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Thread: EUCOM Economic Analysis - Part I

  1. #241
    Council Member Firn's Avatar
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    @Fuchs: I think we had that discussion before.

    1) Compared to the balance of trade of other countries, for example Italy, Spain had indeed a great influx of foreign goods and capital especially considering the size of the economy. Trading ecomics has indeed some good graphs about it.

    2) The Euro did radically narrow the spread and increase the amount of foreign bond holders. The Spanish state was financed in this sense thanks to the Eurozone with a lot more foreign money leaving more capital for the private sector which as I stated in 1) did also experienced a greater relative amount of foreign or foreign-backed capital.

    3) As you wrote and I mentioned before the government and the regions happily enjoyed the ride on the crest of the wave. The housing boom greatly helped to keep the debt of the state low by turbocharging the economy and thus tax revenue. In retrospect the managed not just the bust but also the boom poorly.

    ----


    Yesterday I invested heavily in European index fonds with a good composition of good enterprises. The DAX got the highest relative share. We will see how things go in the long run.
    ... "We need officers capable of following systematically the path of logical argument to its conclusion, with disciplined intellect, strong in character and nerve to execute what the intellect dictates"

    General Ludwig Beck (1880-1944);
    Speech at the Kriegsakademie, 1935

  2. #242
    Council Member Fuchs's Avatar
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    Firn, the Spanish paid for almost all their imports with exports. The trade balance deficit was far less than 1% GDP!
    (The U.S. trade balance deficit was an order of magnitude bigger in %GDP!)

    The statistics simply say "NO!" to the idea that the Spanish boom or government was financed with foreign capital.

    That "the Euro led to a huge capital influx" story is valid for the Baltics, Greece, Portugal, maybe Hungary and so on. It is NOT the story of the Spanish.
    The Spanish squandered their own resources and work.


    -----------------

    Btw, I have recently engaged in some discussions about economics with Americans online. It is astonishing how readily they discuss matters they don't understand for lack of education and keep ignoring arguments and evidence in favour of talking points and aggressive behaviour towards the other tribe or whom they perceive as part of it.
    Party line ideology has clearly taken over both on the left and right. Economic science is often being despised by both wings, and I suspect it's not so much for its actual limitations, but because it gets in the way of their ideology with its actual strong points.

    The left cannot understand that the economy needs more investment and is really not only about consumption.
    The right cannot understand the small role of tax rates for economic growth, what drives potential GDP growth or even the most basic concepts of market imperfections stemming from the early 20th century or even from the 19th century.
    Both wings have absolutely no problem with living in a fantasy world regarding historical outcomes, the state of the science and many other things. They're utterly comfortable living in their non-real worlds.

    Then again, we're basically on autopilot in regard to economic policy in Germany with no smart remarks from either wing...
    Last edited by Fuchs; 06-06-2012 at 07:34 PM.

  3. #243
    Council Member Firn's Avatar
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    Quote Originally Posted by Fuchs View Post
    That "the Euro led to a huge capital influx" story is valid for the Baltics, Greece, Portugal, maybe Hungary and so on. It is NOT the story of the Spanish.
    The Spanish squandered their own resources and work.
    I think we have to agree to disagree on that issue. Anyway I do agree that especially macro has been intertwined by many with political views, and certainly not only in the US, even if there we have reached new extremes. It is of course rather helpful to have "science", often financed by private interests, supporting, neatly fitting, political arguments.

    From an Italian or Latin point of view cui bono is deeply ingrained, perhaps because we had for such a long timeframe in much of Italy institutions working quid pro quo. Maybe one can say that there is a strong tendency to be loyal to the friends and relatives. Nobody stands above that, including my person. Greece has pushed that to European extremes, showing well that the interest of the public can suffer greatly in such circumstances. It is the age old problem that one hand has the power to hand out the public good while an other has the money to "wash" the first one.
    Last edited by Firn; 06-06-2012 at 08:28 PM.
    ... "We need officers capable of following systematically the path of logical argument to its conclusion, with disciplined intellect, strong in character and nerve to execute what the intellect dictates"

    General Ludwig Beck (1880-1944);
    Speech at the Kriegsakademie, 1935

  4. #244
    Council Member ganulv's Avatar
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    Quote Originally Posted by Fuchs View Post
    Btw, I have recently engaged in some discussions about economics with Americans online. It is astonishing how readily they discuss matters they don't understand for lack of education and keep ignoring arguments and evidence in favour of talking points and aggressive behaviour towards the other tribe or whom they perceive as part of it.
    Party line ideology has clearly taken over both on the left and right. Economic science is often being despised by both wings, and I suspect it's not so much for its actual limitations, but because it gets in the way of their ideology with its actual strong points.
    Relative to the rest of the world do we even have a left in the United States? I don’t know of anyone further to the left than Krugman who isn’t automatically labeled as a radical by the taste-makers in the media and political parties.

    I can’t speak for economic science as practiced anywhere outside of the U.S. but here economists (and political scientists to a lesser degree) enjoy a respect unknown to other social scientists. Those working within academia are able to demand salaries commensurate with natural scientists and never asked to answer the “Why do we even need your discipline, anyway?” question. Students looking to make a career in government service are going to be advised to seek a degree in economics (or, again, political science) and to not make life hard for themselves by looking elsewhere in the social sciences or, God forbid, the humanities.

    It would be interesting to me to be a fly on the wall when non-U.S. economists discuss their American counterparts. I say this because I wonder whether the empirical blindness and narrowness of vision of your interlocutors also typifies professional economists within my country (as compared to economists from other national traditions).
    If you don’t read the newspaper, you are uninformed; if you do read the newspaper, you are misinformed. – Mark Twain (attributed)

  5. #245
    Council Member Fuchs's Avatar
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    Quote Originally Posted by ganulv View Post
    Relative to the rest of the world do we even have a left in the United States?
    Well, the average Republican would be considered a Nazi in Germany (and many neocons would have run the risk of getting incarcerated as criminals), while the Democrats' "progressive" left wing reminds me of our 1950's conservatives save for what Americans call "social" (= sex-related) topics.

    There are a couple countries without a true left wing or with an entirely ineffectual right wing, so the U.S. is not alone in its political extremism.

  6. #246
    Council Member ganulv's Avatar
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    Quote Originally Posted by Fuchs View Post
    Well, the average Republican would be considered a Nazi in Germany (and many neocons would have run the risk of getting incarcerated as criminals), while the Democrats' "progressive" left wing reminds me of our 1950's conservatives save for what Americans call "social" (= sex-related) topics.
    More than once I have referred to someone as a fascist (for example) and been accused of casting aspersions when I was just using the term descriptively.
    If you don’t read the newspaper, you are uninformed; if you do read the newspaper, you are misinformed. – Mark Twain (attributed)

  7. #247
    Council Member Fuchs's Avatar
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    Quote Originally Posted by ganulv View Post
    aspersions
    Again a new word. For some unknown reason I've begun to learn new English words recently. Strange, for I believed I had already almost all of them in my passive repertoire.


    Telling the truth about extremists is rarely appreciated by those who tolerate and cooperate with them.

    The U.S. has been so much isolated from the rest of the world (especially from the non-anglophone world) and has such a low opinion about learning from others (assuming it should still be the other way around) that extremism of many kinds is quite widespread by now.

    * % population incarcerated
    * civilian gun ownership
    * military spending
    * small government vs. big government debate (next to non-existent in most countries)
    * evolution vs. some nonsense (basically a rested case for almost a hundred years in Europe)
    * evangelicals
    * anti-abortion (even the Irish aren't that crazy about it and no, I won't quote the newspeak used to describe the opposing sides of this issue)
    * de-industrialisation and over-emphasis of financial sector (OK, some European countries match this)
    * campaigning against labour unions
    * ludicrous ideas about what effects tax cuts can (supposedly) cause
    * fetishism about "small business" owners and the upper class
    * about zero net savings nationwide (!)
    * share of fat people
    * executive empowerment, hollowing out of civil rights
    * money in politics on a never seen before scale
    * lack of nature sciences and engineering studies graduations up to the point that about half of the manufacturing outsourcing is being justified by lack of skilled labour alone
    * disrespect for the idea of compromise and deals (including utter disrespect for obligations once accepted voluntarily in treaties)
    * ludicrous tolerance for hypocrisy, incompetence, manipulation, deception and public lying
    * xenophobia, disrespect of foreign cultures/countries that do not bow to the U.S.


    Europe has about as much extremism, but only in regional pockets, not continent-wide.

  8. #248
    Council Member ganulv's Avatar
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    Hard to argue with the majority of your list, but in my own opinion:


    • Civilian gun ownership isn’t good or bad in and of itself. I grew up in a very rural area with a high rate of gun ownership and gun violence was not an issue. Gun politics in the U.S. does tend to be knee-jerk and ill-informed, but so does all politics.
    • I assume the zero net savings is not unrelated to the pride of place afforded homeownership in the U.S. Which is not to say that it does not remain an isuse.
    • I don’t know how truly xenophobic most Americans are. I think dismissive and ignorant of foreign counties’ citizenry might be better characterizations. Still, we don’t have an equivalent to the FN.
    If you don’t read the newspaper, you are uninformed; if you do read the newspaper, you are misinformed. – Mark Twain (attributed)

  9. #249
    Council Member Fuchs's Avatar
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    Quote Originally Posted by ganulv View Post
    [*]I don’t know how truly xenophobic most Americans are. I think dismissive and ignorant of foreign counties’ citizenry might be better characterizations. Still, we don’t have an equivalent to the FN.[/LIST]
    Uhmm, Republicans in Arizona?


    Its major current policies include economic protectionism, a zero tolerance approach to law and order issues, and a strong opposition to immigration. (...) The party's opposition to immigration is particularly focused on non-European immigration, and includes support for deporting illegal, criminal, and unemployed immigrants
    About which party of both is this wikipedia snippet? Guess!


    Republicans also waged a months-long campaign against a supreme court judge candidate in part because of her being "hispanic". To Europeans, most "hispanics" are Caucasians and the woman in question couldn't be much more pale.
    Last edited by Fuchs; 06-08-2012 at 10:33 AM.

  10. #250
    Council Member Surferbeetle's Avatar
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    China Reduces Interest Rates For First Time Since 2008, By Bloomberg News - Jun 7, 2012 9:02 PM MT, http://www.bloomberg.com/news/2012-0...ince-2008.html

    China cut borrowing costs for the first time since 2008 and loosened controls on banks’ lending and deposit rates, stepping up efforts to combat a deepening slowdown as Europe’s debt crisis threatens global growth.

    The one-year lending rate declines by a quarter percentage point today to 6.31 percent, the People’s Bank of China said in a statement yesterday. The one-year deposit rate drops the same amount, to 3.25 percent. The extra leeway banks will get to determine rates at variance from the official setting was called a “milestone” by UBS AG.

    The move, before China reports inflation, investment and output figures tomorrow, may signal that the economy is weaker than the government anticipated. Policy makers across the globe are also girding for a deeper impact from Europe’s woes, with Australia and Brazil also lowering rates in the past eight days. In South Korea, a pause in raising the benchmark has lasted a year, with the central bank staying on hold today.
    Europe should stop arguing and look to Asia, By Jin Liqun and Keyu Jin, June 7, 2012 8:33 pm, Financial Times, www.ft.com

    Viewed from China, the management of the eurozone debt crisis offers a stark contrast to the handling of the 1997-98 east Asian crisis. In that episode, Thailand, South Korea and Indonesia were all forced to implement tough austerity programmes imposed by the International Monetary Fund. But these countries also lost no time in restructuring their economies. Within about three years, their economies were back on track. This serves as both a warning and a lesson to the eurozone.

    Unlike many of today’s Europeans, the people of east Asia did not have the luxury of large relief funds from outside their countries. The people had to tolerate hardship, and they did not believe in the magic of street demonstrations. In a poignant case, the Korean people contributed gold and household foreign exchanges to the government to help ease fiscal pressure. China made a commitment not to devalue its currency. Politicians took action rather than indulged in endless debates.

    Clearly this has not been the case in Europe. The Greek and Spanish crises have not been seen as shared challenges. They have marched to discordant national anthems. Endless bargaining on terms and conditions for piecemeal bailouts has wasted a lot of time, each summit only reinforcing the belief that the eurozone is stuck in a cul-de-sac. This approach is anathema to a Chinese mindset: in The Art of War, Sun Tzu advocated setting fire to ships behind battling troops. Sometimes no way back is the best reason to fight for survival.
    The writers are the chairman of the supervisory board at the China Investment Corporation and an assistant professor at the London School of Economics
    Sapere Aude

  11. #251
    Council Member ganulv's Avatar
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    Quote Originally Posted by Fuchs View Post
    [*]I don’t know how truly xenophobic most Americans are. I think dismissive and ignorant of foreign counties’ citizenry might be better characterizations. Still, we don’t have an equivalent to the FN.[/LIST]
    Uhmm, Republicans in Arizona?
    I meant on a national level. There are nasty attitudes towards immigrants and immigration in places in the U.S., without a doubt. I have no interest in defending SB 1070 but it’s worth taking into account 1) the federal government looks unwilling and/or unable to tackle holistic immigration reform and 2) that we’re talking about a border state bordering an area of Mexico with insane levels of drug-related violence. So I personally don’t feel the Arizona case is attributable purely to wedge issue politics or brazen racism. There are a couple of similarly worded initiatives outside of Arizona where wedge issue politics and xenophobia look like the primary drivers. One is in Alabama and another is under consideration in the supposedly liberal bastion of Iowa.

    This stuff doesn’t always follow party lines. Rick Perry’s stance on immigration is decidedly touchy-feely and conservative (if not currently Republican) NYC mayor Michael Bloomberg rightly spoke out during the Islamophobic button-pushing of a couple of years ago. Constituencies matter in both cases, of course.
    If you don’t read the newspaper, you are uninformed; if you do read the newspaper, you are misinformed. – Mark Twain (attributed)

  12. #252
    Council Member Surferbeetle's Avatar
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    Euro Crisis Monitor, Institute of Empirical Economic Research, University of Osnabrueck, Germany, http://www.iew.uni-osnabrueck.de/en/8959.htm

    Although the ECB maintains an excellent data section, Target2 balances or „claims/liabilities on the Eurosystem“ are not readily available from a central source. Individual central banks publish these data as part of their monthly bulletins or quarterly reports. The organization of these individual statistics, however, varies widely across the 17 central banks and sometimes over time for individual central banks.

    This web-page, maintained by the Institute of Empirical Economic Research, University of Osnabrueck, Germany, collects these data on a regular basis and posts the latest figures. The web-page is intended to support researchers, journalists and practitioners, in understanding the emerging balance of payments crisis in Europe.

    While the Euro Crisis Monitor currently reports the Target2 data only, the web page will be extended over the coming months to include other "biomarkers" of the Euro Crisis
    Sapere Aude

  13. #253
    Council Member Fuchs's Avatar
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    We like to organise problems away

    My take on the 'German' position on the economic troubles.


    edit: Considering that I'm the copyright owner, I guess a near-100% quote is no problem:


    I've observed with some degree of fascination how Mr. Krugman - an economics Nobel laureate - discussed the Western economic troubles. It's fascinating to see a macroeconomic position with such a huge preference for the short term over the long term. It was also fascinating to see him fail to understand the German position on the economic troubles.
    Mr. Krugman is no doubt a smart man - probably 20-30 IQ points superior to myself - but he appears to lack the cherished multi-disciplinary approach and the necessary wide angle of view. His look at the 'German' position (there is domestic dissent, most notably in the Financial Times Deutschland) is purely about macro. He misses the point.


    Being a busy man promoting a book, having a newspaper column, having a blog and doing research all at once he'll 150% not look at this text. Still, I'd like to share my thoughts on this 'German' position with my readers. After all, it does provide some insights into German military history and doctrine (to some extent).

    The following is merely my opinion and I cannot cite social science study reports as backup:


    Germans have a lower than average tolerance for imperfections, and their preferred countermeasure to imperfections is to organise them away. This "organising" may be about creating an institution, enacting laws, enforcing laws or simply entering a treaty or other agreement. We don't wait for a glorious performance of a single person either - our preferred reaction to intolerable imperfection is a collective one.
    We do not develop a convenient hypothesis (such as "lower taxes solve economic problems") and expect to get rid of an intolerable imperfection the comfortable way. Well, not as often as some other countries. It should be mentioned that almost all imperfections are intolerable to us.
    An example; back in the late 19th century the socialist movement picked up steam in elections and became a major political force. The arch-conservative chancellor Bismarck reacted by introducing the anti-socialist social insurance system. Yes, social insurances are anti-socialist, even though many in the United States call them socialist. Fact is, people from the U.S. have on average no clue about all things socialist anyway.

    To Germans, all major imperfections would be intolerable at home. The economic crisis directed our attention on the Southern European partners (mostly Greece, Spain, Italy) while we keep ignoring most of Eastern Europe. The Austrians look at Eastern Europe - most Germans don't. Eastern Europe - that's to us the non-allied Russia and our neighbour Poland. Poland is the place where we park our cars if we want to get the insurance money for our car because of theft. Such a dangerous life for cars would be intolerable to us at home, of course.

    So we look at Greece and we see a country where nobody really pays attention to red lights in street traffic. A place where tax dodging is a national custom. A place where the government is a booty to be plundered, not an institution to address imperfections in society.
    What we see when we look at Greece (or with other imperfections; Italy, Spain) is a country with intolerable imperfections.

    It's inconceivable to us that these imperfections could be tolerated. It's likewise inconceivable that these imperfections will be addressed successfully once the pressure from the crisis' symptoms is gone. After all, this would imply that the pressure of the crisis' symptoms didn't suffice to force an organisational countermeasure!
    So basically it's inconceivable to us that these countries address the short-term problems (symptoms) in a way people like Mr. Krugman advise - and then just go on. That's simply not our way of doing things, and we're not all that flexible in our way because after all, they kinda work well.
    A superficial repair as strongly promoted by Mr. Krugman doesn't address the imperfections, and living with said imperfections is inconceivable. We couldn't.

    Well, Germans and even Germans with access to widely distributed media are no macroeconomic geniuses. It doesn't matter that said imperfections are likely responsible for the economy having a lower natural gross domestic product growth path as opposed to being responsible for the short-term slump below said growth path.

    Still, what Mr. Krugman doesn't get is that we don't care all that much about what he cares about. He doesn't care all that much about what we care about either. He would probably not be so flabbergasted by the 'German' position on the economic troubles if he understood this. All the macroeconomic data graphs and formulas he can throw against our position are not all that relevant to us - they're designed to be powerful arguments for someone who shares his preferences.


    Mr. Krugman discusses how to apply a medication against the short-term problem (the slump far below the potential GDP growth path). The 'German' position mistakes reasons for a lower potential GDP growth path with roots of the current slump below it. Assuming a long-term focus, 'we' demand that the imperfections be addressed, for they won't be addressed any time soon if not under the current pressure. Thus the readiness to apply additional pressure.
    'We' simply cannot understand how -even under huge pressure- tolerance for major imperfections could prevail over the desire to get rid of them through some organisational response.

    Besides, we won't accept any fix of symptoms that includes major transfers from Germany to South Europe. We had that experiment with Western and East Germany and it sucked. Well, we won't accept it until our notoriously U-turning chancellor does a U-turn on the topic.

  14. #254
    Council Member Surferbeetle's Avatar
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    Ordnung muss sein.


    Doch Ordnung funktioniert nur, wenn ihre Strukturen flexibel bleiben: wandelbar, weil sich die Wirklichkeit wandelt, weil Inhalte und Bedurfnisse in Bewegung sind
    Sapere Aude

  15. #255
    Council Member Fuchs's Avatar
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    Sometimes poll results can go straight into the joke department!



    http://www.pewglobal.org/2012/05/29/...-on-the-rocks/

  16. #256
    Council Member Uboat509's Avatar
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    Quote Originally Posted by Fuchs View Post
    Again a new word. For some unknown reason I've begun to learn new English words recently. Strange, for I believed I had already almost all of them in my passive repertoire.


    Telling the truth about extremists is rarely appreciated by those who tolerate and cooperate with them.

    The U.S. has been so much isolated from the rest of the world (especially from the non-anglophone world) and has such a low opinion about learning from others (assuming it should still be the other way around) that extremism of many kinds is quite widespread by now.
    Quote Originally Posted by Fuchs View Post
    * % population incarcerated
    Mostly a result of poorly thought out "three strikes" laws that are being removed from the books in many places
    Quote Originally Posted by Fuchs View Post
    * civilian gun ownership
    There is not a lot of conclusive evidence that legal gun ownership leads to more violent crime. Many of the places that have been pointed to as proof that strict gun laws reduce crime have lower rates of all violent crimes suggesting that there is some other factor other than guns is at work.
    Quote Originally Posted by Fuchs View Post
    * military spending
    While the amount in real terms is high, the amount as a share of GDP is only %3.6 which, considering the pressure that is placed on the US to play world peacekeeper is not especially high.
    Quote Originally Posted by Fuchs View Post
    * small government vs. big government debate (next to non-existent in most countries)
    I am not sure that this is true
    Quote Originally Posted by Fuchs View Post
    * evolution vs. some nonsense (basically a rested case for almost a hundred years in Europe)
    It is a ridiculous debate but it is not nearly as big an issue as some media outlets portray.
    Quote Originally Posted by Fuchs View Post
    * evangelicals
    What about them?
    Quote Originally Posted by Fuchs View Post
    * anti-abortion (even the Irish aren't that crazy about it and no, I won't quote the newspeak used to describe the opposing sides of this issue)
    This gets a lot of airplay but does not really have that much effect on politics overall. The economy is still the focus for most.
    Quote Originally Posted by Fuchs View Post
    * de-industrialisation and over-emphasis of financial sector (OK, some European countries match this)
    You play to your strengths. The UK for example, will never match the industrial capacity of Germany so they have concentrated a great deal of their economic focus on the financial sector which has made them the finance hub of Europe.
    Quote Originally Posted by Fuchs View Post
    * campaigning against labour unions
    Public sector unions have been the primary target though there has been a general backlash against nearly all unions. Unions in this country (and many others) seem to believe that their purpose is not to ensure that their members are paid a fair wage, are treated fairly and that they should have a safe work environment, rather they believe that their job is to squeeze every last cent out of the employer and enrich themselves.
    Quote Originally Posted by Fuchs View Post
    * ludicrous ideas about what effects tax cuts can (supposedly) cause
    Agreed but there are equally ludicrous ideas about what tax raises can accomplish in Europe (Hollande's %70 rate for instance.)
    Quote Originally Posted by Fuchs View Post
    * fetishism about "small business" owners and the upper class
    This is hardly a US only problem. Hollande made bashing the wealth a plank in his campaign and more than a few European states have protection of small businesses enshrined in their laws.
    Quote Originally Posted by Fuchs View Post
    * about zero net savings nationwide (!)
    Savings are down but a big increase in savings now could very well scupper the recovery.
    Quote Originally Posted by Fuchs View Post
    * share of fat people
    This is also not a US only problem but is rapidly becoming a world wide problem.
    Quote Originally Posted by Fuchs View Post
    * executive empowerment, hollowing out of civil rights
    This is a matter of opinion rather than fact.
    Quote Originally Posted by Fuchs View Post
    * money in politics on a never seen before scale
    True but it remains to be seen what the net effect of this money will be.
    Quote Originally Posted by Fuchs View Post
    * lack of nature sciences and engineering studies graduations up to the point that about half of the manufacturing outsourcing is being justified by lack of skilled labour alone
    I would need to see some stats on that. Labor costs have more to do with outsourcing than anything else.
    Quote Originally Posted by Fuchs View Post
    * disrespect for the idea of compromise and deals (including utter disrespect for obligations once accepted voluntarily in treaties)
    I am not going to argue about the extreme aversion to compromise that has gripped Washington of late but to which treaties are you referring?
    Quote Originally Posted by Fuchs View Post
    * ludicrous tolerance for hypocrisy, incompetence, manipulation, deception and public lying
    I believe the word you are looking for is politics.
    Quote Originally Posted by Fuchs View Post
    * xenophobia, disrespect of foreign cultures/countries that do not bow to the U.S. Europe has about as much extremism, but only in regional pockets, not continent-wide.
    Last edited by davidbfpo; 06-09-2012 at 10:56 AM. Reason: Formatting PM to author
    “Build a man a fire, and he'll be warm for a day. Set a man on fire, and he'll be warm for the rest of his life.”

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  17. #257
    Council Member Surferbeetle's Avatar
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    Niall Ferguson, from Wikipedia, the free encyclopedia, http://en.wikipedia.org/wiki/Niall_Ferguson

    Niall Campbell Douglas Ferguson (born 18 April 1964)[1] is a British historian. His speciality is financial and economic history, particularly hyperinflation and the bond markets, as well as the history of colonialism.[2]

    Ferguson, who was born in Glasgow, is the Laurence A. Tisch Professor of History at Harvard University[1]. He was educated at the private Glasgow Academy in Scotland, and at Magdalen College, Oxford.

    Ferguson's books include Empire: How Britain Made the Modern World, The Ascent of Money: A Financial History of the World and Civilization: The West and the Rest,[3] all of which he has also presented as Channel 4 television series.

    In 2004 he was named as one of the 100 most influential people in the world by Time magazine. He is currently[when?] a contributing editor for Bloomberg Television and a columnist for Newsweek.
    Niall Ferguson: The 6 killer apps of prosperity, TED Global 2011, Filmed July 2011, Posted Sept 2011, http://www.ted.com/talks/niall_fergu...rosperity.html

    Over the past few centuries, Western cultures have been very good at creating general prosperity for themselves. Historian Niall Ferguson asks: Why the West, and less so the rest? He suggests half a dozen big ideas from Western culture -- call them the 6 killer apps -- that promote wealth, stability and innovation. And in this new century, he says, these apps are all shareable.
    "It’s our generation that is witnessing the end of Western predominance. The average American used to be more than 20 times richer than the average Chinese. Now it’s just five times, and soon it will be 2.5 times.”
    Sapere Aude

  18. #258
    Council Member Fuchs's Avatar
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    @Uboat:

    which treaties are you referring?
    For starters, OIF was a violation of the Kellogg-Briand Pact, the Charter of the United Nations and the North Atlantic Treaty.

    In fact, Italy staying on the sidelines as neutral when the red hordes overrun Germany during the Cold War would have been less of a violation of NATO duties than the actions in OIF by the U.S., UK and Poland was.
    I gotta admit that the entire Kosovo Air War was a perversion of NATO (including by my country), though.

  19. #259
    Council Member Surferbeetle's Avatar
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    El Eurogrupo dar hasta 100.000 millones para el rescate sin imponer nuevos ajustes al Gobierno, Carlos Segovia | Javier G. Gallego | Madrid | Bruselas
    Actualizado sbado 09/06/2012 19:10 horas, El Mundo, http://www.elmundo.es/elmundo/2012/0...339227352.html

    Despus de casi tres horas de conversaciones sobre el rescate de la banca espaola, los ministros de Finanzas de la zona euro han llegado a un principio de acuerdo en el que se aportar una ayuda mxima de 100.000 millones de euros, sin imponer condiciones de poltica econmica al Gobierno de Rajoy, segn ha podido saber ELMUNDO.es de fuentes prximas a la reunin.

    Las condiciones se centran exclusivamente a la banca espaola. Entre otras incluye una limitacin en la poltica de dividendo y en la remuneracin de los directivos.
    Conditionality, from Wikipedia, the free encyclopedia, http://en.wikipedia.org/wiki/Conditionality

    Conditionality is typically employed by the International Monetary Fund, the World Bank or a donor country with respect to loans, debt relief and financial aid. Conditionalities may involve relatively uncontroversial requirements to enhance aid effectiveness, such as anti-corruption measures, but they may involve highly controversial ones, such as austerity or the privatization of key public services, which may provoke strong political opposition in the recipient country. These conditionalities are often grouped under the label structural adjustment as they were prominent in the structural adjustment programs following the debt crisis of the 1980s.
    Structural adjustment, from Wikipedia, the free encyclopedia, http://en.wikipedia.org/wiki/Structural_adjustment

    Structural adjustments are the policies implemented by the International Monetary Fund (IMF) and the World Bank (the Bretton Woods Institutions) in developing countries. These policy changes are conditions for getting new loans from the International Monetary Fund (IMF) or World Bank, or for obtaining lower interest rates on existing loans. Conditionalities are implemented to ensure that the money lent will be spent in accordance with the overall goals of the loan. The Structural Adjustment Programs (SAPs) are created with the goal of reducing the borrowing country's fiscal imbalances. The bank from which a borrowing country receives its loan depends upon the type of necessity. The SAPs are supposed to allow the economies of the developing countries to become more market oriented. This then forces them to concentrate more on trade and production so it can boost their economy.[1]

    Through conditionalities, Structural Adjustment Programs generally implement "free market" programs and policy. These programs include internal changes (notably privatization and deregulation) as well as external ones, especially the reduction of trade barriers. Countries which fail to enact these programs may be subject to severe fiscal discipline. Critics argue that financial threats to poor countries amount to blackmail; that poor nations have no choice but to comply.
    Boosting growth in high-debt times: The role of service deregulation, Guglielmo Barone | Federico Cingano, 6 December 2011, VOXEU, http://www.voxeu.org/index.php?q=node/7389

    Many European countries face the challenge of credibly reducing their debt-to-GDP ratios. Boosting output growth is therefore an urgent and key political and economic priority. Given the existing constraints to demand-side measures, most observers see structural (supply-side) reforms as the main policy tool such countries have at their disposal to grow out of their debt problems (e.g. Ivanova et al. 2011, Fernandez-Villaverde and Rubio-Ramirez 2011, Amato et al. 2010). The specific measure they should focus on and the gains to be expected from such reforms are, however, less clear.

    Based on recent research on OECD data, this column argues that increasing competition in the market for key upstream service activities in particular, energy and professional services could have sizeable effects on growth by improving the performance of downstream manufacturing industries.

    In many countries, key inputs such as professional services, energy, transportation, and telecommunication services are not only scarcely traded internationally, but also sheltered from domestic competition by substantial administrative restrictions, including:

    • monetary and non-monetary barriers to market entry;
    • the integration of a priori competitive activities with natural monopolies (as in the case of energy); or
    • the existence of restrictions to market conduct (as in professional services).


    Such restrictions have negative effects on growth in services, in particular because they reduce investments (Alesina et al. 2005). This direct negative effect is only part of the story, however. Combining service-regulation indexes with data on growth in manufacturing industries for a sample of OECD countries, we have shown that there are also sizeable indirect effects, from service regulation to the performance of downstream activities (Barone and Cingano 2011). Interestingly, similar findings are obtained by other works investigating the same issue with different approaches (see Bourls et al. 2010, Arnold et al. 2011).
    The room for further service deregulation in Europe seems substantial. According to the OECD indices used in the research in 2008, for example, the number of restrictions in professional services in countries such as Italy and Greece (and Spain and France) was three (and two) times higher, respectively, than in the US and the UK.
    Structural transformation and the sophistication of production, Rahul Anand | Saurabh Mishra | Nikola Spatafora, 3 June 2012, VOXEU, http://www.voxeu.org/index.php?q=node/8049

    Recent literature emphasises that a key component of the economic growth process is an increase in the “sophistication” of a country’s production. What a country produces and exports matters for growth; indeed, it has been argued that “… not all goods are alike in terms of their consequences for economic performance. Specialising in some products will bring higher growth than specialising in others” (Hausmann et al. 2007; Lall et al. 2005).

    This column makes four key contributions to the debate. First, it systematically documents changes in export sophistication over the past 20 years in low-income countries and middle-income countries. In particular, it describes differences in the performance of different geographical regions, as well as between resource–rich and other economies.

    Second, it analyses to what extent an increasing sophistication of production and exports is associated with overall economic growth. A related question concerns what factors and mechanisms ultimately determine the magnitude of this impact. That is, what determines whether sophisticated sectors act as an engine of growth for the broader economy, or instead turn into isolated enclaves?

    Third, we examine what enables a country to increase the sophistication of its production. In this context, we look at the relative importance of institutional factors, structural reforms, and policy measures (such as exchange rate policy).

    Fourth, and perhaps most novel, the analysis moves beyond the usual focus on goods, and also considers services. Services are gradually becoming more productive and tradable, as reflected in success stories such as India’s software and business-process activities, Nigerian’s film industry, or Kenya’s call centres (Mishra et al. 2011). Reflecting this, the paper analyses the transformation of global production using a new measure of the sophistication of services, in addition to the sophistication of goods.
    IMF, SPAIN, Financial System Stability Assessment, Prepared by the Monetary and Capital Markets and European Departments Approved by Christopher Towe and Reza Moghadam, May 30, 2012, http://www.imf.org/external/pubs/ft/...12/cr12137.pdf

    While there is a core of strong banks that are well-managed and appear resilient to further shocks, vulnerabilities remain. Substantial progress has been made in reforming the former savings banks, and the most vulnerable institutions have either been resolved or are being restructured. Recent measures address the most problematic part of banks’ portfolios (real estate developer loans). Going forward, a further restructuring and recapitalization of some of the remaining weaker banks may be needed as a result of deteriorating economic conditions.

    A major and much-needed restructuring of the banking system is underway. Full implementation of the reforms—including thorough independent valuations, a credible backstop, further restructuring of weaker banks, and dealing with legacy assets—as well as an effective communication strategy are critical for preserving financial stability and laying the ground for recovery.

    The assessment of the financial oversight framework identifies both strengths and weaknesses. Supervisory agencies have highly experienced and respected professional staff, and are supported by good information systems. However, a gradual approach in taking corrective action has allowed weak banks to continue to operate to the detriment of financial stability. The processes and the accountability framework for effective enforcement and bank resolution powers need to be improved.
    Last edited by Surferbeetle; 06-09-2012 at 06:14 PM.
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    Spain’s Record Yields Show Italy Bailout Risk, By Ben Sills - Jun 12, 2012 4:01 PM MT, Bloomberg News, http://www.bloomberg.com/news/2012-0...s-spreads.html

    Spain’s benchmark borrowing costs climbed to a record yesterday, raising the specter of sovereign bailouts for the government in Madrid and then Italy that would stretch European Union finances to their limit.

    The yield on Spanish 10-year government debt rose for a third day, touching 6.83 percent, the highest since 1997, after Fitch Ratings predicted that Prime Minister Mariano Rajoy will miss budget-deficit targets he’s made the foundation of his economic policy. Italian 10-year yields rose to the highest in almost six months.

    The bond rout wiped out the effects of 1.1 trillion euros ($1.4 trillion) in official funding for euro-region banks that has held yields in check since December. Spain’s 10-year yield is close to the 7 percent level that forced Greece, Ireland and Portugal to seek bailouts. Italy, the second-biggest sovereign borrower in the euro area, may need to seek a rescue within months, said James Nixon, chief European economist at Societe Generale SA (GLE) in London.
    Credit Agricole Seeks An End To Its Greek Imbroglio, By Fabio Benedetti-Valentini - Jun 12, 2012 5:00 PM MT, Bloomberg News, http://www.bloomberg.com/news/2012-0...imbroglio.html

    In 2006, Georges Pauget, then Credit Agricole SA Chief Executive Officer, bought Greece’s Emporiki Bank, calling it a “perfect fit.” Six years on, the purchase has put the French lender in the eye of a perfect storm.

    A possible euro exit for Greece has made Credit Agricole the foreign bank with the most to lose. France’s third-biggest bank has 23 billion euros ($29 billion) of Greek loans on its books, the largest such holdings for a foreign bank. Although Greek loans represent about 3 percent of parent Credit Agricole Group’s lending commitments, they amount to at least 40 percent of the country’s private cross-border debt claims.

    Gains made in the polls by Greece’s anti-austerity parties before the June 17 election have raised the specter of the country having to abandon the euro, driving Credit Agricole to reassess support for its unit. Costs from Greece’s euro exit may reach 6 billion euros for the bank, Citigroup Inc. analysts Kinner Lakhani and Florent Nitu estimated.

    “The Greek vote’s outcome will influence Credit Agricole’s decision on whether to stay or to quit the country,” said Jerome Forneris, a Marseille-based fund manager at Banque Martin Maurel, which manages $8.5 billion euros, including Credit Agricole shares. “If Greece exits the euro, what’s the interest of keeping a unit there?”
    Finland Wants Collateral For Spanish Bank Aid From EFSF, By Kasper Viita - Jun 9, 2012 3:00 PM MT, Bloomberg News, http://www.bloomberg.com/news/2012-0...from-efsf.html

    Finland will demand collateral for its share of emergency loans to shore up the Spanish banking system should the money come from the euro-region’s temporary bailout fund, Finance Minister Jutta Urpilainen said.

    “It remains undecided whether the bailout will be granted via the temporary facility, in which case Finland will require collateral,” Urpilainen told reporters in Kokkola, Finland, yesterday. The other alternative is to grant the loan through the European Stability Mechanism, the “permanent crisis mechanism, which will provide better security for taxpayers” and won’t result in demands for extra guarantees, Urpilainen said.

    Euro-area finance ministers agreed to bail out Spanish banks in a rescue worth as much as 100 billion euros ($125 billion) after the country’s access to market funding narrowed. The exact amount will be decided after an audit of the nation’s banks is complete later this month, Urpilainen said.

    Finland demands collateral for payments from the European Financial Stability Facility, the temporary rescue fund, because it lacks a preferred creditor status. The ESM’s preferred status and the rules on private-sector burden sharing in case of default mean the permanent fund is less likely to incur losses, Finnish Finance Ministry aide Martti Salmi said yesterday.
    Cram down, From Wikipedia, the free encyclopedia, http://en.wikipedia.org/wiki/Cram_down

    Informal use

    The term (sometimes used in the phrase cram-down deal) has also gained currency to denote informally any transaction where existing investors (debt or equity) are forced by circumstance to accept an unappealing transaction, such as an expensive financing, a debt transaction that subordinates them, a dilutive equity raising, or an acquisition at an unappealingly low price.[7][8]
    List of countries by tax revenue as percentage of GDP, From Wikipedia, the free encyclopedia, http://en.wikipedia.org/wiki/List_of...centage_of_GDP

    Estonia, 32.3%
    Finland, 43.6%
    France, 44.6%
    Germany, 40.6%
    Iceland, 40.4%
    Ireland, 30.8%
    Italy, 42.6%
    Greece, 33.5%
    Spain, 37.3%
    United Kingdom, 39.0%

    Switzerland, 29.4%
    Washington must agree on the rules of fiscal engagement, By Dennis Hastert and Dick Gephardt, June 10, 2012 10:56 pm, Financial Times, www.ft.com

    Federal budget revenues in the US have fallen from 18.5 per cent of gross domestic product in 2007 to a projected 15.8 per cent in 2012, while federal spending levels have risen from 19.7 per cent to a projected 23.4 per cent, according to the CBO.
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