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  • Panic money-printing won’t save the eurozone

    From telegraph.co.uk

    The dramas on the global markets were sparked by problems created in Europe’s single currency bloc , explains Liam Halligan, but big-time euro-QE is not the answer. 'It sounds far-fetched, I know,” I wrote in this column in December 2007. “But the ultimate victim of this subprime crisis could be nothing less than the single currency’s existence”. Reading it today, the above statement seems pretty reasonable. Many mainstream analysts now recognise the huge stresses imposed by the ongoing credit crunch could yet see monetary union break up, with at least one country leaving. To argue otherwise, certainly in ... (full story)

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  • Edited at 3:29pm Oct 18, 2014 3:16pm | Edited at 3:29pm
Looks like the Keynesian thinking is failing worldwide, we need to be more hawkish not dovish, raise interest rates so that medium and small companies could have good investments, and the prices have to go down to be more accessible to the general public. Fueling stock bubbles and real estate bubbles obviously won't help jackass, it will only create credit card and loan defaults, and people have no jobs to pay the damn loan (10% unemployment).
People have to stop borrowing and start saving money.Also a fiscal reform would be nice too, especially lowering the VAT.
I mean 20-25% VAT in the EU vs only 5% in Hong-Kong, WTF, insane, and you expect economic growth in these conditions?
"won’t save the eurozone" they should say the governments, is hard without growth, without people stupidly borrowing so they could pay TVA and other taxes, now you need to come up with smart politics and reforms.

In EU if every government cuts the social stuff by 15% their problems will be solved but then who is gonna vote them anymore.
Quoting spike00spieg
"won’t save the eurozone" they should say the governments, is hard without growth, without people stupidly borrowing so they could pay TVA and other taxes, now you need to come up with smart politics and reforms.

In EU if every government cuts the social stuff by 15% their problems will be solved but then who is gonna vote them anymore.
I agree with you that social aids should be cut to some degree, and yes it is a question of political will, its easier to get votes if you promise free stuff for the people and for the elderly especially, since they go voting more often than the young ones.

But look at this, the VAT is the most useless tax ever, it is only meant to keep prices higher, thus making the consumer poorer, and the tax that the govt levies from VAT goes into useless programs which wont make the people more prosperous.

I think if all goverments would completely abolish the VAT and the customs tariffs/fees, the international commerce & the consumer spending would become much better, and also poverty would shrink really fast.
Quoting spike00spieg
In EU if every government cuts the social stuff by 15% their problems will be solved but then who is gonna vote them anymore.

EU is unsolvable. As everyone is public servant, you are talking 15% increase in unemployment. Cant do as you have revolution in 1 month.

Problem eu is it is losing market share for anything, yet people expect their living standards to remain/improve.

cant be. too many lazy Indians live there.
Quoting seaman2
EU is unsolvable. As everyone is public servant, you are talking 15% increase in unemployment. Cant do as you have revolution in 1 month.

Problem eu is it is losing market share for anything, yet people expect their living standards to remain/improve.

cant be. too many lazy Indians live there.
No he is talking about cutting the social aid not the number of government workers.

The government social aids are making up a huge portion of the government spending. Ok the healthcare is necessary, and some social aid for disabled persons or unemployment subsidies and pensions. But thats it.

Yet in my country you got: free bus and tram for elderly, free entertainment tickets for elderly (cinema,beach,theathre,etc), energy subsidies, water and electricity subsidies, food subsidies, education subsidies, etc etc.
And how you balance this? Well you raise all taxes, thus we got 24% VAT. And it's insane as we still got a very big poverty level, the average salary in my country is about 520 € (gross wages), yet we pay in total about 45% in taxes, how is that fair?

How can you grow an economy in this conditions? And i`m sure many EU countries face the overtaxation problem too.
  •  Guest
  • | IP XX.XXX.253.38
How can you grow an economy in this conditions? And i`m sure many EU countries face the overtaxation problem too.[/quote]

There's a simple answer to that, you can't... so, lets look at the real problem.

Since 2008 Trillions globally have been printed to prop up the values of assets owned by the 1% Bonds, Shares, Real Estate etc...

In addition, governments globally have grown, Debts, personal, corporate, sovereign have all grown, out of all proportion to the assets backing them.

The mainstream press like The Telegraph have sat by and encouraged so called "Leaders" both Government and Corporate to continue down this path ....Why ?

Because , as they value idea's , handwork and industry, creative innovation , social justice not at all, and their personal illusory , paper wealth in totality they have developed an enormous blind spot, Deflation.

Well, it's now been here since 2008 (actually since 2001).... all the above assets are now going to collapse to probably 10% of current values (think Tokyo real estate 1989 to now).

Taxation in the UK is already way past the "Laffer Curve", exacerbated by the indolence and idiocy of an entire generation of fools that have been encouraged to borrow against their Ponzi scheme heightened real estate values.

Guess what , utterly illusory Wealth is now being replaced by non - illusory debt, bond pre ices will fall, interest rates will rise and only the hard working and talented will survive...... so , thats good bye to corporate fools, government parasites and hello to genius

And that, is a good thing
VAT in Hong kong is 0% (zero)
Quoting scalpeur
VAT in Hong kong is 0% (zero)
According to wikipedia its 5%, but if its 0% then its even better.

I just so envy them
Money-printing certainly saved the USA's ass, no reason why it would not save Europe.
Quoting Schminner
Money-printing certainly saved the USA's ass, no reason why it would not save Europe.
Yes, but USA is only one country, Europe is 26 country's.
Print money for all 26 countries..... or just give each country their own money-printing machine.
3 yrs I'm following some financial news and my observations can be reduced to the following summary:

- if EUR/USD is over 1.35 and raising - "US might default on their debt, low record for labor participation, economy is struggling, bubbles raising...", etc...

- if eur/USD is under 1.27 - "Eurozone is under serious stress, countries might leave EU, debt crisis might be back..."

So I'm not wondering anymore how market participants get sucked into sucker's rallies :-).
Quoting Proximus
Yet in my country you got: free bus and tram for elderly, free entertainment tickets for elderly (cinema,beach,theathre,etc), energy subsidies, water and electricity subsidies, food subsidies, education subsidies, etc etc.

.....

How can you grow an economy in this conditions? And i`m sure many EU countries face the overtaxation problem too.
I think the problem is the subsidies and taxes. As I was young, I work my arse so that I will not endure hardship and burden the family when I grow old.

Here you don't have to work when you are young, because when you are old, you will be subsidized.
I mentioned in one of my previous posts and I am mentioning it again.
From a human being point of view I pity Euro zone conditions.
From a traders point of view ,it does not make a difference to me what is falling and what is rising. I am concerned with the opportunities that come up as per my view/opinion/understanding and the opportunities that I could catch on and profit on.
Sympathy,Empathy,etc are all missing when I am sitting on my terminal.
I don't marry my positions/trades.
  •  Guest
  • | IP XX.XXX.214.75
[quote=michaelpelly;7810072]3 yrs I'm following some financial news and my observations can be reduced to the following summary:

- if EUR/USD is over 1.35 and raising - "US might default on their debt, low record for labor participation, economy is struggling, bubbles raising...", etc...

US economy was blasting when EU was sky high. Notice that when EU gets closer to real valuation, like now, that the numbers in the US start to fall off (partially hidden by the drop in energy).

- if eur/USD is under 1.27 - "Eurozone is under serious stress, countries might leave EU, debt crisis might be back..."

Now that EU is coming down to a livable level, the EZ will begin to stagger back to health. The drop in Germany was more related to investor cash heading west and Ukraine and M/E tensions. Nothing to be too confused about here. If the Euro can survive, it will be on the backs of workmen who can't compete against the rest of the world at E/U 1.40. Who knows? Maybe it will work out ok.
Quoting Schminner
Print money for all 26 countries..... or just give each country their own money-printing machine.
This is a great idea LOL but it would be much better if they printed money and wrote off debt. This way they won't have to pay interest and will have excess cash to finance projects and to create much needed jobs.
Quoting michaelpelly
3 yrs I'm following some financial news and my observations can be reduced to the following summary:

- if EUR/USD is over 1.35 and raising - "US might default on their debt, low record for labor participation, economy is struggling, bubbles raising...", etc....
Low labor participation is the new norm.
People can't find jobs so they stop looking or they are underemployed working 1 or 2 days a week and they are no longer counted as unemployed.
The US authorities then say Look how well we are doing, the unemployment is falling but in reality people are struggling to put food on the table....
What can save the Euro????
World-wide, the one thing that needs to be done is the one thing that those in power refuse to do,.....tax the super-rich to death, do away with all loopholes in tax codes, and for ten years limit incomes to 1 million dollars per wage earner - everything else goes to the governments! What individual cannot live on 1 million dollars a year? That is totally adequate.

These measures will infuse the money back to the governments that can then use it to supply jobs, rebuild infrastructures, and start up new businesses. Otherwise, the super-rich will go on hoarding the money and using it only to stay at the foreground of influence over what decisions governments make that might affect their ongoing ability to either steal from, or disadvantage, everyone else.
Quoting traderathome
World-wide, the one thing that needs to be done is the one thing that those in power refuse to do,.....tax the super-rich to death, do away with all loopholes in tax codes, and for ten years limit incomes to 1 million dollars per wage earner - everything else goes to the governments! What individual cannot live on 1 million dollars a year? That is totally adequate.

These measures will infuse the money back to the governments that can then use it to supply jobs, rebuild infrastructures, and start up new businesses. Otherwise, the super-rich...
No offense to you but what I feel is that if the above does happen then entrepreneurs will not be motivated to open new business. Currently the poor are already getting some benefits from the taxes of the super rich. If earnings are limited then the super rich will look to go elsewhere to start business ventures. This will have a negative impact on the economy and the condition of the poor will go from bad to worse.
Your thoughts?
Quoting frx_trader
I think the problem is the subsidies and taxes. As I was young, I work my arse so that I will not endure hardship and burden the family when I grow old.

Here you don't have to work when you are young, because when you are old, you will be subsidized.
Regardless of their intentions, I think the young ones are more motivated to work than the middle aged and the elderly. The young ones need a career opportunity, money to make a family, buy a home a car.

Yet it's not an option as 24.3% in my country's unemployed are young people (18-24). So while young ones are jobless, the elderly is enjoying free stuff. So who is working for the elderly's free stuff, well the very few who are lucky to have a low paying crappy job. So how do you pay the subsidies?

You tax the hell out of the middle-strata, so that their poorness will pay the subsidies of the elderly? I`m not trying to be disrespectful for the old people but this doesnt seem fair to me, i see that they worked in their life, and they deserve the benefits of the "golden age", but not if that means that all the young people and children suffer for their silly free bus tickets and stuff like that.

I mean really just put things in perspective, this only creates a neverending loophole of raising taxes, because the people get poorer and poorer, so they pay less and less tax, and consume less and less, so you need to always increase the taxes. The never-ending tax raises are the wheel of the Devil.
Quoting traderathome
World-wide, the one thing that needs to be done is the one thing that those in power refuse to do,.....tax the super-rich to death, do away with all loopholes in tax codes, and for ten years limit incomes to 1 million dollars per wage earner - everything else goes to the governments! What individual cannot live on 1 million dollars a year? That is totally adequate.

These measures will infuse the money back to the governments that can then use it to supply jobs, rebuild infrastructures, and start up new businesses. Otherwise, the super-rich...
This is exactly what need to happen, but will it ever occur in this lifetime? Not in a million years..
Quoting Rtm
This is exactly what need to happen, but will it ever occur in this lifetime? Not in a million years..
Yeah right...building back the socialism as in former USSR, we are all pretty aware how all that ended...everybody is equal and everybody is poor. I'm always disgusted with the thought that "the government" is some super-minded wise-aware inhuman creature that will provide for us, who are "incapable" of being on our own entrepreneurship and personal innovation. Wake up, dude - you're in the wrong century! Capitalism is wonderful - you just seem to be on the wrong side of it.
Quoting michaelpelly
Yeah right...building back the socialism as in former USSR, we are all pretty aware how all that ended...everybody is equal and everybody is poor. I'm always disgusted with the thought that "the government" is some super-minded wise-aware inhuman creature that will provide for us, who are "incapable" of being on our own entrepreneurship and personal innovation. Wake up, dude - you're in the wrong century! Capitalism is wonderful - you just seem to be on the wrong side of it.
Im not saying that the wealth needs to be shared equally in monetary value exactly but more on the mindset of to provide things for them like EDUCATION - to those who are in poverty, teach people the skills they need so they can fish for themselves. Peovide more opportuniteis so we can at least say they have a chance. None of this even wealth distributuion because then no one wants to do anything and we all just sit on welfare collecting checks.
Quoting Rtm
Im not saying that the wealth needs to be shared equally in monetary value exactly but more on the mindset of to provide things for them like EDUCATION - to those who are in poverty, teach people the skills they need so they can fish for themselves. Peovide more opportuniteis so we can at least say they have a chance. None of this even wealth distributuion because then no one wants to do anything and we all just sit on welfare collecting checks.
This is utopian. Do ppl want education? No. Do want ppl want to have skills? No. Do ppl want to fish? No. Do ppl want more opportunities? No.

What do ppl want? Money, happiness, to be rich.

If ppl have money, happiness, and rich, do they want education, skills, and go to fish? No. Ppl want to live like a king.

Imagine if they can get money, happiness, and rich for free, why do they need education, skills, and go to fish? The dinner is already served on the table, all they need is to grab it.
Quoting frx_trader
This is utopian. Do ppl want education? No. Do want ppl want to have skills? No. Do ppl want to fish? No. Do ppl want more opportunities? No.

What do ppl want? Money, happiness, to be rich.

If ppl have money, happiness, and rich, do they want education, skills, and go to fish? No. Ppl want to live like a king.

Imagine if they can get money, happiness, and rich for free, why do they need education, skills, and go to fish? The dinner is already served on the table, all they need is to grab it.
This makes NO sense, not on this planet.
They will never be happy with any of those things! LOL look at China! All the rich people not happy. They just want to get away come to west.

If they are educated and skilled they are able to create things way beyond what a bunch of monopoly money can do, for not only themselves but for the human race. If you ever get to a point where you get a lot of money in your life you will also realize this.
Short the euro
Quoting traderathome
World-wide, the one thing that needs to be done is the one thing that those in power refuse to do,.....tax the super-rich to death, do away with all loopholes in tax codes, and for ten years limit incomes to 1 million dollars per wage earner - everything else goes to the governments! What individual cannot live on 1 million dollars a year? That is totally adequate.

These measures will infuse the money back to the governments that can then use it to supply jobs, rebuild infrastructures, and start up new businesses. Otherwise, the super-rich...
What a wonderful idea, except that I guess you didn't look at the Greek government.
Greek politicians have more money stashed in Switzerland than they ever earned in their lives. So where did that come from?
Greek politicians conveniently buried the list of people with huge deposits in Swiss banks, which was given to them by Christine Lagarde.
Greek politicians have more money stashed in Swiss banks than the entire Greek government debt. How many of the Greek politicians are emptying their pockets to support their country?

Do you think Greek politicians are unique amongst the political infrastructure?

....and that is why you do not give all the money to any government.
Quoting Rtm
This makes NO sense, not on this planet.
They will never be happy with any of those things! LOL look at China! All the rich people not happy. They just want to get away come to west.

If they are educated and skilled they are able to create things way beyond what a bunch of monopoly money can do, for not only themselves but for the human race. If you ever get to a point where you get a lot of money in your life you will also realize this.
You are quite true, money can't buy happiness. But money will not get you into debt and tears.

Education for some ppl is hard work. Going to fish for some ppl is hard work. Ppl don't like hard work. Ppl want to live easy lives and spend days bathing in the sun.

Ppl are jealous to these millionaires who have the fortune in the world. Ppl don't want millionaires. Ppl want wealth to be shared.
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  • | IP XXX.XXX.138.5
Quoting Schminner
Money-printing certainly saved the USA's ass, no reason why it would not save Europe.
Yes it did! But when you woke up you realized; it was just a dream. Go back to sleep and have another beautiful dream. Beware of nightmares!
  •  Guest
  • | IP X.XXX.174.50
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  • Posted: Oct 18, 2014 2:34pm
  • Submitted by:
     Newsstand
    Category: Fundamental Analysis
    Comments: 30  /  Views: 5,609