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Post 15 Mar 2015, 1:34 pm

Perhaps. Perhaps not though. She has a difficult balance to strike because on the one hand German public opinion is solidly in favour of giving Greece not a penny more and telling them to go to hell but on the other hand she knows that a Greek default would hit Germany far harder than anybody else, and when German voters wake up to the scale of the losses they won't be very happy with that either. It's something of a lose/lose for Merkel really, although clearly nowhere near as bad as it is for Greece.
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Post 15 Mar 2015, 4:48 pm

I had originally written a longer post, in fact a much longer one, in response to this.

I'm not an alarmist and I do not know as much about the EU as the people who live there (duh). After all, I don't vote in your elections, and if the EU Parliament votes to ban bananas which don't have the right curve in them, your average American newspaper could give a flying [cough].

But, as far as the general pattern of history and human behavior, I think the United States nearly tore itself apart over exactly what's happening in the EU right now. Why? Because it has to do with the less sophisticated economies being in hoc to the more sophisticated ones. This is like the assumption of southern debts by the "new" (c. 1789) federal government, all over again.

Please take the following with a grain of salt. And take into account that, from my chair, it's mostly speculation.

So if I'm not too presumptuous in putting this particular 2 cents (or euros) in on this one, it's not unlike the antebellum United States in some ways. And when you get right down to it, if you put slavery itself aside as a moral issue (which I admit we really shouldn't!) we get Adam Smith's argument on how bad for the economy it is. Backward economies versus more sophisticated ones within a trade system, or even in an organization like the EU, is typically a recipe for disaster (even war).

Now, slavery is not legal in Greece, nor any member state of the European Union, thank God. Nonetheless, you have some societies within the EU which are more financially backward than others. It's no coincidence that in the antebellum US; in Congress, the northern Whigs and Democrats constantly opposed the creation of national banks, whereas their southern counterparts constantly tried to stop them from every happening. Why? Because with a less sophisticated and more indebted financial system in the would-be Confederate States, they'd feel screwed by their northern brethren. This does tend to happen in countries which supply raw materials, as opposed to their trading partners who produce the finished goods. (Anywhere in the world that's a recipe for dependency and poverty.)

Also, our southern states were (and still are to some degree) more politically backward. Not just because slavery was legal there, but because they were really more corrupt (notice I said "more" corrupt than their northern counterparts....because their northern counterparts had corruption themselves, just not nearly as much. But let's not revive THAT debate please.)

Greece, Turkey, Spain, Portugal; all countries with military juntas in the not-too-distant past. Even Italy, though a democracy, gets an honorable mention among those four if only due to the fact that they change governments more often than we change our underwear; one could at least say that their democracy is less stable than most African juntas. Some members of the EU, and I have heard citizens of more "westernized" EU nations say this before, should have had a little more vetting before they became members. There are currently 28 member states of the EU. If you told me, in 1988, that France and Britain would be in an economic (and to some degree, political) union with seven Iron-curtain states, and three former SSR's, I'd have taken away your keys.

Overexpansion. That's what i'm getting at. In 1805, we paid $11.5 million dollars (50 million francs) to double the size of our infant republic. In 1848, we paid (but with bullets instead of dollars) to double it again. A Whig senator was quoted as saying "Mexico will poison us." And it did. The more land we took, the more the "economic issue" (in the US's case I mean slave-based economies) came to the forefront.

I really cannot offer any better explanation, I'm trying very hard to explain what I mean without veering off topic---or inviting others to do so---or to actually discuss the United States and slavery, because I'm not: my intent is to say that this is a very old story, this sort of rapid growth. To make a better analogy from more recent times, it's like when we were bidding up stocks of profitless companies on the NASDAQ in the late 1990s, and paid for it with the worst crash and bear market since the depression once people realized the emperor had no clothes. The antebellum US and the post-Cold War EU are the trendy "growth stocks" of the 1990's.

How long before the EU expansion bubble pops? All these new members should have had far stricter criteria for joining than they did. I counted four former juntas above, and ten countries which, not long ago, were governed by totalitarian Communist parties.

I cannot offer a solution to the EU's woes, and I admit I could be totally wrong. But if Greece and Germany cannot come to an agreement...well the comparison to the overexpansion of the antebellum US is just the best I could come up with, as I totally admit I dont have as much knowledge as you all do about it. However, it's a very, very old story, in fact. Just ask the Ottoman Turks, who expanded their empire less rapidly and paid for their overexpansion in WWI. There's another good example.

But my point is, this is how wars get started. From my chair, this seems to have gone beyond "political capital".
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Post 02 Dec 2017, 11:54 am

Machiavelli wrote:I'm still pretty comfortable with Jan. 1, 2013, Dan.

You still doing your Kevin Bacon impression?

Predicting the future is hard. Hell, Donald Trump is president.
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Post 04 Dec 2017, 7:50 am

Interesting post Jim. Thanks.
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Post 07 Dec 2017, 10:22 am

geojanes wrote:
Machiavelli wrote:I'm still pretty comfortable with Jan. 1, 2013, Dan.

You still doing your Kevin Bacon impression?

Predicting the future is hard. Hell, Donald Trump is president.

I think he has lost his password.

We are nearly five years on from the date Mach gave us. Actually, we are much further on from his original prediction (on old Redscape) that the Euro would have been changed by 2010. The only real change since then has been new nations adopting it formally - Latvia was mentioned, and Lithuania since joined too.

The crisis seems to have gone quiet, Merkel didn't quite win the last election (but is still Chancellor), and the main thing in Brexit, and perhaps the question of Catalonia wanting to leave Spain, which are both political / identity / sovereignty issues rather than economic. Obviously there is an economic dimension, in that Brexiteers and Catalan Nationalists both would agree that they are having to subsidise lazy freeloaders elsewhere.

Things got a bit exciting in 2015 when Greece defaulted and then at referendum rejected a bailout deal, but the can was kicked on down the road and now their economy is growing and bond yields are at pre-2010 levels.

Debt is still massive, though, and still the Greeks are having to promise to make concessions to get debt relief. So it is over, but it seems to be muddling along, rather than collapsing in a heap.

I still have a crate of beans in the garage, and still because I like them and there is a Costco nearby, not because I am prepping for Eurodoom.