Italy’s teetering banks will be Europe’s next crisis • Hacker News Board

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

#191

Post by sievebrain » Mon, Jul 11, 2016, 3:44 PM UTC

adventured wrote: post #82

ktRolster wrote: post #47

Earlier quoted context omitted.

How can Switzerland survive on 16%? That is my question.

Basically like this (just an example): $100,000 income at 20% tax = $20,000 $35,000 income at 40% tax = $14,000 Switzerland's median income is between 2.5 and 3 times that of Italy. They have a smaller black market economy than Italy, so they're likely deriving a higher actual share of taxation out of it. Further, the 16% referenced isn't complete. If you cap out the federal income tax in Switzerland, it's more likel…

This. There are several income taxes.

Also there are lots of hidden costs. Health insurance and mandatory unemployment insurance etc. A lot of stuff is pushed onto the private sector but made mandatory, so you have to buy it.

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

#192

Post by davidw » Mon, Jul 11, 2016, 3:49 PM UTC

danmaz74 wrote: post #114

legulere wrote: post #90

Earlier quoted context omitted.

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.

That points to an underlying political problem: the government is unable to deal with pensions directly, and can only cut them by the somewhat underhanded means of inflating/devaluating them away.

There's no political will or consensus to change some of what's wrong in Italy. To be fair, though, it's not easy anywhere, but Italy seems particularly stuck.

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

#193

Post by antisthenes » Mon, Jul 11, 2016, 3:52 PM UTC

slashcom wrote: post #164

gortok wrote: post #149

Earlier quoted context omitted.

The US is closing in on "Full Employment", if by Full Employment, you mean: January 2008 Labor Participation Rate: 66.2% July 2016 Labor Participation Rate: 62.7% 62.7% participation means 94 Million Americans are not working. (Source: http://www.cnsnews.com/news/article/susan-jones/labor-force-... ) Full Employment only calculates people who are actively looking for work; anyone else is not part of that calculation.…

According to https://en.wikipedia.org/wiki/Demography_of_the_United_State... 27.1% of the US is under 21 and 14.5% is over 65. I know 16 should be working but a good chunk should be getting education. That leaves only 58.4% even eligible for labor participation.

What do you mean "eligible". Are people over 65 somehow not eligible to work that you exclude them from the LFPR?

http://data.bls.gov/timeseries/LNU02000097

9 million workers 65+ would be very interested in how they're not eligible to be a part of the labor force.

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

#194

Post by antisthenes » Mon, Jul 11, 2016, 3:58 PM UTC

speeder wrote: post #155

Fenntrek wrote: post #140

Earlier quoted context omitted.

I think you misunderstand. Yes, the EU as a whole looks good... It's when you peel away the EU flag and look at individual countries you see that some economies are in the gutter pretty much due to countries having vastly different needs. Whats in say Germany's interests isn't in Italy/Greece's interest economically, economies are having crisis points constantly and continuous band aids instead of enacting policy tha…

This is not just a EU problem. I personally think the social changes, coupled with gold standard being dropped are good part of the culprit. For example I am in Brazil, that have "nothing to do" with EU and US. Yet I have a mountain of debts, negative net worth, finished university in 2009, and I am yet to get a legal job. Brazil, even at its "height", when people were praising Lula because it reached 7% of GDP growt…

The global financial crisis was engineered to transfer more wealth to the elites and slow down population growth by making housing unaffordable to the millenial generation.

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

#195

Post by hx87 » Mon, Jul 11, 2016, 4:07 PM UTC

speeder wrote: post #155

Fenntrek wrote: post #140

Earlier quoted context omitted.

I think you misunderstand. Yes, the EU as a whole looks good... It's when you peel away the EU flag and look at individual countries you see that some economies are in the gutter pretty much due to countries having vastly different needs. Whats in say Germany's interests isn't in Italy/Greece's interest economically, economies are having crisis points constantly and continuous band aids instead of enacting policy tha…

This is not just a EU problem. I personally think the social changes, coupled with gold standard being dropped are good part of the culprit. For example I am in Brazil, that have "nothing to do" with EU and US. Yet I have a mountain of debts, negative net worth, finished university in 2009, and I am yet to get a legal job. Brazil, even at its "height", when people were praising Lula because it reached 7% of GDP growt…

> coupled with gold standard being dropped

What exactly does the gold standard have to do with economic troubles around the world? All the gold standard would do is subject any country that adheres to it to crippling deflation whenever the economy grows and crippling inflation whenever it contracts.

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

#196

Post by adrenalinelol » Mon, Jul 11, 2016, 4:16 PM UTC

matwood wrote: post #146

kbart wrote: post #103

Earlier quoted context omitted.

"meanwhile median income between poorest and richest EU members is close to 10x - in the US it's ~2-3 between states" That's comparing apples to oranges. Country != state.

For the EU to work, the countries need to function more as states. Maybe this is just the hard road for the EU to get to something resembling the states, or it will fall apart as a failed experiment.

You can rephrase:

> ...the EU to get to something resembling the states,

as:

EU member nations need to have their sovereignty diminished. That's extremely hard to swallow if you're the one losing rights/protections to a foreign institution.

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

#197

Post by hx87 » Mon, Jul 11, 2016, 4:16 PM UTC

sievebrain wrote: post #186

zakk wrote: post #115

Earlier quoted context omitted.

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

That is a fairly stunning graph. Thanks for the data. One question that has always played on my mind is why these countries find it so much easier to lower their costs via playing games with the currency (e.g. printing more to devalue) than simply lowering prices. Italy could have kept its competitive advantage by simply lowering its wages and export prices, much as Germany has done, but never did.

Lowering wages and prices only works if debt is denominated in the same currency. Otherwise internal devaluation just makes debts harder to pay off.

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

#198

Post by kps » Mon, Jul 11, 2016, 4:42 PM UTC

glenndebacker wrote: post #144

throwaway991132 wrote: post #77

Earlier quoted context omitted.

So what you are saying, is that the problems in Greece are down to the UK? I think you may want to rethink how you perceive your world. The UK has nothing to do with reforms concerning the EURO. That's up to France and Germany and the EU Central Bank. The biggest problem is this. The UK is now leaving and taking a pretty big economy with it. Those payments the UK makes is going too. The Germany Economy can't keep bai…

"So what you are saying, is that the problems in Greece are down to the UK? " The problems in Greece where mostly introduced by abuse of the Greeks themselves. That is the small detail that mostly is left out. "The UK has nothing to do with reforms concerning the EURO. That's up to France and Germany and the EU Central Bank." The OP is talking about the measures the US has taking regarding the banks. We are taking ab…

  > Yeah because that access to the single EU market will come for free...

If the choice is between tariffs paid by importers, and danegeld paid by taxpayers, I know which I'd pick.

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

#199

Post by gortok » Mon, Jul 11, 2016, 4:42 PM UTC

slashcom wrote: post #164

gortok wrote: post #149

Earlier quoted context omitted.

The US is closing in on "Full Employment", if by Full Employment, you mean: January 2008 Labor Participation Rate: 66.2% July 2016 Labor Participation Rate: 62.7% 62.7% participation means 94 Million Americans are not working. (Source: http://www.cnsnews.com/news/article/susan-jones/labor-force-... ) Full Employment only calculates people who are actively looking for work; anyone else is not part of that calculation.…

According to https://en.wikipedia.org/wiki/Demography_of_the_United_State... 27.1% of the US is under 21 and 14.5% is over 65. I know 16 should be working but a good chunk should be getting education. That leaves only 58.4% even eligible for labor participation.

The BLS only counts the people who aren't in prison, and are over 16 as the Labor Force participation rate. You aren't counted if you are thought of by employers as too young or too old to work; so there are a substantial number of seniors who aren't counted because they aren't in the labor force according to the BLS.

http://www.bls.gov/cps/cps_htgm.htm

> Employers think they are too young or too old,

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

#200

Post by sonnhy » Mon, Jul 11, 2016, 4:49 PM UTC

mseebach wrote: post #161

sonnhy wrote: post #157

Earlier quoted context omitted.

Excuse my really basic understanding of Economics, but how "investing everything" does keep you away from losing money to the bank in which your funds are? Aren't, the money you invest, already in a bank, and associated to your fund? If the bank fails how can you manage your investments (as I suppose you will lose your bank account if the bank fails)

Putting cash in a bank account is actually you lending money to the bank (for them to lend to other people), not a neutral store of an asset, like if you put physical bills or gold or whatever in a safe. If the bank goes bankrupt, that mean it's creditors (you) don't get paid, or get paid less than they're owed. To prop up trust in the banking system, governments insure bank deposits, in the Eurozone up to a value of…

Thank you for the quick anwser. I understood your answer to my first point, but, if you know, can you clarify the answer to my second question? If the bank fails, and my account in the bank, where I manage my investments, gets deleted.. where all my investments goes to? How can I manage them?