Free Republic

First lesson of capitalism: Markets eventually end inefficient processes.

Tax break on equipment expired at the end of december. It may explain it.

Manufacturing is actually the only bright spot in US economy, with both exports and orders at record level: +40% and +45% in two years. But in such heavily consumption-driven economy, manufacturing still represents a small part. Americans are top exporters of industrial machinery, agricultural and construction equipment, medical equipment, semiconductors... Even the auto industry is back on its feet, with huge foreign investments like BMW in SC. And what about aerospace? About 1000 US-Made commercial airplanes, bizjets and civil helicopters are exported each year. And nearly half of all jet engines worldwide are built in America. Truly something to feel proud of.

Iran is an important partner for Russia. For example, a huge order for their new superjet aircraft. Iran, Venezuela and others are strategic potential customers for a resurgent russian industry. Russia has to protect its market.

“I will go to sea with the Scandanavians, the Dutch, and the English as well as the Americans.

The Italians and the Greeks? NO WAY!”

You must be very careful then, because 40% of cruise ships and 42% of large yachts in whole the world are built in Italy.

Sanctions hurt regular innocent people, and make dictatorships stronger against a foreign enemy. It´s always the same story. Starving women and children for 10 years in Iraq did not remove Saddam. Do you know that there are 75 million HUMAN BEINGS living in Iran??

Anyway, keep making wars and go bankrupt. Your choice.

I like Ron Paul because of foreign policy views. His economic and social views are too idealistic.

This kind of insulting statements (”retarded socialist brothers to the south”) are openly promoted by the anglo media. I wonder if this is the last kind of racism allowed.

Just for the record. Italy is a major EU net payer. They pay between 4 and 5 net billion euros to Brussels each year. Italians have never got a net cent from Germany. And Spain will become a net payer soon too.

“Austerity measures are still needed throughout Europe’s socialized economy and the debt contagion has not been stopped”

Oh please, they should stop lecturing us!! USA and UK are runing 10% budget deficits. The US budget deficit in one year is worth 50% of total german public debt. Even a struggling country like Italy is on its way to balance the budget in 2012 or 2013.

The crucial difference is the role of central banks. The ECB is not a lender of last resort for governments. While the Fed, BoE and BoJ own a significant percentage of the public debt.

The communist party (whose leader openly defends Stalin) will take adventage if Putin/Medvedev lose power. It doesn´t matter if many of their voters are not communist: they want the Soviet Union back and a single party dictatorship. The other alternative is the anti-american racist clown Zhirinovsky.

By the way, 20,000-25,000 protesters are not many in such a big city.

Exactly. The german government is the european Tea Party. The only ones who don´t want to get out of this crisis printing paper.

Germany passed a constitutional balanced budget amendment in 2009, in the worst moment of the crisis. They will balance the budget in 2012. Believe it or not, it was a socialist government who cut the corporate tax rate from 60 to 30% in 10 years (with a federal tax rate as low as 15%). It was a socialist government who cut from 45 to 42% the top tax rate on personal income. And it was a socialist government who passed the most radical welfare and labor reform (in the sense of more autonomy for companies) in recent german history.

Germany radically opposes that the European Central Banks becomes another Fed or BoE massively printing and monetizing public debt. Germany says that such intervention creates a moral hazard and hides the true structural causes of the crisis: too much debt (both private and public) and the lack of reforms.

They´re 100% right. And they´re truly admirable. But its time to admit that most Europe cannot follow them.

The Euro was designed to remove the monetary autonomy of german competitors. Giving german exporters (the heart of the german economy) a weaker stable new currency without the exchange risk.

UK has a gigantic total debt as a share of GDP. If they were deprived of monetary auonomy or its financial sector was heavily regulated, they would be in worse shape than Ireland, Spain and Italy.

There is no doubt between the german and the british model. The german way is far superior: they´re the last true anti-keynesian nation. But the rest of the Eurozone cannot afford those german monetary and fiscal rigor. If confidence is not back in markets we are moving into a deadly spiral of recession and cuts in Europe.

Don´t go so fast. If the Eurozone is in this trouble is because its central bank is NOT able to directly purchase government bonds like the Fed, BoE and BoJ do. The ECB was created on german anti-keynesian principles.

USA can afford a 10% budget deficit thanks to its central bank. Japan can afford a public debt of 200% thanks to its central bank. UK can afford a gigantic private debt thanks to its central bank. If those three countries were deprived of monetary autonomy, they would be in worse shape than Italy and Spain.

The Eurozone is apparenty in worse shape because the ECB is the only major central bank in the world that is not a lender of last resort for the government. And individual member states cannot devalue the currency by their own like they did in the 1990s. Of course the so called “markets” would be happy if the ECB behaved like the Fed.

It explains why Italy is on the verge of collapse with a 3.5% budget deficit, while USA runs a 10% deficit a year with no major consequences.

The post-WW2 italian political crisis is at least 50 years old: a different government each year, with no real alternation (since the largest left-wing party was communist: mainstream parties corruption was publicly uncovered only after the fall of Berlin Wall). I hope this will change. One of the reasons of Berlusconi being voted was that he brought something similar to a two-party system.

In any case, even if italian risk drops, the financial crisis will go on. They would likely target Portugal or Ireland again, or Spain (22% unemployed) or add a new country like Belgium, which suffers from some “italian” issues (regional dualism, high public debt, political instability).

Several things that many people seems to ignore about Italy:

1) A founding member of the european community.

2) A net EU net payer (unlike the other “PIIGS”). They pay net 5 billion euros to Brussels every year. In a period of 6 years, each italian pays net 780 euros to Brussels (each frenchman pays net 800 euros; each german pays 1200).

3) The second european exporter of manufactured goods (excluding energy and raw materials), ahead of France and UK and only behind Germany. The province of Turin exports more than Greece.

4) Unemployment rate of 5% in the centre and northern regions.

5) Their international investment net debtor position is around 25% of GDP. Much better than the 90-100% in Greece. Portugal, Spain and Ireland.

6) Private debt is sustainable. The public debt is an old issue: it´s above 100% of GDP since the 1980s. A consequence of many years of consecutive budget deficits around 10%, from 1981 to 1993 (sounds familiar??)

7) There are no objective arguments to explain this brutal speculative attack against Italy. Other than the weakness of the government and distrust on Silvio Berlusconi. Once president Napolitano appoints a technical government led by Mario Monti (endorsed by Brussels and Germany) the italian risk will decrease drastically. It´s a matter of 10 days.

In first place, since every italian pays net 800 euros to Brussels, so they have never got a net cent from Germany. Second, Germany will not leave the Euro because a new Deutsche Mark would gain value quickly hurting their export-oriented economy, like it happened in the 1990s. The german industry cheered the Euro a decade ago because it ended the possibility for other european countries to play with currency value in order to win competitiveness. On the other hand, if a “PIIGS” country leaves the Euro it would cause a massive devaluation of that country assets in major european banks. So this European Union will do anything to save the Euro. Forget about any country seceding.

Both Spain and Italy are increasing government revenues and improving budget deficit forecasts this year. Italy (whose public debt issue comes from the 1980s) will end 2011 with a budget deficit close to 3.5%. While Greece is not able to put its deficit under control. I´m sick to see how the media puts all these countries together in the same category. I´m sick of the racist acronym PIGS or Club Med. They are all struggling countries, of course, but very different. There are single italian and spanish provinces that export more than Greece or Portugal.

It´s not fair to call them social democrats: Zakaria and other MSM liberals are beyond socialism. No civilized country has a 50 percent rate. Even Sweden abolished the inheritance tax six years ago.