eussr economic wonderland
Italy fakes government figures, sparking short-term pretendy confidence.
Remember, by far the major part of normal economies is internal, not import/export.
Germany continues towards the economic domination of the EUSSR.
"Italy is not a basket case. Its net international investment position is -30pc of GDP, compared with -92pc for Spain, and -100pc for Portugal. It has very low mortgage debt. Their median wealth is €173,500, making them four times richer than Germans at €51,400.
It is the most virtuous of the big EMU states, with a primary surplus of 2.5pc of GDP. This of course means it can leave the euro whenever it wants without a funding crisis, and it is big enough to weather the shock.
Everything comes down to the national mood in the end. There was a time when the cause of Europe was unquestioned in Italy, but the long slump has taken its toll. An Ipsos poll this week found that a record 74pc of Italians are dissatisfied with the euro. It is a loveless marriage now. One more spat with Berlin and it will turn acrid. Europe's leaders can stop the rot at any time by embarking on a reflation strategy that entirely changes the contours of the crisis and lifts the South off the reefs. But if they do not do so - and there is no sign yet - Italians will be forced to take back their own sovereign destiny." [Quoted from telegraph.co.uk]
The Obama administration complains about German (and Chinese) mercantilist policies.
"Within the euro area, countries with large and persistent surpluses need to take action to boost domestic demand growth and shrink their surpluses. Germany has maintained a large current account surplus throughout the euro area financial crisis, and in 2012, Germany’s nominal current account surplus was larger than that of China. Germany’s anemic pace of domestic demand growth and dependence on exports have hampered rebalancing at a time when many other euro-area countries have been under severe pressure to curb demand and compress imports in order to promote adjustment. The net result has been a deflationary bias for the euro area, as well as for the world economy."
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"The euro area’s recovery has substantially lagged other developed countries, leaving economic activity at a low level. Euro area GDP still remains 3 percent below its peak in the first quarter of 2008, private demand is almost 6 percent below pre-crisis levels, unemployment is running at 12.0 percent, and the periphery remains in recession overall..." [Quoted from bbc.co.uk]
related material
EMU (European
Monetary Union) and inflation – a civil liberty
issue
the economics zone
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switzerland to vote on 2,500 franc basic monthly income
“Switzerland will hold a vote on whether to introduce a basic income for all adults, in a further sign of growing public activism over pay inequality since the financial crisis.
“A grassroots committee is calling for all adults in Switzerland to receive an unconditional income of 2,500 Swiss francs ($2,800) per month from the state, with the aim of providing a financial safety net for the population.
“Organizers submitted more than the 100,000 signatures needed to call a referendum on Friday [...]
“Under Swiss law, citizens can organize popular initiatives that allow the channeling of public anger into direct political action. The country usually holds several referenda a year.”
I think it is the correct and necessary way to go, but it seems a very high starting rate to me.
It’ll be the very devil to claw back if it generates a high disincentive to work. Switzerland has an unusually hard currency.
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citizen’s wage
[Lead from DVH]
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will the euro collapse?
I agree with almost every word of this new article by Ambrose Evans.
What cannot continue will not continue. All that is in question is how much
damage is done in the process of trying to deny reality.
“The deal reached by EMU finance ministers on the use of the bail-out fund (ESM) to recapitalise
distressed banks makes clear who will in fact suffer the real losses: first shareholders, then
bondholders and then deposit holders above €100,000. They stand to lose almost everything,
as we saw with Laiki in Cyprus.”
—
“Indeed so. Nothing has been solved. The eurozone's creditor powers are playing a cruel game,
doing just enough to keep this wretched entreprise alive and to protect their own commercial interests,
but not enough to solve the crisis. The torture is endless. The cynicism plain to see. And the
willingness of victim states to accept their plight so lamely is simply staggering.”
My major concerns are
- the social damage inflicted by inflation, which I regard as an unmitigated evil perpetrated
by corrupt government, and
- the potential for contention between nations if this nonsense is forced through against
the wishes of the citizens of the various nation states. Very few are covering that issue
adequately...
[EMU (European Monetary Union) and inflation –
a civil liberty issue, written 10 February, 1998]
If you can get a country to accept a currency that you control,
you can annex that country nearly as much as you could by annexing it with guns.
In my view, the periphery countries will never stand for that in
the medium to longer term. They will default, especially Spain.
The northern block will either have to accept the losses, or they
will have to break up the euro.
And that process will continue to repeat, even if they accept
the losses this time.
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chinese tractor production and gdp
Recommended reading.
“Mr Li complained in a US diplomatic cable released on WikiLeaks that Chinese GDP statistics are
"man-made", confiding to a US diplomat that he tracked electricity use, rail cargo, and bank loans to
gauge growth. For a while, analysts use electricity data as a proxy for GDP but the commissars kept
a step ahead by ordering power utilities to fiddle the figures.”
—
“ "Keep in mind the next time you are in China and find yourself choking on the foul air that the things
making the air foul are counted as positives for GDP. If you adjust Chinese GDP for environmental degradation
and for over-investment in things that will never be used, it falls in size by 30-50 per cent. Much of this
would show up as non-performing loans in most economies but since such loans are never recognised in China,
it will show up as slower growth in future years," he said.”
—
“The work force began to contract in absolute numbers last year, falling by 3.5 million.
The International Monetary Fund says it will now go into "precipitous" decline, and much earlier
than thought.”
related material
GDP1: Gross domestic product
the economics zone
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government and household economics are not the same
From a correspondent:
- As the famed Mr McCawber said," Annual Income £20, Annual Expenditure £19 19s and 6d, Result happiness.Annual Income £20, Annual Expenditure £20 0s 6d. Result misery." If you or I spent more money than we received over any cycle of time we would be in trouble. A corporate business would go bust. Why is a state any different?
All very true. However, government finances do differ a little from household accounts.
- Consider your household income and expenditure are in a small surplus, while
government is overspending like a socialist. Government can do two things that you cannot.
- 1 It can drive tanks onto your front lawn and threaten to kill you if you don’t hand over still more of your chickens.
2. It can denominate its expenditure in a fiat currency (and others), which it then proceeds to steadily
debauch (otherwise under the heading of ‘inflation
’, another form of government theft).
-
- Not only will this improve the finances of government, it also has the capacity to throw your household accounts out of kilter.
You cannot so easily improve your economy as do governments - that is, steal from your neighbours,
without creating other possible attendant problems for yourself. Of course, such governments run into problems in the
longer term, as they steadily kill the golden goose. This is what left-wing governments always do.
And those thinking independently often have the means to move. Hence the socialist yen for a utopia
of international socialism.
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