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First Greece, Portugal and Spain, next is Italy, Ireland and Belgium?

Discussion in 'Bar' started by ahjteam, Jun 18, 2011.

  1. MindMunch

    MindMunch Member

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  2. updog

    updog Member

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  3. Cheesebone

    Cheesebone Member

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    Until we get these idiots out of offices who actually think prosperity can be achieved through bailouts and printing presses, we'll see this mess happen over and over and over.. it's like they never learn from history.

    The euro is in trouble if they actually decide to bail these countries out. The smartest thing Greece can do is just default on the debt and modify the loans. Sure, life will suck for everyone there for a bit, but it will be a lot easier than what all of Europe will have to deal with if the don't let it happen.

    The only good thing for us here in the States is that at least this mess is taking the focus off of how pathetically screwed our own economy is over here, lol.
     
  4. JeffTD

    JeffTD Senhor Testiculo

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    The Euro isn't based on anything but the world's perception of it; IE how high it is in demand relative to other currencies. Guess what? That's what ever other major currency is right now. It's fiat money. The Pound, American dollar, Euro, Yuan, Yen, Australian and Canadian dollars, Mexican peso, Turkish lira, Swedish krona, Danish krone, etc... are all backed by nothing but the law of their respective countries.

    The American dollar hasn't been backed by gold since Nixon unpegged it completely in the 70's, and even before then it slipped. The American dollar has lost 98% of its purchasing power since the Federal Reserve Act was enacted in 1913, and has not been fully backed by anything since then.

    Quantitative easing is what the Federal Reserve does to try to increase liquidity in the economy, by adding value where it doesn't exist. There is no actual capital injected into the stream, but it's often perceived as real capital and THAT's why it's a bad thing. They don't actually print money, but it tends to have the same effect.

    Other currencies are affected by the US economy being volatile but that doesn't mean that they all are. The Euro is much stronger than the dollar and for a good reason - same with the Pound. The only currencies that are directly affected are the Yen and Peso, because they are literally pegged to ours; their value is defined by the USD.

    QE doesn't come down to one guy, but it is largely spearheaded by Ben Bernanke. It is more or less unregulated, and he can print as much money as he wants, but he cannot do it in complete secrecy.
     
  5. JeffTD

    JeffTD Senhor Testiculo

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    The problem you guys are having is that you're mistaking republics for democracies. The US (and most modern western governments) were developed as republics for many reasons. Whether or not those are still applicable is an entirely separate argument, but it does stand to reason that the hoi polloi of any given country will be far too stupid/uneducated/unmotivated to inform themselves and vote responsibly on issues, budgets, laws, etc. It just does not happen, as Egan pointed out:


    California is completely fucked up as a result of it's direct democracy. Did you know that inmates can't receive anything but brand-name prescription drugs? It is illegal for inmates to be given generic prescription drugs, regardless of how much more effective/economical they can be compared to the name-brand drugs. Our budget is bled dry by laws like this that have been lobbied into legislation all because we can stick something on the ballot with enough signatures and have a proposition turned into law in an instant, and our voter turnout is abysmal at best so it's not exactly hard to get something put into law if nobody knows anything about it or it's not publicized, which happens with the vast majority of propositions.
     
  6. JeffTD

    JeffTD Senhor Testiculo

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    The best thing would be for the EU to actually enforce its own convergence criteria (or re-evaluate and modify it based on current standards) and kick the countries that don't meet them out of the Euro-Zone.


    Personally, I'm praying for another Greek bailout. I'll be living in Europe for 4 months starting in September and would not mind an exchange rate closer $1.20 to 1€.
     
  7. Cheesebone

    Cheesebone Member

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    Lol the problem is that, short-term, a Greek Bailout will probably only strengthen the Euro in the world currency market because most people perceive that a a GOOD thing for the Euro, lol. Long term it's going to be a disaster, but it's much like he same crap we've done here in the US. Facing a recession? Just bail everyone out with stimulus. Wait, now banks fail and we're facing another recession? Better turn up the presses and stimulate some more. These actions have definitely provided short-term relief from the unpleasant effects of a recession, but they've done so at the expense of guaranteeing an even uglier, more painful economic contraction in the future. There is only so much room under the rug to sweep shit before it simply starts spilling out everywhere and becomes impossible to hide anymore, and then you've got a much bigger mess to clean up than the one you originally started with.

    It's gonna be interesting to see how this all pans out though. I'm not completely convinced that all of these troubled countries will get bailed out... I think Greece may, possibly, Ireland.. but I have a feeling that the US economy is going to implode before the rest of the countries that are in deep shit in the EU do. Maybe it'll teach them that the methods they're trying in order to fix things (which mirror the methods we're applying here in the US) are going to backfire. If it destroyed the reserve currency of the globe, then it'll do the same to the Euro in the same environment.
     
  8. JeffTD

    JeffTD Senhor Testiculo

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    I think you've got it backwards - every time a bailout has been announced, the Euro has dropped against the USD. Another one for Greece would pull it under 1.40, in my opinion.

    And I don't think the US currency will implode... I think we'll just default on our loans and the Euro will take it's place as the world reserve currency. That is unless the Yuan is unpegged and China takes the fuck over, of course.

    Super interesting but scary as fuck time to live in. My major in school is political economics, and it baffles me how most countries function even mildly well given the current state of things.
     
  9. Jevil

    Jevil Pro Evolution Fucker

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    Let's take out guillotine again!

    [​IMG]

    'My only solution is a Violent Revolution' - Kreator 2001
     
  10. Aaron Smith

    Aaron Smith Envisage Audio

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    Jeff hit the nail on the head with the fiat currency point; fiat currency not only enables governments to make promises to their people that they can't deliver (entitlement programs), but it also allows governments to wage war without immediately palpable fiscal consequence, and it allows politically popular but utterly wasteful government spending to continue year after year. Also, the fiat money system is directly related to fractional-reserve banking, which when combined with central bankers who attempt to manage economic activity by means of interest rate manipulation, and politicians who pass legislation encouraging a particular form of economic activity ("Every American should be able to own a house, no matter what your income level is, because it's the American dream!"), you end up getting getting gross distortions in the economy, where entire sectors experience an artificially induced boom, which is destined for an inevitable bust. I am not certain that business cycles would be erased entirely if there were no central bank and a gold backed currency, but I am certain that when interest rates are set on the market, as a reflection of the pool of real savings in an economy, rather than by central bankers who believe they can "guide" economic activity better than millions of working/saving/spending/investing private citizens and businesses can with their own money, that any booms and busts will be substantially smaller both in severity and time duration.

    The thing that pisses me off most about the typical popular calls for greater regulation of bankers, is that most of the regulations in place already are all just poor attempts to address the inherent problems with fiat currencies and fractional-reserve banking. And don't even get me started on deposit insurance, like the FDIC we have in the US; what an absolute freaking joke. It's meant to make a bank depositor feel safe and thus prevent bank runs (which would wipe out a fractional-reserve bank, which is inherently insolvent), but in doing so, it essentially subsidizes risky lending practices by banks, which in turn makes bank failures and financial crises more likely. Not to mention, the FDIC has only about 1-2% of the money that it supposedly insures; that is, the FDIC would need to be bailed out by the Federal Reserve if there were enough bank runs or bank closures, and in doing so, the Fed would instantaneously steal a large portion of the purchasing power of all holders of US Dollars in order to create the money needed to honor those lost deposits.

    The gold standard is the best option, period. Money was never intended to be a loosely-defined concept with an unstable value- money is simply the evolution of bartering, as economies outgrew the practicality of trading one specific physical good for another. As Murray Rothbard puts it,

    He continues,

    Anyway, I could go on and on about all of this, but basically, the bottom line is this: the current fiscal and economic woes facing the world can all be traced neatly back to fiat money and fractional reserve banks, which the entire modern world has been built on. My advice to every nervous person out there with some savings, is to buy gold and just sit on it until the current mess blows over...it will blow over, and it will probably be pretty catastrophic, for the US in particular, as our nation has a shocking national debt and an unfathomable amount of unfunded liabilities (Social Security, Medicare, etc), something like $79 trillion. Once the world realizes just how unwise it is to continue holding and spending US dollars as a reserve currency, then the US will be forced to face its own fiscal problems, and it will be very, very ugly for Americans. Cheesebone made a great point, too- the longer that governments try to avoid simply addressing their fiscal problems, and instead lean on the hope that more bailouts and more printing-press stimulus will inspire market confidence, which they hope will lead to economic stability, the worse the underlying imbalances become, and the worse the final day of reckoning.
     
  11. El_Gato

    El_Gato I love this gain

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    I think money is supported by two things right now: Oil and workforce. Everything else is just fictional money. 95% of the money is digital for high-risk transactions and investments on weapons and money itself. Some of the concepts you guys handle are outdated. It's not about printing money or giving one central bank the power to do whatever they want. It's about action-reaction. This does not work, period.

    It's been already proved that neoliberalism and no control over financial institutions does not autoregulate themselves so we need to demand responsibilities to those who drove into this situation. They wouldn't go back and do the same if we were sending them to prison for driving the country to this situation.

    A bank is charging interests for what but to cover the eventual risks of nonpayment? if the bank is not able to recoup the money is because they were doing bad calculations so it's their fault doing their job so wrong, not the citizens who keep watching how banks are being helped with money that is not at population service but bankers are getting richer and richer and no control or responsibilities are being demanded by the governments. It's their job to see risks coming and they didn't, why aren't they fired? We're doing nothing but giving them more power. That money is being taken from education, health care, research, social services...

    Since the 70-80s we see how banks are giving better rates for your money, acting like a business, when they should be in service to society. They kept on growing and growing but this is not sustainable. Fast money is nothing but poverty for tomorrow and the unethical actions the banks and governments are running are nothing but patches that are aggravating the situation. The real development is in our mind and the capacity to change the way we're doing things. Instead of oil (fast money again), we should invest in renewable energies. Instead of high-risk, third generation investments (very profitable) and weapons trading with countries in risk of war, we should invest in new technology and research (not fast money but money).

    We STILL have the same people leading those institutions capable of changing this so don't expect this to change anytime soon. The real shame is that we haven't even blame them for what we know it's their fault.

    The USA has been a pioneer in many things, like ethical banks. If EU or the USA made the move to a more fair society with more control over transactions, I'm sure many would follow them.

    So, IMO, we should ask for responsibilities, control banks and letting people vote if they want a sustainable growing with control over the banks or if they want to keep growing till it collapses again. We don't need unethical banks, banks need us. Too bad we still let them rule the world. Even stockholders are standing up against their own businesses here in Spain for a more transparent, controlled and ethical banking.

    Sorry I didn't go into details, we gotta take the streets in a couple of hours.
     
  12. TheWinterSnow

    TheWinterSnow Den Mørke Natt

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    The transparency within government is a huge problem, probably worse than the lack of transparency from the government to the people. The federal reserve has compete opacity between them and the senate. Decisions like the margin of inflation needed for each round of quantitative easing, which banks to bailout and the privacy of said banks are without the consent of the senate. At the same time the federal reserve is unregulated, they are the sole and only branch to make such decisions, if congress wants to make changes to their (the reserve's) decisions, then they have to pass bills for it, which for the most part haven't happened.
     
  13. Cheesebone

    Cheesebone Member

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    No shit? I'm curious then, you actually think the US politicians have the wherewithal to tell American citizens that we need to default on our debt?

    The implications of that move would be enormous.. obviously NO ONE is going to lend money to the US government anymore, not without stratospheric interest rates at least. But you know as well as I do what a huge move up in interest rates would do to the economy.. everything would collapse instantly all over again. They can artificially keep rates low, but this of course would require anything but an admission of default on the debt.

    It will be interesting to see what happens when QE2 comes to an end later this year - the FED is already buying 70% of US bonds as it is. Who's gonna buy them when the timeframe ends? Japan's currently rebuilding from a disaster, so they can't afford to buy them - if anything, they'll cash in on the 900 billion we already owe them. China has already said it's going to slow down US bond purchases because it's creating so much inflation in their own country..

    The only way that the US could default on the debt, and still finance things at current levels, is to finance it through the FED. There's simply no other way around it, they can't tax it out of everyone. They'd have to use the FED to buy up gov't bonds and ultimately destroy the currency in the long run anyway.

    Of course, if they decide NOT to finance anything through the FED, and actually default on the loans, well, then the economy will implode also. All of the consumer goods that we don't manufacture will stop coming from overseas because we don't have the money to pay for them. The service sector here will shrink massively, and when you have a GDP that's 75% consumption based, this is a recipe for total economic meltdown.

    POLITICALLY, I don't think anyone in office has the balls to tell US citizens that they've collectively screwed this economy up so badly over the last decade or so that now everyone in the country has to suffer because of their poor policies. I think they're just going to print as long as they can get away with it.
     
  14. JeffTD

    JeffTD Senhor Testiculo

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    This is pretty much key. I don't think they'll default on debts in the normal sense, and definitely won't tell the American people about it, but I think they'll devalue the currency to the point where they can pay back the debts in face value but the actual capital value will be nowhere near what it should have been.
     
  15. Cheesebone

    Cheesebone Member

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    Absolutely agree there, paying back with currency of diminished value is exactly the same thing as default. The only difference is that the numbers zero out. But the fact remains that if you give someone half of what you owe them, or give them ALL of what you owe but they can only buy half of what they were able to with it when they lent you the money in the first place - the result is the same for the creditor.

    The real problem is that, defaulting through inflation not only fucks over the creditors (and anyone else holding that particular currency), but it fucks over the citizens of the country that's defaulting as well even harder. It so much more politically expedient to just make the problem go away now and let it blow up on someone elses watch. That's why I can't stand politicians, because 99% of them are more concerned about their own comfy jobs in office than they actually are about the well-being of the country they're supposed to be concerned about.

    I'd almost consider running for some kind of office in my area if I didn't think I'd get booed out of the room because I refuse to spew nonsense, lol.
     
  16. midget donkeys

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    Unfortunately Jeff and Cheasbone you guys are correct. I have been telling everybody around me that the US is going to inflate it's way out of debt for some time now. That will suck balls for average Joe on the street. Who knows what kind of monkey wrench it will through into the world financial system.
     
  17. Cheesebone

    Cheesebone Member

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    I think the world will be fine, they still generally produce for themselves, lol. They'll take a kick in the ass if they hold a lot of dollars but at least they'll be able to fend for themselves. They haven't had the ability to pay people with the reserve currency, so most of their legitimate trade is done with goods and not with fiat currencies.

    I wouldn't be surprised if we see this whole mess kind of shift the idea of a "reserve currency" right into the toilet, and the global markets embrace something else with real intrinsic value again, like gold.
     
  18. Aaron Smith

    Aaron Smith Envisage Audio

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    Cheesebone, you sound like a Peter Schiff fan... I love that dude, he's brilliant.
     
  19. Cheesebone

    Cheesebone Member

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    Lol yeah actually, I first heard about the guy back in 2008 when I found out Ron Paul actually had an economic advisor, lol, I thought "who could this guy possibly have "advising" him?" Ronnie's got his economics hat on straighter than ANYONE in Washington for sure. But Peter - yeah he's a really sharp guy, has a radio show now too, love his stuff for sure. Most of it is just basic Austrian Econ though, but he's exceptional with putting things into words that are easy for anyone to digest. That dude should be president, lol.

    Funny thing about Peter is that I'd previously been really interested in the whole story with his father Irwin and the income-tax law argument for years... I had no idea that Peter and Irwin were family until last year, lol.

    But anyone from that train of thought is pretty good educational material.. Schiff, Thomas Woods, Max Keiser, Jim Rogers, Milton Friedman (although I can't really agree with his view on FED policy but he was a fucking fantastic voice with regards to market economics), any of those names there are probably great resources for legitimate and accurate analysis of the economy.
     
  20. Cheesebone

    Cheesebone Member

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    LOL speaking of which, look what I just found. Smashed the nail on the head!

    [ame]http://www.youtube.com/watch?v=ikmVEhSKqtk&feature=channel_video_title[/ame]
     

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