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Italy’s austerity-fueled crisis is a warning to the Eurozone

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Re: Italy’s austerity-fueled crisis is a warning to the Eurozone

#81

Post by znpy »

bromuro wrote: post #59
pif wrote: post #50

I am Italian. And I am happy to find out it was indeed the fault of EU. Wow, what a relief! I thought we Italian were the problem! I mean, we voted Democrazia Cristiana for decades, just because it had Cristiana in the name, and which party will do any effort to be re-elected when they know in advance they will be re-elected anyway? I mean, I always heard bad things about corruption, but the corrupted politicians wer…

Yes the Euro is to blame. I’ve lived enough in Italy to see how generally Italians have absolutely no idea what’s going on in the global economy and why now the country is in regression now. They are like “distracted” by a telenovela-like politics (you cite Berlusconi) that doesn’t explain anything about the state of the italian economy and why it goes this way down. And when they try, the political discussion is eat…

It's worth adding to the discussion that Berlusconi's influence has begun way earlier that many people would think .

It is a know fact for example that in early 90ies when journalist Marco Travaglio was strongly criticising Berlusconi, Berlusconi was effectively able to get him fired via his control of the advertising company Publitalia 80.

Advertising was already at the time one of the major source of revenew for newspapers, and Publitalia 80 straight up refused to buy advertising space from newspapers that employed Marco Travaglio.

In the end, Marco Travaglio had to create his own newspaper in order to be able to continue do his job.

This was early 90ies. Immagine what more than twentym (thirty?) years of this have made of public information (both public and private).

Re: Italy’s austerity-fueled crisis is a warning to the Eurozone

#82

Post by point78 »

thefounder wrote: post #78
johnzim wrote: post #7

The Eurozone was never intended to do the damage it has done to PIGS economies but it has. What is worse, is that it has unquestionably been of benefit to Germany, which has one of the strongest hands in shaping the future of the EU. If a macroeconomist had sat down to devise a currency that suffocated Italy, Portugal, Greece and Spain - export driven economies (remember that tourism is an export as you have to buy t…

Do you think the United States need more currencies as well?(i.e the Texas dollar, California dollar etc)

As someone else pointed out, the US has federal taxes and ways to distribute from rich states to poor states

Re: Italy’s austerity-fueled crisis is a warning to the Eurozone

#83

Post by presidente20 »

pjc50 wrote: post #34
johnzim wrote: post #7

The Eurozone was never intended to do the damage it has done to PIGS economies but it has. What is worse, is that it has unquestionably been of benefit to Germany, which has one of the strongest hands in shaping the future of the EU. If a macroeconomist had sat down to devise a currency that suffocated Italy, Portugal, Greece and Spain - export driven economies (remember that tourism is an export as you have to buy t…

The logical conclusion of most of these arguments seems to be that the US should have floating currencies between the states, to stop unfairly benefiting the few net productive export states?

Not true. There are a number of important differences. The US gradually merged into a single currency over a long period of time. As a nation the states have a sufficiently integrated fiscal policy such that budget redistribution is possible. Furthermore the US has a common language and genuinely frictionless trade between states developed over many years. The Eurozone is a bunch of homogeneous economies glued together without fiscal integration or adequate redistribution mechanisms.

Re: Italy’s austerity-fueled crisis is a warning to the Eurozone

#84

Post by int_19h »

stordoff wrote: post #46
thenaturalist wrote: post #26

Earlier quoted context omitted.

Your thoughts are on point imo. One must never forget the context of how the EU and it’s main political objective came to be: the culmination of centuries of small scale wars and two world wars within 30 years of each other. Juncker - who is the only European politician who signed the Maastricht treaty in ‘92 still active today - reiterated at a 20 year commemoration mid January this year that for him, the European F…

Closer political union has been on the cards for a long time. Churchill post-WW2 (1948) said "Mutual aid in the economic field and joint military defence must inevitably be accompanied step by step with a parallel policy of closer political unity", and referred to a United States of Europe ("I was anxious at first lest the United States of America should view with hostility the idea of a United States of Europe"), wi…

And the phrase "United States of Europe", in turn, was coined a hundred years before Churchill. And the idea is older still.

Then again, it's also just a logical extension of the same process through which the most powerful European states today have formed themselves.

Re: Italy’s austerity-fueled crisis is a warning to the Eurozone

#85

Post by presidente20 »

debacle wrote: post #15
johnzim wrote: post #7

The Eurozone was never intended to do the damage it has done to PIGS economies but it has. What is worse, is that it has unquestionably been of benefit to Germany, which has one of the strongest hands in shaping the future of the EU. If a macroeconomist had sat down to devise a currency that suffocated Italy, Portugal, Greece and Spain - export driven economies (remember that tourism is an export as you have to buy t…

> Left to float independently, the Deutschmark would not be as low as the Euro is today and the Lira would never be as high. But wasn't that the whole point?

No it wasn't. The point of the euro was mainly political - a step towards a single European state. Economically the benefits are reduced transaction costs and reduced currency risk between countries within the single market.

Re: Italy’s austerity-fueled crisis is a warning to the Eurozone

#86

Post by jacobmoe »

coryrc wrote: post #31
johnzim wrote: post #7

The Eurozone was never intended to do the damage it has done to PIGS economies but it has. What is worse, is that it has unquestionably been of benefit to Germany, which has one of the strongest hands in shaping the future of the EU. If a macroeconomist had sat down to devise a currency that suffocated Italy, Portugal, Greece and Spain - export driven economies (remember that tourism is an export as you have to buy t…

Floating currency is just a way to automatically renegotiate all of a country's contracts. It will not magically create more wealth or lower the costs of materials. In the end, if you're importing something for $1 and you earn $100/yr or it costs $3 because of your devalued currency but you earn $300/yr, nothing has changed. What sucks is the most productive people left and the already massive state obligations fell…

Generally, freedom of movement is a good thing, allowing the most productive people to go to places that enable them to produce the most. The issue appears to be that the EU isn't a real country. Taxing winners and transferring resources to losers of the open borders/single currency zone turns out to be really important.

Re: Italy’s austerity-fueled crisis is a warning to the Eurozone

#87

Post by lixtra »

johnzim wrote: post #7

The Eurozone was never intended to do the damage it has done to PIGS economies but it has. What is worse, is that it has unquestionably been of benefit to Germany, which has one of the strongest hands in shaping the future of the EU. If a macroeconomist had sat down to devise a currency that suffocated Italy, Portugal, Greece and Spain - export driven economies (remember that tourism is an export as you have to buy t…

It may be worthwhile to note that the Euro never had support of the German people and it’s very difficult what the long term impact will be for them. My impression is that they borrow other countries money (through ECB and TARGET) to buy their goods that get produced while creating very little wealth for the average worker (in terms of net purchasing power per productivity).

Re: Italy’s austerity-fueled crisis is a warning to the Eurozone

#88

Post by rorykoehler »

johnzim wrote: post #7

The Eurozone was never intended to do the damage it has done to PIGS economies but it has. What is worse, is that it has unquestionably been of benefit to Germany, which has one of the strongest hands in shaping the future of the EU. If a macroeconomist had sat down to devise a currency that suffocated Italy, Portugal, Greece and Spain - export driven economies (remember that tourism is an export as you have to buy t…

Whilst I agree with your analysis I would prefer fewer currencies and better redistribution instead. Though there are significant risks the EU could really benefit in terms of cohesion from federalisation.

Re: Italy’s austerity-fueled crisis is a warning to the Eurozone

#89

Post by thefounder »

point78 wrote: post #82
thefounder wrote: post #78

Earlier quoted context omitted.

Do you think the United States need more currencies as well?(i.e the Texas dollar, California dollar etc)

As someone else pointed out, the US has federal taxes and ways to distribute from rich states to poor states

So issue is really the lack of fiscal union in the EU. Better work on this than on divisive solutions.

Re: Italy’s austerity-fueled crisis is a warning to the Eurozone

#90

Post by roel_v »

zizee wrote: post #77
pjc50 wrote: post #34

Earlier quoted context omitted.

The logical conclusion of most of these arguments seems to be that the US should have floating currencies between the states, to stop unfairly benefiting the few net productive export states?

The US has federal taxes and mechanisms to redistribute money from richer states to the poorer states to address this sort of imbalance.

While there are no EU direct taxes, there are redistribution schemes in the EU. I don't know how their magnitude compares to that of American interstate redistribution though.
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