Spain’s Unemployment Situation Becomes Hopeless

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Alternatively, the ECB could lend them money, the banks could take a significant hair cut, their economies can grow and they can emerge on a more fiscally sustainable path.

So you are in effect taxing the banks. Making them pay for the bulk of it.

LOL . . . tell me what happens when the Euro goes to shit, Spain and the rest default or inflate their way out of debt leaving the banks in the healthy Euro countries with massive losses and no trading partners?

No trading partners? Did the US get nuked in your fantasy land?

But "the pain" isn't working. The pain is only leading to more pain. They'd be better off having just defaulted two years ago.

Yes, they would have been better off to have defaulted two years ago. it would also have been better to kick them out of the Euro two years ago rather than continuously loaning them more and more money as you would do.

Look, SF, if you want me to take you seriously, don't start off your point with something that we disagree on. And pretending that "pain" worked at one point in time doesn't justify imposing "pain" at all times thereafter. Particularly when its clear that "pain" isn't doing anything but causing lots of unnecessary human suffering for no positive outcome whatsoever.

I can't help the fact that you disagree with reality. We have tried your way here in the US... yet our unemployment rate remains far too high. Does that mean we abandon that strategy too since it clearly hasn't worked?

Don't challenge me, son. If you really want me to do that, I can, but I have better ways to spend my time than digging through old threads to show you what I know to be true. We had a discussion about whether the banks that lent to Greece should take a haircut and you protested loudly that forcing them to do so would be terribly unfair and that Greece had an obligation to make good on its debts.

Sorry daughter, but I challenge you. Do it.

 

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They should start with Greece and my guess is that they will do it the first half of this year. Ireland wouldn't be too hard to do either. But Spain and Italy are going to be tough. I don't know if they can get them out of the Euro without disbanding the thing entirely.

That's the point I was making the other day, if Spain and Italy crashed and burned it will have profound implications for the rest of the world.

 

[Bonestorm]

So you are in effect taxing the banks. Making them pay for the bulk of it.

That's hilarious. Taxing the banks would mean taking money from the banks and giving it to others. At present, the ECB is making enormous loans (half a Trillion Euros) to the banks. My proposal is simply to have the ECB lend money to debtor governments as opposed to lending cheap money to banks which they either lend to governments (at a high interest rate, of course) or hold. The banks have been bailed out and bailed out and bailed out and it isn't solving anything. They have to clean up their balance sheets. Holding onto shitty loans in the hopes that something magical will happen and the loans can be repaid in full isn't working. The ECB should give cheap money to the debtor governments, some of that should go to the banks to get rid of the shitty debts they are holding and the rest should go towards economic stimulus.

No trading partners? Did the US get nuked in your fantasy land?

Only 6.7% of Germany's exports go to the US. By contrast, a huge percentage of Germany's export are within Europe. To pretend that the collapse of the Euro wouldn't totally fuck the German economy is insane.

Yes, they would have been better off to have defaulted two years ago. it would also have been better to kick them out of the Euro two years ago rather than continuously loaning them more and more money as you would do.

Better for who to have kicked them out? There are very good reasons why the stronger Euro countries want to keep the lesser countries in and it isn't because they think the Greeks and Spaniards are a colorful people.

I can't help the fact that you disagree with reality. We have tried your way here in the US... yet our unemployment rate remains far too high. Does that mean we abandon that strategy too since it clearly hasn't worked?

We haven't really tried it. To the extent that we did, it worked.

Sorry daughter, but I challenge you. Do it.

No thanks. You and I both know what you said.

 

[Bonestorm]

We are not in the Euro thankfully, in spite of Blair's attempts to get us in, and we still have triple A status.

Which makes it all the more puzzling that your government is pursuing policies that have your economy performing worse that it did during the Great Depression:

 

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Which makes it all the more puzzling that your government is pursuing policies that have your economy performing worse that it did during the Great Depression:

We have passed a trillion pounds in sovereign debt, thanks to the last Labour government and the sub prime crisis. We still have the memory of the mid 70's where we had to go cap in hand to the IMF and Black Wednesday in 1992. We are still relatively free to set our own fiscal policy, without the the straightjacket of the Euro. In addition, we do not have the luxury of being a reserve currency.

 

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That's hilarious. Taxing the banks would mean taking money from the banks and giving it to others.

When you ask them to mark down debt... what exactly happens in your fantasy world?

Here in the real world it means you are transferring their asset to someone else.

If X loans money to Y in the amount of $1B, X has a $1b loan asset and Y has a $1B liability.

If X is asked to mark down that loan by 50%, X now has a $500mm asset and Y has a $500mm liability.

Only 6.7% of Germany's exports go to the US. By contrast, a huge percentage of Germany's export are within Europe. To pretend that the collapse of the Euro wouldn't totally fuck the German economy is insane.

The US is the second largest importer of German goods. The UK is the fourth. China is the sixth. France is the first.

Italy is the only PIIG in the top ten, though Spain sits at 11.

By dissolving the Euro and reverting back to their own currencies do you think their position will be better or worse? They get rid of the anchors around their necks. No matter what happens at this point, Spain, Italy and the other PIIGS are not going to be big buyers. Unless of course we use your plan where we give more German money to Spain to buy German goods and then pretend that helped the debt problem.

Better for who to have kicked them out? There are very good reasons why the stronger Euro countries want to keep the lesser countries in and it isn't because they think the Greeks and Spaniards are a colorful people.

By all means... do list for us these very good reasons.

We haven't really tried it. To the extent that we did, it worked.

LMAO... you truly do live in a fantasy world.

No thanks. You and I both know what you said.

Which is why you won't link up. You know you are wrong.