Why Germany seems not to want a quick fix for the euro crisis • Hacker News Board

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

#61

Post by discreteevent » Wed, Oct 05, 2011, 3:59 PM UTC

yequalsx wrote: post #27

_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…

I've said this over and over again to Germans that I know and they simply don't believe what you say. They really think that they are bailing out profligate Greeks and that there is no benefit to them. Politically, it isn't feasible for Merkel to come out and say that German banks need to be bailed out. It's much easier to talk about European unity and solidarity as the reason for "bailing" out Greece. Germans pride…

I agree. The simplest way to make this clear is to simply let the Greek banks default (and any other banks for that matter). This will expose the German banks and the German Government will be forced to bail them out. This bailout will be a much easier sell than the current one as it will be clear to the German taxpayer that they are bailing out their own banks who made bad bets out of greed, lack of diligence and just plain ineptitude(just like all the other bankers around the world).

There is this constant argument about "confidence" going around. We must maintain investor confidence etc. There is a limit to that and its much shorter than its usually stretched to. I've seen the same thing in software where management will cover up a systems flaws and press on with new features. In the end it all falls apart and a post mortem always reveals that they should have faced up to the problems sooner. So fk confidence, the whole thing is going to fall apart anyway and the longer we leave it the harder it will be to fix. Let the Greeks default and let the bankers take the hit, replace them with some talented young people (there are plenty) and lets get fixing things now that they are no longer covered up.

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

#62

Post by abollaert » Wed, Oct 05, 2011, 4:18 PM UTC

tftfmacedo wrote: post #60

IdeaHamster wrote: post #57

Earlier quoted context omitted.

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…

Regarding Turkey negotiations, I guess you know why. Human rights issues ( http://en.wikipedia.org/wiki/Human_rights_in_Turkey ), Cyprus, death penalty.

The cynic in me sometimes wonders if this argument is used as a red herring, and that there are other issues that need sorting out (involving money and control).

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

#63

Post by jtbigwoo » Wed, Oct 05, 2011, 4:22 PM UTC

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…

...they make a point of only spending the money they have.

Germany has the third-highest public debt in the world with only the fifteenth-highest population. Their debt is much higher as a percentage of GDP than the U.S. (83% vs. 62% according to the CIA world Factbook. [1]) They've spent plenty of money they don't have.

[1] https://www.cia.gov/library/publications/the-world-factbook/...

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

#64

Post by [deleted] » Wed, Oct 05, 2011, 4:31 PM UTC

tftfmacedo wrote: post #60

IdeaHamster wrote: post #57

Earlier quoted context omitted.

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…

Regarding Turkey negotiations, I guess you know why. Human rights issues ( http://en.wikipedia.org/wiki/Human_rights_in_Turkey ), Cyprus, death penalty.

[deleted]

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

#65

Post by harryf » Wed, Oct 05, 2011, 4:50 PM UTC

zerostar07 wrote: post #14

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…

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.

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

#66

Post by harryf » Wed, Oct 05, 2011, 4:54 PM UTC

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…

Agreed. But to me she doesn't need to be a subject expect on financial markets. My point was her education has trained to be able to understand models of complex environments. I'd argue that gives her better chance of actually understanding what her financial experts are telling her.

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

#67

Post by cbr » Wed, Oct 05, 2011, 4:58 PM UTC

zerostar07 wrote: post #39

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…

I fail to believe that markets serve the common good when the price of gold (a barely useful metal that on its own can't feed a single child) soares and also that the economic output of europe relies on greece. That's what the market would suggest. I'm not saying kill the markets, i just like rational markets. PSI invested in greek bonds (for 10 years now), for their own reasons, let them take the hit.

Gold is "barely useful"? See http://en.wikipedia.org/wiki/Gold#Use_and_applications , especially "Industry".

You are right that the price of gold is far higher than it would be if people weren't using it for investing, though.

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

#68

Post by onemoreact » Wed, Oct 05, 2011, 5:08 PM UTC

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…

Economics and Quantum Chemistry accually have a lot in common. They are both looking for mathematical shortcuts / models for highly complex systems and use similar tools. So sure reading a few book is not going to give you an in depth understanding of economics, but being able to look at the math and call Bull !@#$ is invaluable.

EX: It is generally accepted that money is created when a bank creates a loan, however, you can make also make a similar argument that it's only when banks fail that new money is created. Both are in some ways true, but the second is actually a more useful when looking at what happens when the economy takes a real dip, because the banks created IOU's not money, but the FED get's to create money to replace those IOU's.

That's not to say Economics is easy, lacks depth, or had no concrete progress. However, there is a wide range of models out there and evaluating there relative merits in the short and long term during such complex times takes deep analytic insight.

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

#69

Post by jan_g » Wed, Oct 05, 2011, 5:15 PM UTC

vsl2 wrote: post #25

This article spotlights two of the root causes of the crises in Europe - namely, (i) broken governments that spend beyond their means and the (ii) moral hazard that exacerbates such overspending. Greece Example: Greece spent too much money raised through issuing debt (which increasingly looks like an imminent default) and creditors continued to lend Greece money under the belief that Greece wouldn't be allowed to def…

Most smaller countries with their own currency can not do (ii), because they can only get dollar or euro denominated debt from international markets/institutions.

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

#70

Post by hugh3 » Wed, Oct 05, 2011, 5:23 PM UTC

jan_g wrote: post #69

vsl2 wrote: post #25

This article spotlights two of the root causes of the crises in Europe - namely, (i) broken governments that spend beyond their means and the (ii) moral hazard that exacerbates such overspending. Greece Example: Greece spent too much money raised through issuing debt (which increasingly looks like an imminent default) and creditors continued to lend Greece money under the belief that Greece wouldn't be allowed to def…

Most smaller countries with their own currency can not do (ii), because they can only get dollar or euro denominated debt from international markets/institutions.

What's "smaller" in this case?

I thought that most countries didn't need to borrow money internationally, they just sell bonds primarily to their own citizens.