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EU Markets Move Based on the Same EU Lies
Europe is leading the world higher today on two items:
- EU President Barroso stating that there are limits to austerity.
- Spain’s Prime Minister Rajoy agreeing with Angela Merkel that nations must cede sovereignty if Europe is to last.
The first of these issues is just political grandstanding. Europe’s problems are not related to whether or not EU politicians pursue austerity or growth policies; they are related to EU bank solvency and demographics.
Europe, at its core, is a 17+ country union in which aging populations, all promised large social and welfare payments at retirement, are lining up to cash their checks at the very moment in which a massive real estate bubble collapses and threatens to take down their banking systems.
Having run up tabs that it cannot possibly hope to meet (both on a personal and a national level) Europe is now playing around with ideas like growth and austerity as though EU politicians can simply pull various levers on a macro levels and the EU economy will start roaring again.
The fact of the matter is that the only way Europe could resolve its issues would be if it started running real surpluses and seeing massive GDP growth of 3+ per year for at least five years.
That would be growth. But the chances of Europe doing that are less than 1%.
As for #2, Rajoy isn’t saying anything new or meaningful. Ceding sovereignty won’t solve Europe’s problems. Germany doesn’t have the funds to hold the union together (even if it wanted to).
Germany is already sporting a Debt to GDP of 81%. When you include unfunded liabilities its over 200%. The country’s export driven economy is at risk due to a global economic slowdown. And if things should get ugly globally, Germany will be in no position to hold Europe together.
All in all, the markets are falling for the same ploy they’ve fallen for dozens of times in the last few months: more political promises from those who cannot and will not do what is needed to solve the region’s problems.
How long this latest pop lasts remains to be seen. But the clear signals are already in place that the global economy is slowing once again. And now amount of political posturing will solve that.
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Best Regards,
Graham Summers
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You sir are still a douche bag
a long hot summer...summers...you never change your false tune.
Interesting how Germany itself, while pompously saying 'debts must be paid' by Southern Europe, is apparently trying to evade paying its own heavy debt obligations
Seems the Germans are absolute hypocrites about debt and repayment, and are in fact serial defaulters
Great piece from John Ward of the Slog, on legal challenges being prepared by Greeks and others regarding Germany's debts on which it has schemed, evaded, and finally refused to pay
After World War II, under US pressure, other European countries postponed the heavy war debts of Germany so Germany could rebuild in the 1950s ... although Germany promised to pay after Germany was re-unified
The argument was that forcing German to pay its debts would stifle growth in Germany and Europe
Then after the fall of the Berlin Wall and the 1990 German re-unification, the Germans refused to honour their legal duty to call a conference about arranging repayment, because they had so many re-unification expenses, and the debt with interest from World War II was so huge
Same argument again, paying German debts would stifle growth in Germany and Europe
But it seems that, legally, Germany still owes debt and reparations from World War II, that they have not paid
For example, a big debt to the Greeks and the Greek government, who were massively robbed by the Nazis, stolen gold and much more
Now Germany says its own unpaid debts are 'ancient history' and should be forgotten, but they want Southern Europe to totally pay up right now to German bankers ...
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From John Ward's article:
« ... after the second world war the Americans imposed the London debt agreement of 1953 on their allies, an exercise in debt forgiveness to Germany on the most generous terms. West Germany’s economic miracle, the stability of the deutschmark and the favourable state of its public finances were all owed to this massive haircut. But it put Germany’s creditors at a disadvantage, leaving it to them to cope with the financial aftermath of the German occupation.’
The London debt agreement deferred settlement of the reparations question to a conference to be held after a future German reunification..which most people thought would never happen. But ever since it did happen in 1990, the Germans have steadfastly refused to honour the settlement.
In 1990, the Germans argued that any plausible deal would exceed the country’s resources, and that continued financial co-operation in Europe instead would be infinitely preferable. Waydergo: wouldn’t it be just peachy if the Germans now returned that favour in relation to Greek debt? Would a little smidgen of Berlin forgiveness and cooperation in relation to ClubMed be appropriate here? »
http://hat4uk.wordpress.com/2013/04/21/crisis-athens-outside-of-finance-...
Bank Guy:
I am in CT (half way between Boston and NYC). I know of two old women that are still getting German compensations for free work that they did during ww2.
I am sure that there are many others. I don't know how much if any payment were made to Czech Rep and Poland for the total destruction that Nazis caused.
Iron curtain had save Germany a lot of money.
Ok, but who do these stupid Greeks (or Portuguese, or Irish, or Cypriots or Spaniards etc. etc.) still try to honour their debts and implement fruitless EU-dictated bullshit policies... They should all just F*cking default by stepping out of the EMU and devalue their old currencies again. Only way to get out of this mess. The EU will never be "one" country