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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

#71

Post by jfruh »

IdeaHamster wrote: post #57
jonnathanson wrote: post #35

Earlier quoted context omitted.

The sentiment is justified, but the position is untenable. With every passing day, Greek debt compounds massively, and the hole gets bigger. Meanwhile, the uncertainty in the markets causes further volatility and pain for all concerned, and you risk the setting in of total panic. You end up with the worst of both worlds: all the market pain of a Greek default, without the default itself...but with the default still q…

There's an interesting extension of this line of thought. My sister-in-law works in Istanbul for a Greek company. She says that most of the actual profit-generating work done for this company is done in Romania or Turkey. The Greek offices, from what she describes, are more or less completely dysfunctional. Now, take that insight of conditions on the ground along with a chart of the growth of the Greek vs Turkish eco…

Human rights are a factor, plus there's the fact that Turkey is a Muslim country, though many in the EU won't admit that. But even that could probably be overlooked if not for the fact that Turkey is a huge country. With a population of 73 million people (and a growing population, whereas many European states are stagnant in this regard), Turkey would immediately become the second-largest EU state, which means more members of the EU parliament than France or the UK and more voting power in those institutions where countries vote by weighted population.

If Turkey were a Muslim country with a European toehold and a history of dodgy human rights abuses but a general trendline towards democracy and it had a population of about 10 million, the EU would be falling all over itself to admit it and show how enlightened it was.

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

#72

Post by lispm »

adrianN wrote: post #3

> Think of nuclear fission: it generates useful energy but if it runs out of control you get a cataclysmic explosion. After Fukushima, Germany announced that it would phase out nuclear power. And yet, when it comes to the sovereign-debt crisis, Germany is prepared to live with the risk of economic meltdown. This bullshit analogy nearly made me stop reading the article.

It is simply not clear that the economic meltdown will be prevented by throwing more money at the problem. It will make some people rich, but the root causes are not addressed.

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

#73

Post by hugh3 »

phillmv wrote: post #31
_delirium wrote: post #21

Earlier quoted context omitted.

That's the main quandary that the politicians/economists appreciate but the general public doesn't, I think: either way Germany is stuck bailing out this debt, because in large part it's not really bailing out Greece , but bailing out German banks . The main choice is whether to pay the banks directly (let Greece default on the bonds, then cover the losses to keep banks solvent), or to pay them indirectly (send Greec…

This is what I hate, hate, hate about all the language used to describe the PIIGS. Deadbeats! Irresponsible losers! Well, a little bit but – someone had to lend them the money in the first place . The liquidity crisis of 2008 hit everyone…

Sounds like Animal House:

"You fucked up! You trusted us."

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

#75

Post by jasonwatkinspdx »

HSO wrote: post #28
harryf wrote: post #8

As the article makes a point of mentioning Angela Merkel... > All this is true. Yet Mrs Merkel seems to lack a sense of urgency. Despite the world’s calls for action, she does not believe in bold strokes—be it letting Greece default, or issuing Eurobonds to mutualise governments’ debt. Only a slow, step-by-step approach will work. In other words, the pain, austerity and market turmoil will go on for the foreseeable f…

I have no doubt she is intelligent, experienced, and has good intentions. But to make the simple connection from physics background, decades away, to today's financial markets and economies strikes me as rather bold. You need to have thought about things, and you can't (unfortunately) just read a couple of books or articles to "learn" this subject. You are aware how the economics profession as a whole performed over…

I don't know if this was the above posters intent, but from what I gather lots of qaunts and other statistically minded finance workers have a background in physics because the math education they've received is highly applicable.

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

#76

Post by anamax »

sunnydaynow wrote: post #2

"The vast majority of financial transactions, he told fellow finance ministers in a closed meeting earlier this month, “do not serve the real economy”. When markets go astray the answer is not to make the taxpayer step in once more, but to introduce better regulation." Spot on!

> When markets go astray the answer is not to make the taxpayer step in once more, but to introduce better regulation."

And this better regulation is going to come from the folks who wrote Dodd-Frank, who think that the CRA is a good idea, who keep defending Fannie Mae and Freddie Mac.....

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

#77

Post by hugh3 »

harryf wrote: post #8

As the article makes a point of mentioning Angela Merkel... > All this is true. Yet Mrs Merkel seems to lack a sense of urgency. Despite the world’s calls for action, she does not believe in bold strokes—be it letting Greece default, or issuing Eurobonds to mutualise governments’ debt. Only a slow, step-by-step approach will work. In other words, the pain, austerity and market turmoil will go on for the foreseeable f…

it's worth pointing out, by comparison to other world leaders, Angela Merkel has a PhD in Physics (Quantum Chemistry in fact). In other words she's more than capable to grasping the complexities of financial markets.

I also have a PhD in quantum chemistry, and I don't think this in itself qualifies me to understand economics any better than anyone else.

Actually there was an interesting article on the subject of why smart people so often make really bad politicians.

The tldr: "So why do intelligent people consistently make such a hash of things? Because they are smart enough to talk themselves into anything. Ordinary mortals don’t engage in fancy mental gymnastics to reach conclusions that defy common sense. But intellectuals are particularly prone to this."

http://reason.com/archives/2011/10/04/why-smart-presidents-d...

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

#78

Post by anamax »

jasonkolb wrote: post #45

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…

> Say, $1/EUR per trade would remove the incentive for High frequency trading and encourage some more productive market dynamics.

Why do you think that?

These trades net far more than $1 (or one euro).

Yes, they're looking for pennies, or less, on each share, but they're not trading single shares.

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

#79

Post by gahahaha »

IdeaHamster wrote: post #57
jonnathanson wrote: post #35

Earlier quoted context omitted.

The sentiment is justified, but the position is untenable. With every passing day, Greek debt compounds massively, and the hole gets bigger. Meanwhile, the uncertainty in the markets causes further volatility and pain for all concerned, and you risk the setting in of total panic. You end up with the worst of both worlds: all the market pain of a Greek default, without the default itself...but with the default still q…

There's an interesting extension of this line of thought. My sister-in-law works in Istanbul for a Greek company. She says that most of the actual profit-generating work done for this company is done in Romania or Turkey. The Greek offices, from what she describes, are more or less completely dysfunctional. Now, take that insight of conditions on the ground along with a chart of the growth of the Greek vs Turkish eco…

Turkey has grown strongly lately, but GDP/Capita is still 1/3 of Greece and 1/5 of Germany. I wish them all the best, but they are still a quite poor country. (and if you look at stuff like the acceptance of evolution (extremely low), an argument could be made that they are quite backwards too)

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

#80

Post by zerostar07 »

harryf wrote: post #65
zerostar07 wrote: post #14

Earlier quoted context omitted.

Others will jump in to say that markets are not predictable like chemical bonds, but i would counter-argue that they should be more predictable and less fear-and-rumour-driven

Well quantum physics has this at it's core - http://en.wikipedia.org/wiki/Uncertainty_principle I'm not saying it's directly applicable but the anyone who has grasped it, should be capable of understanding market effects as well.

The uncertainty principle results in indeterminacy, not unpredictability. You still have an expected outcome.
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