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Why Germany seems not to want a quick fix for the euro crisis

economist.com

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Re: Why Germany seems not to want a quick fix for the euro crisis

#41

Post by DasIch »

athoma wrote: post #11

Even the title of this article doesn't make a large amount of sense. Of course the Germans want to take part in "fixing" the Euro crisis. But this is the problem with people in the finance world today. All they want is a "quick" fix. "Patch" the hole and the boat will stop leaking. I completely agree, something must be done to avert a double dip however a "quick fix" will not get us there. Most importantly, people ne…

If people save more and spend less, the prices go down, the companies make less money and unemployment figures go up. I don't quite see how this would solve the problem.

Re: Why Germany seems not to want a quick fix for the euro crisis

#42

Post by tomjen3 »

stfu wrote: post #20

The EU has and always will be a forced construct that Germany will essentially have to shoulder. Other countries were going to tolerate Germany's reunion only when they support the EU. Now that they realize how the construct attempts to level the standards of live across the union, Germany realizes in what kind of downward spiral they tapped. Going to be even more "fun" to watch, when certain rules such as "penalty"…

It is only going to be fun if you can watch it from afar.

Those of us who live in Europe see no point in antagonizing somebody who isn't a pain in the ass.

Re: Why Germany seems not to want a quick fix for the euro crisis

#43

Post by sprash »

"German politicians are constrained by a complex federal system, a sceptical public, messy coalition politics and jealous institutions such as the constitutional court."

You mean German politicians are constrained by Democracy. This article portays it as if it was a bad thing.

Re: Why Germany seems not to want a quick fix for the euro crisis

#44

Post by lukeschlather »

gibsonf1 wrote: post #26

I have no idea why Keynesian ideas are assumed as the proper way to solve economic problems when, in fact, they never work. Germany is unusual, especially in comparison to the United States, in that they make a point of only spending the money they have. They have been watching the "wonderful" results of Keynesian intervention in the US recently and around the world and likely noticed that the results are always grea…

The US has been doing extremely half-assed Keynes. It's not working because the bills haven't been large enough to have a measurable effect. Fundamentally I think the problem is the US has been too risk-averse. We've been hamstrung by our inability to accept that we have to take big risks to solve big problems, instead we're neutering any sort of solution to the point here it doesn't present a risk, and consequently can't present a true solution.

I think there's a similar issue with this economist article. The assumption that there is a "correct choice" I think is wrong. There are a variety of bad choices, and it's probable that extremely risky choices are the only ones that have a chance of solving the crisis.

Re: Why Germany seems not to want a quick fix for the euro crisis

#45

Post by jasonkolb »

While I generally abhor taxes, I really like the idea of a financial transaction tax. It would effectively eliminate the profit margin for high frequency trading and remove a LOT of volatility from the markets. IMHO the market volatility is causing the average person to doubt the stability of the economy and hurting the entire ecosystem.

Even a small transaction tax... Say, $1/EUR per trade would remove the incentive for High frequency trading and encourage some more productive market dynamics. I mean, really, who wants to IPO in a market like this? And that removes a pretty significant source of funding for new businesses...

Re: Why Germany seems not to want a quick fix for the euro crisis

#46

Post by prewett »

tomjen3 wrote: post #40
mtts wrote: post #17

Earlier quoted context omitted.

With this caveat that financial markets fund a lot of the real economy as well. So you really don't want banks going bust left and right, as morally righteuous as that would be.

Why not? All that would happen would be that some other previously small bank would get more business. Remember, nobody is too big or has been around too long to be allowed to fail. Assyria fell, so can Goldman Sax.

When banks start failing left and right, people start getting scared, taking their money out of banks, causing banks to become insolvent, causing more banks to fail, etc. When a bank fails, you lose money (absent depositor's insurance), potentially lots of it. This is not a good thing. It caused a lot of pain in 1929/1930s in the U.S., and led to the creation of the FDIC. Even 80 years later, we sort of have a cultural memory of bank failures as being a large part of causing the Great Depression in the U.S.

Re: Why Germany seems not to want a quick fix for the euro crisis

#48

Post by hugh3 »

lukeschlather wrote: post #44
gibsonf1 wrote: post #26

I have no idea why Keynesian ideas are assumed as the proper way to solve economic problems when, in fact, they never work. Germany is unusual, especially in comparison to the United States, in that they make a point of only spending the money they have. They have been watching the "wonderful" results of Keynesian intervention in the US recently and around the world and likely noticed that the results are always grea…

The US has been doing extremely half-assed Keynes. It's not working because the bills haven't been large enough to have a measurable effect. Fundamentally I think the problem is the US has been too risk-averse. We've been hamstrung by our inability to accept that we have to take big risks to solve big problems, instead we're neutering any sort of solution to the point here it doesn't present a risk, and consequently…

You're making economics sound like a religion rather than a science, there. If Keynesian economics hasn't worked in the US, then there's two possibilities:

1. It was too small or wrongly applied, or

2. Keynesian economics doesn't really work

Re: Why Germany seems not to want a quick fix for the euro crisis

#49

Post by zwieback »

derpapst wrote: post #19

Also interesting that the Economist continues to come up with the same kind of story every week. Just check the last Economist links that were posted on HN over tha last weeks and you will see that they all have the same message. To be honest, I would expect them to be more diverse.

That's what the Economist is all about, though - extremely well written and produced with a very predictable and consistent message and opinion.

Re: Why Germany seems not to want a quick fix for the euro crisis

#50

Post by hugh3 »

mtts wrote: post #34
HSO wrote: post #24

Earlier quoted context omitted.

Have you ever thought twice about what exactly "faceless markets" are? Markets are composed of many agents, people, institutions, and mostly your pension money! It's true. Pension funds and other institutional investors are the single-largest segment, esp. of sovereign bond markets! Now ask yourself, with the Greek government in its current position, if it came to you today and asked you to lend it money, not to inve…

Markets are indeed composed of many agents, people and institutions squandering your pension money, all of whom hide behind the faceless market, arguing that if "the market" is doing it, it has to be right. Which is exactly what got us into this mess in the first place - everyone shirking off responsibility for their actions.

"Rational markets", eh?

Does that mean that you should be forced to sell things for a price lower than you're willing to accept, or that you should be forced to buy things for a price higher than you're willing to pay?

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