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Europe is Damned

by Jerome a Paris Thu Feb 11th, 2010 at 04:45:50 PM EST

Investors bewildered by EU deal over Greece

The euro plunged in early New York trading as the realisation took hold that the eurozone was “damned if they do and damned if they don’t” help Greece.

This has got to be the end game. When whatever the news are, the "analysis" is that Europe is f*cked (obligatory [Europe.Is.Doomed™ Alert] ), there's little more to say and do. There are no arbitrage opportunities if everybody expects the same woe whatever happens.


Display:
The really funny part is how the financial reporters can use the same explanation whether the Euro goes up or down. Here's what CNN has on their website right now:
The euro gained against the dollar as investors watched a summit of European Union leaders on the debt situation in Greece.

At the summit, EU President Herman Van Rompuy did not announce a deal to rescue Greece, but said European countries would be prepared to step in if needed.

by gk (gk (gk quattro due due sette @gmail.com)) on Thu Feb 11th, 2010 at 04:50:37 PM EST

EU pledge on Greece fails to calm fears

A pledge by the European Union to stand by crisis-hit Greece punctured hopes in the financial markets yesterday of a swift rescue and raised fears of renewed selling.

Efforts by Nicolas Sarkozy and Angela Merkel, the French and German leaders, to paper over differences between Berlin and Paris on how to deal with the Greek debt crisis led to a summit statement in Brussels that stopped short of providing immediate support for Athens.

(...)

But the lack of a detailed bail-out plan underwhelmed investors in financial markets. While global stocks and bonds made modest gains, the euro fell 0.9 per cent against the dollar.

(...)

Jonathan Loynes, an economist at Capital Economics, said the agreement was "disappointing. It seems to amount to little more than a vague statement of support for Greece." Steven Major, at HSBC, said: "It all hangs on whether the implicit guarantees go down well with the markets. If they don't, then there could be a sell-off."

It all sounds like extorsion: "give us real money, or we'll keep on bringing your pals down"

In the long run, we're all dead. John Maynard Keynes

by Jerome a Paris (etg@eurotrib.com) on Thu Feb 11th, 2010 at 04:57:45 PM EST
So what if they sell the already issued bonds?

The "problem" is that the sell-off will make new debt issues more expensive.

But it will also make it possible for governments to buy back some of their old bonds at a profit in the "sell-off".

En un viejo país ineficiente, algo así como España entre dos guerras civiles, poseer una casa y poca hacienda y memoria ninguna. -- Gil de Biedma

by Migeru (migeru at eurotrib dot com) on Thu Feb 11th, 2010 at 05:02:32 PM EST
[ Parent ]
but they need to borrow to buy back the discounted old bond...

...unless France and Germany do the buying themselves, and hold the paper to maturity, making a nice profit in the process...

In the long run, we're all dead. John Maynard Keynes

by Jerome a Paris (etg@eurotrib.com) on Thu Feb 11th, 2010 at 05:07:55 PM EST
[ Parent ]
It's a no-risk operation. They should have no problem borrowing the requisite money directly from the ECB, no?

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Thu Feb 11th, 2010 at 05:08:55 PM EST
[ Parent ]
Well, they can always raise taxes or issue money.

After all, they're Euro-denominated bonds.

En un viejo país ineficiente, algo así como España entre dos guerras civiles, poseer una casa y poca hacienda y memoria ninguna. -- Gil de Biedma

by Migeru (migeru at eurotrib dot com) on Thu Feb 11th, 2010 at 05:09:10 PM EST
[ Parent ]
Anything that is even a fraction as glorious as the actions of the Hong Kong currency board will find me applauding.

Peak oil is not an energy crisis. It is a liquid fuel crisis.
by Starvid on Fri Feb 12th, 2010 at 01:52:18 PM EST
[ Parent ]
These bastards will have to be burned big time in order to learn anything. Then they will want the US Govt. to bail them out. Again.

I saw an ad running during the NBC Evening News yesterday that delineated the course of the GFC with iconic names such as AIG flashing up. They noted that an additional bailout fund had been approved by the House and then urged Arkansans to write and call their senators, Mark Prior and Blanche Lincoln, to vote against it. I will urge them to vote against closure to even consider it.

In my bones I believe the only way to end this nightmare is to let the predators blow them selves up, or, more improbably, to kill them. So fucking what if we get a financial meltdown. If there is no bailout there will be no choice but to write down debt that is the result of counterfeit anyway. At least we would get something from such a crisis: it would put in place the basis for a recovery. I cannot see how a real recovery can occur under the existing conditions.

But who am I to question the Masters of the Universe?

"It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Thu Feb 11th, 2010 at 05:16:01 PM EST
[ Parent ]
The ecofin and the ECB could sink the bastards if they wanted. They have the deeper pockets.

En un viejo país ineficiente, algo así como España entre dos guerras civiles, poseer una casa y poca hacienda y memoria ninguna. -- Gil de Biedma
by Migeru (migeru at eurotrib dot com) on Thu Feb 11th, 2010 at 05:19:25 PM EST
[ Parent ]
They should DO IT and then be given the Nobel Peace Prize!

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Thu Feb 11th, 2010 at 05:37:46 PM EST
[ Parent ]
Do you guys get what's going on?

Um, Paulson is one of the people leading these raids.

Paulson!!!!

Let's think about it.

by Upstate NY on Thu Feb 11th, 2010 at 11:10:29 PM EST
[ Parent ]
Is Paulson back at GS?

En un viejo país ineficiente, algo así como España entre dos guerras civiles, poseer una casa y poca hacienda y memoria ninguna. -- Gil de Biedma
by Migeru (migeru at eurotrib dot com) on Fri Feb 12th, 2010 at 01:55:52 AM EST
[ Parent ]
No, he's barred for one year per gov't law, but he's probably ready to jump back in. The ones leading the current raids are actually his best friends, but it was Paulson who mentored them, and Paulson who was there when the deals to both hide Greece's debt and to sell Greece the hidden CDS's were made. So you get involved with Greece and toxic finance, you leave then to save GS from CDS deals and toxic finance, then you resign, and while you're waiting around for a year, your mentees lead a raid on a country that they know is in trouble because they are the ones who sold the CDS's and toxic finance in the first place.
by Upstate NY on Fri Feb 12th, 2010 at 10:22:14 AM EST
[ Parent ]
we've been trying to make sense of your Paulson point over several threads but now it is clear! (at least to me)

In the long run, we're all dead. John Maynard Keynes
by Jerome a Paris (etg@eurotrib.com) on Fri Feb 12th, 2010 at 12:32:38 PM EST
[ Parent ]
I'm sorry. I read ET a lot, and when I post, it seems I post in a flurry.
by Upstate NY on Fri Feb 12th, 2010 at 12:44:36 PM EST
[ Parent ]
Are they trying to play George Soros on the Euro?

If that is so, it's a huge miscalculation - the Euro is 10 times larger than the British Pound and the political will to keep the Eurozone together is much larger than the will to keep the EMU exchange rate mechanism together. Not to speak of the fact that the EMU was entirely political whereas the Eurozone has an actual currency.

En un viejo país ineficiente, algo así como España entre dos guerras civiles, poseer una casa y poca hacienda y memoria ninguna. -- Gil de Biedma

by Migeru (migeru at eurotrib dot com) on Fri Feb 12th, 2010 at 02:00:33 AM EST
[ Parent ]
The GS guy and the hedge fund guy are not the same people.

In the long run, we're all dead. John Maynard Keynes
by Jerome a Paris (etg@eurotrib.com) on Fri Feb 12th, 2010 at 02:05:09 AM EST
[ Parent ]
John Paulson, hedge fund boss.

Henry "Hank" Paulson, former Treasury Sec.

by afew (afew(a in a circle)eurotrib_dot_com) on Fri Feb 12th, 2010 at 04:19:33 AM EST
[ Parent ]
I'm referring to Henry Paulson, the GS guy. It was under Paulson that the credit swap deals with Greek banks were made. GS knows from the inside what Greece's financial status is.
by Upstate NY on Fri Feb 12th, 2010 at 10:23:30 AM EST
[ Parent ]
GS arranged the "loan" and the "special mechanisms" that disguised that fact. GS created the CDSs around that debt and then sold those CDSs to (other?) Greek Banks. Now GS is behind all of the clamor about Greek debt problems. I am unclear if the "loan" was actually a bond sale or what and don't have time to go back and check. I am wondering how GS will profit from this. One way might be to have sold short some of the CDSs. Then if the value of the CDS drops due to clamor and concern, they can buy the CDS for well less than the value of the CDS they owe who ever they borrowed it from. They could also be shorting bonds I suppose. Can someone who has insider knowledge clarify?

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Fri Feb 12th, 2010 at 02:10:55 PM EST
[ Parent ]

To Fix America

ecause any economic growth right now increases the prices of oil, which then strangles the economy, you must reduce dependence on oil, or you can't fix your problems.

Because banks aren't lending, and because they are a net drag on the economy having destroyed more wealth than they created, you must break up the major banks or take other similiar actions to the same ends, or you don't fix your problems.

Because defense spending is essentially un-productive you must  end the American empire, cutting "defense" spending by at least half, and "intelligence" spending by three-quarters, or you don't fix America.

Because education is the backbone of modern economies and good education is what allows democracies to work, as the founders understood, you must fix education, so that everyone who is qualified can get a degree without being burdened by a decade of debt and so that the the lower class is able to get through university again, or you don't fix your problems.

For the same reasons you must fix education at the primary and secondary levels by removing it from the property tax base, or you don't fix your problems.

Because oligopolies strangle innovation, produce inferior services and soak up oligopoly profits they haven't earned break up your major oligopolies outside the banks, starting with the telecom companies, or you don't fix your problems.

Because government is now a bidding operation in which monied interests buy the policies that are good for them and not for America you must fix campaign finance, or you don't fix your problems.

Because a lopsided wealth and income distribution leads to deep social pathologies, reduction in real demand, short term risk taking and looting by the financial class and the destruction of functional democracy you must reinstitute steep progressive taxes on the 1950's level, or you don't fix your problems.

Because locking up more people per capita than any other nation in the world is massively economically inefficient and causes severe social pathologies you must break up the prison-industrial complex, or you don't fix your problems.

Because police states are not efficient, and for the sake of your own souls, you must end the drug war and the paramilitarization of US police forces, or you don't fix your problems.

Because real modern infrastructure is one of the keystones to economic growth and competitiveness you must build out proper transportation (high speed rail) and internet (cheap, un-metered high speed to every home) or you don't fix your problems.



In the long run, we're all dead. John Maynard Keynes
by Jerome a Paris (etg@eurotrib.com) on Thu Feb 11th, 2010 at 05:08:53 PM EST
All true! But to fix those problems we have to fix good those who are benefiting from those problems.

Who benefits from students having to hock their futures to get an education?

Who enjoys the biggest oligopoly profits?

Who benefits from the current campaign finance system?

Who is on the winning side of lopsided wealth distribution?

Why are we not investing in modern infrastructure?

Breaking up the TBTFs, GS, MS, etc. is very difficult but essential to making progress on any of these. Easier than breaking them up is letting them blow themselves up. Going along for that ride would be a pleasure compared to paying to make the miscreants whole again.

"It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Thu Feb 11th, 2010 at 06:07:27 PM EST
[ Parent ]
What students are hocking their futures?

Most state universities are total bargains.

The USA has an excellent higher education system, it's open access and it costs less for the user than many European systems.

Take New York state's system. The average cost per student to the university is $19,500. But tuition for the year is below $5,000.

Pell Grant for a year is $5,500.

by Upstate NY on Thu Feb 11th, 2010 at 11:13:38 PM EST
[ Parent ]
http://www.finaid.org/loans/

These figures were calculated using the data analysis system for the 2007-2008 National Postsecondary Student Aid Study (NPSAS) conducted by the National Center for Education Statistics at the US Department of Education.

(...)The median cumulative debt among graduating Bachelor's degree recipients at 4-year undergraduate schools was $19,999 in 2007-08. One quarter borrowed $30,526 or more, and one tenth borrowed $44,668 or more. 9.5% of undergraduate students and 14.6% of undergraduate student borrowers graduating with a Bachelor's degree graduated with $40,000 or more in cumulative debt in 2007-08. This compares with 6.4% and 10.0%, respectively, for Bachelor's degree recipients graduating with $40,000 or more (2008 dollars) in cumulative debt in 2003-04.

(...)Graduate and professional students borrow even more, with the additional cumulative debt for a graduate degree typically ranging from $30,000 to $120,000. The median additional debt is $25,000 for a Master's degree, $52,000 for a doctoral degree and $79,836 for a professional degree. A quarter of graduate and professional students borrow more than $42,898 for a Master's degree, more than $75,712 for a doctoral degree and more than $118,500 for a professional degree. At the 90th percentile cumulative debt for graduate and professional degrees exceeds $59,869 for a Master's degree, $123,650 for a doctoral degree and $159,750 for a professional degree.



Maybe we can eventually make language a complete impediment to understanding. -Hobbes
by Izzy (izzy at eurotrib dot com) on Thu Feb 11th, 2010 at 11:34:09 PM EST
[ Parent ]
Those figures are for private universities as well.

no one forces people to go to private universities.

by Upstate NY on Fri Feb 12th, 2010 at 10:07:47 AM EST
[ Parent ]
nobody forces people to buy private pensions either... not private health insurance.

In the long run, we're all dead. John Maynard Keynes
by Jerome a Paris (etg@eurotrib.com) on Fri Feb 12th, 2010 at 10:19:23 AM EST
[ Parent ]
UCLA is not a private university.

En un viejo país ineficiente, algo así como España entre dos guerras civiles, poseer una casa y poca hacienda y memoria ninguna. -- Gil de Biedma
by Migeru (migeru at eurotrib dot com) on Fri Feb 12th, 2010 at 10:28:19 AM EST
[ Parent ]
Well, when it comes to those there is no option. The USA has no public health care or insurance system for those who aren't poor or elderly.

But it still finances higher education. As I said, each student is financed in New York State with a $15,000 subsidy, and the poor and middle class students receive an additional $5,500 in Pell Grant, subsidized student loan at low rates (between 2 and 3%), a loan that is forgiven after 10 years if you work in low paying jobs, and it's a loan with reduced payouts based on your income. Not to mention the grants-in-aid and scholarships for the best students.

As part of the system, I'm a big booster. Obviously.

by Upstate NY on Fri Feb 12th, 2010 at 10:36:00 AM EST
[ Parent ]
I would add that Izzy's figures show that about 10% graduate with onerous loans, which probably corresponds to the kids going to private schools and taking on huge loan burdens. I do not consider $20,000 to be an onerous debt load, and that figure probably corresponds well to the indebtedness of Swedish students after the completion of their studies.
by Upstate NY on Fri Feb 12th, 2010 at 10:39:40 AM EST
[ Parent ]
Upstate NY:
I do not consider $20,000 to be an onerous debt load, and that figure probably corresponds well to the indebtedness of Swedish students after the completion of their studies.

That it does. Though with todays weak dollar it might be a bit low.

And just to clarify, the education is free, but living is not. Swedish student loans are for living. They are on pretty generous terms, you do not have to pay anything back as long as you study and after that you can lower your annual payment to 5% of your income (7% after the age of 50), so they are a bit like an extra tax.

Sweden's finest (and perhaps only) collaborative, leftist e-newspaper Synapze.se

by A swedish kind of death on Sat Feb 13th, 2010 at 11:51:37 AM EST
[ Parent ]
Right. Acknowledged. It's the same thing in the states though. The total bill and the debt accounts for living expenses and student fees  (book etc.)

This is why I wrote about Pell Grants of $5,500 covering more than actual tuition at American state schools. Then the student loan and work study cover living expenses and student incidentals.

Net result is that you receive an education valued at $80,000. You don't pay anything for it. The Pell Grant takes care of $20,000 of that education (assuming graduation in 4 years), and the taxpayers pick up the remaining $60,000. Then, you also earned $40,000 (4 years of part-time and summer work) and took out a loan of $20,000 ($5,000 a year) for a total of $60,000 on which to live. $15,000 a year for food, housing, books, etc.

People always mention that you would be working full-time and earning more if you didn't go to school, but what isn't mentioned is that in the USA, jobs that do not require college degrees pay on average $15,000 less a year ($49,000 for college grads and $34,000 for non-college grads).

by Upstate NY on Sat Feb 13th, 2010 at 02:34:46 PM EST
[ Parent ]
Hope those fees last in the State University of New York.
Current estimated tuition fees and expenses at UCLA:
resident, living with parents:  $19,417
non-resident,                        $42,134

University of Arizona:
resident, living with parents:  $15,640
non-resident                         $42134

UofA grad student:
resident:           $35,930
non-resident:     $42,806

Google "UCLA tuition and fees"  "Univ. of Arizona tuition & fees"                        

"It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Thu Feb 11th, 2010 at 11:37:38 PM EST
[ Parent ]
How sad... It was nowhere near that 5 years ago when I graduated.

En un viejo país ineficiente, algo así como España entre dos guerras civiles, poseer una casa y poca hacienda y memoria ninguna. -- Gil de Biedma
by Migeru (migeru at eurotrib dot com) on Fri Feb 12th, 2010 at 02:05:23 AM EST
[ Parent ]
But it's nowhere near that now.
by Upstate NY on Fri Feb 12th, 2010 at 10:12:12 AM EST
[ Parent ]
As for fees, you need a house, you need to eat, whether or not you go to college. $10,000 in living expenses for a year.

I don't know what or where you are Googling, but if a student is living with parents, he is not paying $15,640 in tuition and fees.

At U. Arizona, tuition and fees are $6,800 according to this:

http://www.bursar.arizona.edu/students/fees/showrates.asp?term=101&feetype=undergrad&feerate =res

Where are you coming up with $15,640?

by Upstate NY on Fri Feb 12th, 2010 at 10:11:23 AM EST
[ Parent ]
"At U. Arizona, tuition and fees are $6,800"

Which is huge

Earth provides enough to satisfy every man's need, but not every man's greed. Gandhi

by Cyrille (cyrillev domain yahoo.fr) on Fri Feb 12th, 2010 at 11:07:20 AM EST
[ Parent ]
It is huge? Really?

I wouldn't really want it to be lower.

For a variety of reasons.

But as I said, I accounted for Pell grants from the federal gov't and a variety of subsidies and scholarships.

Let me put it this way. The amount of subsidy for public higher education in many US states far far exceeds anything elsehwere in the world. Asking students to take on 1/4 of the cost of their education (when that quarter itself is totally met by Pell grants and grants-in-aid for a big percentage of students) is not asking too much. Many of my students work 15 hours a week at part-time jobs. The alternative to this tuition structure is to dismantle the current system of higher education because we can't ask taxpayers to do more than fund $15,000 per student in a state like New York. The teacher to student ratio at my school, and the level of support, is 3x better than it is one hour away at a marvelous school like the U. of Toronto in Canada. The tax rate in New York is 7% of income, 9% sales tax, and $9,500 a year property tax on a $250,000 house (if you can find one that cheap). These are state and local taxes, not federal. The alternative to $5-7,000 in tuition is a dismantling of the higher education system.

The problem is, if students do not want to pay $5-7k for research universities, they have the option of attending satellite universities and community colleges at less than half the cost. But I don't want all schools to be turned into that.

by Upstate NY on Fri Feb 12th, 2010 at 12:01:48 PM EST
[ Parent ]
Well, my 7 years of studying in France probably totalled less than €2000 of fees. And it was not because I went to second-grade schools.

So yes, I think it is huge to pay $6800 for one year. It's one third of the median income!

I guess there is a major cultural difference there. It doesn't cost that much to train as a medical practitioner here. But then, they do not demand as crazy fees once they are trained. This may regrettably change as neo-liberalism and individualism are catching here. But I am quite attached to that system where you don't start life burdened with debt.

Earth provides enough to satisfy every man's need, but not every man's greed. Gandhi

by Cyrille (cyrillev domain yahoo.fr) on Fri Feb 12th, 2010 at 01:40:54 PM EST
[ Parent ]
I really am not saying that anything that doesn't do it the USA way is second-rate. This is why I said U. Toronto is a marvelous school.

But, the level of research and development at US universities still far exceeds those elsewhere, and the classroom structures are different (at Toronto, there are 3x as many students in a class as at my school), as are the number of lectures. I know the British system requires more of a time commitment from students and instructors as far as face-to-face interaction goes, but in some European countries such as Italy and Spain, it's the reverse. Lectures are not offered three times a week.

by Upstate NY on Fri Feb 12th, 2010 at 01:53:55 PM EST
[ Parent ]
But, the level of research and development at US universities still far exceeds those elsewhere

Not in surface or solid state physics. Certainly not in high-energy physics.

Indeed for all of the natural sciences, it greatly depends on how much you stretch "far." In many cases even on your definition of "exceeds," if you get my drift.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Fri Feb 12th, 2010 at 02:55:35 PM EST
[ Parent ]
I'm definitely referring to money and support.

Although I would point out the US system is pretty efficient, unlike our health care. We spend the most there too.

by Upstate NY on Fri Feb 12th, 2010 at 04:55:22 PM EST
[ Parent ]
Normalised to population, GDP or nothing?

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Fri Feb 12th, 2010 at 05:04:32 PM EST
[ Parent ]
(n/t) signifie "non texte."

Friends come and go. Enemies accumulate.
by JakeS (JangoSierra 'at' gmail 'dot' com) on Fri Feb 12th, 2010 at 05:05:26 PM EST
[ Parent ]
I recently went over the different figures because our job search season is in December/January and we had two noted European scholars with whom we were discussing different systems. I was quite surprised to see the difference in expenditures, but I do not want to equate resources with quality of education, because there is not a tight correlation. For a faculty member, however, resources are always a significant factor.
by Upstate NY on Fri Feb 12th, 2010 at 05:10:07 PM EST
[ Parent ]
But, the level of research and development at US universities still far exceeds those elsewhere,

That has not been my experience, it would be fair to say that US universities get more media coverage.  In terms of quality*quantity of research I've found the US about what you'd expect for its population.

by njh on Fri Feb 12th, 2010 at 03:09:59 PM EST
[ Parent ]
EU2020 says that US investment in research at the level of higher education exceeds EU investment by multiples.

In terms of expenditure for higher education alone (i.e. including but not limited to research) the EU has an expenditure of 1.1% GDP, while the US is 2.3% GDP.

From the EU2020 site:

"American universities have far more substantial means than European universities on average, two to five times higher spending per student. The resources brought by students themselves, including by the many foreign students, partly explain this gap. But American universities benefit both from a high level of public funding, including through research and defence credits, and from substantial private funding, particularly for fundamental research, provided by the business sector and philanthropic foundations. The big private research universities also often have considerable wealth, built up over time through private donations, particularly from graduate associations.

The growing under-funding of European universities jeopardises their capacity to attract and keep the best talent, and to strengthen the excellence of their research and teaching activities(1). Given that it is highly unlikely that additional public funding can alone make up the widening shortfall, new ways have to be found of increasing and diversifying universities' income. The Commission plans to conduct a study on the funding of European universities in order to examine the main trends in this area and identify examples of best practice."

by Upstate NY on Fri Feb 12th, 2010 at 05:02:02 PM EST
[ Parent ]
EU2020 is a political programme, not an attempt to examine reality.

That doesn't mean that the numbers are wrong, but it does mean that we need to know what they count. Particularly since they're being used as an excuse for backdoor privatisations - a use of numbers than normally means that they fall just short of being make-believe.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Fri Feb 12th, 2010 at 05:09:02 PM EST
[ Parent ]
I see. Well then, I've got nothing.

I know in relation to Canada that the funding doesn't compare. It's more than double in the US.

by Upstate NY on Fri Feb 12th, 2010 at 05:11:08 PM EST
[ Parent ]
Don't get me wrong - I'm not saying that they've made up the numbers on purpose.

It's just that this kind of international comparison is not trivial. To take an obvious example, South Korea boasts of a 20 % of GDP "education budget" - but they include primary and secondary schools in that figure!

Similarly, if less blatant, at anything below postgraduate level, there are structural and organisational differences between Europe and the US that make comparisons a non-trivial exercise.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Fri Feb 12th, 2010 at 05:14:59 PM EST
[ Parent ]
Another thing to keep in mind is where the applied science is done. When Vestas develops a new alloy, they do it in-house. I don't know what the American system is in that respect, but given the reputation of places like Lawrence Livermore for pay-for-play research for the armaments industry, I suspect that the mix is different.

Whether it is desirable to have the applied science lodged with universities is a subject of ongoing debate, of course, but it's one of the things that needs to be kept in mind if we want to make apples-to-apples comparisons.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Fri Feb 12th, 2010 at 05:21:25 PM EST
[ Parent ]
I think that same article I linked to put European R&D at 2% GDP and American R&D at 2.5% so not that much of a difference at all.
by Upstate NY on Fri Feb 12th, 2010 at 06:18:35 PM EST
[ Parent ]
This article is not about the topic we're discussing (only about technology transfers) but it does cite differences in total funding for higher education.

http://www.voxeu.org/index.php?q=node/3825

by Upstate NY on Fri Feb 12th, 2010 at 05:14:47 PM EST
[ Parent ]
I was going on the highly biased and mostly anecdotal evidence from papers I've reviewed and read for various conferences.  No doubt the areas I have been active in are unusual.  I do question whether more money produces more quality research or merely more big toys.  The best papers in computational complexity theory for many years came from russians without even computers to work on.
by njh on Fri Feb 12th, 2010 at 06:03:14 PM EST
[ Parent ]
As for fees, you need a house, you need to eat, whether or not you go to college.

True, but if you are a student you need time to attend classes and to study for those classes. Too much time spent working defeats the purpose of attending college by resulting in poor grades and employment prospects for many.

For UCLA the numbers come from their web site.

For the University of Arizona the numbers are from here.

All of these things could be fixed by taxing those who have the money: the wealthy and the big financial institutions. But we have just been through forty years of public instruction in Neo-Classical Economics that has succeeded in teaching a majority that it is not really possible to tax the wealthy. Over 90% of all US graduates with one or more degrees in economics believe this. NCE is the language in which they express their thoughts, the air they breathe.

Of course it is all self serving bull shit, but try and explain that to a majority of the population. That is our task. You are one of those for whom the spell has been broken.

As for the cost of public education, the University of California and the California State University systems were enormous bargains when our son was attending. He lived at home while obtaining both his bachelor's and master's degrees and left school without debt. In order to do that today I would first have to find work in California, and school construction has virtually collapsed in the last two years.

Having hamstrung themselves by allowing the creation of requirements for super-majorities in the state legislature for budgets, the only way the State of California has been able to respond to the dramatic drop in state revenues is to transfer more and more of the cost of education at state universities to the students.

"It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Fri Feb 12th, 2010 at 05:43:55 PM EST
[ Parent ]
That link took me to estimated expenses and not charges.

In other words, that's no UCLA that is charging the amount beyond University fees. That is simply a notice of what they imagine will be required to feed and clothe a student living with parents. The parents nor the child pay that money to UCLA for the privilege of living and eating at home.

As for work, I don't think 15 hours of work outside university is unreasonable. I did it. And in the summers, I earned up to $5,000.

We are in partial agreement. I do agree that one might take on onerous debt and really put their future in hock, as is evident in Jeffersonian's post. I myself am in hock, but that was because I could not abide by the $12,000 salary I was asked to live on as a grad student (I could have lived on it, but I chose not to). My undergrad was paid for by the redistribution of funds from the rich to myself (i.e. I received grants in aid 90% from my university and the rest was work-study--I even pocketed my summer employment).

I still think $15-20k is not too much debt, and that in my experience, students who pay seem to appreciate their education more. With Pell Grants and Work Study, a student from the lower middle class starts off the year with $12,000. Tuition is $5,000 to $7,000. Summer work could bring in $4,000. A student loan brings in another $5,000. That means a student has resources of $21,000 a year without tapping into their parents at all. That money minus tuition must meet their housing, food and book needs.

I'm actually much more concerned with the massive recent cuts in higher education. I think now is the time when the system might be dismantled.

by Upstate NY on Fri Feb 12th, 2010 at 06:31:35 PM EST
[ Parent ]
My future is hocked.  I never got a Pell grant but I do have 178k in student loans for U Michigan and UVA, and interest is growing.  I'll never be in a position to pay that off and my only hope is that the Board of Veterans Appeals will abide by the medical evidence I submitted and grant me 100% disability.  In which case those loans are forgiven by a recent law.  Or I marry here in Germany and walk away from the US entirely (nanne will you marry me?  I can be in Berlin in 3 hours!)

By contrast, I am attempting to write my dissertation at FSU Jena, Germany, where I pay no tuition and 190 euro a semester for student fees.

My experience has shown me that excellent higher education happens in former socialist states.  Unless you can afford it.  And unless you consider a university who gave us Schiller, Schlegel, Hegel and Marx a substandard education.

"Schiller sprach zu Goethe, Steck in dem Arsch die Flöte! Goethe sagte zu Schiller, Mein Arsch ist kein Triller!"

by Jeffersonian Democrat (rzg6f@virginia.edu) on Fri Feb 12th, 2010 at 07:44:39 AM EST
[ Parent ]
Michigan is indeed expensive but it's also the most expensive public school in the entire nation.

I still don't get how you racked up that much in loans.

by Upstate NY on Fri Feb 12th, 2010 at 10:12:55 AM EST
[ Parent ]
Well, my wife went for one semester (or was it called trimester? it was 4 months long and should really be a quadrimester, but it wasn't) at Georgia Tech.

She paid more for that than I paid for the entirety of my studies (8 years of them, including a one year Master of Science at LSE which accounted for something like 85% of all my fees)

Earth provides enough to satisfy every man's need, but not every man's greed. Gandhi

by Cyrille (cyrillev domain yahoo.fr) on Fri Feb 12th, 2010 at 10:22:15 AM EST
[ Parent ]
Was she a foreign student?

I guess I'm simply referring to state education for state residents.

by Upstate NY on Fri Feb 12th, 2010 at 10:24:52 AM EST
[ Parent ]
Indeed she was -you have a point there.
So was I at LSE of course.

Of course, yearly fees for French students in France are probably around 200€. So the part abroad was always going to be most of the costs.

Earth provides enough to satisfy every man's need, but not every man's greed. Gandhi

by Cyrille (cyrillev domain yahoo.fr) on Fri Feb 12th, 2010 at 11:05:17 AM EST
[ Parent ]
I don't get it either, but they say I did.  Not only that, but I was in-state tuition for both schools having served in the military and having more leeway for residency

"Schiller sprach zu Goethe, Steck in dem Arsch die Flöte! Goethe sagte zu Schiller, Mein Arsch ist kein Triller!"
by Jeffersonian Democrat (rzg6f@virginia.edu) on Fri Feb 12th, 2010 at 10:24:17 AM EST
[ Parent ]
My God, sorry to hear that.

Together with my wife we too have burdensome loans, but that's what 17 years of post-undergraduate education will do to you. And we knew what we were doing all along. We just didn't want to live on the meager graduate assistant income, at the time. I don't really blame our former selves, even now. Living on $12k a year sucks especially when you're young. I don't regret it.

by Upstate NY on Fri Feb 12th, 2010 at 10:26:45 AM EST
[ Parent ]
LOL. I can't believe I just proposed to nanne on European Tribune!  That will be fodder for future wise-cracks.

Heh, I never said I wasn't desparate - nor proud

"Schiller sprach zu Goethe, Steck in dem Arsch die Flöte! Goethe sagte zu Schiller, Mein Arsch ist kein Triller!"

by Jeffersonian Democrat (rzg6f@virginia.edu) on Fri Feb 12th, 2010 at 11:32:46 AM EST
[ Parent ]
I completely missed this. I'd suspect we'd have to marry in the Netherlands, though :-)
by nanne (zwaerdenmaecker@gmail.com) on Mon Feb 22nd, 2010 at 11:16:44 AM EST
[ Parent ]
Or Spain...

En un viejo país ineficiente, algo así como España entre dos guerras civiles, poseer una casa y poca hacienda y memoria ninguna. -- Gil de Biedma
by Migeru (migeru at eurotrib dot com) on Mon Feb 22nd, 2010 at 11:17:26 AM EST
[ Parent ]
Where is that from?

I agree with everything except the higher education part.

by Upstate NY on Thu Feb 11th, 2010 at 11:11:35 PM EST
[ Parent ]
Thank you Jerome. great, succinct summary of the basics --all those crying needs that won't happen.
It is sadly true that almost nothing of any significance in the US works anymore.

Capitalism searches out the darkest corners of human potential, and mainlines them.
by geezer in Paris (risico at wanadoo(flypoop)fr) on Fri Feb 12th, 2010 at 04:05:29 AM EST
[ Parent ]
THE SKY SHE IS FALLING!!!!!!!!!!!!!!!!!!!!!

In foreign exchange, the euro hit lows across the board as the market reacted negatively to the opaque Greek rescue efforts. At 1640 GMT, the euro fell 0.7% to $1.3638. Against the U.K. pound, the euro dropped to GBP 0.8712. The U.K. pound was up 0.4% at $1.5654.

Dippy whoop.

Last year the euro was at 1.27847 USD (averaged for the month.)

She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre

by ATinNM on Thu Feb 11th, 2010 at 05:18:30 PM EST
Oops forgot the cite: quote from WSJ

She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre
by ATinNM on Thu Feb 11th, 2010 at 05:19:23 PM EST
[ Parent ]
Massive, massive losses.

We're in a Euro crisis, clearly.

This spells the end.

(Etc.)

by ThatBritGuy (thatbritguy (at) googlemail.com) on Thu Feb 11th, 2010 at 05:58:53 PM EST
[ Parent ]
yup, i hope haiti shares that recipe for mudcakes with us soon...

'The history of public debt is full of irony. It rarely follows our ideas of order and justice.' Thomas Piketty
by melo (melometa4(at)gmail.com) on Fri Feb 12th, 2010 at 03:23:07 AM EST
[ Parent ]
And EU exports get cheaper. I suspect judo finance is in operation. Quartal v 4 year results (on average).

You can't be me, I'm taken
by Sven Triloqvist on Fri Feb 12th, 2010 at 11:18:12 AM EST
[ Parent ]
So is this a "You try and regulate us, your economy might get broken" play? with this being just a reasonable opportunity?

Any idiot can face a crisis - it's day to day living that wears you out.
by ceebs (ceebs (at) eurotrib (dot) com) on Thu Feb 11th, 2010 at 05:41:42 PM EST
Perhaps it is a "You are so pathetically contemptible that we are just going to take what we want. Try to stop us!" move.

GS thinks that because they can jerk the USA around regularly and blatantly that they can do the same with everyone, (perhaps excepting China.)

"It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Thu Feb 11th, 2010 at 11:42:35 PM EST
[ Parent ]
Are they right?

Capitalism searches out the darkest corners of human potential, and mainlines them.
by geezer in Paris (risico at wanadoo(flypoop)fr) on Fri Feb 12th, 2010 at 04:07:13 AM EST
[ Parent ]
That's what I want to know.

Trichet could stop this nonsense in a heartbeat. He can set an arbitrary floor on the price of Greek bonds by buying them in the open market, at no cost since the ECB has the authority to create euros and since the size of the Greek GDP is just 3% of the Eurozone's, and without announcing that he's done it since open market operations are anonymous.

En un viejo país ineficiente, algo así como España entre dos guerras civiles, poseer una casa y poca hacienda y memoria ninguna. -- Gil de Biedma

by Migeru (migeru at eurotrib dot com) on Fri Feb 12th, 2010 at 04:16:03 AM EST
[ Parent ]
Who doesn't want him to do that?
by afew (afew(a in a circle)eurotrib_dot_com) on Fri Feb 12th, 2010 at 04:22:42 AM EST
[ Parent ]
Questions:

  1. Does this kind of market intervention even fit in Trichet's marketista/monetarist brain? Does it fit in the marketista/neoliberal brains of the Ecofin? How about the Commission?
  2. Has he proposed it to the marketista/neoliberal Ecofin? Does he need to do it?
  3. Has the idea occurred to anyone in the merketista/neoliberal Ecofin? Have they proposed it to Trichet?


En un viejo país ineficiente, algo así como España entre dos guerras civiles, poseer una casa y poca hacienda y memoria ninguna. -- Gil de Biedma
by Migeru (migeru at eurotrib dot com) on Fri Feb 12th, 2010 at 04:27:12 AM EST
[ Parent ]
Migeru:
the merketista/neoliberal Ecofin

I assume it's a typo, but I like it.

by afew (afew(a in a circle)eurotrib_dot_com) on Fri Feb 12th, 2010 at 04:55:52 AM EST
[ Parent ]
It is a typo, but I'm trying to decide whether the right spelling is Marketista or Merkelista.

En un viejo país ineficiente, algo así como España entre dos guerras civiles, poseer una casa y poca hacienda y memoria ninguna. -- Gil de Biedma
by Migeru (migeru at eurotrib dot com) on Fri Feb 12th, 2010 at 07:01:56 AM EST
[ Parent ]
Perhaps you in Europe too have your Obamanations. Can or will the EP bring any pressure on any of these people?

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Fri Feb 12th, 2010 at 12:44:42 PM EST
[ Parent ]
The ECB is the most politically indepedent central bank out there. And unlike the Fed, whose price stability mandate is on a par with other goals such as macroeconomic stability and employment, the ECB is only charged with price stability.

En un viejo país ineficiente, algo así como España entre dos guerras civiles, poseer una casa y poca hacienda y memoria ninguna. -- Gil de Biedma
by Migeru (migeru at eurotrib dot com) on Fri Feb 12th, 2010 at 02:19:04 PM EST
[ Parent ]
But would not putting the burn on manipulators and pirates such as GS serve to insulate the euro from volatility, thus aiding the ECB's sole directive?

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Fri Feb 12th, 2010 at 05:17:23 PM EST
[ Parent ]
Not if you labour under the delusion that volatility is just measurement noise, not a real effect of economic significance.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Fri Feb 12th, 2010 at 05:22:22 PM EST
[ Parent ]
Volatility is noise, but not measurement noise :P

En un viejo país ineficiente, algo así como España entre dos guerras civiles, poseer una casa y poca hacienda y memoria ninguna. -- Gil de Biedma
by Migeru (migeru at eurotrib dot com) on Fri Feb 12th, 2010 at 05:25:17 PM EST
[ Parent ]
For any who think it is "just noise" I would suggest that they try standing within half a kilometer of the launch pad of the Space Shuttle--without ear protection, or, more mercifully, within a meter on axis of a large speaker array being swept with 1/3 octave noise at 130 dB SPL. Indeed, I have wondered how much of the electro-magnetic component of the Big Bang can be accounted for by 1/f noise. A large part of the detonation of a thermonuclear device is "just noise". Idiots.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Fri Feb 12th, 2010 at 05:56:33 PM EST
[ Parent ]
As I have argued in another comment, sovereign Euro debt is part of the money supply and so managing the debt markets falls within the purview of the ECB's monetary policy mandate, narrow though it is.

But anyway, I think it's obvious by now I'm too unserious to be central banker.

En un viejo país ineficiente, algo así como España entre dos guerras civiles, poseer una casa y poca hacienda y memoria ninguna. -- Gil de Biedma

by Migeru (migeru at eurotrib dot com) on Fri Feb 12th, 2010 at 05:27:33 PM EST
[ Parent ]
So we continue to suffer at the hands of blind regulators, whatever the cause of the blindness.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Fri Feb 12th, 2010 at 05:59:00 PM EST
[ Parent ]
Quatremer yesterday:

L'Union ne fait pas la solidarité - Coulisses de Bruxelles, UE

a BCE accepte en dépôt de la dette étatique : lorsqu'une banque commerciale se refinance auprès d'elle, elle dépose en garantie des titres, dont des emprunts d'Etat. La BCE pourrait aussi parfaitement acheter des titres d'Etat que les investisseurs se revendent entre eux (c'est ce que l'on appelle le marché secondaire) : aucun article des traités ne l'interdit. Dans le cas grec, cela voudrait dire que la BCE achèterait la dette dont les investisseurs se débarrassent par peur du risque, contribuant ainsi à faire baisser les taux d'intérêt. Un excellent moyen de couler ceux qui spéculent sur une cessation de paiement de la Grèce... Mais la BCE est-elle prête à franchir ce pas ? Pas pour l'instant.

The same proposal, but nothing clear in his conclusion:

But is the ECB ready to take this step? Not for the moment.
by afew (afew(a in a circle)eurotrib_dot_com) on Fri Feb 12th, 2010 at 05:07:35 AM EST
[ Parent ]
Upstate NY has a theory why not.

En un viejo país ineficiente, algo así como España entre dos guerras civiles, poseer una casa y poca hacienda y memoria ninguna. -- Gil de Biedma
by Migeru (migeru at eurotrib dot com) on Fri Feb 12th, 2010 at 05:16:55 AM EST
[ Parent ]
Which implies Trichet can't buy Greek debt because other decisions have been taken for him (though he may also agree with them...).
by afew (afew(a in a circle)eurotrib_dot_com) on Fri Feb 12th, 2010 at 05:51:32 AM EST
[ Parent ]
Hmm, Trichet can always buy Greek debt as a matter of monetary policy.

Fiscal policy is for the Ecofin and that's what the Council decides.

En un viejo país ineficiente, algo así como España entre dos guerras civiles, poseer una casa y poca hacienda y memoria ninguna. -- Gil de Biedma

by Migeru (migeru at eurotrib dot com) on Fri Feb 12th, 2010 at 06:17:27 AM EST
[ Parent ]
That's the theory, but will Trichet run a policy that will be frowned on by Germany?

Angela Merkel dashes Greek hopes of rescue bid | Business | The Guardian

Angela Merkel, the German chancellor, mounted stiff resistance tonight to any swift bailout of Greece, as a rift opened up between European capitals over how best to tackle the risks posed to the euro.

Despite a show of Franco-German unity on the crisis and the first statement from EU leaders pledging to safeguard the currency's stability, hopes on the markets of a German-led rescue plan to shore up Greece's critical public finances were dashed by Merkel, who repeatedly emphasised that Athens would need to put its own house in order and brushed aside all questions of financial support.

"Germany is stepping totally on the brakes on financial assistance," said a senior EU diplomat. "On legal grounds, on constitutional grounds and on principle."

"Financial assistance" may not be the term for an ECB debt-purchasing programme, but the German attitude seems abundantly clear on the whole.

by afew (afew(a in a circle)eurotrib_dot_com) on Fri Feb 12th, 2010 at 06:35:52 AM EST
[ Parent ]
"Germany is stepping totally on the brakes on financial assistance," said a senior EU diplomat. "On legal grounds, on constitutional grounds and on principle."

Legal grounds: do they mean the Lisbon Treaty?
Constitutional grounds: do they mean the German Constitution? Does it bind other EU states?
Principle: sure, Germans are monetarist hawks.

En un viejo país ineficiente, algo así como España entre dos guerras civiles, poseer una casa y poca hacienda y memoria ninguna. -- Gil de Biedma

by Migeru (migeru at eurotrib dot com) on Fri Feb 12th, 2010 at 06:47:34 AM EST
[ Parent ]
I'm sure Merkel and Sarko would be quite pleased if the euro drifted down to $1.20-1.25. What better way to accomplish that than a vague statement of support for Greece. (I would note that LEP would also be quite pleased.)

Hey, Grandma Moses started late!
by LEP on Fri Feb 12th, 2010 at 07:07:41 AM EST
[ Parent ]
Guillaume Duval, chief ed of Alternatives Economiques, says :

...la Banque centrale européenne (BCE) (...) n'a pas le droit d'acheter des titres de la dette publique d'un Etat membre.

(The ECB does not have the right to buy public debt issues of a member state).

What's the legal basis for what the ECB can or can't do?

by afew (afew(a in a circle)eurotrib_dot_com) on Fri Feb 12th, 2010 at 10:02:47 AM EST
[ Parent ]
and presumably absorbed into the Lisbon Treaty now. I think the relevant articles are in the 100-125 range IIRC.

In the long run, we're all dead. John Maynard Keynes
by Jerome a Paris (etg@eurotrib.com) on Fri Feb 12th, 2010 at 10:18:03 AM EST
[ Parent ]
Nothing precise in those articles of Lisbon (different numbering, but Maastricht numbers are cited too) about ECB intervention on the open market, or the right to purchase member state debt.
by afew (afew(a in a circle)eurotrib_dot_com) on Fri Feb 12th, 2010 at 10:41:52 AM EST
[ Parent ]
See my parallel comment.

En un viejo país ineficiente, algo así como España entre dos guerras civiles, poseer una casa y poca hacienda y memoria ninguna. -- Gil de Biedma
by Migeru (migeru at eurotrib dot com) on Fri Feb 12th, 2010 at 10:44:43 AM EST
[ Parent ]
Gah. That's idiotic.

En un viejo país ineficiente, algo así como España entre dos guerras civiles, poseer una casa y poca hacienda y memoria ninguna. -- Gil de Biedma
by Migeru (migeru at eurotrib dot com) on Fri Feb 12th, 2010 at 10:29:34 AM EST
[ Parent ]
Is that at the time of issue or in the secondary market?

En un viejo país ineficiente, algo así como España entre dos guerras civiles, poseer una casa y poca hacienda y memoria ninguna. -- Gil de Biedma
by Migeru (migeru at eurotrib dot com) on Fri Feb 12th, 2010 at 10:33:33 AM EST
[ Parent ]
He doesn't say, just says the ECB can't help Greece by this means.

I'm looking at the General Documentation on Eurosystem Monetary Policy, Instruments and Procedures, The Implementation of Monetary Policy in the Euro Area (pdf), which has a chapter on Open Market Operations, summarised in this table:

The detailed description of the operations says they are carried out by national central banks, with the exception of "fine tuning operations", where it is also possible "the Governing Council of the ECB can decide" to authorize the ECB to carry them out.

by afew (afew(a in a circle)eurotrib_dot_com) on Fri Feb 12th, 2010 at 10:50:27 AM EST
[ Parent ]
Open market operations on public Euro debt are allowed.

Now, when he says "the ECB cannot help Greece" he's assuming that Greece is bankrupt and needs an ECB loan and there's nothing else that can be done to help Greece.

In fact, Greek traded debt instruments are being subject to speculative attack in the markets and the as part of a "pump-and-dump" operation in which market price volatility is talked up as a sign of insolvency. The ECB could kill the volatility stone dead and enforce a floor on the price, and possibly bankrupt the speculators, through open market operations. That would help the whole Eurozone.

And trading in sovereign debt is a part of monetary policy. Sovereign debt is a key component of the money supply, right after cash.

En un viejo país ineficiente, algo así como España entre dos guerras civiles, poseer una casa y poca hacienda y memoria ninguna. -- Gil de Biedma

by Migeru (migeru at eurotrib dot com) on Fri Feb 12th, 2010 at 10:56:48 AM EST
[ Parent ]
So how can we imagine this possibility doesn't occur to Trichet and others?
by afew (afew(a in a circle)eurotrib_dot_com) on Fri Feb 12th, 2010 at 11:02:50 AM EST
[ Parent ]
Ideological blinders.

En un viejo país ineficiente, algo así como España entre dos guerras civiles, poseer una casa y poca hacienda y memoria ninguna. -- Gil de Biedma
by Migeru (migeru at eurotrib dot com) on Fri Feb 12th, 2010 at 11:07:29 AM EST
[ Parent ]
Jean-Claude Juncker has a frank interview with Quatremer. I should do it as a diary.
by afew (afew(a in a circle)eurotrib_dot_com) on Fri Feb 12th, 2010 at 12:18:17 PM EST
[ Parent ]
[ET Moderation Technology™]

link

En un viejo país ineficiente, algo así como España entre dos guerras civiles, poseer una casa y poca hacienda y memoria ninguna. -- Gil de Biedma

by Migeru (migeru at eurotrib dot com) on Fri Feb 12th, 2010 at 02:23:13 PM EST
[ Parent ]
let's see:

  1. "keeping their powder dry"?
  2. not going to war against their friends, partners and neihbors the Serious People?
  3. not going to war against the financiers who are absolutely needed to save us from a bigger crisis?
  4. it's probably socialisticky?


In the long run, we're all dead. John Maynard Keynes
by Jerome a Paris (etg@eurotrib.com) on Fri Feb 12th, 2010 at 12:40:18 PM EST
[ Parent ]
I think they don't see a problem so they don't look for a solution.

If there is a problem, they think it's entirely Greece's fiscal position, and the solution is neoliberal reform.

The thought that the bond market might be the problem hasn't crossed their minds.

En un viejo país ineficiente, algo así como España entre dos guerras civiles, poseer una casa y poca hacienda y memoria ninguna. -- Gil de Biedma

by Migeru (migeru at eurotrib dot com) on Fri Feb 12th, 2010 at 02:21:27 PM EST
[ Parent ]
There is something called the European Investment Bank Group, made up of the EIB (aimed at integration and cohesion) and EIF, the European Investment Fund, which focuses on a creating a homogenous venture capital market in Europe. The European Investment Bank is a majority shareholder to endorse the role of the EIF as the exclusive vehicle for venture capital of the European Investment Bank (EIB). Other shareholders are the European Union, represented by the European Commission, and a number of European banks and financial institutions from the public and private sector.

EIF carries out its venture capital and guarantee activities using either its own funds or funds entrusted by mandates. The principal sources of mandated funds are the main shareholders, the EIB (EUR 4bn) and the European Union (EUR 1.1bn), whilst up to EUR 1bn is derived from EIF's partnerships with public and private bodies.

The ECB is the central bank for Europe's single currency, the euro. The ECB's main task is to maintain the euro's purchasing power and thus price stability in the Eurozone, made up of the 16 EU countries that have introduced the euro since 1999.

(my text for a website on the EP)

You can't be me, I'm taken

by Sven Triloqvist on Fri Feb 12th, 2010 at 11:04:58 AM EST
[ Parent ]
Article 123
(ex Article 101 TEC)
  1. Overdraft facilities or any other type of credit facility with the European Central Bank or with the central banks of the Member States (hereinafter referred to as "national central banks") in favour of Union institutions, bodies, offices or agencies, central governments, regional, local or other public authorities, other bodies governed by public law, or public undertakings of Member States shall be prohibited, as shall the purchase directly from them by the European Central Bank or national central banks of debt instruments.

  2. Paragraph 1 shall not apply to publicly owned credit institutions which, in the context of the supply of reserves by central banks, shall be given the same treatment by national central banks and the European Central Bank as private credit institutions.
Okay, so the ECB can intervene in the secondary market to prevent price speculation on Euro sovereign debt.

What the ECB cannot do is fund a public debt issue, and that makes some sense from certain ideological perspectives.

En un viejo país ineficiente, algo así como España entre dos guerras civiles, poseer una casa y poca hacienda y memoria ninguna. -- Gil de Biedma

by Migeru (migeru at eurotrib dot com) on Fri Feb 12th, 2010 at 10:42:42 AM EST
[ Parent ]
(source: consolidated EU treaties, PDF)

En un viejo país ineficiente, algo así como España entre dos guerras civiles, poseer una casa y poca hacienda y memoria ninguna. -- Gil de Biedma
by Migeru (migeru at eurotrib dot com) on Fri Feb 12th, 2010 at 10:43:37 AM EST
[ Parent ]
I scanned that too quickly, just read "overdraft".
by afew (afew(a in a circle)eurotrib_dot_com) on Fri Feb 12th, 2010 at 10:55:51 AM EST
[ Parent ]
What the ECB cannot do is fund a public debt issue, and that makes some sense from certain ideological perspectives.

Because by having passed through the bid-ask spread of a major investment bank, it is suddenly converted from a loan into a monetary instrument?

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Fri Feb 12th, 2010 at 11:15:56 AM EST
[ Parent ]
Ideological blinders...

En un viejo país ineficiente, algo así como España entre dos guerras civiles, poseer una casa y poca hacienda y memoria ninguna. -- Gil de Biedma
by Migeru (migeru at eurotrib dot com) on Fri Feb 12th, 2010 at 11:22:10 AM EST
[ Parent ]
LTE to alternatives économiques?

En un viejo país ineficiente, algo así como España entre dos guerras civiles, poseer una casa y poca hacienda y memoria ninguna. -- Gil de Biedma
by Migeru (migeru at eurotrib dot com) on Fri Feb 12th, 2010 at 10:57:49 AM EST
[ Parent ]
I tried to leave a comment but it doesn't seem to have worked - their site is a mess.
by afew (afew(a in a circle)eurotrib_dot_com) on Fri Feb 12th, 2010 at 11:03:39 AM EST
[ Parent ]
We should send them an op-ed :P

En un viejo país ineficiente, algo así como España entre dos guerras civiles, poseer una casa y poca hacienda y memoria ninguna. -- Gil de Biedma
by Migeru (migeru at eurotrib dot com) on Fri Feb 12th, 2010 at 11:05:50 AM EST
[ Parent ]
not surprisingly FT does not like euro, eurocrats and everything they do not control. but so far greece problem was a small problem in debt markets. if anglo-saxons want to make euro cheaper, that's fine, it's an opportunity for Eurocountries to increase exports.
by FarEasterner on Fri Feb 12th, 2010 at 04:05:30 AM EST
Everybody's been mocking the eurozone authorities for pushing the euro too high and being stuck on damaging "hooverian" policies that worry about imaginary inflation at a real cost in jobs (and people like redstar have made that case here as well), while lauding the more pragmatic UK and US approach which effectively amounts to a devaluation of the currency.

Now that the euro is going down a bit, is this seen as good news? No - it's yet again a sign of terrible things for Europe.

In the long run, we're all dead. John Maynard Keynes

by Jerome a Paris (etg@eurotrib.com) on Fri Feb 12th, 2010 at 04:37:27 AM EST
[ Parent ]
And our idiot politicians believe it.

En un viejo país ineficiente, algo así como España entre dos guerras civiles, poseer una casa y poca hacienda y memoria ninguna. -- Gil de Biedma
by Migeru (migeru at eurotrib dot com) on Fri Feb 12th, 2010 at 04:39:25 AM EST
[ Parent ]
Heh, I just want to blow everything up and go back to the Deutsche Mark.  There's a "Fight Club" instinct there where all the corporate headquater's buildings get blown up in the end.  I will be Ikea-boy no more.

Of course that is purely a selfish wish as it would help me personally at the expense iof the population as a whole.  It's also a wish shared by most of my German friends for equally selfish reasons.  Then again, they also long for the good ole' days of the DDR.

So maybe all of our selfish opinions are really not credible after all.

Nevertheless, it is how a lot of us feel and that can translate easily into politics, for better or for worse.

"Schiller sprach zu Goethe, Steck in dem Arsch die Flöte! Goethe sagte zu Schiller, Mein Arsch ist kein Triller!"

by Jeffersonian Democrat (rzg6f@virginia.edu) on Fri Feb 12th, 2010 at 08:10:04 AM EST
[ Parent ]
That would be an incredibly short-sighted policy.

Germany benefits enormously from being one of the big players in a European Union that's expanding its authority and sphere of influence.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Fri Feb 12th, 2010 at 09:30:57 AM EST
[ Parent ]
Pretty much what I am saying in my comment above.  It is very short-sighted policy but it is also very populist.

I mean, I try very hard to see the big picture but at the same time living on 974 USD a month which has just now broken over the 700 euro mark this week.

That's going to be the conundrum, imho - personal economics over the general welfare.

"Schiller sprach zu Goethe, Steck in dem Arsch die Flöte! Goethe sagte zu Schiller, Mein Arsch ist kein Triller!"

by Jeffersonian Democrat (rzg6f@virginia.edu) on Fri Feb 12th, 2010 at 10:29:30 AM EST
[ Parent ]
You are mixing criticisms.

In Q4 2008 people like me were seeing aggregate demand plummet in the Eurozone in real time and wondering why people like Merkel and especially Steinbrueck were sitting on their hands, After all, they had an even more comprehensive look at aggregate demand in their countries than some of us in industries  which, while well correlated to overall economic growth, were in single industries all the same.

And that is indeed what I was seeing in Q4, starting in the second half of October and accelerating in November of 2008, making obvious the case for government demand to bridge the output gap, or government action of some sort to cushion coming shocks.

Not doing anything in the face of the biggest downturn since the 1930's may not be Hooverian...if the American moniker is off-putting, perhaps you would prefer "Austrian"...  this being said, it was not a particularly social stance, and coming from so-called "social democrats" like Steinbrueck belied a certain rhenish conservatism which had nothing to do with the left or with worker's progress.

Devaluating the currency is indeed what is in order. As is higher inflation targets. That is the pragmatic and, yes, left approach to the crisis which is still about us., and in this sense a strong Euro was bad policy (and still is).

Today's criticism is something different however. Rather than criticizing the ECB's legendary tightfistedness and economically stupid no-growth and instability act (as we will soon see in Greece and perhaps elsewhere) pact...this time the criticism is of the EU's legendary lack of central economic stabilizers and economic governance vacuum at the center. This is the explanation for the weak Euro now, which I still think is a good thing.

It's hard to argue in my view with the first criticism. The second different one also has a point, but the counter point is that it is precisly from such crises that the need to fill the power vacuum in Bruxelles becomes obvious, and stabilization mechnaisms and further fiscal coherence are likely now to be formalized. (And if they are not....then there is no need for Bruxelles...)

 

The Hun is always either at your throat or at your feet. Winston Churchill

by r------ on Sun Feb 14th, 2010 at 02:38:14 PM EST
[ Parent ]


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