rtg24

On Europe's future

24 posts in this topic

I don't know. This seems a bit over-optimistic to me. I can tell you that in France, the politicians and the media are on the same page: the Euro is "under attack" from "speculators" and what Europe means is "financial integration", which in the local context means that European countries should adopt social policies on par with France's. The Germans are blamed for largely causing the crisis threw their exports. It's insane.

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And instead of tossing Greece out, the talk is of the possibility of the German people voting in a government that will pull them out of the Euro.

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And instead of tossing Greece out, the talk is of the possibility of the German people voting in a government that will pull them out of the Euro.

First I hear anything about that. Can you point to an article or something? I'd be interested in reading about it.

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And instead of tossing Greece out, the talk is of the possibility of the German people voting in a government that will pull them out of the Euro.

First I hear anything about that. Can you point to an article or something? I'd be interested in reading about it.

Last night's Charlie Rose. The first interview was with one of the Financial Times editors.

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I don't know. This seems a bit over-optimistic to me.

I'll say. And both the US and EU had better get there act together given the rise of China and a lethargic but colossal India. (When oh when will we use the tax code as the lethal weapon that it is against statists?)

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I don't know. This seems a bit over-optimistic to me.

I'll say. And both the US and EU had better get there act together given the rise of China and a lethargic but colossal India. (When oh when will we use the tax code as the lethal weapon that it is against statists?)

Why see emerging markets as competition or "enemies"? A rising China is a good thing for the world over - see what a rising Japan did to global quality of life, both directly via superior goods, technology and additional investment in US businesses (and, unfortunately, government paper) and indirectly via the competitive spurt it forced American businesses to follow.

India's growth will be severely limited by the fact that it is completely controlled by a few very wealthy families. So they're sticking with the top-down system even if the entire country runs as a parallel economy. It's a bit sad for Indian businesses actually, since the large ones, blighted by corporatism typical of large corps in semi-socialist countries, are getting decimated by Koreans (most fridges sold in India are now LG) and the Chinese (who make things cheaper and more accurately).

A rising China is also not a military threat in an age where a. the United States has a clear, and many decades-long technological military superiority (only one F-117 was ever downed - a plane built in the 70s! - and only because a commander spent his life trying to do so) and b. the Chinese own most of their assets in US government paper (since there is no other market large enough to absorb the huge amounts of FX surpluses China is accumulating). In a way, China is interested in the US remaining strong; that is, unless it wants to wipe out a few trillion.

Anyway, let's see how Asia does in the current collapse. It is just a hunch but it seems their fiscal strength is ironically causing the sell-off (stronger currency = less exports).

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I don't know. This seems a bit over-optimistic to me.

I'll say. And both the US and EU had better get there act together given the rise of China and a lethargic but colossal India. (When oh when will we use the tax code as the lethal weapon that it is against statists?)

Why see emerging markets as competition [...]?

Because they most certainly are competition. And while increased competition is a good thing for everyone, so would actions that make the US and EU more able to respond to whatever will come from China and India.

A rising China is a good thing for the world over

Yes, the rise of China can be a good thing. But there is a powerful statist/collectivist thing there that's rooted in millennia's worth mysticism. One way to minimize that element, in China and the world over, would be for the US to take drastic measures with its tax code. (Things like eliminating the corporate tax, eliminating the personal tax on income over $500K, a flat tax, dropping the tax rate as capital gains rise, etc.)

see what a rising Japan did to global quality of life, both directly via superior goods, technology and additional investment in US businesses (and, unfortunately, government paper) and indirectly via the competitive spurt it forced American businesses to follow

Yes, examples of this sort of thing abound. Time to raise the bar again.

India's growth will be severely limited by the fact that it is completely controlled by a few very wealthy families. So they're sticking with the top-down system even if the entire country runs as a parallel economy. It's a bit sad for Indian businesses actually, since the large ones, blighted by corporatism typical of large corps in semi-socialist countries, are getting decimated by Koreans (most fridges sold in India are now LG) and the Chinese (who make things cheaper and more accurately).

The easily observed social structure of India aside: we're still talking about a massive nation. It wouldn't take much for India to reach the sort of critical mass that would allow them to start having massive impact on the world. And while it's clear that this sort of rise can greatly benefit people the world over, it can also further stall Western nations that have been slowing down for some time now.

A rising China is also not a military threat in an age where a. the United States has a clear, and many decades-long technological military superiority (only one F-117 was ever downed - a plane built in the 70s! - and only because a commander spent his life trying to do so)

Technological superiority isn't the only factor here.

And China's quickly growing military capacity doesn't have to reach the point where they can overwhelm the US for the geopolitical balance to shift, or for the US to need to spend disproportionately to maintain its edge or to keep up. (And how is it that we're so certain that the Pentagon will maintain that technological edge for decades?)

b. the Chinese own most of their assets in US government paper (since there is no other market large enough to absorb the huge amounts of FX surpluses China is accumulating). In a way, China is interested in the US remaining strong; that is, unless it wants to wipe out a few trillion.

That doesn't guarantee much, does it? History is packed with nations and individuals acting against their own interests. And the potential leverage that debt may give China over the US could be a problem in the longterm.

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The easily observed social structure of India aside: we're still talking about a massive nation. It wouldn't take much for India to reach the sort of critical mass that would allow them to start having massive impact on the world. And while it's clear that this sort of rise can greatly benefit people the world over, it can also further stall Western nations that have been slowing down for some time now.

That's what I initially thought, and why I moved to India and worked in corporate there for a while (Indian corporation). It convinced me of my current view - that India really does not matter anywhere near as much as China. They are paralyzed by their statist, almost European government that refuses to allow much foreign investment and to liberalise the economy some more. They think it would be "chaos" (I think they should walk through a North Mumbai street if they think there isn't any right now). The attitude really put me off India.

And China's quickly growing military capacity doesn't have to reach the point where they can overwhelm the US for the geopolitical balance to shift, or for the US to need to spend disproportionately to maintain its edge or to keep up. (And how is it that we're so certain that the Pentagon will maintain that technological edge for decades?)

The Chinese see their military as an asset in their version of capitalism, though. Whilst our forces waited by the side whilst Western ships got looted, the Chinese sent commando teams to Somalia and vowed to destroy any attempts at piracy. No Chinese ship seems to have had problems since. I think we have lessons to learn from the Chinese.

That doesn't guarantee much, does it? History is packed with nations and individuals acting against their own interests. And the potential leverage that debt may give China over the US could be a problem in the longterm.

To the first part, I have noticed that the Chinese are much better at acting in their own interest - at the detriment of others - than any other nation in the world, right now. They are literally scaling down socialism as much as they can afford, hanging anybody who has anything to do with corruption (this is a big difference with India where "property rights" are very loosely interpreted and police jobs are popular for the money you can make in bribes), etc. - it's improving much faster than any other emerging market (but I still think there is a bubble component to it).

To the second part... actually, it's been fairly positive. The only reason the US isn't wildly printing money is because Beijing has had a few heated talk with Washington. It's a massive, massive constraint of Obama's team's ability to print money and devalue the currency. That's bad for the Dems and good for you, the US citizen with savings :D

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The easily observed social structure of India aside: we're still talking about a massive nation. It wouldn't take much for India to reach the sort of critical mass that would allow them to start having massive impact on the world. And while it's clear that this sort of rise can greatly benefit people the world over, it can also further stall Western nations that have been slowing down for some time now.

That's what I initially thought, and why I moved to India and worked in corporate there for a while (Indian corporation). It convinced me of my current view - that India really does not matter anywhere near as much as China. They are paralyzed by their statist, almost European government that refuses to allow much foreign investment and to liberalise the economy some more. They think it would be "chaos" (I think they should walk through a North Mumbai street if they think there isn't any right now). The attitude really put me off India.

All the personal experience in the world can't change the easily observed fact that India is a massive nation that could limp its way to a position of influence relatively soon. And this doesn't address the main point, namely, that the West needs to reinvigorate itself.

The Chinese see their military as an asset in their version of capitalism, though.

This doesn't address my point. It also ignores the tendencies of statist-collectivists in general, China's support of N.Korea, the role China played in Pakistan's nuclear program and all that may follow from that, the harassment of US military assets, etc.

To the first part, I have noticed that the Chinese are much better at acting in their own interest - at the detriment of others - than any other nation in the world, right now.

What are you referring to here?

To the second part... actually, it's been fairly positive.

That it may have been positive so far doesn't reduce the potential for negative.

The only reason the US isn't wildly printing money is because Beijing has had a few heated talk with Washington.

How do we know this?

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If I heard Limbaugh correctly a few minutes ago, one of the terms the EU has set for Greece is that it privatize healthcare.

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All the personal experience in the world can't change the easily observed fact that India is a massive nation that could limp its way to a position of influence relatively soon. And this doesn't address the main point, namely, that the West needs to reinvigorate itself.

Yup, just making a side point. But I think the "India" bubble tends to be overhyped. The best Indians still flee to the US ASAP.

This doesn't address my point. It also ignores the tendencies of statist-collectivists in general, China's support of N.Korea, the role China played in Pakistan's nuclear program and all that may follow from that, the harassment of US military assets, etc.

All good points. I theorize these may be due to fundamental cognitive disfunction amongst the Chinese Communist Party, and should subside with time. Moreover, they are more about a display of force, and, similar to China's involvement in Somalia, a message that China does not hesitate when it comes to foreign policy (China's toughness, amongst other things, coupled with Obama's lack of skill reminiscent of Jimmy Carter in terms of foreign relations, have meant most US trips to China have obtained nothing for the US).

More worrying (to US interest) is China's colonization of Africa, and the enormous control it is gaining on many of the world's natural resources. But ultimately, much as I trust in the forces of capitalism to develop prosperity, I trust the Chinese mercantile mindset to avoid serious damage to its main customer.

What are you referring to here?

Too long and confuse to explain in detail. It is an impression I am building over years of reading. I'm not calling a directional bet on China yet, although my general impression is that they are selfish in a good way (i.e. not the USSR's).

That it may have been positive so far doesn't reduce the potential for negative.

How would it turn negative? In some ways, if anything, it is pressure the US can put on China...

How do we know this?

Heard of it about a year ago whilst following the renminbi vs. USD stories floating around markets. The Chinese have reason to be worried - every episode of hyperinflation has been a product not of pure monetary policy, but has come for fiscal reasons - that is, the country in question has decided to print money to pay off excessive interest. For example, Weimar Germany and the war reparations.

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If I heard Limbaugh correctly a few minutes ago, one of the terms the EU has set for Greece is that it privatize healthcare.

This would be quite funny if true, considering what EU member states consider ideal for healthcare.

No matter the terms, though, Greece is going to continue rioting, and will eventually default. This is the consensus on markets. Greek debt is no longer valued based on what it is worth, but how likely it is that there will be a buyer to get rid of it (hence inverted yield curve) and CDS is trading sky high.

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All good points.

They're more than that, in the sense that they should give serious pause to those who've decided that China isn't a potential threat in the midterm.

I theorize these may be due to fundamental cognitive disfunction amongst the Chinese Communist Party, and should subside with time.

Principle trumps theorization, right?

Moreover, they are more about a display of force, and, similar to China's involvement in Somalia, a message that China does not hesitate when it comes to foreign policy

You understand that this "display of force" has armed NKorea and Pakistan with nuclear weapons, right? You also understand that NKorea has shared all sorts of WMD tech with other dictatorships, and that Pakistan will be a potential problem for a long time to come?

How much more would you need to see before you decide that China is a problem?

it may have been positive so far doesn't reduce the potential for negative.

How would it turn negative? In some ways, if anything, it is pressure the US can put on China...

They could call in any part of it, at any time, for any reason.

How do we know this?
Heard of it about a year ago whilst following the renminbi vs. USD stories floating around markets. The Chinese have reason to be worried - every episode of hyperinflation has been a product not of pure monetary policy, but has come for fiscal reasons - that is, the country in question has decided to print money to pay off excessive interest. For example, Weimar Germany and the war reparations.

Have you heard, seen and/or read the reaction of Americans on this issue?

Personally, I can't wait to see when and how Bernanke is going to pull two to three trillion dollars out of the economy for that much talked about soft landing. Fly or flop, it should be historic.

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A New York Times piece has it that Obama helped talk Merkel into the trillion Euro package:

“He was trying to convey that he knew these were politically difficult steps that the leaders there had to take, that he had gone through them as well,” said one senior administration official familiar with the conversation. “And that, from his experience, trying to get out ahead as much as possible was the right way to go.”

That call was part of what a senior Treasury Department official called “one long conversation” with European leaders, who over an extraordinary weekend of late nights and early mornings overcame German resistance and agreed to a wholesale expansion of the bloc’s political and financial mission. Bending the rules, they backed the stability of all 16 countries that use the euro with loan guarantees adding up to nearly $1 trillion.

But the states that share the euro, which is controlled by the independent European Central Bank, do not share a single treasury, tax system or budgetary authority. The euro’s lack of coordinated financial backing had become excruciatingly evident after Greece admitted that its level of debt was much higher than previously reported, due to bad management and prevarication.

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What a ridiculous mess we're in.

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I left this out:

Washington was also ready to help, in a limited but crucial way. The Federal Reserve offered to swap euros for dollars, easing pressure on European central banks, which were bleeding dollars.

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A New York Times piece has it that Obama helped talk Merkel into

I prefer the term "coerce". Call a cat a cat as we say in France.

Disgusting. Not only are we in for another generation of debt-fuelled welfare (with tension increasing with every round), you guys are now (via the IMF) going to lose $50 billion (for now). Thankfully, Wall Street and Greenwich should bring much of that wealth - and hopefully more - straight back where it belongs, in US bank accounts, with their shorts of that whole mess.

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A New York Times piece has it that Obama helped talk Merkel into

I prefer the term "coerce". Call a cat a cat as we say in France.

Disgusting. Not only are we in for another generation of debt-fuelled welfare (with tension increasing with every round), you guys are now (via the IMF) going to lose $50 billion (for now). Thankfully, Wall Street and Greenwich should bring much of that wealth - and hopefully more - straight back where it belongs, in US bank accounts, with their shorts of that whole mess.

What would be His leverage?

Merkel not only arranged for Him to campaign for the Presidency of the USA in Berlin, but actually took the time to treat him as a head of state right before that much hyped appearance.

My guess would be that when push came to shove, Merkel and her advisors had nothing to fall back on "instinctively" (they're not much worse than almost all Western "leaders" in this regard. See what the Cowboy did with the contradictions offered to him by "experts" like Paulson.) I'd bet that what slight hesitation the German leadership may have experienced before agreeing to this postponement of the inevitable, quickly dissipated when they realized the geopolitical position Germany would likely be in in the short- to mid-term.

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Exactly. Obama has nothing on Merkel. The reason she (and Trichet) folded is because she had no solid philosophical underpinning for her political convictions. At the end, when push comes to shove, she's a pragmatic. Trichet and her will come to regret what they did.

(Arguably, Trichet's agreement to "monetize" the debt is a much bigger - and more dangerous - move.)

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If I heard Limbaugh correctly a few minutes ago, one of the terms the EU has set for Greece is that it privatize healthcare.

From RealClearMarkets.com:

Policy Failure: Greece was told that if it wanted a bailout, it needed to consider privatizing its government health care system. So tell us again why the U.S. is following Europe's welfare state model.

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