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German Economy Minister Rainer Bruederle isn't mincing words when it comes to the Fed's...

German Economy Minister Rainer Bruederle isn't mincing words when it comes to the Fed's anticipated QE2 move: "It’s the wrong way to try to prevent or solve problems by adding more liquidity" and "is an indirect manipulation of an exchange rate."
Comments (42)
  • untrusting investor
    , contributor
    Comments (9973) | Send Message
     
    Nothing indirect about it. Bernake is dead set on devaluing the US dollar and has done so significantly over the past few months. Who knows how much more to go, but apparently Bernake doesn't care. Might just take a lynch mob on Bernake's doorstep, after consumer prices have reduced many Americans to dogfood, before the madman can be stopped (or lynched).
    23 Oct 2010, 04:51 PM Reply Like
  • The_Hammer
    , contributor
    Comments (4248) | Send Message
     
    nice post untrusting. The Mad Scientist bernanke and his failed experiment are going to crush the poor and middle class and especially retirees on fixed income.
    He has enabled polticians to spend like a drug addict. Bernnake must be removed like right now along with his henchmen(women) at the fed.
    24 Oct 2010, 09:52 AM Reply Like
  • Duude
    , contributor
    Comments (3394) | Send Message
     
    And yet the US arrived at the group of 20 finance ministers in South Korea hoping to convince other countries to support the US proposal to establish a market mechanism to rebalance trade affected by currency manipulation. What kind of disconnect is that? How can we even make such proposals with a straight face?
    Just another case of do as we say and not as we do?
    23 Oct 2010, 04:53 PM Reply Like
  • Ranni
    , contributor
    Comments (145) | Send Message
     
    I think dollar is grossly undervalued, very decent currency going forward.

     

    img693.imageshack.us/i...
    23 Oct 2010, 05:27 PM Reply Like
  • ebworthen
    , contributor
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    Click on the link before you vote...
    23 Oct 2010, 10:42 PM Reply Like
  • D. McHattie
    , contributor
    Comments (1844) | Send Message
     
    Thanks, ebworthen. I was going to give Ranni the mother of all thumbs-downs until I clicked the link. Geithner looks like he's pissed himself, he's laughing so hard.
    24 Oct 2010, 02:57 PM Reply Like
  • mjrcme
    , contributor
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    Minister Rainer is right on. The whole world holds zillions of dollars and our Fed expects everyone to be excited about devalueing their holdings. How about austerity Ben.
    23 Oct 2010, 05:28 PM Reply Like
  • filipo
    , contributor
    Comments (4018) | Send Message
     
    mjrcme: who the hell wants to talk austerity when there's elections on the doorstep ? The first politician who does that must be raving mad.
    23 Oct 2010, 06:45 PM Reply Like
  • countrybanker
    , contributor
    Comments (107) | Send Message
     
    filipo:

     

    Though your statement used nto be correct, in the US today, you have abetter chance of getting elected if your preach less government, less spending, less taxes, more self reliance,and less 'bring home the bacon'...thats not quite austerity, but it is getting there
    23 Oct 2010, 08:20 PM Reply Like
  • filipo
    , contributor
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    @countrybanker: If that's true, there is some hope for the USA. What you recite would also imply "less Army, less Banksters". That might bite, no ?
    24 Oct 2010, 03:56 AM Reply Like
  • blueice
    , contributor
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    Do I dare say, that Uncle Ben like Greenspam, were born in a bubble

     

    and now are simply reproducing...
    23 Oct 2010, 08:55 PM Reply Like
  • Teutonic Knight
    , contributor
    Comments (2349) | Send Message
     
    I believe my fellow Teuton meant what he said, and said what he meant, no fluff, no bluff, straight to the point.

     

    A British Economic Minister would have had uttered something like this: "...His courage is admired, method less so.. A more prudent approach could be cultivated...".

     

    The meanings are the same, it's just that when it comes across, words are embodied in the respective culture.
    23 Oct 2010, 10:45 PM Reply Like
  • kmi
    , contributor
    Comments (4234) | Send Message
     
    Why would the Germans support this?

     

    they are uniquely positioned in the global economy because they have others to devalue their currency for them - see Greece, Ireland, Spain, Portugal.

     

    They must be LOVING their neighbors right now, if they were still on the deutche mark their currency would have skrocketed to the moon and made them 1 million percent less competitive.

     

    Would be nice if we could all have fall guys to cover our asses so we can look good and talk tough.
    24 Oct 2010, 11:32 AM Reply Like
  • filipo
    , contributor
    Comments (4018) | Send Message
     
    @kmi: Don't forget the PIIGS cost them a lot of €€€€€€€'s: without German solidarity, meaning that they have to buy Greek, Portuguese, Irish, Italian and Spanish Debt (Government Bonds), there wouldn't be a European Union.
    There has been German criticism on Chancellar Angela Merkel on that point: are we Germans supposed to support those lazy Greeks with the money we earned with our sweat ?
    So, don't blame the Germans, they worked for every dime and it's not their fault the Greeks made the € plummet. In Germany they didn't find it funny when it appeared the Greeks had cheated on their Balance Sheet and that it was to the Germans to pay for it.
    24 Oct 2010, 12:07 PM Reply Like
  • blueice
    , contributor
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    Excellent post, Filipo!
    24 Oct 2010, 12:22 PM Reply Like
  • filipo
    , contributor
    Comments (4018) | Send Message
     
    Tnx Blueice, and there's another cause for the € staying low: the Chinese.
    They don't use a peg against the €, only against the $. That means they buy $$$$$'s every time the $ faints. As a result the $ lifts not only vs the Yuan, but vs all the world's currencies, also vs the €.
    So, here's another cause for the relative devaluation of the € the Germans can't be taken responsable for.
    24 Oct 2010, 04:43 PM Reply Like
  • kmi
    , contributor
    Comments (4234) | Send Message
     
    The Germans reaped the benefit of a stacked deck.

     

    When the Euro came about, the PIGS nations weren't competitive with the French and the Germans - but they could at least rely on currency mechanisms to level the playing field. Once they joined the common currency, money flows went one way -from the periphery to the center.

     

    Now that the Germans and the French ripped the wealth of their neighbors out from under them, they come as shining knights to 'save' them - with loans?

     

    I find this righteousness about hard-working Germans hilarious. It betrays a misunderstanding of what a clusterfk the common currency ended up to be.

     

    Quality of life in the Mediterranean countries isn't just going down because tax evasion is a national sport (in all of them), or because of public sector waste and overenthusiatic entitlements (a problem everywhere but in... the BRICs... go figure) but what wealth there was was taken under the guise of the common currency.

     

    I can give you several examples but here is a good one: Continent, the French Walmart, opened a buncha stores in the Meditterranean nations and decimated local mom and pop grocery stores - and subsequently took all its profits out of the countries and back to France. This should have had the knock on effect of raising France's currency relative to say Greece's. but since it didn't, that competitive edge never went away. So Continent was able to do this for years. Until it precipitated a crisis.

     

    There's your 'hard working French' for you. Clearly the ones at fault are the lazy Greeks with their pervasive tax evasion. Or maybe not.
    24 Oct 2010, 08:07 PM Reply Like
  • Wyatt Junker
    , contributor
    Comments (4503) | Send Message
     
    Germany builds stuff. Good, high quality stuff. Whether its guns or cars, great stuff all the way around. I love my Heckler & Koch PS 2000 sub-compact.

     

    My take is that these are people who work well with their hands, in the garage, disciplined, responsible, level headed. Can do.

     

    Now, compare them to the euro-derelicts in France or Spain or, obviously in Greece. Public sector expansion. Welfare. Mandated 30 hour work weeks WITH 8 weeks of annual vacation. That is a dying system.

     

    Of course Germany will prosper in the end, until it all comes crashing down.

     

    God forbid Germany rebuilds its military machine. Who knows what kind of dark storm could come from that. And what if Hitler was successful back then, to today? Could you imagine? Hitler, the first highway builder? He'd have reunited that old world Teutonic Germanic empire of rough neck Anglo Saxons. Maybe we would have been flying to work in space cars by now? Blade Runner anyone?
    24 Oct 2010, 01:15 PM Reply Like
  • The Mighty Wart
    , contributor
    Comments (118) | Send Message
     
    Nobody in this world gives something for free and this applies in particular to stingy Germans and French. First of all, and let me be very clear, the French has been travelling in the European Union train in first class with a second class ticket whether they like to admit it or not.

     

    The “convergence” as they like to call the process by which the periphery will level-out with the centre (i.e.: Germany) has been a very “expensive” process indeed but has given massive returns to the big contributors (i.e.: mainly Germany as Britain gets a very hefty check back every year from the EU; more than 4 billion Euros in 2005) in the form of cheap labour. Many manufacturing plants established in Spain, Italy, Greece and Portugal while Ireland focused on services from countries in the European centre since the 70s and 80s taking advantage of cheap and skilled labour. As the GDP increased in these countries and with the advent of the euro they started to be less competitive and many manufacturing facilities started to move to eastern Europe or even China. But the euro didn’t move, it remained in the PIIGS making these economies even less competitive. So I wouldn’t say Germany did any form of Plan Marshall or charity program with the PIIGS as some people here might be implying. It was rather what the industrialised world have been doing with China with the BIG difference that the Chinese kept control of their currency (to the anger of some Americans that would like to get some of those dollars back to revitalise their economy). In addition, the Chinese market is by and large a close market for many international corporations due to protectionism and national favouritism things that clearly were not the case with the PIIGS. Where are those big Portuguese, Irish and Greece multinationals?? Look at the Chinese market cap these days…

     

    In fact, the PIIGS have been better at level-out the game with Germany than Eastern Germany with Western Germany. It is well known that the German integration it’s far from being a success. Why? Because Eastern Germans should earn the same as Western Germans, they also have the euro and they both speak the same language so mobility is very high (it’s the same country at the end of the day) which is not the case for PIIGS national. So this integration has been, with a big yes, very expensive. On the other hand, it’s just so easy for Germans and their ignorant apologists to open their mouth talking rubbish about the “PIIGS burden” when they haven’t even completed their job with their own people and it’s in fact this “burden” which keeps that country afloat and competitive these days. Germany these days is not different from a bank when is allowed to keep it’s toxic assets in another entity: in these case they have a competitive euro thanks to the less competitive periphery. I’m not taking any merits out from hard workers Germans but nobody gives nothing for free in this world and this is even more so from a nation to another nation. Whoever implies the opposite is either naïve or an hypocrite.
    25 Oct 2010, 02:46 AM Reply Like
  • filipo
    , contributor
    Comments (4018) | Send Message
     
    @The Mighty Wart:
    No Marshall Plan for the PIIGS ?
    Get yourself informed:
    hubpages.com/hub/Trill...
    Of this Marshall Plan the Germans pay the bulk:
    www.econbrowser.com/ar...
    To the benefit of the Germans I hear you say ?
    Well, that's what the Real Marshall Plan of 1948 was also all about, wasn't it ? America benefited and the Europeans did.
    Get realistic.
    25 Oct 2010, 03:40 AM Reply Like
  • The Mighty Wart
    , contributor
    Comments (118) | Send Message
     
    econbrowser.com/ar...: good article on how to conjugate in future tense. Everyone with a blog these days is a self-appointed expert, wonder where all these experts were in 2006 and 2007. You see Spain, Portugal and Ireland are placing their debt very smoothly these days with oversubscriptions for the former. Regarding hubpages.com/hub/Trill... nothing new here. One of the reasons, if not the main, of this package was to keep the speculators out of the game and bring stability to the euro. Don’t you see a contradiction between the European austerity plan (which is a reality going on) and this trillion fiat money (which it hasn’t been barely used)? And if you don’t think so ask any Greek living in Greece how “nice” are things over there.

     

    Mind you the euro not long ago hit 1.19, see where it’s today. The same experts were proclaiming in all directions the “imminent collapse of the Euro”, “parity in a month”. 1.4045 as I’m trading now… don’t believe everything you read mate specially from people in Wisconsin which most likely have never been Europe and want to derive the reality from a couple of graphs and reprocessed media garbage.
    25 Oct 2010, 04:03 AM Reply Like
  • filipo
    , contributor
    Comments (4018) | Send Message
     
    Even my best friend Emmanuel Choustoulakis says Greeks are lazy.... due to weather conditions. I was in Spain last summer: 45°C in Cordoba. So, nothing wrong being lazy with those temps.
    The Germans (and French) understand that; that's why they are willing to support the Greeks and keep on having nice vacations in Greece.
    Oversubscription of Greek bonds is due to the ECB backing them. The Markets know they can easily get 6.7% on 10y Greek Bonds without to much risk since the ECB stands behind. From May-September the ECB bought € 16b Greek Debt. If that's no insurance, I don't know what is.
    I reckon YOU are the expert who can tell me who to believe and who not.
    25 Oct 2010, 02:50 PM Reply Like
  • kmi
    , contributor
    Comments (4234) | Send Message
     
    I guess we can infer from your comment most of California, Florida, Texas, hell the whole Southwest is also lazy, as are Mexicans, Indians, Indonesians, and um... who else lives in a moderate climate...

     

    Of COURSE the ECB is backing Greece, this is the roundabout mechanism the center is using to artificially keep the Euro low... or lower than it otherwise might be, to the benefit of the exporting center.

     

    Greece would absolutely LOVE to default and walk away from its obligations - but the center won't let it. No reason not to make money on this game but its a stacked deck and the insiders already know everyone's hand.
    25 Oct 2010, 03:03 PM Reply Like
  • filipo
    , contributor
    Comments (4018) | Send Message
     
    They have airco over there, don't they ? Not so in Greece or Andalucia.

     

    Gimme a break. Are you that dull ? The reason why the ECB decided to intervene on behalf of the Greeks was to keep the Eurozone together. They had to show their solidarity, or it would have been over and out for the Eurozone and, who knows, for the political European Union. Or do you really think US Government meets California Debt to keep the $ artificially low to the benefit of its exporters, the Farmers of the Corn-Belt ? Why not pretend then that California (Greek) Debt is intentionally perpetrated to drive the currencies down ?

     

    If the euro went down to 1.19, it was not the purpose, it was the result. Try to see the difference. If you can't, you'll keep on seeing conspiracies around every corner.

     

    Your view on the Greek rebuffed will to default is astonishing. They still are a sovereign Nation. If they really wanted to default, they could, but considering the overall disadvantages they decided not to. Having to devalue every now and then, as they did in the past with the Drachme, is not so funny after all.

     

    It seems to me your expertise stinks.
    25 Oct 2010, 03:36 PM Reply Like
  • kmi
    , contributor
    Comments (4234) | Send Message
     
    First of all, I was pointing out the idiocy of your "heat makes em lazy" comment , surely you can agree it was pretty poor reasoning, and makes it hard to bother to pay attention to the rest of your comment. I'm gonna allow the aircon comment to go unchallenged in the belief it was an attempt at a witticism.

     

    Second of all, I've lost track of what you're trying to argue. And just as fyi, I follow the Greek situation VERY closely, I lived/worked there a few years (and can verify aircon is pretty prevalent).

     

    Here is my point plain and simple.

     

    Germany is uniquely benefited by the common currency. They will moan and whine, but they will never leave the common currency, or create a situation in which it is beneficial for the periphery to leave it.

     

    You claim "are we Germans supposed to support those lazy Greeks with the money we earned with our sweat ?" and my answer is, "bull". As you see repeatedly in my comments as well as other folks,, there was a currency mechanism in play which allowed Germans and French to destroy the economies of the periphery by taking their wealth. It was hardly the German work ethic and it was hardly that the periphery was lazy.

     

    And frankly, if the Germans didn't literally talk down the Euro to 1.19 by BS'ing and stalling, I'd be damned surprised, tyhey had a million opportunities to get out in front of the problem before a sovereign debt/currency crisis became what it did, and they didn't. And I'll be a monkey's uncle if there was ever a chance of Greece, Germany, Spain, Ireland, Portugal, or anyone leaving the common currency, the ONLY ones discussing it were media in the good ole US of A, at the same time that the line was 7 deep for countries trying to get IN to the currency.

     

    Get your head straight, this is not about "honest hard working Germans who pay their taxes" or lazy Greeks with too many vacation days (you need to check your data on the entitlements allocated to German workers) this about a mechanism - the common currency - that FUBAR'd the wealth of nations.

     

    And just fyi- devaluing the currency was very common and constant in Greece prior to the 2001 adoption of the common currency, it let currency and trade mechanisms work right, and "fun" or not, it was a fact of life Greeks were accustomed to.
    25 Oct 2010, 04:05 PM Reply Like
  • filipo
    , contributor
    Comments (4018) | Send Message
     
    Heat is what makes GDP in African countries so weak. Or do you say it's in the genes ? Since I live part of the year in Madrid or Cordoba, I can assure you that life halts when temps rise above 40°C. And no, airco is not so general in Southern Europe as it is in Phoenix Arizona (where I stayed a few months in 1990). If you had it in Greece, good 4 you, but most people don't have it. I have been living on Corfu and I can tell you except the luxury hotels no one even heard of airco.
    Don't blame this discussion for not being able to properly respond on my California Debt argument.
    What really happened when the eurozone was created (and Greece joined in 2001), was that economies of different "speed" came together: Germany, the Netherlands, France (a bit less), Belgium had huge GDP/inhabitant and the Southern countries had less. You know why ? Because N European countries have higher Productivity (whatever that implies).
    European politicians had good hopes that the PIGS would grow (convergence, indeed) and that after a while, these "two-speed" problems would vanish.
    However, they didn't. The Greeks kept on spending, not producing; the Germans kept on producing, hardly spending. Actually, the Greeks who had entered the eurozone with cheated Budget Figures and Overall Debt Figures, found the situation rather pleasant: they suddenly found themselves able to spend more with a strong euro then they ever had done before.... by making still more Debts.
    Since I live a great part of the year in Spain, I can tell you all about vacation days and siestas (I don't speak about Barcelona or Madrid, I speak about 80% of the pop., mainland Spain).

     

    I like your "Devaluation ... was a fact of life Greeks were accustomed to". Do you really realize what you say ? You defend regular devaluations (that's the phenomenon that happens to the $ right now). Do you realize what negative effects it has on the possibility to save, to build up Capital (the necessary Blood for the Economy) ? You know what Onassis did when he built his empire ? He shifted all his money into Am. $$$$$'s, not such a great support for the Greek Economy.

     

    I'd rather have a talk with your uncle. He sure has some notion why the Germans don't leave the EU (yet): they like us.
    25 Oct 2010, 05:31 PM Reply Like
  • The Mighty Wart
    , contributor
    Comments (118) | Send Message
     
    I don’t know if your weather determinism stuff can hold too much longer. The Chinese coastal cities including Shenzhen, Hong Kong, Hangzhou, Suzhou and Shanghai have horrendous weather in summer with +40 temp and 100% humidity and I wouldn’t say people there are lazy or unproductive. Far from that, in fact 40% or more of the Chinese GDP is produced there and believe me they do work in sweat workshops (no Carrier aircon there). Weather can affect crops which indirectly can affect human productivity; no food = no productivity. But this is certainly not the case for Mediterranean countries which historically have been the barn of Europe. I recommend you read Guns, Germs and Steel from Jared Diamond to have more grounds when discussing about how weather, among other things, can determine the destiny of people and nations.

     

    PIIGS were less productive simply because they were poorer. They didn’t have the technology or the means of production to have more output per same input. It’s not because they are lazy, or they have so many siestas. East Germans around the corner in Berlin where are also significantly less productive that their brothers around the corner in West Berlin for the same reasons. They did have the same weather, food, not doing siestas, etc but their GDP at the time of reunification was substantially lower because of isolation and communism.
    25 Oct 2010, 10:35 PM Reply Like
  • filipo
    , contributor
    Comments (4018) | Send Message
     
    @The Mighty Ward:
    If it's not weather determinism (it includes vulcano activity, hurricanes, tsunamis...) that is responsable for Productivity, then what is ? DNA ?
    You're right though about the Chinese sweat shops in horrid humid and hot conditions. That they work hard, I won't even question. But the thing is, will they ever get our GDP/inhabitants ratio with the bad weather condtions they have to endure (right now they had to deport 1/4m people for the latest hurricane in a row).
    Compare it to Florida: lower Productivity (GDP/inhab.) than NY State or California, and yet they are the same people. If your infrastructure gets destroyed every now and then, you get sort of disillusioned I guess: the Haïti syndrom.
    I promise I'll read Jared Diamond.
    "PIIGS were less productive because they were poorer. They didn't have the technology...": Then what did make them have less techn. ? In your view the Germans I suppose ? How do explain then that even in the 19th century Greece was nowhere, while Germany was already a super power. German instigation again, according to you ?
    You give a nice example of East Germany. Only, you should know the difference of Productivity between East and West still exists (though slightly less now) as in the time of the reunification. You know why ? Because the Ossies have been made lazy by communism: the State gave them everything, prevented them to think and be entrepreneurial. It'll take generations before the Ossy-mentality has changed. It's not always the weather that's responsable, but it sometimes is. The cases were the weather isn't, are no proof for those where the weather is. Don't extrapolize.
    26 Oct 2010, 03:28 AM Reply Like
  • The Mighty Wart
    , contributor
    Comments (118) | Send Message
     
    Politics and religion play also role. They are called memes and they can also determine your success as a nation but not weather.
    26 Oct 2010, 10:19 AM Reply Like
  • filipo
    , contributor
    Comments (4018) | Send Message
     
    Sure, one thing doesn't exclude the other.
    Calvinism f.i. was very favourable to Capitalism, hence the economical succes of Scots, Dutch and Swiss.
    Your dislike of the weather component in economy wouldn't suit farmers, I guess.
    26 Oct 2010, 11:20 AM Reply Like
  • The Mighty Wart
    , contributor
    Comments (118) | Send Message
     
    Sorry I just don’t agree that the weather makes people lazy or more industrious. If you want to prove your point you need to provide some evidence for this. It’s not enough to say that PIIGS underperform because they are lazy because of the weather. They underperform for other reasons and whether Germans have benefitted or not from this recently is a different story but I don’t believe Germans have anything at all to complain about the current situation.

     

    And the underperform bit doesn’t make any justice to them because in fact for many years since their incorporation to the EU and lately to the Euro these economies outperformed substantially the centre in particular Ireland and Spain. So what then? They stopped doing siestas or going to the pub at that time and now they resume it?

     

    I will move on to the next posts. It just gets repetitive.
    27 Oct 2010, 08:22 AM Reply Like
  • filipo
    , contributor
    Comments (4018) | Send Message
     
    @The Mighty Ward:
    Maybe lazy isn't the proper term. I should have said less efficient, since Southern Europeans often do hard physical efforts in a way that doesn't always bear fruit. I have no scientific explanation for this. It only struck me when I spent my vacations in Spain, Greece, Italy, Portugal. During the Semana Santa f.i. they carry huge flags and banderolles ... made in Holland or Belgium. At the Pamplona Bull run at San Fermin a lot of energy is deployed... for what ? Now there's a bull run in almost every major Spanish City. What a waste of Energy ! They are lucky so many crazy tourists come and spend money to have themselves hurt and boost the economy, but these incomes are negligable. They have soooo many feasts. Ever heard of the Valencia Las Fallas where they burn huge dolls ?
    The truth is hard to tell (and my Greek friend won't like this), but the reason why Spain and Ireland have been outperforming since their incorporation in the EU is:
    #1Spain: has been buried under Euro-subsidies (e.g. for the Olive Tree Cultures and Road-construction); the same is true for Greece.
    #2Ireland: has outperformed because of the Euro-subsidies AND the low-tax regimes that attracted hundreds of foreign Companies.
    For both Countries, Spain and Ireland, the heavy Borrowing (Leveraging) has also played a major role.

     

    So, in fact they didn't have to stop doing their siestas (or go to the pubs) to even have more output. In reality, they kept on having their siestas (or go to the pubs) while the easy money (from German and French Banks) did their work. In Ireland they imported an army of 50.000 Poles to do the work.

     

    Now that the Euro-subsidies have been shifted to the Eastern European Countries and Spain, Greece and Ireland get less, this came as a shock for their economies.
    And with the economic crisis the multinationals closed their plants (Dell eg closed a factory in Ireland affecting thousands).
    Since Construction based on Borrowing and Loans in both countries was so huge during the Leveraging Phase, it's no wonder it's especially there that the Deleveraging hits the hardest.
    Cheers.
    27 Oct 2010, 11:32 AM Reply Like
  • filipo
    , contributor
    Comments (4018) | Send Message
     
    I forgot to mention: Spain, during the Leveraging Phase, imported over 1 million Latinos who worked mainly in Construction and they still employ tens of thousands Africans to work in the Glass (actually it's plastic) Houses at the Southern Rim (Almeria region).
    So, during the phase where there was a lot of labor to perform, the Spanish themselves did not have to stop doing their siestas or taking time for their numerous fiestas.
    Overall, Barcelona region is the lucky exception.
    27 Oct 2010, 12:35 PM Reply Like
  • kmi
    , contributor
    Comments (4234) | Send Message
     
    Wow the fact that you are serious about the aircon stuff really fascinates me.

     

    Although I am familiar with Corfu I will hardly consider extending discussion about how aircon contributes to productivity and GDP. Perhaps you can commission a study on this and enlighten us all.

     

    Your analysis is accurate to a point: the center and the periphery did have differing economic "speeds". The belief was in fact that these speeds would converge. To this end, Greece was initially (prior to 2001) the recipient of large sums of GRANTS as well as loans to create Euroarea worthy infrastructure and industry.

     

    To expect however that a mom and pop grocer can compete with a global institution the size of Continent, as in my above example, is to betray an ingnorance of the concept of economies of scale.

     

    The lowering of tariffs and the creation of a free trade environment uniquely benefited Greece's neighbors to the north. And.. well I already explained what happened.

     

    You claim Greeks kept "Greeks kept on spending, not producing; the Germans kept on producing, hardly spending." Perhaps it is me at fault here, unable to explain the mechanism by which the wealth of Greece was removed from the country by it's more competitive neighbors, but this is in fact what happened.

     

    Was there public sector excess? I don't dispute that. In fact I'd point out that public sector excess is currently extant in more of the developed world. Was there a regular and recurring devaluation of the drachma? Yes there was. Was this a painful phenomenon? It wasn't prior to 2001 - want to know why? I can enlighten you to this. Most of Greek consumption was domestic. Domestically produced goods consumed locally.

     

    I remember the Greek breweries, dairy producers, butchers, that were slowly and methodically wiped out by larger rivals from France and Germany. The difference is, when a Greek butcher is selling Greek pork to a fellow Greek there is no currency concern. When a French multinational is selling Argentinian beef to a Greek consumer cheaper than a Greek can sell Greek beef, because Greeks adopted the Euro, and they can't source beef as cheaply as the French multinational, and then the French multinational takes his profits out of the country, this is creates a problem.

     

    You can whine all you like about budget obfuscation, air conditioning, laziness, or whatever, or pretend that somehow the Germans are simply a superior productive people, but what I am describing, happened. And it happened because Greece didn't have a mechanism to fight it after it joined the common currency.

     

    And speaking of siestas... Greece had them too. They don't since 2001. You don't know anything about Greece except what you read in the newspapers.
    25 Oct 2010, 05:51 PM Reply Like
  • filipo
    , contributor
    Comments (4018) | Send Message
     
    @kmi:
    Fascination and curiosity is the beginning of wisdom.
    The "mom and pop grocer" analogy doesn't convince me 100% though it certainly plays, depending on the resilience of the people in question.
    Look at Finland f.i.: caught between a rock (USSR) and a Hard Plate (Germany) they however managed to build their own strong economy and they are part of the Eurozone altogether.
    Why wasn't their output run over by German exporters ? They produce no oil, no gas ans yet they can (Nokia) compete with Siemens, Eriksson, LG, Samsung.. whatever big cell phone C°.
    "And speaking of siestas... Greece had them too. They don't since 2001. You don't know anything about Greece except what you read in the newspapers"
    I get convinced you're a proud Greek yourself. My experience of 2 years ago (I crossed Rhodos and Corfu: 2 months) was that they still have siesta, maybe not in the cities, but among the common people. You'd be surprised to learn how "primitive" Greeks still live on the countryside.
    26 Oct 2010, 03:46 AM Reply Like
  • kmi
    , contributor
    Comments (4234) | Send Message
     
    Just to wrap this convo up, although I agree with our friend Wyatt Junker below that we would make more progress over coffee, I'll mention that neither Corfu nor Rhodes are centers of economic activity or industry in Greece, their economies are largely based on tourism generated cash, and that my experience with Greece comes from 8 years of living/working there and having family there, including an uncle who is one of the larger industrialists (having started from absolute nothing) with significant international exposure, another uncle who is a real estate developer with large holdings in the north (having started with 30 head of sheep and some cattle), and others who are employed in both the private and public sectors. I don't need to read the paper to know what's going on there, and I have a pretty good idea of the extent of 'laziness' in the Greek people.
    26 Oct 2010, 04:28 AM Reply Like
  • Wyatt Junker
    , contributor
    Comments (4503) | Send Message
     
    Perhaps you two could discuss this over an espresso with a nice little dish of shared hummus and some peasant bread? Or a goatcheese wheel and those lovely, miniature knives, the ones you find in the IKEA catalogue under kitchenware?

     

    Make a day of it, all the giggling and cultural excitement!
    25 Oct 2010, 07:58 PM Reply Like
  • filipo
    , contributor
    Comments (4018) | Send Message
     
    Make it tea for me.
    "their economies are largely based on tourism generated cash"
    Indeed, but Tourism generates 15% of overall GDP, not so bad vs 20.8 for Industry and only 3.4 for Agriculture.
    Maybe you don't need to read the newspapers to know what is going on there, but try Wikipedia:
    en.wikipedia.org/wiki/...
    My apologies though for having been unknowingly so rude in my viewpoint on the degree of laziness of the Greeks.
    Being a (half)Greek yourself,maybe your viewpoint is a little troubled by justified patriotism.
    My final point is that we as Europeans shouldn't start blaming each other or the fun of a common market might be soon over. You can't deny that the Greeks did make some mistakes in the past and that they now are having to pay for.
    26 Oct 2010, 06:10 AM Reply Like
  • filipo
    , contributor
    Comments (4018) | Send Message
     
    ... or is it a coincidence the very same s***ty problems of deleveraging occur in the countries where leveraging was so huge: Greece, Spain, UK, USA, Portugal, Ireland...
    If one gets himself into trouble by lending unproportionately large amounts, it's obvious the day will come to have to pay them back. That's what they call deleveraging.
    No reason to blame the Germans for that. As far as I know, it was GS that engineered the Greek CDS's.
    But that's the eternal discussion between debtors and creditors: they blame each other.

     

    You, my friend, suffer 2 major handicaps: #1 you're Greek, hence your view is influenced by patriotic feelings and #2 you have 2 Greek uncles, one active in the Greek industry and the 2nd active in Real Estate Development.
    I can clearly see the picture now: your 2 uncles are the first to suffer from deleveraging. They witnessed the years of leveraging based on loans from their customers and now those customers face defaulting and hardship so they can't place new orders anymore.
    Especially the uncle active in Construction must have problems. I guess Greek construction must have stopped (like in the USA, Spain, Ireland...) due to defaulting of the debtors.
    No need to blame the Germans therefore.
    If I were your uncle, I'd stop Construction rightaway (I see no future in that business in Greece for the next 5 years at least) and shift to business or Tourism. Try to get back the customers that the Turkish have taken over the last decade. I'd be glad to be of any assistance.
    26 Oct 2010, 08:49 AM Reply Like
  • kmi
    , contributor
    Comments (4234) | Send Message
     
    I was done with this convo, but this post is arrogant in its ignorance.

     

    Actually my friend, my uncle the industrialist is big enough where the domestic problems of Greece do not affect him, he is, you see, and exporter, and my developer uncle has large investments in rental property, and is not suffering, even with high vacancy rate. Both of my uncles are products of the pre-Euro economy, an economy that was heavily based in cash equity, not leverage.

     

    The difficulties in Greece my friend, are in the public sector, in the middle class, and in the small entrepreneur.

     

    It's ok that you do not know this, I know you are swinging wildly in the dark in an attempt to make a relevant point.

     

    The issue I am here discussing has never been deleveraging, or the specifics of the Greece situation, which I used to illustrate my point, but which you keep hanging onto for some odd reason.

     

    I have simply been trying to educate you about how trade imbalances (caused by whatever reason) amongst nations with a shared currency contributed far more to the European periphery's problems than most care to admit, yourself included.

     

    Clearly I have failed in my endeavor and I will cease my efforts and move on to... other posts...
    26 Oct 2010, 10:47 AM Reply Like
  • filipo
    , contributor
    Comments (4018) | Send Message
     
    Finland lies on the periphery, and yet...
    Your theory doesn't fit 100%.
    27 Oct 2010, 04:35 AM Reply Like
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