# default what now



## gussy (25 Jul 2011)

Just wondered how people are feeling now having got this relief from the troika. Would you feel bringing back your savings to irish banks or post offices would give you peace of mind.


----------



## cavanMan (25 Jul 2011)

Doin't think people will be rushing to put their hard earned money back into irish banks!! defo not me anyway.


----------



## Chris (26 Jul 2011)

Nope, no way. This deal is not going to save Ireland from the, in my opinion, inevitable default. Even the default rate on Greece is way too low to solve their problems. The entire exercise has just postponed the problems a little bit longer.


----------



## roker (26 Jul 2011)

The politicians have a habit of telling lies right up to the last minute, so they will catch you out if there is a default. What I wonder is what happens to our pensions and welfare payments? How can they guarantee our savings if they have no money?


----------



## oldnick (26 Jul 2011)

gussy - you are asking the wrong people. AAM, especially this thread represents Irelands pessimists as regards Ireland's future. AAM actually means "*All Money Abroad."*

The truth is ,so far, that those who put their money in sterling a month ago when there was a flurry of posts about opening accounts in newry etc have lost. Depending on the actual day, anyone depositing 50.000 could be 2-3.000 down .And that's before the loss of the selling and buying rate. That is, if you bought €50k 's worth of sterling and wanted it back today you may get less than €45k.

Never mind that ,they'll say, money should stay abroad until "the big crash"
They believe that if that if things go wrong with Greece -and, yes, there is a strong chance of that -   this will only affect Ireland and Portugal. Actually it's the French and German banks that will suffer mightily.  Generally the whole euro-zone will suffer and this may lead to a devaluation of the Euro..

But devaluation against what ? Sterling ? UK economy's in a bad way. No way do they want an expensive sterling  rate. they'll just print more money.

The Dollar? HA HA HA HA.

The yen? Japan strongly against its currency getting more valuable.

However, many speculators are not taking their money out of Euro - they are puitting into German euro accounts. Why ?

They believe that , excuse while I stop laughing, that if there is a crash due to ,say, a Greek default and after the German and French banks have lost countless billions the German and French  govnts will split the Euro.........
 " let's make our Northern euro really expensnive -30% more than the peripheral euro. That'll do it. Of course, we wont be able to sell anything abroad but it doesn't matter. Our banks are weak but it doesnt matter. The Franco-German Euro will be strong!"
Without exports  and badly damaged banks Germany is finished - and yet some people think Germany will make "their" Euro far dearer than "our" Euro !!

Of course, there are always profits to be made from intelligent speculation -a spread of vital commodities, precious metals (silver may rise more than gold,who knows?), and ,yes, a spread of currencies.

But just dumping your money in a German account ,which usually pays at least one percent less than over here, doesn't seem to make that much sense. And if you have the slightest feeling of Irishness consider this....

People, like the previous posters, who are getting AAM -All Money Abroad - are presently causing the economy a lot of harm . Whilst we all hate the banks we must acknowledge if there is no money in the banks they can't possibly lend to house hunters and small businesses.
By ,basically, causing a run on the banks they are making a fulfilling prophecy.
Of course there'll be a crash if everyone in Ireland takes their money abroad.
 And thus the other posters can tell me "-told you so"


p.s. For the record I have two UK accounts with a few hundred quid, am an immigrant to ireland, and am keeping what I have here. Stupid foreigner?
=======================================


----------



## onq (26 Jul 2011)

Old Nick,

You may indeed be a stupid foreigner, but I wish we had more like you 

Well done that man - let the cowardly self-serving gombeens take their money.

When it gets "frozen" in British banks like the Icelandic accounts, they'll weep bitter tears.


ONQ.


----------



## horusd (26 Jul 2011)

....I blame all those forriners for all our troubles...they crashed the banks and made people lend and borrow wrecklessly, and then they hightailed it to forrin parts with bag-loads of cash and without easy extradition back to the auld sod.

But never mind all that. Loyalty to the state must mean that if you don't trust the banks (and why should you?) and you decide to save your hard-earned shekels by putting it in those forrin devil banks you can trust, well  then you're a gombeen man, out to do the country in.

Maybe, just maybe if Irish banks were trustworthy, people wouldn't be hightailing it. And I agree with Chris, default in Ireland is almost inevitable. Even if it's not called default.


----------



## bryanod (26 Jul 2011)

Fan-bloody-tastic oldnick!


----------



## L0llip0p (26 Jul 2011)

I agree. Lets "pull on the green jersey".

Our government have done fantastic. They NEGOTIATED the reduction in rate and loan extension all by themselves!!!

Yes, I'm gonna follow the lead of our minister for finance and put my money where he has it. 

.....oh wait....

you spin me right round baby right round, like a record baby, right round right round


----------



## WizardDr (26 Jul 2011)

If we havent BORROWED all the money YET - where is this 'inevitable' default coming from? 2/3 of this mess is current budget defecit as in we spend more than we get in.


----------



## gussy (26 Jul 2011)

well said old nick I totally agree with you.I have no money out of the country and can safely say I never will. We have got to save Ireland and we have got to put our money here to try and get the economy moving again.


----------



## The Ghoul (26 Jul 2011)

I also agree with oldnick. Although I don't blame people for worrying about their savings - I sometimes worry about mine and get ideas about opening an offshore account, stuffing the mattress or splurging my savings on hookers and coke (the idea being that if I'm going to lose it anyway I might as well enjoy it)

But then I take a step back and ask myself if I'm being rational. Panic results in irrationality. The more people that allow panic to influence their decisions, the worse it'll be for everyone.

A bit like the property mania really. "Get on the property ladder before it's too late" has been replaced with "get your savings into a German bank account before its too late". And the more people that buy into these fears, the more likely they are to come to pass.


----------



## serotoninsid (26 Jul 2011)

I most definitely don't agree with old nick.  There's no sentiment to be had where my savings are concerned (and I'd imagine that's the case with all the others who have been posting on here - trying to work out what to do).  
It's not '_pessimism_' that has manifested itself on AAM in relation to this issue but shear pragmatism. Someone mentioned something about 'self serving gombeens'.  Quite the opposite. Nothing has changed in relation to the manner in which Ireland Inc. is being run - and if there's gombeenism to be sought out, it's there that you will find it.  And you guys call for patriotism (knowing that nothing has changed) over pragmatism?  Good luck with that - but i'm out!



			
				WizzardDr said:
			
		

> If we havent BORROWED all the money YET - where is this 'inevitable' default coming from? 2/3 of this mess is current budget defecit as in we spend more than we get in.


Did we not bring in a government with a mandate to do the heavy lifting that the previous administration wasn't capable of?  If so, then why isn't this getting sorted? Have senior civil servants taken the trimming that's necessary?  If not, why not?


----------



## oldnick (26 Jul 2011)

Just to be clear.

It was only a last point of my post that mentioned the harm being done by those taking their money abroad.  

The main point of my post was that even if there was a nasty default in Europe it is unlikely that there will be any major adverse effects on "our" Euros. 

A good counter-argument on this point would be welcome.


----------



## Godfather (27 Jul 2011)

horusd said:


> ....I blame all those forriners for all our troubles...they crashed the banks and made people lend and borrow wrecklessly, and then they hightailed it to forrin parts with bag-loads of cash and without easy extradition back to the auld sod.



Really? The CEO of Anglo was a foreigner? All that lending from irish banks without any deposit in place was decided by foreigners? All the govt's push into the fake bubble of ghost estates with tax-concessions came from foreigners?

Wow! I must have lost something here... Sorry but I think we all need to be humbler before blaming someone or something so strongly... Reality is what it is, that's it. And the wild tiger (=ROI seeking investors) will always eat the gazelles every day. But please let's not turn all foreigners into wild (insensitive) tigers.

I'm a foreigner but I deeply love this country. I moved my savings abroad as I don't want to become Saint in Ireland (sorry) but I keep declaring all of my untaxed interest here, I try to do voluntary work, trying to work hard in order to be taxed harder and deserve my job that might be given to a local person in more difficulties, etc.

Ireland made 2 mistakes in my opinion:
1) believing so much in derivatives like US-people did and not having a strong plan B in order to prevent domino effects
2) inflating so much the estate bubble just because no-one among the elected politicians (were they all foreigners with irish passport?) had the courage to say "party over my friends!" after for example the funds from European Community ended. Instead we keep hearing comments like "keep helping the economy by spending": yes, spend money you have, not money you borrow because that same economy wants full payment too...

I agree on diversifying the investments, that's sure. Noone is to be trusted anywhere.

And Ireland, Greece, Portugal as well as my beloved Italy with our disgusting bunga-bunga prime minister (involved with less than-18 years girls but he pays a lot to the party coalition which has got more credibility) are going to go bankrupt unless we all decide to agree that the Euro was just a stupid dream that cannot survive unless Europe becomes a country. We are at a cross-road: either we move into the United States of Europe or please let's finish this Euro-pantomime please...

But if anyone of you wants to blame recklessly and by generalizing so much then ok, that's your chosen approach trying to feed hatred instead of mindfully trying to change it as some of us (I hope the majority otherwise we're destined for a 3rd World War soon) are doing (good old "be the change you want to see in the world around you" as Gandhi said): at the end of the day it's easier to criticize than trying to change reality we all know that...



oldnick said:


> People, like the previous posters, who are getting AAM -All Money Abroad - are presently causing the economy a lot of harm . Whilst we all hate the banks we must acknowledge if there is no money in the banks they can't possibly lend to house hunters and small businesses.
> By ,basically, causing a run on the banks they are making a fulfilling prophecy.
> Of course there'll be a crash if everyone in Ireland takes their money abroad.
> And thus the other posters can tell me "-told you so"
> ...



This is like preaching what you are not doing...

My suggestions:
1) please not to crucify people who are moving their hardly earned savings abroad just because they didn't have a big party in the celtic tigers' years and that are just saving for their dreams. But these same people might declare any lower interest here thus helping the economy somehow else.
2) please let's not keep feeding the fake slogan "help the economy by spending" without sense of true priorities. Yes, let's help the economy by spending but please not with borrowed money (which you mightn't be able to repay in the future) because the same economy wants full payment as well...

My opinions... Just my opinions...


----------



## horusd (27 Jul 2011)

> Really? The CEO of Anglo was a foreigner? All that lending from irish banks without any deposit in place was decided by foreigners? All the govt's push into the fake bubble of ghost estates with tax-concessions came from foreigners?


 
I am being sarcastic Godfather. But foreigners do deserve part of the blame. 



> also agree with oldnick. Although I don't blame people for worrying about their savings - I sometimes worry about mine and get ideas about opening an offshore account, stuffing the mattress or *splurging my savings on hookers and coke* (the idea being that if I'm going to lose it anyway I might as well enjoy it)


 


oldnick, blaming worried depositers for the woes of the banks, and for trying to squirrel away and protect their money is a bit like blaming the ratings agencies or shooting the messenger. What loyalty do depositors owe banks or even the state? They don't deserve loyalty. Let them prove trustworthiness,safety etc. When that happens money will return. 

If the Euro breaks up, Germany will have no choice but to be a stronger DM as investors head to safety. Germany has the financial muscle to weather instability best.


----------



## Godfather (27 Jul 2011)

horusd said:


> I am being sarcastic Godfather. But foreigners do deserve part of the blame.



Sorry mate, that sentence wasn't sarchasm, it was black-or-white thinking that so much damage has done and has always been doing among people who try that approach...

Just my opinion, just my opinion...


----------



## horusd (27 Jul 2011)

Godfather it takes two to tango, reckless lenders and reckless borrowers.Foreign banks that lent recklessly share the blame. And bear in mind that private debt was heaped onto taxpayers with total disregard for capitalism. It's fairly black and white in this respect.


----------



## Godfather (27 Jul 2011)

horusd said:


> Godfather it takes two to tango, reckless lenders and reckless borrowers.Foreign banks that lent recklessly share the blame. And bear in mind that private debt was heaped onto taxpayers with total disregard for capitalism. It's fairly black and white in this respect.



Exactly, so please let's blame them both without having to direct the blame to only one of them. Finally we reached agreement


----------



## onq (27 Jul 2011)

horusd said:


> Godfather it takes two to tango, reckless lenders and reckless borrowers.Foreign banks that lent recklessly share the blame. And bear in mind that private debt was heaped onto taxpayers with total disregard for capitalism. It's fairly black and white in this respect.



Which foreign banks lent recklessly and to whom?

Not directly to the laypersons, the Irish electorate, but to Irish banks who should have discharged their duties far better than they did.
The Irish Banks were supposed to be the buffer, the professionals acting on their borrowers interest, but they became street traders, disavowing their professionalism.

They acted more like rogue traders, chasing share price and market share without any thought for the wider consequences, buying sub-prime mortgages as part of toxic packages without even checking them, offering 110% loans without requiring proof of identity or valuation.

Certainly there were influences at work from outside Ireland, but we were lured, not pushed and I didn't see bankers beating people over the head to accept unsustainable low interest rate loans.

======================

People taking their money out of the country are now compounding the error, forcing the taxpayer to borrow to fund the resultant loss of deposits to ensure banks remain viable.
When the book gets written on this, the only thing comparable to the forcing of odious debt on an unwilling electorate will be the actions of those who failed to support this country and moved their deposits elsewhere.

Some might be honest enough to admit what they've done, but shame on them anyway for doing it, and I can see I'm not alone in thinking like this about their actions.

They go on and on pontificating about their "losses" [which they have NEVER suffered] to justify their traitorous actions
All the time they are making it more likely Ireland will default through creating a deposit "Hole" for others to fill and making their fears into a self-fulfilling prophecy.

Its the same Gombeen Man "I'm alright, Jack" attitude that has held this country back for so long and does more good for other economies than our own.
Depositors need to think about what they're doing to this country with every Euro they remove.

======================

"Its just money - its nothing personal".
Its very personal when another business fails and another family ends up on the dole queue.

I feel very strongly about this matter.
The flight of capital from Ireland has done this country immeasurable harm and we are barely holding it together.

I believe that Irish people who do not support the Irish economy in times like this should have their passports taken away.
They are behaving unpatriotically and are now little more than tools of destruction in the hands of foreign entities like the rating agencies.

If they don't see their role in keeping their money here and spending it here to help Ireland recover, then they are behaving like "mé-féiner" parasites.
Their supposed support for social contracts and democracy is thus only lip service, because supporting an abstract concept while not supporting the country itself is mere sophistry.

ONQ.


----------



## L0llip0p (27 Jul 2011)

but sure if we take Michael Noonan's passport away, how will he get to brussels?


----------



## L0llip0p (27 Jul 2011)

[broken link removed]

speaking of passports, who let this guy retain his? $40,000 per speech in US. Holy muder o' f***

you reckon bertie and pals have their money in ireland?


----------



## elefantfresh (27 Jul 2011)

> you reckon bertie and pals have their money in ireland?



Sure, Bertie was one of the first of us NOT to have his money in Irish banks - haha!


----------



## Godfather (27 Jul 2011)

(comments previously added on this reply now removed from myself as I don't want to keep inflating easy demagogic considerations. Guys, feel free to follow your heart and 6th sense however you prefer. I gave my answer on the default-situation and I'm ok with that. All the best!)


----------



## Chris (3 Aug 2011)

horusd said:


> oldnick, blaming worried depositers for the woes of the banks, and for trying to squirrel away and protect their money is a bit like blaming the ratings agencies or shooting the messenger. What loyalty do depositors owe banks or even the state? They don't deserve loyalty. Let them prove trustworthiness,safety etc. When that happens money will return.
> 
> If the Euro breaks up, Germany will have no choice but to be a stronger DM as investors head to safety. Germany has the financial muscle to weather instability best.



I agree with you. The whole idea of deposits leaving the country being the problem simply ignores reality. Deposits leaving the country is merely a symptom of the disease. The disease is a bankrupt state, bankrupt banks and politicians and the public with the head in the sand. Simply getting people to return or retain their deposits here and selling this as the solution is like giving a lung cancer patient a bottle of Benylin to stop the cough.


----------



## swervedriver (3 Aug 2011)

Chris said:


> I agree with you. The whole idea of deposits leaving the country being the problem simply ignores reality. Deposits leaving the country is merely a symptom of the disease. The disease is a bankrupt state, bankrupt banks and politicians and the public with the head in the sand. Simply getting people to return or retain their deposits here and selling this as the solution is like giving a lung cancer patient a bottle of Benylin to stop the cough.


 
As well, people should realise that when they leave their money with an Irish bank, their money doesn't necessarily stay in Ireland. It can be used to guarantee purchases and investments by that bank outside of the state.

They only people the banks care about is their shareholders. Why should Irish depositors make purchasing decisions which are then syphoned off in profit? One could argue that all Irish people are in some way shareholders of Irish banks, but these banks are dodos and I very much doubt we'll be seeing any dividends from our investments. We've got very little from our huge investment in Bank Of Ireland, the supposedly good bank, one third of which was sold for a billion (after we've pumped in multiples of that amount and removed most of their bad loans, off to NAMA). 

I keep most my deposits in a bank regulated by the ICB (RABO), but only because I'm monitoring the situation and nothing to do with a misplaced sense of nationalism.


----------



## Guest105 (3 Aug 2011)

L0llip0p said:


> I agree. Lets "pull on the green jersey".
> 
> Our government have done fantastic. They NEGOTIATED the reduction in rate and loan extension all by themselves!!!
> 
> ...



Now see what you have done I just can't get that song out of my head


----------



## L0llip0p (4 Aug 2011)

thats the idea 

they can use that song in "reeling back the years" when they get to 2001,2002,2003,2004,2005,2006,2007,2008,2009,2010,2011 etc.

Hopefully we'll get to a year when playing "killing in the name of" - Rage against the machine will be appropriate.

"F**k you, I won't do what you tell me" !!!


----------



## oldnick (4 Aug 2011)

Japan today weakened their currency because they want to protect export and economic  growth -which is exactly what Germany, will do in the remote possibility of the Euro splitting.

Taking money out of Ireland into German banks in the belief that Germany will have a new DM worth,say, 20-30% more than the punt means that one must believe that Germany will retain an expensive currency.
This is nonsense. If Germany has currency worth much more than  others, it destroy their economic growth which is greatly based on exports.

No state wants an expensive currency -even the Swiss have just  reduced interest rates  to ease pressure on the increasingly dear SF.

Chris and Horus - you do like to misquote and indeed imagine things that were never said...

..nobody says that taking deposits out of the state is *the* problem.  We know the problems . But continued capital flight is a problem and will exacerbate other problems - whereas it is possible that a return of deposits to Irish banks may ease some of the our problems. Certainly, lending to home buyers and small businesses may increase if banks had more money.

None of this is patriotic sentiment. (Personally, I'm a unionist -I don't believe in an independent Irish state -I think Ireland would have done better in a United Kingdom).
It's just plain economic sense for people here to stop dumping their money abroad, especially if those people wish to remain here.


----------



## Chris (4 Aug 2011)

oldnick said:


> Japan today weakened their currency because they want to protect export and economic  growth -which is exactly what Germany, will do in the remote possibility of the Euro splitting.
> 
> Taking money out of Ireland into German banks in the belief that Germany will have a new DM worth,say, 20-30% more than the punt means that one must believe that Germany will retain an expensive currency.
> This is nonsense. If Germany has currency worth much more than  others, it destroy their economic growth which is greatly based on exports.
> ...


I'm afraid none of this stands up to economic history. Germany always had a strong currency and always maintained a strong currency. At the same time Germany after WWII always had a strong, or stronger, economy when compared to the rest of Europe. A strong currency is a huge advantage as it causes capital to flow in which allows the economy to expand. It also makes people and businesses wealthier as they are then able to buy more than before witht he same amount of money. 
The whole idea that depreciating a currency is the magic pill to increasing economic growth is nonsense. Depreciating a currency's value does not give rise to medium or long term growth, as the increased cost of imports at the very least offsets the increased exports. The most successful economies in the world all have strong or strengthening currencies:



oldnick said:


> Chris and Horus - you do like to misquote and indeed imagine things that were never said...
> 
> ..nobody says that taking deposits out of the state is *the* problem.  We know the problems . But continued capital flight is a problem and will exacerbate other problems - whereas it is possible that a return of deposits to Irish banks may ease some of the our problems. Certainly, lending to home buyers and small businesses may increase if banks had more money.


I disagree, deposit flight is not the problem that needs to be addressed it is merely a symptom of the problem.


----------



## oldnick (4 Aug 2011)

Chris - perhaps you should forward your opinion that strong currency= strong economy to the Swiss NB who, after already reducing interest rates, has warned that it will increase the supply of SF  to stem the increase in value of SF...
.. or to Japan where the govnt has warned that it cannot allow the Yen to increase in value.
And a weak (or,rather, a deliberately weakened)currency hasnt exactly hurt the Chinese economy in the last decade.

Just as ten economists may have a dozen different economic views there are arguments for and against the view that strong currency=strong economy or v.v.

It is my view that, with limited domestic demand and being highly dependent on exports, Germany would not be able to sustain a currency much higher than currencies in the rest of Europe. 
Anyway, we disagree and you may be proved right. As regards the problem about money leaving Ireland...

... Once again please stop misquoting me. I never said that deposit flight is *the* problem. I said that it was *a *problem that,if it increases will not help Ireland recover. 
This opinion does not detract from my agreement with you that there are far deeper problems.


----------



## Sunny (5 Aug 2011)

One of the great fallacies often thrown about is that the era of the DM was the glorious years of the German economy and everything has gone downhill since the Euro. It's rubbish.

Oldnick is right. If the Euro was to break up and the DM was re-introduced, Germany stands to lose as much as Ireland. It's export market that it is hugely dependent on would collapse completely considering 40% of it's exports go to Eurozone Countries who will all now have their own much weaker currencies. Their banks who hold a shed load of euro-denominated foreign debt would face huge losses as these bonds were re-denominated into local currencies. Not even going to go down the list of all the other problems...

This isn't just about a strong versus weak currency argument. That ship has sailed. The Countries in the Euro are all in this together. There is no painless get out clause for any Country whether that be Greece or Germany. The sooner the politicians realise that the better. We are not heading for the breakup of the Euro. We are heading to the issuance of Eurobonds and fiscal union. It's ironic that Germany went to war to try and rule Europe when all they had to do was create the Euro!


----------



## Sunny (5 Aug 2011)

And the EU have just announced they are going to publish a report looking at the feasibility of Eurobonds. They must have read my post!


----------



## horusd (5 Aug 2011)

Sunny said:


> And the EU have just announced they are going to publish a report looking at the feasibility of Eurobonds. They must have read my post!


 
Mrs M. doesn't sound to keen on the idea. She's off walking in the mountains as we speak! Hope she has the mobile with her. And the German supreme court in Karlsruhe might well strike this down if any attempt is made to introduce it. ...there may be trouble ahead....


----------



## Guest105 (5 Aug 2011)

horusd said:


> ...there may be trouble ahead....



Don't start me off again


----------



## Chris (5 Aug 2011)

oldnick said:


> Chris - perhaps you should forward your opinion that strong currency= strong economy to the Swiss NB who, after already reducing interest rates, has warned that it will increase the supply of SF  to stem the increase in value of SF...
> .. or to Japan where the govnt has warned that it cannot allow the Yen to increase in value.
> And a weak (or,rather, a deliberately weakened)currency hasnt exactly hurt the Chinese economy in the last decade.


Switzerland and Japan are constantly talking about weakening their currencies, and sporadically intervene in the FX market. But every time they do so the trend quickly reverses within days or weeks. If they were serious they would massively intervene and keep their fx rate below a certain level. It's all political talk.
And the renminbi has been appreciating, even against the Dollar that it is pegged to, albeit at a very slow pace that wouldn't be matched by the open market. Nevertheless, China would be much better off if it could massively cut its import costs for all the natural resources it so desperately needs. Any pressure to increase export prices would be offset by lower import prices of goods needed to produce the goods. The real cost of keeping its currency weak is also only starting to play out through the very significant price inflation numbers.





oldnick said:


> ... Once again please stop misquoting me. I never said that deposit flight is *the* problem. I said that it was *a *problem that,if it increases will not help Ireland recover.


OK, let me rephrase that, deposit flight is not a problem, it is a symptom of the underlying problem. I think we basically agree here, but I just think that the media and public opinion is focusing erroneously on deposit flight as a or the problem.




oldnick said:


> It is my view that, with limited domestic demand and being highly dependent on exports, Germany would not be able to sustain a currency much higher than currencies in the rest of Europe.





Sunny said:


> One of the great fallacies often thrown about is that the era of the DM was the glorious years of the German economy and everything has gone downhill since the Euro. It's rubbish.
> 
> Oldnick is right. If the Euro was to break up and the DM was re-introduced, Germany stands to lose as much as Ireland. It's export market that it is hugely dependent on would collapse completely considering 40% of it's exports go to Eurozone Countries who will all now have their own much weaker currencies. Their banks who hold a shed load of euro-denominated foreign debt would face huge losses as these bonds were re-denominated into local currencies. Not even going to go down the list of all the other problems...


There was a very interesting article in the German Wirtschafts Woche that completely contradicts the idea that Germany made bigger export gains after the introduction of the Euro. (http://www.wiwo.de/politik-weltwirtschaft/die-lebensluegen-des-euro-475574/8/)
You can run it through google translate to get the full text, but here is the important part:
- after the introduction of the Euro, Euro zone exports grew by 5.2% per year
- at the same time exports to non Euro zone countries grew by 7% per year
- from 2000 to 2010 GNP grew by 1.1% annually
- from 1990 to 1999 GNP grew by 2.3% annually

Germany was doing better before the Euro, and after the introduction of the Euro it's exports grew more outside the Euro zone than inside.




Sunny said:


> This isn't just about a strong versus weak currency argument. That ship has sailed. The Countries in the Euro are all in this together. There is no painless get out clause for any Country whether that be Greece or Germany. The sooner the politicians realise that the better. We are not heading for the breakup of the Euro. We are heading to the issuance of Eurobonds and fiscal union. It's ironic that Germany went to war to try and rule Europe when all they had to do was create the Euro!


I agree that there is no painless outcome or solution and that politicians need to wake up to this, but as horusd has already pointed out one of the German state supreme courts has already made it clear that a Eurobond would not be constitutional and there are two hopes in a constitutional amendment.
Modern Germany also never wanted to rule Europe through economic and monetary strength, it simply behaved in a fiscally and monetary sound fashion and other countries were quickly exposed by the markets for doing the opposite.


----------



## Sunny (6 Aug 2011)

Yes because I was serious about Germany wanting to rule Europe..... For every paper that shows Germany has lost out with the introduction if the euro, I can show you one that shows it has benefited hugely. I do a lot of investment in Germany for my company. Ask the manufacturers in Germany what they think and believe me, they all want the euro. Unfortunately the German public are tiring of the project. 

Everything Germany does is constitutionally challenged including the various bailouts which were illegal fiscal transfers in all but name. Germany are already allowing the rescue funds to leverage off their rating. It's not a big step to Eurobonds especially since bailing out italy would be a lot more expensive. The only question is what Europe will look like in the future. Won't happen overnight but it is where we are heading. Not to the breakup of the Euro.


----------



## Chris (7 Aug 2011)

Sunny said:


> Yes because I was serious about Germany wanting to rule Europe..... For every paper that shows Germany has lost out with the introduction if the euro, I can show you one that shows it has benefited hugely. I do a lot of investment in Germany for my company. Ask the manufacturers in Germany what they think and believe me, they all want the euro. Unfortunately the German public are tiring of the project.


Yes, but the numbers speak for themselves, the German economy was performing better before the Euro than after.
Big business in Germany is in favor of the Euro, as they are the biggest beneficiaries, after banks, of an inflationary monetary policy. But ask small and medium size companies, and you will find a very different opinion which is more aligned to that of the public. My family has several small and medium size businesses in Germany and every one of them say that the Euro has not worked out well for them and that business was a lot more stable with the DM.



Sunny said:


> Everything Germany does is constitutionally challenged including the various bailouts which were illegal fiscal transfers in all but name. Germany are already allowing the rescue funds to leverage off their rating. It's not a big step to Eurobonds especially since bailing out italy would be a lot more expensive. The only question is what Europe will look like in the future. Won't happen overnight but it is where we are heading. Not to the breakup of the Euro.


I agree, and it is the way it should be. The problem is that the bailout and especially an official Eurobond have already been commented by the Bundesverfassungsgericht as dubious. They refused to dismiss the case last months and there will now be an official hearing. The interesting thing is that when the introduction of the Euro was challenged in the 90s, the court said that the fact that there was a no bailout clause in the TFEU (I think it is article 125) meant that the Euro would be constitutional. It is now faced with a huge dilemma of credibility of its own rulings.


----------



## oldnick (7 Aug 2011)

I've just seen the statistics about exports to euroland and noneuroland -and actually I think they back up my argument that if the Germans were to have a currency worth say 20-30% more than the PIGGSEuro then this would badly affect the German export market .

German exports in the last decade did indeed rise more rapidly to noneuroland than to euroland. But this was due to the ever expanding market in the BRIC countries, overwhelmingly China. I suspect that whether or not the euro was created it would not have made any difference in the last decade -German exports would have boomed to those new markets.

But what will happen if  suddenly the German new euro were 30% dearer than the Piigs euro ? forget the export market to Europe - what about exports to China and other new markets?

Naturally, Germany produces many fine products that can't be matched by Piggs and the Chinese will always want them. But if there is any trouble or slowdown in this vital market then an increase in german prices will surely have a detrimental effect ?

Furthermore,whilst german labour costs per unit have been amongst the lowest in Europe is it not possible that -if they succeed - austerity measures,improved efficiency in the Piggs will decrease the gap in labour cost per unit -regardless of the new higher priced DM.

So, I reaffirm my belief that a higher priced DM v Piigseuro will not be in German intrests and if the euro were to split the  the eventual difference in value will be minimal.

P.S. figures showing an annual percentage increase in GNP mean little per se. If one goes from 5 to 10 to 20 this shows an increase each year of 100% . If in the fourth year the figure is 35 this shows an increase of "only" 75%  -GNP growth has fallen in percentage terms !

Anyway these are academic arguments and current events may prove all of us wrong.


----------



## bryanod (8 Aug 2011)

Chris said:


> .
> You can run it through google translate to get the full text, but here is the important part:
> - after the introduction of the Euro, Euro zone exports grew by 5.2% per year
> - at the same time exports to non Euro zone countries grew by 7% per year
> ...


 
Anyone have these figures for the U.S. and want to specualte why the Euro may have affected them?


----------

