http://www.telegraph.co.uk/finance/c...an-Greece.html
    I could go on and on but you get the picture...

    - - - Updated - - -

    Quote Originally Posted by GoblinP View Post
    Actually The south's wages need to go down to bring them in relation to productivity - They all rose out of order with productivity, something most 'blame Germany' people overlook.
    No. You cannot cut wages like that and expect it to work. Its what is being done already via austerity for the last 6 years and has been an absolute disaster. You cannot deflate your way out of a debt crisis as debts don't shrink while income does, meaning that the debts become an ever increasing burden to bear so as to consume an ever larger share of national income which asphyxiates the real economy.

    Quote Originally Posted by GoblinP View Post

    No they are proud of a well functioning economy - Keeping Wages in line with productivity is very good thing - If you don't you either have inflationary boom and bust cycles, (that benefit the rich) or you get stuck in low wage land, because the sectors driving the wage gains are not subject to external pressures.

    Also the reason the Germans don't want to send money down south with no input over how its spent is because the last time they did that, things went to shit.
    But there will be fiscal transfers, when the south will hand over control over its books to the EZ and (maybe) everyone will surrender borrowing power to the EZ.
    That's the point wages have not risen in line with productivity. German wages are far below being inline with productivity. On a trade adjusted basis from estimates I have seen say they are ~20% below where they should be.
    Quote Originally Posted by Redtower View Post
    I don't think I ever hide the fact I was a national socialist. The fact I am a German one is what technically makes me a nazi
    Quote Originally Posted by Hooked View Post
    You haven't seen nothing yet, we trumpsters will definitely be getting some cool uniforms soon I hope.

  8. #11888
    Quote Originally Posted by GoblinP View Post
    No a state requires (absent it being a micro state or just very even) some form of internal redistribution to maintain social cohesion - Even without a joint currency there would be pressures (in the EU) - with a joint currency there is a need for fiscal transfers.
    However, that simply wont happen until the north is satisfied the Souths economical problems are unrelated to corruption and crappy policy - or not, they are trying for something, details TBD.
    The need for fiscal transfers (or fiscal union)... is what I said?
    As for corruption, heh. That will take a while, at least here. Policies are under surveillance of the fiscal compact afaik
    Last edited by nextormento; 2016-06-28 at 11:51 PM.

  9. #11889
    Deleted
    Quote Originally Posted by nextormento View Post
    The need for fiscal transfers (or fiscal union)... is what I said?
    I agreed with you.

  10. #11890
    Quote Originally Posted by nextormento View Post
    That's Krugman's take on it all, right?.
    I imagine the German expectation is that every EU member became net exporters.
    But alas, I don't see how it's a long/short term thing. If Germany is the one pulling the strings, they don't need to have any interest in the rest of the member states beyond their self-interest; that is: they'll "help", and consider themselves a piggy bank, so long as it fits their goals and sets well with their population. Non of the policy can change if the policy makers (Germany, in a sense) are not invested in those states beyond their self-interest. Intra-state that happens because elections: the policy makers are accountable to the electorate, and can be punished, whereas Greece can't punish Germany in such a way.

    Any such proposal, as I see it, needs the fiscal union, or some fiscal transfer mechanism in place for anything to actually function.
    Or maybe I'm just too ignorant on these maters. I don't know.
    No idea. But I expect he believes more or less what I do. Virtually all major economists do (not saying I am one).

    I do find your net exporter comment hilarious though. There is a long running joke on this German "idea" that states that we (europe) just need some Martians to export to (because its kind of obvious that its impossible for everyone to all be net exporters all at the same time).

    And I have no idea if Germany will change or not. Either it does and things will be fixed. Or it doesn't and southern Europe will end up doing a brexit. There really is no other choice. No nation will accept permanent economic depression such as Germany is enforcing. At some point they will revolt.
    Quote Originally Posted by Redtower View Post
    I don't think I ever hide the fact I was a national socialist. The fact I am a German one is what technically makes me a nazi
    Quote Originally Posted by Hooked View Post
    You haven't seen nothing yet, we trumpsters will definitely be getting some cool uniforms soon I hope.

  11. #11891
    Quote Originally Posted by GoblinP View Post
    I agreed with you.
    It was confusing to read >_<

  12. #11892
    Deleted
    Quote Originally Posted by alexw View Post

    No. You cannot cut wages like that and expect it to work. Its what is being done already via austerity for the last 6 years and has been an absolute disaster. You cannot deflate your way out of a debt crisis as debts don't shrink while income does, meaning that the debts become an ever increasing burden to bear so as to consume an ever larger share of national income which asphyxiates the real economy.
    Yes it is what would work.
    Austerity is about reducing government spending - This would be about reducing salaries - not the same thing.
    https://en.wikipedia.org/wiki/Internal_devaluation
    The only realistic way of improving southern competitiveness is to lower their salaries - Even your plan of raising german wages will primarily work through this method as the inflation will eat away at their wages, while they (hopefully) wont be able to rise.
    This shit all happens rather automatically in countries with floating currencies, but absent that, You have to do it manually.



    That's the point wages have not risen in line with productivity. German wages are far below being inline with productivity. On a trade adjusted basis from estimates I have seen say they are ~20% below where they should be.
    And the wages in the Med is 20% higher than where they should be.

    - - - Updated - - -

    Quote Originally Posted by nextormento View Post
    It was confusing to read >_<
    well i could have tied it to your profession of ignorance a bit better.
    Not my best post out of the collection.

  13. #11893
    Quote Originally Posted by alexw View Post
    And I have no idea if Germany will change or not. Either it does and things will be fixed. Or it doesn't and southern Europe will end up doing a brexit. There really is no other choice. No nation will accept permanent economic depression such as Germany is enforcing. At some point they will revolt.
    We waited our dictator to die, we can slug through this .
    The revolt is already there: syriza/podemos. Syriza is a bit of a joke; and Podemos I won't criticize because I don't want to be sent to Gulag.

  14. #11894
    Quote Originally Posted by GoblinP View Post
    Yes it is what would work.
    Austerity is about reducing government spending - This would be about reducing salaries - not the same thing.
    https://en.wikipedia.org/wiki/Internal_devaluation
    The only realistic way of improving southern competitiveness is to lower their salaries - Even your plan of raising german wages will primarily work through this method as the inflation will eat away at their wages, while they (hopefully) wont be able to rise.
    This shit all happens rather automatically in countries with floating currencies, but absent that, You have to do it manually.




    And the wages in the Med is 20% higher than where they should be.

    - - - Updated - - -



    well i could have tied it to your profession of ignorance a bit better.
    Not my best post out of the collection.
    No it would not. Greece and Co have been undertaking internal devaluation for years. It simply doesn't work. No ifs nor buts about it -

    http://www.economonitor.com/blog/201...l-devaluation/

    - - - Updated - - -

    Quote Originally Posted by nextormento View Post
    We waited our dictator to die, we can slug through this .
    The revolt is already there: syriza/podemos. Syriza is a bit of a joke; and Podemos I won't criticize because I don't want to be sent to Gulag.
    Ahh you are Greek? I did not know that. Out of curiosity when do you think the next Greek blow up will be? Do you think the country is getting closer to leaving the Eurozone?
    Quote Originally Posted by Redtower View Post
    I don't think I ever hide the fact I was a national socialist. The fact I am a German one is what technically makes me a nazi
    Quote Originally Posted by Hooked View Post
    You haven't seen nothing yet, we trumpsters will definitely be getting some cool uniforms soon I hope.

  15. #11895
    Deleted
    Just heard on the radio someone talking about introducing austerity measures in England to fix the damages causes by brexit. It wasn't in English so I'm not sure if I got it right.
    Is that happening?

  16. #11896
    Quote Originally Posted by alexw View Post
    Ahh you are Greek? I did not know that. Out of curiosity when do you think the next Greek blow up will be? Do you think the country is getting closer to leaving the Eurozone?
    Spaniard. Podemos is our syriza-like party and I don't want to upset them.
    I don't think Greece will be out anytime soon. I, in fact, proposed earlier to make a festivity out of it and have their bailouts be just part of our traditional vernacular celebrations.

    - - - Updated - - -

    Quote Originally Posted by Djalil View Post
    Just heard on the radio someone talking about introducing austerity measures in England to fix the damages causes by brexit. It wasn't in English so I'm not sure if I got it right.
    Is that happening?
    They are already under austerity measures until 2018.

  17. #11897
    Warchief Bollocks's Avatar
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    Quote Originally Posted by Djalil View Post
    Just heard on the radio someone talking about introducing austerity measures in England to fix the damages causes by brexit. It wasn't in English so I'm not sure if I got it right.
    Is that happening?
    Nope you are not alone I read it on r/uk politics can't find the article right now also @GoblinP austerity is the reason Greece is thus down deep in this mess to begin with because they did not implemented QE. Which could have worked had Greece left the euro.

  18. #11898
    The Unstoppable Force PC2's Avatar
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    Quote Originally Posted by Bollocks View Post
    Nope you are not alone I read it on r/uk politics can't find the article right now also @GoblinP austerity is the reason Greece is thus down deep in this mess to begin with because they did not implemented QE. Which could have worked had Greece left the euro.
    Austerity isn't what caused the debt crisis. Vast over spending did.
    Last edited by PC2; 2016-06-29 at 01:07 AM.

  19. #11899
    Quote Originally Posted by PrimaryColor View Post
    Austerity isn't what caused the debt crisis. Vast over spending did.
    "Vast over-lending did".

    If it was just "money spent" there would be no problem now; the problem is banks want at least interest if not principal paid on those "lost money". ...and then to lend more to cover the gaps in those payment plans too, just to avoid writing it down as a loss on their balance sheet.

    And if you would refuse them that, as Iceland did, you would see them recovered already.
    Last edited by Shalcker; 2016-06-29 at 01:26 AM.

  20. #11900
    The Unstoppable Force PC2's Avatar
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    Quote Originally Posted by Shalcker View Post
    "Vast over-lending did".

    If it was just "money spent" there would be no problem now; the problem is banks want at least interest if not principal paid on those "lost money". ...and then to lend more to cover the gaps in those payment plans too.

    And if you would refuse them that, as Iceland did, you would see them recovered already.
    Nope the lender was not the main problem, they did not ask or force Greece to borrow. It is Greeces fault.

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