Favoring the deutsche mark
The politics of this crisis have taken a decided turn for the worse in the country that effectively holds the veto power right now -- Germany.
A June poll for ARD public television showed that 55% of Germans want the deutsche mark back. That's up 9 percentage points since the May survey in this poll.
I find two things disturbing about this poll.
First, despite significant evidence showing that the German economy derives a considerable benefit from pricing exports using a weaker euro rather than a stronger deutsche mark, a majority of Germans want their old currency back. In the same survey, 56% of Germans say they're worried about their savings. Weighing the advantages of the euro against the potential threat from the single currency, a majority have decided that the threat outweighs the advantages.
Second, the deteriorating politics of the "austerity countries" and their need to ask for either more time or more bailout funding plays into an increase in political sentiment against the euro and in favor of the deutsche mark.
The debate over the Greek request for more time and better terms, even if the Greek plan is shot down (and I expect it will be), feeds right into the political narrative in Germany. A significant number of German voters, evidence or no evidence, see the southern European countries as the home of lazy freeloaders who don't work very hard (and then retire at 45).
Problems deepen with recession
Even German voters who don't feel this way are likely to be dismayed when Greece, Portugal, Spain, France and Italy all miss their budget deficit targets this year. And that is all but inevitable, since the eurozone countries are all in or sinking toward recession. Slower economic growth means budget cuts and tax increases made to date won't reduce budget deficits as much as projected, because tax revenues sink with slowing economic growth. If Germans have euro bailout fatigue now, think of the politics as this crisis drags on into 2013 and beyond. (And 2013 is an election year in Germany.)
Germans are already justifiably worried about the dangers of throwing good money after bad. If the austerity economies are going to go under anyway, the logic goes, wouldn't it be better to let them go now rather than after Germany has sent them billions more euros? I sense growing support for the not-so-easily refuted argument that it would be better to spend limited resources on an orderly wind-down of the euro than to put billions more into rescue plans that are doomed -- and will leave Germany on the hook for further payments for dissolving the eurozone.
Eroding German support for the euro wouldn't matter quite so much if Germany weren't key to any solution, and if important German institutions weren't opposed to the aggressive moves that are needed to save the euro. But Germany has the financial firepower to make the difference in the crisis.
The Bundesbank, Germany's central bank, has opposed actions including the purchase of Italian and Spanish debt in the secondary markets, the European Central Bank's decision to open a huge lending facility for European banks, and recent suggestions to use that European Financial Stability Facility to directly capitalize Spanish banks.
Politicians in the opposition, but also and more critically, inside Chancellor Angela Merkel's own coalition, have succeeded in delaying Germany's vote for the European Stability Mechanism, the permanent European bailout fund. Facing elections in 2013 and coming off a series of defeats in state elections, Merkel sounds increasingly as if she fears sentiment among German voters could quite easily turn against her.
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They have all run budget deficits on the nanny programs, for the last 12 years, except Norway, who uses the entire output of their North Sea Oil wells to pay for them..
Their business and "rich" have left the Euro countries in a steady stream, to avoid things like 63% in Income taxes and VAT's
.They will continue to try to hang on to their handouts until their economies simply lie down, then they will acknowledge there is no such thing as a free lunch.
Watch them closely, this is the paradigm, for the USA.
It was insane to create the euro, it has cost the europeens a lot ! As a europeen, I hope the euro be gone.
More socialistic bS. The soluttion isn't thave haves paying for the have nots.
“Parts of it read like a wish list,” German Deputy Foreign Minister Michael Link told reporters in Luxembourg. The proposals lean “toward various models for mutualizing debt. What comes up short is improved controls,” he said.
This week's summit of European leaders is the last real chance to save the euro.
Well, that is until next week, when the next newest johnny come lately plan to save the Euro is trotted out.
I mean really, how many times have we heard something along the lines of "this is it, the last chance, the final hurrah, after this, everything falls apart".
Now, I certainly believe that it is going to fall apart, but Europe has been crying wolf for at least two years now, so I'm not going to bet the farm that this latest effort is the final straw.
The pattern seems to be, whenever the pundits call for the knock out punch, China comes along and says they'll step in. Of course, I don't recall them actually having stepped in as yet, but just the suggestion by China that it is supposedly willing to do so seems to be enough to kick the can down the road for another few months....just enough time for the next latest johnny come lately plan to be trotted out, and then the pattern repeats itself.
This is not a socialist thing or a haves versus have nots thing (it is a divide and conquer thing)
One currency for multiple nations, but each nation raises money to print the currency through separate bond sales means:
Germany raises money for less than smaller nations (lower interest on the instruments they sell to get Euros from the ECB. Their 'euro' costs less than a greek or spain or italian euro. They now have the ability to produce more at less cost than the neighbors to the south. Neighbors to the south have an incentive to import on credit rather than produce (kind of like US versus China).
Massive debt is inevitable to the south, while the larger economies become power houses.
Next thing on the horizon - the banks will try to implement a FED like entity over Euro nations to 'level things out.' That will lead to a bank controlled europe, continued long term debt and decay.
Very simple - separate nations need separate / competing currencies in order to remain separate nations.
Separate nations also need separate political classes to maintain sovereignty ( a single overarching entity will destroy that)
Want to save the euro (why?) - Take Germany, Greece, Spain, Portugal, Ireland and Italy out of the European Union and that might happen, but again, why? Bad ideas (common currency across multiple diverse nations) are just bad ideas. But people are stupid enough to believe that this is a socialist / captialist / communist / fascist or whatever thing.
It's just simple economics.
Now austerity measures are imposed on the hurting middle/working class - in the name of profits for investors, multinational corporations, and financial institutions?
Sticks = kindling for a great fire of revolution.
I know nothing.
A revival of the Glass-Steagall Act, the Depression-era law that separated commercial and investment banking, is “absolutely necessary” to protect the U.S. financial system, Federal Deposit Insurance Corp board memberThomas Hoenig said in a Bloomberg Radio interview.
Using Dodd-Frank Act powers to break up banks one-by-one is the wrong approach to removing the threat that risky trading could spark a repeat of the 2008 credit crisis, Hoenig said today on “The Hays Advantage” with Kathleen Hays.
Its just to much debt.The usa has to much also.We are kept afloat with debt,money printing.
How long can it last?
Talk is cheap. The Euro is getting cheaper by the minute. So spend until it hurts.
I personally liked the DM better than the Euro. But of course that was because it was 50% of US Dollar at that time 2DM to $1 US dollar. Some items were still the same prices even after the currency conversion so the dollar strength wasn't much of a currency power.
What I liked about it, it fit the culture where they had mark unit coins rather than a bunch of paper bills. And now, it is apparent the lack of sovereign control over the currency makes it unfeasible unless they want to create a strong central European government like the we have in the US. And for some reason, I don't think that will work. Culturally, they still all speak various languages and have various different social systems. So I don't think that will work.
I say go back to individual currencies. It only works in the US because most of the states are on the same continent and speak English and the history of how the US formed was based on the principle of states being united.
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last-chance-deal to those troubled nations. But they know from history that Spaniards, Italians, and Greeks do not think like Germans. They know that those incapable governments that abuse their people will not solve anything. So, the best think to do is to buy some time to figure out how to proceed.
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