Timmy elsewhere

City AM:

The euro is the most absurd thing anyone has done to the European economy in modern times. Its death would be a blessing. If that causes the failure of the EU, so be it. A system which impoverishes so many in southern Europe should not survive anyway.

53 thoughts on “Timmy elsewhere”

  1. Interesting comparison in those two views. Tim talks about economics. Iain Anderson talks solely about politics.

  2. “A recent survey by the Bertelsmann Stiftung, a German foundation, showed that support for the EU in Italy has grown since the UK’s EU referendum”

    OK, everyone relax. There’s been a survey.

  3. Grown by a number equal to the arrived “refugees” no doubt.

    Do they know its Christmas?

    It seems they fucking do.

  4. Where is the evidence that the Italian economy would have grown any more outside the EU or euro?

    Oh.

    And Tim of all people supports the government (taxpayers) refinancing a host of failed companies? Companies that, under capitalism red in tooth and claw, would go bust to be replaced by more competent upstarts or competitors?

  5. Nothing to me illustrates the bogus nature of our claims to be European like our lack of interest in the damage the Euro has caused.

    Since the referendum I’ve since any number of perfectly intelligent people wrapping themselves in the EU flag while bleating about “stolen futures” and “economic vandalism”. But the Euro and its effects are things that happen to foreigners – like practically everything else that goes on in the EU.

  6. So Much For Subtlety

    Bloke in Germany – “Where is the evidence that the Italian economy would have grown any more outside the EU or euro? ”

    So you’re saying that if Italy had the power to devalue and did so, if it had the power to have a more appropriate interest rate, there is no reason to think that Italy would have had any extra economic growth?

  7. @SMFS,

    What would be a more appropriate interest rate? Presumably one lower than the -0.4% that we have been told for years is being kept artificially and insanely high for the benefit of Germany.

    And sure, you can devalue your way to “growth” in your devalued Lira, at least some of which is, admittedly, due to your exports getting cheaper. But your imports (the whole point of trade, as Tim always tells us) get more expensive. And at the end of the day, it just means your producers and government get a holiday from addressing the real problem – which is one of competitiveness. Italy’s major economic problem is its own government, and the lack of labour market flexibility because of the laws that government supports.

    Note that the euro is devaluing at the moment anyway (or seems to be). So problem solved.

  8. “Where is the evidence that the Italian economy would have grown any more outside the EU or euro?”

    So you think that Italy outside the euro would have had a stronger currency? Or you think a weaker currency would have provided no economic stimulus to their economy whatsoever? Despite the fact the Italian economy managed to grow during the lira years and has only hit the buffers since being trussed up in the euro straitjacket?

  9. “Note that the euro is devaluing at the moment anyway (or seems to be). So problem solved.”

    Not vs the deutschmark it isn’t.

  10. @Jim,

    Admittedly what the euro is doing is exposing how well run various countries’ economies are without the option to devalue against other Eurozone countries.

    Looked at from another angle, not being able to devalue means you don’t get to turn on the magic money tree, thus ripping off your investors, every time you run out. You instead have to deal with that problem some other way, ideally some more productive way. Greece and to some extent Italy have not yet learned that – whereas Ireland and to some extent Spain, have learned that.

    A solution of some sort is clearly needed for the debt trap that makes it difficult to do that, but there’s no reason that can’t be done (or is more expensive to do) within a currency union than outside it.

  11. “Looked at from another angle, not being able to devalue means you don’t get to turn on the magic money tree, thus ripping off your investors, every time you run out. You instead have to deal with that problem some other way, ideally some more productive way. Greece and to some extent Italy have not yet learned that – whereas Ireland and to some extent Spain, have learned that.”

    In others words – You Vill Obey Orders.

  12. @Jim,

    I don’t follow.

    You can’t indefinitely consume what you don’t produce – other than through taking it off other people. Serial devaluation is one such means of taking it off other people, and incidentally only became an option after 1974 anyway.

    I don’t understand why welfare opponents are so keen on this form of welfare.

  13. Is it not that the Italian’s would need to devalue if they had the Lira but that a floating Lira would be weaker than the euro they are currently forced to use?

  14. Wow, this thread’s just rife with central planning. My revolutionary take is that it’s impossible to say what value the Lira would have had under various hypothetical circumstances. Pretty sure it would have veered around all over the place over the years. Maybe the Italians would have introduced currency controls or a fixed exchange rate at some point. But whatever happened, the Italians would at least have had the option of allowing their currency to be appropriate to their economy, rather than having it forced to be appropriate to someone else’s.

  15. A recent survey by the Bertelsmann Stiftung, a German foundation, showed that support for the EU in Italy has grown since the UK’s EU referendum, and the number of people who wanted to leave has fallen.

    That’s funny, because fairly recent surveys showed that support for the EU in the UK had grown and the number of people who wanted to leave had fallen. Then we had the Referendum. Funny things, surveys.

  16. “I don’t follow”

    Its pretty obvious to all now that the euro is a device whereby the Germans gets a lower value currency than their economic performance would warrant, thereby allowing them to out compete their less efficient neighbours, unhindered by a rising currency, while the neighbours get a higher value currency than their economic performance warrants and thus condemns them to perpetual economic stagnation.

    Your argument appears to be ‘the rest of Europe should become like Germany, or suffer the consequences’. I seem to remember someone else had that idea 80 years ago, and its didn’t end well either.

  17. Alternatively, the EU could have imposed entry criteria, and limited the eurozone to qualifying nations.

    Excluded nations that wished to join would have to reform themselves in advance.

    This would also have avoided the possibility of having an interest rate that favoured some nations, but not others.

  18. @Jim,

    So you are advocating that other countries currencies should lose value against the DM perpetually? Or just a one-off adjustment?

    This really isn’t anything to do with nazis, as you can’t help insinuating any time anything remotely connected to Germany comes up – it’s actually the way the entire world economy worked between roughly the dawn of time and 1974. Italy fixed its Lire at 600 and change to the dollar until then.

    Was Italy economically destroyed by lack of competitiveness against the USA? Or was it boom time?

  19. Jack C,

    ‘Alternatively, the EU could have imposed entry criteria, and limited the eurozone to qualifying nations.’

    They did do that, then the countries that couldn’t get in were encouraged to use Goldman Sachs to play with the books until they looked good enough to join.

  20. “The euro is the most absurd thing anyone has done to the European economy in modern times.”

    Not the EU then?

    Europe does not have ‘an’ economy – it has 44, 28 of which in the EU, 19 in the Eurozone – that is the problem.

  21. BobRocket,
    No they didn’t “impose entry criteria”.

    Entry criteria started as a mandatory requirement, then got dropped sticking to them would have meant no euro.

    The fiddling that happened was just window-dressing.

  22. Big, are you really saying that the dawn of time was 1948, or whenever Bretton Woods happened? Before then, there were attempts to fix currencies against precious metals but exchange rates did tend to fluctuate rather more than you suggest. Perhaps if you look at how the UK emerged from the recession of the 1930s,you might get a clue. The pound got devalued.

  23. “This really isn’t anything to do with nazis, as you can’t help insinuating any time anything remotely connected to Germany comes up – it’s actually the way the entire world economy worked between roughly the dawn of time and 1974”

    The dawn of time being 1946 (when the Bretton Woods accord was implemented) then, as Diogenes points out? Bretton Woods lasted 25 years, then collapsed because the various members had diverged economically. Maybe Italy wasn’t diverging so much from its competitors then, it certainly is now. It was also a period that was not very instructive to compare with, as the vast majority of the world economy was rebuilding from the destruction of WW2, so growth was almost guaranteed – everything that could be made could be sold easily. Once the post war reconstruction had been completed, countries had to compete with each other more, and some did better than others, and strangely enough the fixed exchange rate system collapsed as a result.

    And while its not anything to do with nazis, its everything to do with the German obsession with controlling the rest of Europe – it tried militarily twice in the 20th century, it’s now trying economically in the 21st century. It won’t end any better.

  24. @Jim,

    Well the other view bandied around is that the euro was to tie Germany’s hands economically, and reduce it to a minority of a greater whole. It was the price for allowing reunification. But then septics have to live with quite a bit of cognitive dissonance as well.

    And let’s not forget the British obsession with controlling the entire world. Which it did pretty much achieve. Militarily and economically. What lessons for today should we draw from that period of history?

    Devaluing a currency is just a way to rip people off. To rip off anyone who is owed money in your currency, to rip off anyone contracted to supply stuff paid for in your currency.

    I do wonder why devaluation might ever be necessary in a free economy allowed to find its own prices. Its probably only necessary because of government interference, or to enable government interference.

  25. BiG

    Devaluing a currency is just a way to rip people off.

    Just? Yes, market devaluation of a currency has disadvantages as well as advantages. Among the advantages, it functions as a as a shock absorber in times of economic stress.

  26. “And let’s not forget the British obsession with controlling the entire world. Which it did pretty much achieve. Militarily and economically. What lessons for today should we draw from that period of history?”

    Rule one: Win. Rule two see Rule one. Rule three: Don’t invade Russia.

  27. Bloke in North Dorset

    Jim,

    “And while its not anything to do with nazis, its everything to do with the German obsession with controlling the rest of Europe – it tried militarily twice in the 20th century, it’s now trying economically in the 21st century. It won’t end any better.”

    I’m not there’s equivalence there. This time round European countries fell over themselves to abide by rules that Germany had set and was quite clear they wouldn’t bend. Maybe the other countries thought they could use moral blackmail when the enevitable happened, but Germany is having none of it.

  28. BIG On the contrary, trying to maintain a currency at too high a parity can have calamitous effects – look at the economy of the UK in the 1920s after resumption of the Gold Standard at a bad rate. And then see what happened when the pound was left to find its own rate in the markets.

    You might also care to reflect on the impact on the former DDR of replacing their currency with the Deutsche Mark at an over-valued rate.

  29. Life is about experience and relationships.

    Having had the misfortune to live in Germany for 3 years and the good fortune to live in other countries, although not Italy, I can say that the quality of life in Germany (based on my limited experience) is shite and no economic prosperity could compensate me for that

  30. BiG

    And let’s not forget the British obsession with controlling the entire world.

    Obsession? There was no coherent plan of imperial domination. It just happened – because Britain was the most advanced and dynamic economy, and favoured by luck and chance.

    Which it did pretty much achieve. Militarily and economically.

    Certainly, Britain was the dominant economic and military power in the 19thC. But Britain did not rule the world.

    What lessons for today should we draw from that period of history?

    The legacy of the British Empire is overall hugely positive, whatever the Marxians and libtards say. The mother country created and fostered four important democracies — Canada, Australia, NZ and the USA. Britain left a legacy of democracy and the rule of law in India – and perhaps less successfully in Africa. (Unfortunately, the genetic inheritance of violence- inclining genes is a problem in Africa.)

  31. PF:

    Britain/England created and fostered the early eastern seaboard American colonies, and then bequeathed them the legacy of the rule of law and the democracy. Whatever happened subsequently, the USA would not be the state it is without the anglo-saxon cultural input.

  32. “And let’s not forget the British obsession with controlling the entire world.” There was no such policy, with the exception of the obsession of abolishing the slave trade for everyone else too.

  33. BiG:So you are advocating that other countries currencies should lose value against the DM perpetually? Or just a one-off adjustment?

    Hmm. In the late 50’s there were approximately 12DM to the £ and that dwindled to about 5 in the 70s dipping to less than 3 when the € was born. The marvel is that German industry remained competetive in international markets despite this.

    The Peseta, Lira, Drachma weren’t tradeable in quantity or in forward markets with the volumes being thin, domestic credit limited and the underlying economies weak and less politically stable.

    So the Euro was a cocktail of folly from the off.

    BiND:This time round European countries fell over themselves to abide by rules that Germany had set and was quite clear they wouldn’t bend.

    Not entirely, in fact the Germans started breaking the Euro’s GSP rules along with the French and the others followed suit when they noticed there were no sanctions.

  34. Bloke in North Dorset

    TMB,

    Yes, Germany should be spending more according to the rules. But even if it did that ain’t gonna rescue the Euro because the German menality is mercantilist and they’ll spend it n themselves.

    A German panzer battalion commander first explained it to me in the ’80s, if a German is given a choice they will pay more for German goods of inferior quality, but they don’t do inferior quality. I’ve heard that since.

    Perhaps BiG is having a different experience.

  35. BiND: I’m not sure that we’re talking about the same thing here. Germany exceeded the 3% rule in 2002 and that set a precedent that others have merrily followed.

  36. The mother country created and fostered … the USA.

    I’m sure that the successful birthing of a Democratic Republic was at the top of Gen. Cornwalllis’ mind that final day at Yorktown.

  37. So Much For Subtlety

    Bloke in Germany – “Well the other view bandied around is that the euro was to tie Germany’s hands economically, and reduce it to a minority of a greater whole. It was the price for allowing reunification. But then septics have to live with quite a bit of cognitive dissonance as well.”

    Well yes but Stupid Policy A does not rule out Stupid Policy B does it?

    “What lessons for today should we draw from that period of history?”

    The world is better off when British liberals rule?

    “Devaluing a currency is just a way to rip people off. To rip off anyone who is owed money in your currency, to rip off anyone contracted to supply stuff paid for in your currency.”

    Indeed it is. But that is besides the point. The Italians are where they are. They would be better off if they were not where they are. But they are. We can’t simply say they would be better off starting from somewhere else. The only question is how to get them out of the problem they are in. The Euro is not helping. The ERM was, at least, better as it gave them their own interest rate.

    Now a devaluation would rip everyone off. But the present policy is making everyone suffer too. The world would be a better place without devaluation (and if Germany had won WW1 but that is beside the point). The point is that if the Italians had their own currency and they devalued, they would restore economic growth. Everyone would be a bit poorer, but the economy would be moving again. As a short term fix it is definitely a fix.

  38. SMFS

    When BiG says: Well the other view bandied around…

    he is of course distancing himself from the next bit

    is that the euro was to tie Germany’s hands economically, and reduce it to a minority of a greater whole.

    which is nonsense, whereas:

    It was the price for allowing reunification.

    is fair enough if you replace the word “Mitterand” for “the” to give you:

    It was Mitterand’s price for allowing reunification.

    Es tut mir Leid, Großer, aber du hast wirklich keine Ahnung…

  39. So Much For Subtlety

    The Meissen Bison – “Es tut mir Leid, Großer, aber du hast wirklich keine Ahnung…”

    Mitterand is a moral blot on the landscape of the world. A standing condemnation of the moral and intellectual bankruptcy of the French.

    However I think I am still safe in saying that the stupidities of one policy do not excuse the inevitable consequences of those stupidities. That the French had a stupid policy and the Germans were willing to pay France’s price does not mean that it was a good idea.

    The European problem has been Germany grew too big and too successful. Everything since Bismark has been a failed attempt to prevent Germany exercising the sort of power in Europe it deserves. It would have been much better simply to accommodate the Germans back in 1914. Preferably at French expense. We are still fighting this same stupid battle. It is nuts. Cheaper to give Germany Morocco.

  40. Smfs, it is not the done thing to remind us of anomalous Spanish enclaves in Morocco, while concealing the cankerous growth that is Gibraltar

  41. So Much For Subtlety

    Diogenes – “Does sauerkraut grow in Algeria?”

    No idea. Does it matter?

    Diogenes – “it is not the done thing to remind us of anomalous Spanish enclaves in Morocco, while concealing the cankerous growth that is Gibraltar”

    I didn’t. Google SMS Panther.

  42. SMFS – the bit in German was addressed to the Bloke in Germany, of course, and though it’s me who has the German passport, I’m assuming he has some of the language…

    Also, I think that the imperative for Helmut Kohl – the reunification of Germany – was simply too strong even if the Bundesbank thought that the Euro was misconceived. Hard to disagree with your assessment of Mitterand, of course, though Gorbachev was also pushing for a united Germany that would be subsumed into a larger whole.

    BiND – thank you. The bending and disregarding of the rules goes back to the dawn of the Euro and given that it’s often the little southerners who are castigated, it’s worth emphasising that it’s the big countries that set them the example in the first place.

  43. Something I don’t understand about the EZ is this: when a currency is pegged to another ( e.g. Danish Crown to the Euro ) then the central bank has to keep selling reserves, or buying in currency to maintain the peg, and this would be ok if the buying and selling are broadly equal. It goes awry when there is sustained pressure one way, and the Central Bank gives up the peg as they are running out or acquiring too much. Taxpayers lose out as it’s their money that’s been spunked at below market prices, as well as paying salaries of the government officials involved.
    But when two regions have the same currency, and the peg is 1:1, what is the equivalent process when there is sustained pressure in one direction?

  44. Smfs, without googling, I assume you are referring to Germany’s failed attempt at gunboat diplomacy. But my point was that the EU allows loyal states to undermine anomalous territories such as Gibraltar while allowing pseudo nations such as Spain to keep hold of tracts of Africa and also enclaves that should belong to France, such as the Aran Valley etc, that crept through because of linguistic ambiguities.

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