Posted on 03/09/2008 9:57:57 PM PDT by ScaniaBoy
with stefan10
doh...
Might as well be two lifetimes. We aren't even looking ahead to next month.
Demand for bonds leads to a decrease in interest rates. U.S. treasury rates aren't low because no one wants them.
Fed rates are interbank short term. Look at 10yr and 30 yr. treasuries! Someone likes them. Why? Because, in the long run, the U.S.A. has stability and if you are lucky enough to have some euros, you can buy a lot of treasuries for a few euros.
yitbos
Stefan,
I don't know if you cared to read the article or if you just switched off when you saw it was from the DT. If you had read the first few lines you would have noted that Mr Evans-Pritchard referred to a report by the Swiss bank UBS. Further down he quoted the ECB chairman J-C Trichet. But why bother, we know that none of these people can hold a candle against the wisdom of Stefan 10.
But tell me, do you agree that all the southern countries have lost competitiveness against Germany, year after year for a decade? I think an answer to that question would clear up a lot of things.
Italy/greece
italy has always been and it seems it will always be a financial disaster. They have these problems for decades. The question is what could they gain if they leave the Euro with a 100%+ debt and still deficits to come. Somebody should imagine the spread they would have to pay for italian bonds outside of the euro zone. They would be forced to finance these bonds in euros anyway. Who should buy Lira bonds at which price with a existing devaluation pressure the article based his argumentation on? If there are any italian politicians with a clear mind left they should thank god that they were allowed to enter the euro zone.
Greece more or less the same example. They were even willing to produce fake budgets and deficit numbers to enter the Eurozone. Someone should take some minutes and think about the question why they were willing to do that?
Spain a complete different case. Still high economic growth number 4% last year. There are not many countries that benefits so much form the EU than spain. They suffer now mor eor less the sam problems we could see within the USA or the UK. Sure if you run a current account deficit you need foreign investments. It is also true that you must pay higher rates if you do not get enough investments. But also here where would be the benefit if Spain leaves the euro? The argument of the bond spread is strange. Perhabs if someone believes in the concept of: devaluation brings higher exports and lower imports and so a better current account situation but we all know italy tried that concept for decades and i can not see that the result is positiv but it´s just me. But with a devaluation pressure you would also have to pay higher yields or publish your bonds in euros.
my problem with the telegraph is that they always try to connect (mainly true) economic facts with their political agenda but they shoud at least explain where they see the connection and how should it work and why. How many articles about the doomed euro have you read in this newspaper with ho wmany different reasons. They should better ask why the euro is still there and where the benefits might be. Perhaps they will have to realize that it would be a very good idea to join the euro.
If someone has political reasons like national pride or thinks like that it is fine for me. It is a political decision in the end but not always this pseudo economic arguments without explanation.
The other EU countries lost competitiveness against germany mainly because they had higher wage increases and germany had very hard years of some political reforms but mainly economic changes. It is true that we get better here every year while our main competitors lose ground. As written above devaluation a a currency (an that´s what we talk about) is no solution for competitive problems. We have enough examples here.
Someone can say we made our homework others will say we pay for our export numbers and our competitiveness with still decreasing consumption numbers (in real numbers) and a high saving rate. The upcoming years will hopefully bring the benefits for the german economy in terms of increasing consumption spending. We are the other extreme example compared to the US or maybe Spain and not really better.
Yeah Sweden is a peach.
Why don’t you just move over there.
There is a real nice town that loves immigrants.
I think the name is Malmo.
You’ll have a blast!
My FRiend, any country that keeps her women tall, blonde and leggy is a fine by me, and one I would happily move to!
What will the effect be on countries that lose their competitiveness year after year, and are not able to devalue themselves out of their bad positions?
Well, either they go through an “iron bath”, very much like the Germans did, or they have to leave the eurozone.
Will countries like Italy and Spain be able to maintain their democracy and still carry out the necessary economic reforms? Are there a risk that in a catastrophic situation they will rather leave the euro than risk their democracy?
It is questions like these that long-term investors must ask themselves, and it is the answers that make the spread between the German and Italian 10-year bonds widen, and eventually will make US bonds a much safer bet.
Note that UBS thought the risk of a break-up was small - but they did not see it as insignificant or impossible.
If I remember correctly the BUBA did initially not want to have Italy and other ClubMed countries in the euro. However, the German bankers were forced to accept the decision of their politicians and the problems this caused is what we have to live with now. (I mean we haven't even begun to discuss the position of Greece.)
In that case Malmö is probably not the place for you....
The EU is a mess
the Euro is nothing but a political stunt - there is still waayyy too much disunity and general differences between all the member nation states for a common currency to work.
Not Malmo hey? Stockholm then!
I have always said that joining the Euro or even the EU is mainly a political decision where economic reasons might play a important role. I absolutely understand countries that want to keep their currency as a symbol of national pride or whatever. Every country every society and every individual has a different perspective and view and within a democracy the majority decides.
“What will the effect be on countries that lose their competitiveness year after year, and are not able to devalue themselves out of their bad positions?”
Again The answer to longterm economic problems can not be short term solutions like a devaluation of a currency. it does not work in the long run. They have to address the real problems. These problems are different and need different answers. Again Italy and in many ways also France tried that for decades.
Well, either they go through an “iron bath”, very much like the Germans did, or they have to leave the eurozone.
I can not see which of the southern countries should benefit from leaving the euro because of the reasons i described.
It is questions like these that longterm investors must ask themselves, and it is the answers that make the spread between the German and Italian 10-year bonds widen, and eventually will make US bonds a much safer bet.
safer bet for whom? The rates in the us will decrease further while the ECB shows no signs of action here. Not to talk about the US current account situation. The devaluation pressure on the dollar is still there and alive. I would not invest a single euro in Us bonds (i would not invest in state bonds at all) because of so many reasons. I personally have no investments with currency risks at the moment because i am not sure about the future developments.
Note that UBS thought the risk of a break-up was small - but they did not see it as insignificant or impossible.
Which country should leave and why? because of the problems mentioned in the article? Someone should think about the consequences.
“f I remember correctly the BUBA did initially not want to have Italy and other ClubMed countries in the euro. However, the German bankers were forced to accept the decision of their politicians and the problems this caused is what we have to live with now. (I mean we haven't even begun to discuss the position of Greece.)”
WE have and had different financial and currency traditions in europe. The bUBa had a very powerful and independent role in germany and germany as a nation benefit from that and hopefully the ECB will follow this example. My views and opinions are typical german. If you read for examples comments of french politicians you will see the difference.
If you look at the italian numbers the answer is very easy. Sure it was a political decission because italy is a founding member of the EU and greece cheated their way into the Euro but the mastricht rules are not really based on economic laws. They are more guidelines for politicians to show the way as long they are following this road there is no problem.
Sweden is on the road to having none of those very nice things and whatever is left will be under a burka.
You are fairly clueless about the country you tout as such a utopian paradise.
The grass is always greener when it looks like someone else is responsible for paying for it.
Please use HTML!
That last post looked like you were arguing with yourself.
I couldn’t be ar$ed making a serious argument for the pro’s and con’s as to Swedens social program. I was attempting to being some levity to the thread, but you dont seem to have a sense of humour, or want one for that matter.
I would argue that it is you who is fairly clueless about the country you are happy to slander, without knowing any of the politics, social issues etc. All you know is what you read and watch on Fox, CNN and the like. Imagine how Chinese State TV views you Yanks? Probably not all that well, but that doesn’t mean its true does it? Quid pro quo.
I would argue that you are fairly clueless as to my background, education and work life, so leave your slanderous insults at the door.
This I got from Wiki, have a look, or dont for that matter, I dont care...
...”While similar in form to other governments in Western Europe, the Swedish state is among the most active in the scope of government services provided. These include tax-funded childcare, parental leave, a ceiling on health care costs, tax-funded education (all levels up to, and including university), retirement pensions, tax-funded dental care up to 20 years of age and sick leave (partly paid by the employer). Parents are entitled to a total of 480 days partly paid leave between birth and the child’s eighth birthday, with 60 days reserved specifically for each parent, in effect providing the father with two so-called “daddy-months”. The ceiling on health care costs makes it easier, relative to other nations, for Swedish workers to take time off for medical reasons.” (Wikipedia. 2008)
(Tax at 47%)
its a stronger currency than the dollar, so what does that say about you lot?
;)
“Sweden is on the road to having none of those very nice things and whatever is left will be under a burka.”
You speak utter S Tripe man! But thats cool, more beauties for the rest of us who can appreciate a decent country when we see one, and dont build our walls higher screaming for the evil foreigners to go away!
You’re more than welcome to all those US women, who in a recent study over 25% of them were found to have some form of STD!!!! And higher in some places too!!
Hahahaha! Enjoy! Try not to get the clap!!!
“its a stronger currency than the dollar, so what does that say about you lot?”
apples and oranges my friend
US currency has purely economic issues responsible for its problems but it is a currency that is part of one nation. The EU has a common currency for different nation states without the same political cohesion as the US. Also there are vastly different economic policies from member to member making a common currency that much more difficult to maintain. Again long term i see problems for this currency. Which is not to say the dollar doesnt have its own problems just different and probably less problematic in the long term.
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