Europe is broke but can find 100 bn euros to bail out Spanish banks?

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   CMHypnoposted 12 years ago

   Austerity, people committing suicide, 25% unemployment in some parts of the Eurozone, yet these vast sums can always be found to bail out banks? If this kind of money is available, why not inject it directly into local areas to create jobs and stimulate growth?
   
   
   http://www.telegraph.co.uk/finance/fina … ilout.html

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      CHRIS57posted 12 years agoin reply to this

      Who says Europe is broke? It is not. The European economy as a whole has a remarkably balanced accumulated current account. And the current account is the best method to understand the real condition of an economy.
      So when there may appear debt and deficits on parts of the economy, there are other parts who can compensate for it.
      To make it simple: There is Northern Europe with huge surplusses and there is Southern Europe with huge deficits. To explain the situation: Germany allone has some 2,4 Trillion accumulated current account surplus. The German economy made about half of that surplus with other Euroland members (1,2 Trillion). To fill this sum: Some 700 Billion are held by the Bundesbank (German federal bank) Target 2 (Trans-European Automated Real-time Gross Settlement Express Transfer System), some 250 Billion are German taxpayers money. The last 250 Billion of some 13% of the surplus are held by banks. May be that is too simplified, but it does show that real values, earned money is behind all and not virtual money out of thin air.
      Banks are involved, but not as much as one may think, at least for Northern Europe.
      The solidarity issue in Euroland is bilateral. On one side are the deficit countries who demand support and financial solidarity. On the other side are the lender countries who demand honest real structural reforms to close the whole in the budget buckets.

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         CMHypnoposted 12 years agoin reply to this

         But the problem is that the deficit countries cannot possibly be competitive and grow when constrained by the structures of northern Europe, and that is why they are in deficit.  The rise in prices and rising costs of their export sales brought on by joining the Euro was never going to be sustainable for them.
         
         The Euro should never have happened in my opinion, but admitting countries like Greece and Portugal into it was just plain wrong.  And if we are all in Europe together, how can we stand by and let Greek pensioners starve and commit suicide? I really don't think the Greeks sit back of an evening and say 'oh it's all right we are wealthy really because there is plenty of money in Germany'
         
         And I'm sure the German taxpayers do not look too kindly on continually bailing out other countries, even if Germany has prospered because of the weakness of it's southern neighbours.

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            CHRIS57posted 12 years agoin reply to this

            I am totally with you, CMH.
            My point is that the whole thing is not a banking or Wall Street or London City or you name it issue. These institutions are only the messengers of bad news. The real issue is the productivity gap between economies on this planet. And what is displayed on the European stage en miniature is happening on our planet en large.
            All those distortions are caused by shifting real values around (doing trade). They are only camouflaged by the derivate gambling world of said institutions.

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               EmpressFelicityposted 12 years agoin reply to this

               I too think it's short sighted just to blame the banks - they are simply playing the game with the cards they've been given by their respective governments. I mean, if you're allowed to lend out ten times as much money as you've actually got, then you're going to do it, aren't you? Otherwise your profits will be tiny compared to the other banks, and you will go out of business.
               
               It's all a giant con trick. As long as the music's playing and people are confident that they have a chance of winning when they gamble, then everything will carry on as it has been.
               
               But when the music stops playing, that's a different story.

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            feistyfoodposted 12 years agoin reply to this

            I agree. I think it's disgusting the way ordinary working (when they once had a job) people in Greece are blamed for this mess. I also feel really sorry for he young people there, who do not appear to have any kind of future.

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         EmpressFelicityposted 12 years agoin reply to this

         Doesn't Germany have a national debt just like the rest of us?
         
         http://www.datosmacro.com/en/national-debt/germany
         
         ...which is about 2 trillion Euros if I've read the graph correctly.
         
         I find the thought of a 100 billion Euro bank bailout really scary. Who is going to end up actually paying that bill?
         
         
         
         
         

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            CHRIS57posted 12 years agoin reply to this

            Certainly true, Germany runs 80% public debt, but steady and declining (1% last year). To evaluate the state and capability of an economy you have to add public, corporate and household debt.
            While the US has recently passed the 300% of GDP in total debt, there are very few developed economies who manage to stay below 300%, Germany being the largest economy of that health club.
            If only public debt would matter, then Japan would be leading the pack with more than 250%/GDP public debt. Japan may be struggling, but they get along by themselves quite well even with their huge public debt.
            High public, corporate and household debt in combination with high current account deficits are what is really crippling economic options. Just look at Spain: Public debt lower than Germany but all other debt and deficit figures much, much worse.

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               EmpressFelicityposted 12 years agoin reply to this

               I have to admit I always ignore statistics that give "debt as a percentage of GDP" and look at just the straight debt.
               
               If I went to my bank manager and said, "Hey, my overdraft is increasing but its value as a percentage of my income+spending is going down", I think he'd burst out laughing.

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      feistyfoodposted 12 years agoin reply to this

      +1

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   knolyourselfposted 12 years ago

   Because the banks run the capitalist world.

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      tohimilookposted 12 years agoin reply to this

      www.heretical.com/miscellx/usury.html
      
      Banks are the modern day slave owners.  Despite the harsh economic times, the bankers are taking home loads of money.   I wonder how do they sleep at night.  Do the politicians consider the unemployed.   The whole thing boggles my mind.

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   lovemychrisposted 12 years ago

   This is really worth watching.
   
   http://www.youtube.com/watch?v=rH6_i8zuffs

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4. 70

   Cagsilposted 12 years ago

   It never made sense that a broke country could bail out a bank. Where would the country get the money if it's broke? They would have to borrow it from a central bank. Why aren't the Central banks bailing out the banks they are Central to?
   
   A Central bank should be the ones bailing out all lower banks. I would have figured it was part of the process of banking. It would make sense instead of governments being forced to borrow money to bail them out.

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      Petra Vlahposted 12 years agoin reply to this

      Bailing out a mismanaged institution is encouraging them to repeat the same mistakes again and again. Failure should not be rewarded by governments or anyone else for that matter.
      Until the safety net of being bail out by others is taken away once and for all, country after country and  institution after institution will play with fire and never care about consequences.

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5. 59

   knolyourselfposted 12 years ago

   A government collects taxes. A bank collects deposits and interest.

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      Petra Vlahposted 12 years agoin reply to this

      And your point is?

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   beaddveposted 12 years ago

   I am not sure if I am correct. Is this the good time to start and create their own business?

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7. 67

   2uesdayposted 12 years ago

   The EU has an on going problem that pre-dates the  current financial crisis. There has been vast sums of money wasted for years on stupid projects which are carried out badly.
   
   If the EU is to continue it needs to get its priorities right and to stop admitting countries in the future that cannot stand on an equal footing.
   
   If you look back at some of the balance sheets from the past,there were winners and also losers, as in those who paid in more than they got out and those who got out more than they paid in. On that - Germany appeared to be high up in the list of losers, i.e. for years they paid out on some things more than they got back in return.
   
   If I borrow money from , I bet I would have to agree to terms and stick to them. If not I would have to decide to manage on my own.

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