What the hell do we do about the Euro?

[Richard Roman]

Far from promoting growth and political solidarity, which is what the single currency was supposed to do, the euro is in fact achieving the opposite effect, by condemning the eurozone to long term recession and now extreme political infighting. Again, it cannot be right to persist with something which is achieving the opposite of what it was meant to simply because the alternatives are thought to be worse.

 

What does anyone here think? This is serious

[Fin MacDonald]

Hi Madji--

Credit default swaps and the like and then public bailouts without any kind of systemic changes contribute profoundly to current financial woes.  Deregulation, including the repeal of the Glass Steagall act in 1999, set the stage.  Subsequently, the banking industry engaged in a kind of gambling, based on stacked derivatives, especially mortgage-based.  Goldman Sachs and Federal Reserve people (Timothy Geitner, for example) designed the cure, a fabulous bailout, the first stage occurring under George Bush--basically a looting of the treasury on the way out, pumping blood into the cadavres of AIG, Bank of America, Goldman Sachs, etc.  I could provide links, but nothing is opening at the moment; The same folks pulled a similar caper in Greece http://www.forbes.com/sites/streettalk/2010/02/18/goldman-sachs-sho...

[马吉帝 Majdi]

Joshua. You are confused between  'greed' and 'fear'...  

below quoted from an article "The virtue of Greed". 

"YOU CAN CALL IT GREED, selfishness or enlightened self-interest, but the bottom line is that it's these human motivations that get wonderful things done. Unfortunately, many people are naive enough to believe that it's compassion,". 

http://www.capitalismmagazine.com/culture/69-the-virtue-of-greed.html 

 Do someone buy Bentley (car) instead of Toyota because of fear? or buy a private jet instead of taking the economy class because of fear? 

However, not having food, water, shelter causes fear and makes consumers want to buy home, water, vegetables, meat... but not a Bentley. 

 

Claiming that the banking is the problem, apart from emotional explanations, I would like to hear a 'technical analysis', on how banking created the problem? I'm all ears guys. 

 

My opinion simply, a nation that lived beyond its means had to pay this extra cost by borrowing money, until one day it woke up and learned that it can't borrow anymore because creditors are afraid of its default. 

[Richard ridealgh]

Wasn't the euro and the European union about a showing of unity and commitment to each other. Every country knew the risks yet in times of darkness they all now want to be free from this burden of recession. History repeats itself again.
What's really worrying is what julien was saying about these people who are known to us are slipping into new roles within the financial world and are holding us yet again to ransom.
I should care(I do) about this huge problem but yet I find myself turning off from it because of the lack of ability to change anything at this level. Coffee anyone!!!

[Fin MacDonald]

What transpired in Chili in the 1970's was, metaphorically speaking, a "Tragedy of the Commons", in which an ownership class fenced out the grubby mass who wouldn't know what to do with wealth anyway.  It was a radical reconstruction of a society toward greater inequality and toward increased corporate rule, deregulation, and privatization.  The same thing happened in Argentina, Bolivia, Poland, USSR, and to one extent or another, countries all around the world.  Naomi Klein describes this new phase with Iraq as a model--super-protected green zones for them and dangerous, impoverished red zones for us.  Insult is added to injury when it is the very debt created by the Goldman Sachs crowd that is being used as an excuse for more savage reconstruction in the favor of an entrenched financial-corporate elite.  One example of this in the US is a law in Michigan in which emergency managers can replace elected municipal managers, entire school boards, and elected positions of various sorts if there is a financial crisis.  And the "manager" doesn't need to be a real person--it can be a corporate "person".  There's at least one town, Benton Harbor, which is now owned by a corporation.   

[Fin MacDonald]

Julien, I think you hit the nail on the head, and I would underscore that the crisis is primarily a banking crisis, with public debt being a secondary problem.

[Julien Cordry/朱可夫]

Interresting debate.

Richard, I don't think the Eurozone countries would do so much better on their own. Did Argentina in 2001 do better than Greece is doing now? I don't think so. If Greece or Italy leave the Eurozone, will the trouble be over for the other European countries? I don't think so. Not as long as financial markets are pressuring the Eurozone countries. And this is not over; take a look at the rate that is asked from France over its debt these days.

I don't think the problem lies with the European Union as a structure or with the Eurozone. The problem is that the European Union, the European central bank (independant from any democratic institutions), and the International Monetary Fund, that are called the troika, have enough power to replace democraticaly elected governements with people that belong to the very same financial markets (investment banks, edge funds, insurance companies) which are advising their clients to bet on the collapse of the eurozone, and expect to make a 40% profit a year.

Mario Monti, the future prime minister of Italy, is an adviser for Goldman Sachs. Mario Draghi, newly appointed head of the European Central Bank, is a former vice chairman of Goldman Sachs.

Those are the guys who are making a profit from this crisis. And they are slowly becoming those who govern us and dictate what they want from us by the means of reforms. By the way, they still are laundering money through the world fiscal paradises that did not move an inch in terms of tax reforms and transparency since the beginning of the debt crisis in 2008: Guernesey, Luxembourg, Switzerland, Monaco, Hong Kong, Cayman Islands ...

Having a hugh debt is not a necessity for all the post industrial countries. Sweden is not a fiscal paradise, without much natural ressources and still doesn't quite have the same debt as Japan, Italy, the USA ... Debt is also a matter of domestic policy.
The commercial imbalance between the southern and the northern countries is not much related to this crisis either. As a matter of fact, the countries of the European economic area import much more from other European countries than from China (e.g. China is just 4.4% of the French imports, but Germany is 19.4% of the French imports). Now China will become the major economic power of the world in a few years, but that doesn't necesseraly mean that the debt of other countries is due to some commercial imbalance with China. When Peugeot closes factories in France, sure, they open factories in China, but they also open factories in Slovakia.

[马吉帝 Majdi]

Richard, I'm on-board. Carrie, my wife, might join too. 

[Richard Roman]

majdi - We can have it as a special meeting within the Arts and letters group - am happy to organise.  -Just have to decide on a day and see who wants to contribute by putting forward their ideas for discussion - I think you, me, Fin, Anabel and John probably would all want to pitch in with ideas - then open floor for discussion - what do you think?

[马吉帝 Majdi]

Hi Fin,

As far as 'greed' is concerned, it's an essential emotion to drive the economic growth in capitalism (a non . The desire to possess things is what drives the consumption and consequently the innovation to create new things, cheaper, attractive, useful and unique. If everyone stand content with what they have the economy will collapse... 

I agree with you that the existing systems are 'unsustainable', I know some group of smart guys presently working on building new financial/social systems, contrary to the systems made by Carl Marx and Adam Smith. This brings me to Richard's suggestion of having a 'meeting' about 'where the world will be in 2020?' ... I think the answer will depend on whether the existing system will continue or a new systems will be put in place.. 

 

Richard. I'm worried if I start a group, my time won't allow me to make it as successful as it should be, and myself become the 'liability'  for group growth. I would love to be a contributor. If any meeting, I'm interested to join. 

[Fin MacDonald]

Majdi, I think there is something to your point about greed but also feel that the discussion might be expanded.  Greed sounds like nature, a factor we can't do much about.  Yet, I would argue, the manner in which wealth is regarded today is stuck in the industrial revolution, when entreptreneurs believed in a world without limit and that resources would never run out.  Unsustainable systems were contrived--today's financial problems are rooted in outdated thinking, outdated systems.