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Italy’s teetering banks will be Europe’s next crisis

economist.com

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Re: Italy’s teetering banks will be Europe’s next crisis

#111

Post by Gmo »

simonh wrote: post #50
charlesdm wrote: post #34

Earlier quoted context omitted.

As often with things in life, is there really a correct way? I mean, yes, there are laws saying banks cannot receive state aid, but they were only introduced recently. Does that really mean we should let a massive bank (or multiple banks) go bankrupt? Given the global financial system is so interconnected, only a fool would think this would have no impact to the german economy. I don't mind rules, but every rule is m…

You manage a German bank. You follow strict capitalisation rules, are careful about the loans you make and operate your business according to the highest principles. You clients start doing more and more of their business with an Italian bank that has poor capital reserves and a shoddy loan book and is losing money, but offers better terms to customers. The bank looks like it's going to fail, so the Italian governmen…

Except the German banks are not as clean as they would like you to believe, particularly the regional ones.

Re: Italy’s teetering banks will be Europe’s next crisis

#112

Post by blahi »

ZenoArrow wrote: post #89
blahi wrote: post #84

Earlier quoted context omitted.

Oh but it does. Because you will essentially be destroying the wealth of the rich people. They will not agree to that.

All it requires is for people to choose democratic representatives that stick up for the interests of the masses. Even if a few rich people disagree with the policy, it doesn't matter if the masses have decided what they want to happen.

Oh, if that's all that is required then it shouldn't be such a big problem.

Re: Italy’s teetering banks will be Europe’s next crisis

#113

Post by ZenoArrow »

blahi wrote: post #112
ZenoArrow wrote: post #89

Earlier quoted context omitted.

All it requires is for people to choose democratic representatives that stick up for the interests of the masses. Even if a few rich people disagree with the policy, it doesn't matter if the masses have decided what they want to happen.

Oh, if that's all that is required then it shouldn't be such a big problem.

Glad you agree.

Re: Italy’s teetering banks will be Europe’s next crisis

#114

Post by danmaz74 »

legulere wrote: post #90
guelo wrote: post #24

It’s easy for Merkel to insist that Italy has to strictly follow EU rules since she doesn’t have to win an Italian election. The Euro just seems like a complete failure. Giant economies are limping along with 20% unemployment, unable to recover 8 years after the recession. In contrast the US has managed an OK recovery, now closing in on full employment. The problem is that each EU national leader is accountable only…

I still haven't seen a good reasoning why the Euro is to blame for the economic problems in southern Europe. It certainly is a issue that those countries can't devalue their currency anymore, but devaluing is not a miracle cure.

The big, big, big problem in Italy are pensions. Pension contributions eat 33.4%, before taxes, and this make our companies uncompetitive and lots of the best workers leave. Devaluation would allow to deflate pensions, and make our labor more competitive. Not without lots of other problems, but right now there is practically nothing we can do.

Re: Italy’s teetering banks will be Europe’s next crisis

#115

Post by zakk »

legulere wrote: post #90
guelo wrote: post #24

It’s easy for Merkel to insist that Italy has to strictly follow EU rules since she doesn’t have to win an Italian election. The Euro just seems like a complete failure. Giant economies are limping along with 20% unemployment, unable to recover 8 years after the recession. In contrast the US has managed an OK recovery, now closing in on full employment. The problem is that each EU national leader is accountable only…

I still haven't seen a good reasoning why the Euro is to blame for the economic problems in southern Europe. It certainly is a issue that those countries can't devalue their currency anymore, but devaluing is not a miracle cure.

Devaluation definitely worked for the Italian economy.

This plot shows the difference between the Italian GDP per capita and the Eurozone average GDP per capita. The vertical blue line marks the day the exchange rates between European currencies were fixed.

http://i.imgur.com/mmD8kP7.jpg

Re: Italy’s teetering banks will be Europe’s next crisis

#116

Post by mtanski »

pjmlp wrote: post #33
guelo wrote: post #24

It’s easy for Merkel to insist that Italy has to strictly follow EU rules since she doesn’t have to win an Italian election. The Euro just seems like a complete failure. Giant economies are limping along with 20% unemployment, unable to recover 8 years after the recession. In contrast the US has managed an OK recovery, now closing in on full employment. The problem is that each EU national leader is accountable only…

As a foreign living in Germany I do appreciate the mentality that things "should be done the correct way", but many here don't understand you cannot just change a country's culture by forcing them to strictly follow EU rules. As it has already been proven by the lumping economies in the southern Europe, people will suffer and everyone will just make use of black market for jobs and goods to survive at any cost or jus…

> As a foreign living in Germany I do appreciate the mentality that things "should be done the correct way", but many here don't understand you cannot just change a country's culture by forcing them to strictly follow EU rules.

You mean like Germany's biggest car maker solved the disel exhaust correctly? I don't your generalization stands up.

What I can agree with is that the Germans are sticklers for sticklers sense. And I could argue that breaking more rules and being more aggressive during the financial melt down has left us much better of in the US. Vice versus in the EU being slow and not compromising enough has only paid the shit dividend they've been reaping since the melt down. Much of that fault lies with the Germans being sticklers for sticklers sake.

Finally, it seams pretty short sighted when DB (Deuche Bank) is it self a ticking time bomb, one with additional exposure on Italy.

Nobody is denying that Italy needs structural reform; that's obvious. Germany's instance to be a stickler for sticklers sake is not helping anybody (themselves included).

Re: Italy’s teetering banks will be Europe’s next crisis

#117

Post by tremon »

sievebrain wrote: post #66
vidarh wrote: post #56

Earlier quoted context omitted.

For that to happen, Europe would need to go federal. You can't have a legislative parliament in the current system because it'd violate the constitutions of a large proportion of the member states to delegate sovereignty somewhere else. This is the big challenge. People complain about the lack of powers for the EU Parliament, but largely aren't willing to support a model that'd make it possible. This is also why the…

This sort of argument is merely playing with words and has no intellectual merit. The EU's directives MUST be passed into law due to the treaties involved. A country cannot simply refuse to implement directives it does not agree with, without also leaving the EU. Failure to obey the rules is met with fines and other forms of punishment. Whilst a handful of lawyers may pretend this is not a transfer of sovereignty, no…

The EU's directives MUST be passed into law due to the treaties involved. A country cannot simply refuse to implement directives it does not agree with

You're leaving out the part where every single nation has a veto on every single directive before it takes effect.

Re: Italy’s teetering banks will be Europe’s next crisis

#118

Post by sergiosgc »

legulere wrote: post #90
guelo wrote: post #24

It’s easy for Merkel to insist that Italy has to strictly follow EU rules since she doesn’t have to win an Italian election. The Euro just seems like a complete failure. Giant economies are limping along with 20% unemployment, unable to recover 8 years after the recession. In contrast the US has managed an OK recovery, now closing in on full employment. The problem is that each EU national leader is accountable only…

I still haven't seen a good reasoning why the Euro is to blame for the economic problems in southern Europe. It certainly is a issue that those countries can't devalue their currency anymore, but devaluing is not a miracle cure.

Runaway balance of trade deficits and superavits. If a country consistently runs a trade superavit, it will, in infinity, suck all other countries dry of money.

Traditionally this is compensated by currency fluctuation. The Deutsche Mark rises, cancels German advantage against French exports and the trade balance evens out.

The euro prevents this correction mechanism.

The US largely uses investment flows as a compensation mechanism, mostly via the industrial military complex. Europe has no such military, but must come up with some type of investment flow to counter trade imbalances.

As it is now, we have fines. Germany is in line to be fined for having too much of a trade superavit (idiotic fine, which won't happen anyhow)

Re: Italy’s teetering banks will be Europe’s next crisis

#119

Post by tomp »

visarga wrote: post #78
netcan wrote: post #62

Earlier quoted context omitted.

I'm not strongly opinionated on what's wrong with the euro currency, but this is a pretty major issue with the EU generally. There isn't a coherent democratic polity, it's being governed like a trade agreement while acting like much more. I think Brexit highlighted this big hole. Who spoke for the EU? You'd occasionally see a headshot with a "EU President" title attached to it, which would then be dismissed in favour…

Direct voting, like the UK referendum, can lead to impossible situations. People vote for what they wished was the reality, and many times it's just not possible.

I think it's the exact opposite. Direct democracy would lead to people voting for what they want much more granularly, whereas the Brexit vote was once-in-a-generation opportunity that conflated many many different issues (immigration, "ever closer union", single market, London vs. the rest of England, England vs. Scotland, economic inequality, ...). I people were given a chance to vote for each of these issues separately, I would expect much saner (and less contradictory) outcomes...

Re: Italy’s teetering banks will be Europe’s next crisis

#120

Post by ZenoArrow »

choult wrote: post #40
aphextron wrote: post #28

Earlier quoted context omitted.

>In 1998 alone, there are 5 digs at Clinton over the Monica Lewinsky scandal. Three in 2000 at Bush, and several more over the course of the presidency (to be fair, Bush kinda was an easy target for this sort of stuff)--and they endorsed him. Vladimir Putin has also been a sore point for them (Vlad the Impaler all the way back in 2003? I'd forgotten Putin's been around that long...). The 2008 Super Tuesday issue had…

The BBC is clearly doing a pretty good job at being unbiased (as per its mandate) as _everyone_ thinks it's biased against _them_. In reality, in an attempt at balance, the Beeb generall gives too much time to fringe views, often lending the appearance of legitimacy to them. (cf. Their climate change coverage up until fairly recently)

The BBC has a bias for whomever is in power. You can see it most clearly in their political coverage. For example, compare this...

https://www.youtube.com/watch?v=JpkpUaJF8Og

With this...

https://www.youtube.com/watch?v=jVe5foPumHE

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