Eurozone crisis: We're all dooomed! Here's why

Quite what is actually happening over the Eurozone I can't actually tell you: it's not that things change too fast to write about them, it's that things change to fast to read about them. Berlusconi still PM? Italian bond yields over or under 7 per cent? That changes as often and as fast as Berlusconi does condoms. France to go …

[filo]

Tough times ahead

It is the right way to do it, however the debt in some instances is unmanageable. Perhaps the central funds could be used to clear debts rather than adding to them.

As for the people we are all the unfortunate losers in this situation. Is there any other way out of this but to cut spending to within sustainable limits? It is a galling proposition especially when considering the political / financial leaders at the time of the crash come out smelling of roses.

What are the alternatives?

[Anonymous Coward]

War between London and Frankfurt financial outfits

Whatever Mr Worstall and friend(s) may want Joe Public to believe, what you are seeing here is not what he wants you to think it is.

As readers will know, the City are very keen on light touch regulation so they can carry on making megabucks from things like Credit Default Swaps and so on.

As sensible readers will know, CDSes are potentially financial weapons of mass destruction and the ECB wants the CDS business to be supervised from Frankfurt.

That doesn't appeal to the City and their puppets in the Millionaire's Cabinet.

There's loads more to it than this but I need to be elsewhere; the best short writeup I've seen is at

http://www.guardian.co.uk/discussion/comment-permalink/13232166

Austerity, or democracy. Take your pick.

[Zog The Undeniable]

The best thing Gordon Brown ever did

was not joining the euro. This might hurt us, but not so much as it hurts them. *We* can still print money.

[airbrush]

Consumer debt is huge in the states, the largest in the western world. Their government debt is worse than Greece. It's politicians generally seem at least as corrupt as Greece's, do wonder if this whole euro crisis was a smokescreen for the mess in the US. Now if say the euro replaced the dollar as a world currency, the us + goldman sachs et al would be totally sunk.

[Anonymous Coward]

Had you heard the one about the toppling of Saddam being largely about the fact that Saddam wanted to sell his oil in Euros not in petrodollars?

No, not many people have. I wonder why. Anyway, here's a piece of the story you can easily find:

http://www.time.com/time/magazine/article/0,9171,998512,00.html (13 Nov 2000)

Europe's dream of promoting the euro as a competitor to the U.S. dollar may get a boost from SADDAM HUSSEIN. Iraq says that from now on, it wants payments for its oil in euros, despite the fact that the battered European currency unit, which used to be worth quite a bit more than $1, has dropped to about 82[cents]. Iraq says it will no longer accept dollars for oil because it does not want to deal "in the currency of the enemy."

[Anonymous Coward]

illegal?

If the easy solution is illegal, just change the law.

Works for the US all the time.

[nucotech]

Good article. We now just need to get the politicians to realise what everyone else here worked out quite some time ago.

[crowley]

"It's also not a large default, we're talking about the entire financial system losing £100bn or so: sure, real money but it doesn't bankrupt everyone or melt all the banks."

Err.. that stuff is used to leverage up all kinds of other investments you know, such that the whole house of cards crumbles if they default. Probably more like £2 trillion at stake.

"We could just make new money. The European Central Bank (ECB) can do that.... Sure, we get a bit of inflation out of this: but that's actually good at this point.... The ECB just isn't allowed to print money and bail Italy (or whoever) out."

Yeah, a bit of inflation for most, outright theft from savings for the Germans.

They're not blocking such a move just to throw their weight around.

Whilst our government happily let inflation out of the bag and thereby stuffed all the savers, the German's as a nation of savers see no reason to stuff their entire populace.

[NomNomNom]

The solution is to ban lending

there I said it

[A Butler]

"I can't wait until we leave this corrupt EU mess :)"

Yeah and dig up those fibre cables linking the london financial district to the rest of global financial economy; the UK biggest industry by far. Plus the euro goes down, it will pull every finance house in London down as well: Europes biggest financial services city and on to New York, the domino effect.

Oh yeah lets leave EU, like we do not need to be a trading global economy.

What gold fish bowl do you live in?

[Anonymous Coward]

Just waiting for China...

They'll buy up all our debt and then declare the EU as part of the Republic of China......

[pompurin]

The Peoples Republic of China? I don't think the Taiwanese have enough cash to bail us out :)

[Robert E A Harvey]

Ransom

Well, there are too sides to this debacle

Governments, like the rest of us, should be living within thier means. They have lied to us about this since the end of the first world war, and are finally getting found out. How Britain can so suddenly go from the Largesse of the Brown years to the Misery of the Coalition should be evidence of how untrustworthy governments are.

But the Loan Sharks are accountable to no-one in this, and are being Greedy. To effectively double the cost of repaying Italy's debt is just banditry, and in the past we used to hunt down bandits and hang them. Now we watch as they give each other multi-million pound bonuses, and if it looks like their nasty racket is going to come off the rails our governments - the same governments they are blackmailling - prop them up with yet more of our cash.

To make both thing possible governments just print more money, making the value of my savings drop. This is why house prices have not plummetted since the crisis began (ok they have slipped a little but, but not off the cliff) - because there has been a secret revaluation of the money we measure them in, and it is now worth half what it was 5 years ago.

A pox on governments, and a pox on bankers.

It is time for the ptichforks and flaming brands, I tell you. Are there no lamp-posts? is there no rope?

[mraak]

I so wish to be Greece

if debt > N:

debt = 0

[Anonymous Coward]

Interesting concept,...

the price to paid for admitting the situation is out of control will be to the egos of those notionally in charge, which means they will watch the entire system fall down rather than admit they got it wrong.

"Any system is perfect until humans are involved." Skynet(tm), 2050AD

[browolf]

Surely the obvious answer is for Greece to sell some islands...like Crete?

[Werner McGoole]

What'll happen is this...

The rich euro countries must realise that it's a choice between them hanging on to their money for now but having a financial disaster resulting in no euro, no banks and probably eventually no money. Or, they can bail out the debtors in the eurozone, resulting in a continuation of the status quo, albeit with less money for themselves and an urgent need to reform how the euro works.

The decision really rests on how much Germany and France want to keep the euro (i.e. how much they're willing to pay to keep it). When push comes to shove, if they decide it has to be rescued (and I think they will), the fact that there's no legal way won't matter. These are politicians - they make the laws (or they re-interpret them as necessary).

IMHO, Germany and France shouldn't be that bothered about having to bail out the PIIGS. The PIIGS have suffered from having an over-valued currency (the euro), while France and Germany have profited from having an under-valued currency (also the euro). If they want to continue profiting, it's only fair some of that gain goes back to the PIIGS who are keeping the exchange rate down for them.

So a transfer union of some sort, but the reason that hasn''t already happened is because the rich euro countries don't want to sign a blank cheque. While they can, they're determined to make the PIIGS reform their economies as that will make the eventual bill as small as possible. But I think they know the bill will eventually fall on them, probably through some form of QE. That'd be the fairest way, as all sectors of the euro economy would then pay via the effects of inflation.

I know the eurozone politicians are acting like they're stupid, but I think most of them know how this must play out. They just don't want to commit before they've squeezed as much as possible out of the PIIGS. Similarly, China, Russia, Brazil, US, UK, et al. aren't going to commit to helping the eurozone via the EFSF until they've squeezed as much as they can out of Germany and co.

It's all politics of course, but in this situation it's also good economics. Those who have made mistakes must pay, but only as much as they can afford to pay without wrecking the whole financial system. That's what's being negotiated at the moment via a process of brinkmanship.

[Old Painless]

demeaning..

..this whole "money" concept just makes us look a bit tawdry as a species really doesn't it? I mean if you can really solve the problem by printing more "money", we might as well just switch over to using leaves, or drawing our own notes at home.Honestly, as a species, is this the best we can do? What a bunch of cocks..

[Zolko]

no, printing money would "solve" anyting

1) printing money wouldn't solve any problem: it would just push it down the road, because there is not only accumulated *debt* but also chronic *deficit*, and paying back the debt would only reset it, but you'd still have the chronic deficit. Actually, the USA and UK have done the Qauntitative Easing stuff, with absolutely zero effect. You'd want the BCE do the same fuck-off ?

This chronic deficit has mainly 2 reasons: petrol and free-trade. Unless these are solved, printing money has no benefit.

2) the real solution is to default on the debt, which lowers the value of the money of the concerned country, making imports pricier and exports more competitive, with a transitional 1-2 years of hardship. To rely on domestic industries and resources.This is the road Argentina and Iceland have taken, with very good results.

Of course, the US pension funds would go bust, but that should be *their* problems, not ours.

[Calum n Shady]

Three men went into a bar..

A Greek, an Italian, and Portugeezer.. who paid ?

The German !

[Johan Bastiaansen]

I have the sollution

We put the people, responsible for the ECB not being allowed to print money and buy bonds, in front a firing squad.

They are willing to risk the entire economy all because of "procedure"? Let's see if they're willing to lose their lives because of their holy procedure.

[Kay Burley ate my hamster]

I'm now judging this article by the comments of the author's party supporters.

[The Serpent]

It's time

So our first efforts at a world economy failed - it's to be expected really and quite silly to think something will work out right first time. <conspiracy>It's time to roll out all those low cost/no cost alternative energy sources being kept quiet<conspiracy/>. They were hoping to prep us a bit more, but I think global financial ruin has crept up faster than expected. Reducing the cost of goods to just materials and labour would put a real rocket under the @rse of WorldEconomy2.0

[Alfred Butler]

A wise man once said

You come in to this world with nothing, if you die in debt, you've made a profit.

[Darren Barratt]

So, we're agreed then. We hang all the bankers and start again from scratch?

[JaitcH]

Thank you, Tim Worstall, and Register for publishing this

With this comment being in the two hundreds only one or two will read it but i want to say THANK YOU for explaining such a complex subject in such a a lucid manner.

[davefb]

If I wanted stuff like this

I'd pop by the Daily Mail ?

No offence, but little englanders belong in the last century.

[amanfromMars 1]

Sordid Dirty Great Games are in Dire Straits Need of a Executive Systems Purge ... a WipeOut

Y'all are thinking that trillions has been lost, but in reality has it just been transferred into other accounts. It is as simple as that. And your leaders right at the top know that, for they are responsible account holders and they fear it most whenever they try to enjoy their ill gotten gains for it marks them as proven guilty as charged.

Nobody loses money, and especially not bankers with banks and banker and sub-prime ministerial, political clients. So there are the perps of your growing misfortune and enslavement to artificially created debt burdens?

Too Fantastic to Believe ..... Meet and Greet Too Big to Fail ........ and so Simple and Easy to Hide in Full Complex Sight.

[SleepyJohn]

Monty Python's dead parrot could have foreseen this

Instead of arguing about something that Monty Python's dead parrot could have foreseen with ease we should perhaps ponder on the strange case of a democratically elected Prime Minister being elbowed aside by a has-been Euro-Bank boss with no political experience and no mandate from the people.

The front men of the EU strutting on the world stage may be babbling buffoons but the silent ones beavering away in the bowels of Brussels, who pull their strings, are clearly not. If an ex-parrot could see this coming then they certainly could. So why did they allow it?

Standard political tactic #1 - engineer a crisis (encourage feckless idiots to borrow too much money) that appears to be caused by someone else (the banks - hated, easy target), then step in as a White Knight to rescue the people.

And guess what? An EU big-wig has hinted that the disparate economies make it impossible to deal with the crisis properly, so it can only be resolved by handing central control of all the nations' affairs to an unelected EU 'politburo', neatly sidestepping the fact that the EU caused the problem by sucking in all those disparate economies knowing full well what would happen, and is going to use the resulting mess to justify taking even more unaccountable, authoritarian control over the people than it already has. See para 1 for the thin end of this wedge. You don't have to be a 'racist pig' in UKIP to worry about that.

I began worrying when I saw roads and bridges all over Scotland plastered with political logos and Orwellian slogans, and people slurping up handouts from Brussels that clearly deliberately circumvented the policies and control of the elected government. I worried even more when I discovered posters all over my children's school telling them their milk came courtesy of the wondrous EU, and that Euro-police could now drag me off to prison on the Continent without trial or proof of any wrongdoing. And when the Euro court decreed that criticism of the EU or its bosses was akin to blasphemy I decided it was time to leave.

We escaped to New Zealand pretty pronto. NZ is a nice place, 12,000 miles from Brussels. There is no euro-brainwashing, no foreign police with the power to imprison you abroad without trial, and you can actually elect your government, which brings nostalgic memories of old England. But it is sad seeing my home country being turned into a Soviet-style satellite, ruled by strangers over whom the people have no control.

[All names Taken]

??

Hmm

New Zealand you say?

[jonfr]

Dear Mr. Wrong at The Register

Hello Mr. Wrong and UKIP supporter at The Register.

The Greece might well be having hair raising problems in terms of debt problems. But as they are a country they cannot default (a common mistake) on its debt. But they can and often have refused to pay back what they owe to its creditors. From what I can tell that is not going to happen to Greece or Italy. While the problems are big and complex, they are going to be solved and fixed. It is just going to take some more time. I also have no worries about the euro. It is going to remain and only get better with age.

Now. If I where you I would worry about that pound that you have. The inflation rates are not looking good for the next 48 months forecast.

[elkyyz]

A parrot or a headshot??

Surely I appreciate a British view, but this is more than ridiculous.

Just because you don't like or understand Europe oughtn't (!!) obliviate a clear view of what's going on in Europe. Namely: a unified Europe is pulling your British pants down, is finishing your colonial visions and marginilizing your very existence to a petty poop.

Of course you don't like it ... tho you will have to get used to it. All the US / UK short calls will not stop Europe to finally get its act together and stand united. Greece? A 2% problem (in debt or GDP).

Give up your snot-nosed non-sensical disapproval and realize that you are outclassed, outdated and outthought. Britain is by now a failure, a non-entity, a declassed has-been!!

[An ominous cow heard]

strangers over whom the people have no control

"my home country being turned into a Soviet-style satellite, ruled by strangers over whom the people have no control."

Yep, much of Europe is just a playground for the banksters now.

Austerity for the 99%.

Megabonuses for the 1%

e.g. £40M/yr each for the top table at Barclays:

http://www.dailymail.co.uk/news/article-1363790/Barclays-bosses-47m-head-pay-bonuses-Bob-Diamond-says-greed-good.html

[we all know how irritating it is having to interact with the shopkeeper in any way]

We can all say this

"I can find a Usenet post of that vintage saying exactly that. Being right is quite wonderful"

Anyone can find a comment supporting their case, as both sides promoted their views. So comments like this have no meaning.

[Tim Worstal]

No

I mean a usenet post written by me predicting that this would happen.

[All names Taken]

Look, ...

... life goes on.

Is a mega-whammy headache to some in financial-politico sectors better or worse than a universal nation-by-nation call up for those between 18 and 35 to report for immediate training for armed forces battle actions?

It appears that Euro is a form of Tower of Babel, well, so what?

Capitalism theory will always tell you boom follows bust oftentimes overlooking the converse bust follows boom?

And ultimately: why believe anyone proclaiming that the end of the world as we know it is about to arrive (won't wee see that for ourselves)

Would lurve to babel more but just kant bee botherded?

[SleepyJohn]

Four possible simple explanations ...

It seems to me there are four possible, simple explanations for this mess:

1 - The EU bosses did not know this would happen, because they have no idea how human communities function.

2 - The EU bosses thought this would not happen, because they have no clue how banking works.

3 - The EU bosses knew this would happen but did nothing, because their "Grand Design" is more important to them than the lives of the people.

4 - The EU bosses made this happen, because it gives them an excuse to increase their control over the 500 million people living in what is already a de facto dictatorship.

So the results are --- Incompetence - 2 : Malevolence - 2.

Would you vote for them to run your country? Oh wait ...

[elkyyz]

Four possible simple explanations ... you say ?

Do please consider that you could be wrong. No, sorry ... a complete idiot would not think of a fitfth alternative. -- It's about Europe. It's about a common purpose, a continent in peace, a community of nations united.

But there you are, an idiot. English, neverthless.