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

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

#211

Post by speeder » Mon, Jul 11, 2016, 7:51 PM UTC

jazzyk wrote: post #208

speeder wrote: post #201

Earlier quoted context omitted.

> 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. If that was true, then why US, that of course had a recessions and booms at the time, still had prices mostly stable for more than a hundred years, while its population was expanding very quickly? Or the same, for several other countries. Gold, doe…

Why is the above downvoted? The inflation taking place since 1970s is a fact, not an opinion. See for yourself, here is the graph (from BusinessInsider, but the source is Bureau of Labor Statistics) : http://www.businessinsider.com/chart-inflation-since-1775-20...

Graph, about the wages (that I also claimed that declined since 1970s)

https://img.washingtonpost.com/blogs/ezra-klein/files/2012/0...

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

#212

Post by guelo » Mon, Jul 11, 2016, 8:03 PM UTC

gortok wrote: post #149

guelo wrote: post #24

It’s easy for Merkel to insist that Italy has to strictly follow EU rules since she doesn’t have to win an Italian election. The Euro just seems like a complete failure. Giant economies are limping along with 20% unemployment, unable to recover 8 years after the recession. In contrast the US has managed an OK recovery, now closing in on full employment. The problem is that each EU national leader is accountable only…

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.…

Economists have reasons for measuring the way they do, it's not some evil conspiracy or something, the EU measures unemployment similarly. Labor participation rate is complicated by the retiring of the baby boomers so it's hard to use it as an indicator of labor utilization. The measure you would want to look at is BLS's U-6 which includes the normal U-3 unemployment definition and adds "Discouraged" and part time workers that would like to work more. If you look up U-6 you'll see that it's getting back down to pre-recession levels.

In any case, the point is that the US has recovered better then the EU and that is true no matter which numbers you look at.

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

#213

Post by matwood » Mon, Jul 11, 2016, 8:24 PM UTC

adrenalinelol wrote: post #196

matwood wrote: post #146

Earlier quoted context omitted.

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.

I agree, and that's the problem with the EU. It is what led to Brexit and may lead to eventual Grexit, then Italy and Spain leaving. The Nordic countries never fully joined for similar reasons.

I wonder if the free movement of people is an unworkable concept without also consistent laws.

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

#214

Post by cylinder » Mon, Jul 11, 2016, 8:47 PM UTC

blablablame wrote: post #156

cpr wrote: post #124

Earlier quoted context omitted.

If you think the US has managed a recovery, I'm afraid you're in denial. The US unemployment picture is horrible, but being masked by official government figures that ignore the people who've given up looking for work, and including people working less than full time at marginal jobs.

Yes, but the EU numbers use similar data as the US, and while average is 9% unemployment, some countries are in the 20% range. And this is with a lot of 0-hour contracts or in 'courses' (doesn't count as unemployed).

If you're averaging all the US, average all of EU as well.

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

#215

Post by dredmorbius » Mon, Jul 11, 2016, 9:10 PM UTC

blahi wrote: post #134

dredmorbius wrote: post #122

Earlier quoted context omitted.

Where do cricket points come from? Money comes from the same place. It's not substance. It's not energy. (Though yes, it's exchangeable for both. And time. And space.) It's information. About obligations and demand rights. It can be created as fractional reserve. Or simply issued into existence (thogh market ops make pricing more transparent). While we're at it, I'm not entirely certain of that 9 billion figure eithe…

>(Though yes, it's exchangeable for both. And time. And space.) Yeah, that's kind of a big differentiation though. Isn't it?

Sorry, I don't grasp your point.

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

#216

Post by basicplus2 » Mon, Jul 11, 2016, 9:25 PM UTC

smcl wrote: post #43

basicplus2 wrote: post #26

EU now requires all member nations to enforce bail-in so ordinary depositors carry same risk as creditors of banks. America - Gone EU - Gone Canada - Gone New Zealand - Gone Australia - nearly gone - Turnbull was head of Goldman Sachs in Australia. All thanks to Goldman Sachs etc http://cecaust.com.au/releases/2014_03_20_Treasury_Bail_In.h... http://cecaust.com.au/releases/2015_11_27_G20_Accepts_Bailin... http://ceca…

I don't understand what the "- Gone" lines are and can't relate them to the first part of your comment. Did you miss something out?

These countries now all have bail in legislated

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

#217

Post by basicplus2 » Mon, Jul 11, 2016, 9:27 PM UTC

shoo wrote: post #44

basicplus2 wrote: post #26

EU now requires all member nations to enforce bail-in so ordinary depositors carry same risk as creditors of banks. America - Gone EU - Gone Canada - Gone New Zealand - Gone Australia - nearly gone - Turnbull was head of Goldman Sachs in Australia. All thanks to Goldman Sachs etc http://cecaust.com.au/releases/2014_03_20_Treasury_Bail_In.h... http://cecaust.com.au/releases/2015_11_27_G20_Accepts_Bailin... http://ceca…

Be aware: the above links point to press releases from the Citizen's Electoral Council - this is the most batshit insane political party I am aware of in Australia. You don't get to print and distribute pamphlets talking about lizard people running the world and then get to be taken seriously.

if you follow the links within their articles you will find the hard evidence.

even crazy people sometimes talk about true stuff too.

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

#218

Post by cdavid » Mon, Jul 11, 2016, 9:57 PM UTC

oarsinsync wrote: post #142

cdavid wrote: post #57

Earlier quoted context omitted.

I really doubt you only pay 16 % of taxes in Switzerland. When talking about taxes, especially comparing between countries, you need to be very careful about what you are talking about. FWIW, income taxes are 40 % for income above ~32k, and the UK are not considered heavily taxed in Europe.

That's actually 40% marginal tax on income over £43,000, not £32,000, if you earn under £100,000. It's only 40% from £32,000 if you earn over £122,000. https://www.gov.uk/government/publications/rates-and-allowan...

true, but that already starts to depend on your personal details, which is why comparing countries is hard. For example, while many countries take into account your marital situation when calculating brackets, the UK almost doesn't: it is much better, from a tax perspective, for a household to have 2x 40k earners than 1x 80k earner.

And then of course, you need to compare the services you get for the money the state take from you (e.g. in the UK, state pension is close to nothing so you need to remove 15-20 % of your pre-tax income, and then you need to consider mediocre health system, expensive child care, etc...).

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

#219

Post by zakk » Tue, Jul 12, 2016, 12:00 AM UTC

tetraodonpuffer wrote: post #162

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

do you think that the euro is the only reason? If you ask people on the street the real reason behind Italy's fall is the rise of China, Italy used to have a lot of small manufacturing businesses, which are now pretty much gone or dying, and leading to the issues you are seeing with the GDP as well as contributing to the bank problems (small businesses can try to stay afloat with bank loans for a while) It also didn'…

> do you think that the euro is the only reason?

No, it's not. It exposed some structural problems of the economy which could have gone unnoticed for, say, ten or twenty years.

Italy has a very high state spending, which is not matched (as in e.g. Northern countries), by a very high level of state-provided services. The Italian state indebted itself by granting privileges in the 60s, 70s and 80s, notably in form of unsustainable pension, so that today's retired people are getting more money than they gave through taxes, creating more debt.

This gigantic, bloated ship has been kept afloat by devaluating the currency (while we could) and by a high taxation.

And, yes, the taxation level in Italy (red line) is inversely correlated to the increase/decrease of the GDP (in blue).

http://i.imgur.com/0VgdH25.png

On top of that civil justice is painfully slow and uncertain, bureaucracy is rampant, setting up a business requires tens of authorization and months.

> If you ask people on the street the real reason behind Italy's fall is the rise of China, Italy used to have a lot of small manufacturing businesses

I'm not sure about it. An embarrassing number big Italian brands has been sold abroad, so I don't think the dimensions of the business are a factor here.

Italy it's simply no longer a good place to do business. If you can go abroad, you go there. Most new activities I see in my city are restaurants or retailers goods produced elsewhere.

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

#220

Post by danmaz74 » Tue, Jul 12, 2016, 6:22 AM UTC

davidw wrote: post #192

danmaz74 wrote: post #114

Earlier quoted context omitted.

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.

I see your point David, but directly cutting pensions (not just the rich pensions, which outrage so many people but in aggregate are little more than a drop in the ocean) is something that would be political suicide for anybody, and I guess not just in Italy.