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When George Soros Broke the British Pound (2014)

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Re: When George Soros Broke the British Pound (2014)

#161
post #126

Earlier quoted context omitted.

>So you have countries like Germany that are effectively subsidized by poorer countries. Could you explain this comment further, or have links to stories that go in depth on how that works? Not saying you are wrong, but I don't understand how germany, which is an economic powerhouse and exports a lot of goods, are being subsidized by poorer countries.

The gist of it is that if Germany were still on the Mark, then the Mark would be significantly stronger than the Euro is today. Having weaker economies on the same currency causes Germany's currency to be artificially weak, which makes its exports artificially cheap on the world market. In contrast, the poorer Eurozone countries have an artificially strong currency, which makes their exports more expensive than they…

how is having an artificially weak currency a subsidy to Germany? isn't that like underpricing their goods? and wouldn't that imply that countries who import German goods are being subsidized, because they are able to get German goods at artificially low prices?

also can you suggest a place where I could read more about this? its awfully confusing, and somewhat counter-intuitive and it would be helpful to read where someone has presented this idea in a paper or article or something.

Re: When George Soros Broke the British Pound (2014)

#162

Earlier quoted context omitted.

"A nation is born stoic and dies epicurean" – Will Durant, http://bit.do/stoicepicurean A more popular corollary is "Hard times create strong men. Strong men create good times. Good times create weak men. Weak men create hard times."

I feel most of these social theories have no basis is reality. Similar logic is used to argue that videogames cause violence, or (in Russia) that men become gay because it's cool. They just 'make sence' to the people perpetuating them.

> Similar logic is used to argue that videogames cause violence, or (in Russia) that men become gay because it's cool.

What exactly is the similar logic here?

> I feel most of these social theories have no basis is reality.

I always think back to a passage from Georges Canguilhem's "The Normal and the Pathological", which is a bit hard to read but hit the nails on the head (and I'll be the first to admit not to be a philosopher or any sort of expert on the topic):

In anthropological experience a norm cannot be original. Rule begins to be rule only in making rules and this function of correc­tion arises from infraction itself. A golden age, a paradise, are the mythical representations of an existence which initially meets its demands, of a mode of life whose regularity owes nothing to the establishment of rules, of a state of guiltlessness in the absence of the interdict that ignorance of the law is no excuse. These two myths proceed from an illusion of retroactivity according to which original good is later evil kept in control. The absence of rules goes hand in hand with the absence of technical skills. Golden age man, and paradisiacal man, spontaneously enjoy the fruits of a nature which is uncultivated, unprompted, unforced, unreclaimed. Nei­ther work nor culture, such is the desire of complete regression. This formulation in negative terms of an experience consonant with the norm without the norm having had to show itself in and by its function, this really naive dream of regularity in the absence of rule, signifies essentially that the concept of normal is itself normative, it serves as a norm even for the universe of mythical discourse which tells the story of its absence. This explains why, in many mythologies, the advent of the golden age marks the end of a chaos. As Gaston Bachelard said: "Multiplicity is agitation. In literature there is not one immobile chaos" Lop. cit., p. 59]. In Ovid's Metamorphoses the earth of chaos does not bear fruit, the sea of chaos is not navigable, forms do not remain identical to themselves. The initial indetermination is later denied determination. The in­stability of things has as its correlative the impotence of man. The image of chaos is that of a denied regularity, as that of the golden age is that of wild [sauvage] regularity. Chaos and golden age are the mythical terms of the fundamental normative relation, terms so related that neither of the two can keep from turning into the other. The role of chaos is to summon up, to provoke its inter­ruption and to become an order. Inversely, the order of the golden age cannot last because wild regularity is mediocrity; the,satisfac­tions there are modest aurea mediocritas – because they are not a victory gained over the obstacle of measure. Where a rule is obeyed without awareness of a possible transcendence, all enjoy­ment is simple. But can one simply enjoy the value of rule itself? In order to truly enjoy' the value of the rule, the value of regula­tion, the value of valorization, the rule must be subjected to the test of dispute. It is not just the exception which proves the rule as rule, it is the infraction which provides it with the occasion to be rule by making rules. In this sense the infraction is not the ori­gin of the rule but the origin of regulation. It is in the nature of the normative that its beginning lies in its infraction. To use a Kantian expression, we would propose that the condition of the possibility of rules is but one with the condition of the possibil­ity of the experience of rules. In a situation of irregularity, the experience of rules puts the regulatory function of rules to the test.

Re: When George Soros Broke the British Pound (2014)

#163

Earlier quoted context omitted.

How much each member contributes to the EU budget is a drop in the bucket compared to the transfer payments I'm talking about (healthcare, social security, defense). The Eurozone should either go all the way like the US, or they should scrap the currency union. This halfway step only serves the wealthy.

Not true at all. I am from Czech republic and we benefited massively from these contributions. If I compare for example general state of infrastructure it is much better than in UK where I currently reside. All the train stations were rebuilt using EU funds. Also not sure what you are talking about "This halfway step only serves the wealthy.", not not really. Look at quality of life and GDP rise in post soviet EU cou…

The Czech Republic isn't in the Eurozone and doesn't face the structural disadvantages that Greece or Portugal do.

Re: When George Soros Broke the British Pound (2014)

#164
post #159

Forgetting the politics of George Soros (which isn't suitable for HN anyway), I don't believe he is to blame for the UK government's questionable choices. To put the estimated £3.3 billion loss into perspective: * The failed NHS software update/upgrade project cost >£12 billion [0]. * The UK spends ~£9 billion a year (after calculating rebates) to be a minority voting block in the EU [1]. It's currently costing ~£0.7…

UK should be now getting 350 million GBP per week for NHS.

Re: When George Soros Broke the British Pound (2014)

#165

Earlier quoted context omitted.

Not true at all. I am from Czech republic and we benefited massively from these contributions. If I compare for example general state of infrastructure it is much better than in UK where I currently reside. All the train stations were rebuilt using EU funds. Also not sure what you are talking about "This halfway step only serves the wealthy.", not not really. Look at quality of life and GDP rise in post soviet EU cou…

The Czech Republic isn't in the Eurozone and doesn't face the structural disadvantages that Greece or Portugal do.

The Czech Republic definitely shows one way to approach the EU: get the transfer payments from a political union and partial economic union (in trade policy, etc.), as well as remittances from emigrants employed elsewhere in the free-movement zone, but retain an independent floating currency and avoid monetary union. Greece would've been in a considerably different position if they had taken the Czech route and stayed out of the Euro. Arguably a better position, though that's not something all economists agree on. Certainly a different one, at any rate.

Re: When George Soros Broke the British Pound (2014)

#166
post #126

Earlier quoted context omitted.

The gist of it is that if Germany were still on the Mark, then the Mark would be significantly stronger than the Euro is today. Having weaker economies on the same currency causes Germany's currency to be artificially weak, which makes its exports artificially cheap on the world market. In contrast, the poorer Eurozone countries have an artificially strong currency, which makes their exports more expensive than they…

how is having an artificially weak currency a subsidy to Germany? isn't that like underpricing their goods? and wouldn't that imply that countries who import German goods are being subsidized, because they are able to get German goods at artificially low prices? also can you suggest a place where I could read more about this? its awfully confusing, and somewhat counter-intuitive and it would be helpful to read where…

I don't like how you're being downvoted for asking a legitimate question in apparent good-faith. This idea can be genuinely counterintuitive the first time you encounter it.

The issue is that, normally when a country with its own currency is economically uncompetitive, its currency weakens, which helps give a boost to domestic industry by making their exports cheaper than those of richer nations. So there's a natural corrective function to economic fragility that helps these countries get back on their feet. The Eurozone breaks that corrective mechanism: without the Euro, right now e.g. Greece would have a weak currency and Germany a much stronger one, which would help Greek industry because their products would be cheaper than Germany's. But since they're all using the Euro, Greece can't get any kind of comparative economic advantage.

Re: When George Soros Broke the British Pound (2014)

#167

Earlier quoted context omitted.

how is having an artificially weak currency a subsidy to Germany? isn't that like underpricing their goods? and wouldn't that imply that countries who import German goods are being subsidized, because they are able to get German goods at artificially low prices? also can you suggest a place where I could read more about this? its awfully confusing, and somewhat counter-intuitive and it would be helpful to read where…

I don't like how you're being downvoted for asking a legitimate question in apparent good-faith. This idea can be genuinely counterintuitive the first time you encounter it. The issue is that, normally when a country with its own currency is economically uncompetitive, its currency weakens, which helps give a boost to domestic industry by making their exports cheaper than those of richer nations. So there's a natural…

To add to this, one of the parts that's counterintuitive is that in principle currencies are just accounting mechanisms, so you can achieve the same effects in a currency union. The problem is that it requires a lot more coordination. When you devalue a currency, a bunch of things in the country move together: wages go down in external terms (e.g. $ or € denominated terms), but housing costs, domestic service prices, etc., all move together, because they're denominated in the same local currency. So the currency has become worth fewer dollars or euros, but the ratio between wages and rents in local currency is unchanged, so people can still in the immediate future pay their rent out of their wages, the same as before.

To accomplish the same without an independent currency requires managing this movement in nominal terms. If the problem is that the country is basically broke or uncompetitive, and needs to solve this by "getting cheaper" compared to other countries, everything in the country has to get cheaper simultaneously. Wages have to go down in €, housing has to go down in €, etc., and this all has to happen in a coordinated way so everyone can still pay their now-lower rent with their now-lower wages, and so on. Economists call this "internal devaluation", i.e. achieving the same effects as a currency devaluation while not having a separate currency, by just lowering actual prices for everything.

The consensus seems to be that it's difficult to pull this off successfully, and really good positive examples are rare. It's complicated by just the general difficulty of coordination, as well as longer-term contracts (e.g. most people's rent and wages don't get renegotiated monthly). Greece has been sort of doing this through consistent single-digit deflation, but it draws it out over a long period. Many (though not all) economists think the result is worse than an all-at-once currency devaluation would've been.

Re: When George Soros Broke the British Pound (2014)

#168

Earlier quoted context omitted.

The Eurozone is fatally flawed because they share a currency but have no transfer payments between rich and poor members. So you have countries like Germany that are effectively subsidized by poorer countries. It's been a great setup for 20 years if you've been in the German capital class, not so great for anyone else.

> “The Eurozone is fatally flawed because they share a currency but have no transfer payments between rich and poor members.” This is incorrect. The EU has substantial transfer payments. Wealthier EU countries (like Germany) subsidise poorer ones (like Poland) on the order of tens of billions of Euros annually. Regional development (subsidies for poorer areas) is the second largest EU budget line item after agricultu…

At the same time the euro gives Germany a benefit much greater than inter-EU German transfer payments. By greatly weakening the euro, the zone's fiscally-challenged countries pull open the gates for German exports which roar out of the Europe with significantly lowered sticker prices in other currencies. It appears to be a massive benefit since one can easily imagine a uniquely German currency being 30% higher. Now that's a bargain.

What's more, Germany may even have a built-in advantage datinng back to the inception of the euro, when the Deutsche Mark was brought into the union at what many believe was about a 6% undervalued rate. "Updated IMF data suggests that by 2017 the German pricing edge built into the euro had about doubled to over 12%."[1]

https://www.forbes.com/sites/miltonezrati/2018/01/23/the-ger...

Re: When George Soros Broke the British Pound (2014)

#169
post #81

Earlier quoted context omitted.

Because criticizing him is anti-semitism or something.

It is very often associated or motivated by that. He has become a boogeyman for many people with terrible motives.

But he does legitimately do some sketchy things. You cant just handwave it away because some idiot bigots have it on repeat.

Re: When George Soros Broke the British Pound (2014)

#170
post #126

Earlier quoted context omitted.

The gist of it is that if Germany were still on the Mark, then the Mark would be significantly stronger than the Euro is today. Having weaker economies on the same currency causes Germany's currency to be artificially weak, which makes its exports artificially cheap on the world market. In contrast, the poorer Eurozone countries have an artificially strong currency, which makes their exports more expensive than they…

how is having an artificially weak currency a subsidy to Germany? isn't that like underpricing their goods? and wouldn't that imply that countries who import German goods are being subsidized, because they are able to get German goods at artificially low prices? also can you suggest a place where I could read more about this? its awfully confusing, and somewhat counter-intuitive and it would be helpful to read where…

I read this long essay, "Germany Must Lead or Leave", by Soros himself, seven years ago when it first came out:

https://www.spiegel.de/international/europe/george-soros-on-...

My memory of such isn't perfect, and I won't reread all dozen-ish pages for the sake of an HN comment, but I remember it covering some of the issues of Eurozone integration, and seems very topical given this thread is about Soros.

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