They told us they were creating the model of what the world economy should be:
The economic growth in the current member countries of the eurozone has been slowing down since the 1950s and 1960s and the euro hasn’t altered this trend in any way. According to the European Central Bank data (ECB Statistics Pocket Book, March 2010), the average annual GDP growth in these countries was 3.4% in the 1970s, 2.4% in the 1980s, 2.2% in the 1990s, and only 1.1% in the “decade of the euro”, more precisely between 2001 and 2009. Such dynamics doesn’t take place in other regions of the world.
Another expected goal hasn’t occurred: the inflation rate of the eurozone hasn’t dropped. Two distinct groups of countries have emerged within the eurozone: one of them has a low inflation rate while the other – Greece, Spain, Portugal, Ireland, and a few others – have a higher inflation rate. Long-term imbalances of the trade surpluses and deficits have also increased. The export-dominated countries have been separated from the countries that run trade deficits (it’s no coincidence that it’s the countries with the highest inflation rate). No homogenization of the eurozone has been achieved by its creation.
The global financial and economic crisis has “only” escalated and unmasked all these problems: it hasn’t caused them. It’s no surprise for me. “The euro currency zone” of the present 16 European countries is currently not an “optimum currency area”, which is what the elementary theorems of the economical theory demand. The fact that the birth of the eurozone was primarily a political decision, which in no way guaranteed that this whole group of countries was appropriate for the project of a shared currency, is repeatedly confirmed (most recently, in Prague in December 2009) even by a former member of the banking committee of the European Central Bank and its main economist Otmar Issing (e.g. in his book “The Birth of the Euro”, Cambridge 2008). However, if the currency zone fails to be an optimum currency area, it is inevitable for the expenses to create and maintain the union to exceed the benefits caused by its continuing functioning.
The Eurozone … every progressives economic wet dream.
Luckily in North America, regulators know a good options spread when they see one.
Update: Does it rain in Spain?
And Soros shorting the Euro all the way down. Then he will turn to the US$ after his minion in the White House gets it done.
Well, I opened that link to the NDP site after I made my first comment (shudder, my eyes are still burning) I see at the top that the NDP has great ideas for all to participate in the economic recovery.
So we have an economic recovery under way? That couldn’t be PMSH doing could it? It couldn’t be Jim Flaherty’s stewardship? Noooo. Of course not. it has been done on the back of the poor downtrodden gays and immigrants and women waiting in line for their abortions. Or perhaps it has been the design of the U of T’s political science department.
If the Greeks had any sense they would abandon the €uro and go back to the drachma, but then they might have to consider shorter holidays and retiring on a small state pension at 65 like most countries rather than at 59 on 95% of the average salary. This won’t end well. The EU will not give up its socialist power grab without a fight. However the Germans may prove to be rather more obstinate. Better grab some popcorn.
“Spain’s economy has a high level of private sector debt and there are issues with the flexibility of the labor market, Coulton added.”
Resulting in 18% unemployment. They are predicting 22% this year. Gotta love those “fair labour” laws.
The eU is like all other economic and governance unions in that it largely removes the competitive element between members. Sloth increases and the economies of scale savings are eclipsed by the waste caused by this monopolistic sloth.
Check out the GTA, and Canada for that matter. The western province’s drive for harmonization may be a slippery slope as well.
And read up on Stephen harpers policy inititiative he unveiled in davos recently – he is way ahead of the rest of the world on this and he is on the right path.
Given the farce that the ratings from S&P and their ilk were leading up to the 2008 fiasco, does anyone believe they are now providing objective and accurate ratings on this soveriegn debt? I don’t.
I’ll be booking my European vacation for some time this fall.
Euro may be worth about $1.20 Canadian by then. I’m thinking Greece, just before the 2,500th anniversary of the first marathon.
It’s going to be mucho cheapo.
Socialism. The worlds diabetes.
Only this is fatal over time.
Ponzi scams for government programs.
The Marxists have inverted reality.
Mean while all our bureaucrats can do is raise their wages. Politicians trips all over the World.
Cusioned to the point where the “Princess & the Pea” fairytale, becomes redundant when your an MP or Ottawa political ho….
JMO
The news out of Europe is that Deutsche Bank and several others have been raided in a C02 swapping tax evasion scheme.
href= ” http://www.businessinsider.com/here-are-ten-companies-that-are-making-a-killing-on-european-carbon-swaps-2010-3#ixzz0mQTowiJ9“ >link
Couple of points:
1) Arbitrarily giving substantial wage increases with the expectation of increase in quality of public services and increased tax revenues – that didn’t happen;
2) Better quality of life for better paid workers, (pst. add in their ‘traditional’ non-taxed income ) – now they have high private indebtedness, wage freezes, but still have their jobs.
Now these well paid workers are protesting, violently at times, blaming overseas banks and bankers(fat cats), the EU and whomever else they haven’t thought of yet. Wildcat stikes at hospitals and schools now and it’s just a matter of time before the forest fires start.
So who are the real ‘fat cats’ in this mess?
From your link xiat this interesting aside snip:
” … because European carbon market rules were badly constructed, plenty of companies — not just banks — are already making a fortune — merely by virtue of the fact that slow business has meant they’ve easily come under their goals. ”
And checked out the ones holding all this green stock – euro-based power companies and cement companies.
Cement companies investing in green stock?
Hmmmm.
( sorry for straying a bit off topic here )
Couple more points..
I read that the PIGS group used book keeping ideas offered by Goldman Sachs that allowed the concealment of deficit spending.
Is that why all this popped up so quickly?
Never trust bond ratings. Greek bonds went from good to junk status overnight. Bondholders become unhappy deficit doners.
Italy has the next biggest overdraft. No possible way to bail out that debt. Also Spain and UK debt is too big to fix.
Lower your overhead and hang on.
I swear, if I was Wayne Brady I’d “smack a b**ch”; the next one that points to Europe as a model that Canada should aspire towards.
Putting aside the obvious economic pitfalls of the EU, there is another aspect that will limit the EU’s ability to survive regardless of economics. It is my view that a country IS more than just an economic alliance. Without shared values, aspirations and some common history, an economic alliance is just that; therefore, the inevitable culture based conflicts(ie. Germany’s small ‘c’ conservatism) will always present hurdles for the economic alliance, including hurdles for sound economics(ie. Transfer payments). A chain is only as strong as its weakest link, the question is: does the strong link benefit from the relationship with the weaker link? If it does, then the redistribution of resources(wealth) is necessary to maintain the integrity of the chain; but, if it doesn’t, it’s a whole different matter.
For example, if a family member is in need, more often than not they can go to another family member for monetary support; even when the lender knows the “loan” is high risk and will likely not be paid back. Non family members are much more likely to be sceptical, and less giving. Hell, I already loath sending transfer payments to Quebec knowing full well that the cap & hand will never be retracted…willingly that is.
Quebec is family, but I’m not sure that the Germans see the Greeks, nor the French the same way.
Socialism: “Ebola”. Swine flu. Cannibalism.
The religion of the stomach.
…-
“Spain hit as Greek ‘illness’ spreads over Europe”
“His call for urgent action was echoed by Angel Gurría, head of the Organisation for Economic Co-operation and Development, who compared the risk facing other eurozone states to a virus. “This is like Ebola. It’s threatening the stability of the financial system.””
http://business.timesonline.co.uk/tol/business/economics/article7111123.ece
O’freakin’ White House = O’freakin’O.
O’s No Grecian Formula.
…-
“The Greek crisis is obviously freaking out The White House.”
“Now Obama Is Making Emergency Calls To Merkel Over Greek Aid”
“According to MSNBC’s Chuck Todd, Obama has made a personal call to the recalcitrent Angela Merkel over moving forward on the bailout.
Germany is getting pressure from all sides. The IMF wants it to act, Obama wants it to act, and you know the leaders of Spain and Portugal want it to act.
The problem is that nobody in Germany wants it to happen, and Merkel is showing no signs of bowing to this pressure.
How long can she hold out?”
“There’s a HUGE list of potential victims if Greece collapses >”
http://www.businessinsider.com/now-obama-is-making-emergency-calls-to-merkel-over-greek-aid-2010-4
Bailouts for Greece, then Portugal next will be Spain, Ireland, Italy and Iceland, did I miss any?
The EU airlines want a bailout from the ash cloud fallout. Where’s the EU going to get this massive bailout funding from? China? Green stocks?
Nonetheless, Merkel will cave, has to, if not everyone will blame Germany for the break up of the EU even though it’s the individual countries own faults. Tough spot for Merkel right now.
Merkel may not cave. No point. Start with Greece and the other pigs will demand help..
Total debt 2.5 trillion or thereabouts.
This will be messy.
Good the sooner the whole mess collapses and the whore like behavior of the union “workers” stops due to bankruptcy the better you just cannot pay the public sector as much as the private, that includes pensions, the public sector is parasitic due to not producing anything. I read that nearly 60% of Ontario gov employees earn over 100K, sack the lot, no loss.
She caved – didn’t think they’d let her dismantle their EuroUnion dream land arrangement.
Greece and all others will get their welfare bailouts, calling it a re-structuring…ha ha ha.
Unreal.