Welcome to European Tribune. It's gone a bit quiet around here these days, but it's still going.

Of Corona bonds and viruses

by Frank Schnittger Sun Apr 26th, 2020 at 11:41:39 AM EST

There is no doubt that having a common currency like the Euro has been a net benefit for most members, most of the time. For a net exporting country like Germany it eliminates one barrier (currency fluctuations and exchange costs) to trade. For a small economy like Ireland it can also avoid the wild fluctuations in currency value experienced by our previous currency, the punt, which could be gamed by a medium sized hedge fund. Businesses crave predictability and eliminating exchange rate fluctuations and costs helps provide that.

On the downside, a 'one size fits all' currency exchange rate with outside currencies and ECB monetary policy can be wildly inappropriate for some countries some of the time. The low interest rates required to fund German re-unification also boosted an Irish property bubble which led, in significant part, to the Celtic Tiger crash.

Then again, there is no way a small economy like Ireland could now borrow at near 0% if we had our own currency. Currency trader and investor knowledge of smaller economies is patchy at best and there will always be a risk premium attached to borrowing in a smaller currency.

Greece should, of course, never have been allowed to join the Euro in the first place. It's structural deficits (and false accounting) were bad enough even when it did have its own currency. The Euro brought in an era of cheap credit and orgy of borrowing that would never have been possible with the Drachma. It's introduction required the adoption of Germanic disciplines and controls on borrowing that simply wasn't part of the culture.

Interestingly Greece has decided to stick with the Euro even after all the pain it has endured. If you are a relatively small trading nation heavily dependent on tourism having a common currency with your customer base has a lot of attractions. Tourists can get their cash at any ATM with minimal if any transaction costs (although banks have been trying to re-introduce them).

Italy is the really hard case. It has suffered a structural relative economic decline ever since it joined the Euro. Whether this would have happened in any case due to Asian competition for much of its industry is hard for me, as an outsider, to judge. But there is no doubt that the value of the Euro - too low for Germany, too high for Italy - didn't help. Draghi's policies helped to reduce the cost of its huge debt pile but didn't solve the underlying problem.

I am unconvinced that continually devaluing your currency or regularly defaulting on debts a la Argentina is any more viable a strategy even if it has its short term attractions. "Once off" devaluations or debt defaults have a habit of recurring as they tend not to to resolve underlying issues. One way or the other, the problem of competitiveness has to be addressed, if you are going to allow relatively open trade on a global basis. In any case the problems caused by trying to exit the Euro could make Brexit look like a walk in the park.

Varoufakis is right to criticise the moralistic northern European habit of ascribing virtue to lenders and fecklessness to borrowers. Every lender needs a borrower and every net exporter needs a net importer. Having a common currency and interest rate regime reduces the tools policymakers have to correct those imbalances which would normally be "managed" via currency devaluations and or interest rate differentials both of which can be painful, but perhaps not as painful as prolonged deflation.

In practice, wage rate and public service level differentials are now doing much of the work of adjusting for differences in competitiveness. Again this has little to do do with virtuous work ethics or public sector efficiencies and a lot to do with how well positioned an economy is to take advantage of economies of scale, location, technological innovation, marketing expertise, market dominance and high margin industries like financial services and pharmaceuticals. It doesn't help social cohesion either at regional or international level within the EU when this results in even greater inequalities and imbalances.

Debt mutualisation could improve cohesion and reduce the total cost of borrowing by creating economies of scale and reducing perceived lender risk but does little to address these underlying structural imbalances. The suspicion in net surplus countries will always be that any interest cost reduction for high deficit countries will be at their cost either through reduced income on their savings, or an increase on their cost of borrowing relative to what their own national bonds would have cost.

But it doesn't have to be an either or. The issue of a mutual EU wide "Corona bond" to fund specific pandemic related costs to a set maximum value in any one economy could be an important demonstration of solidarity while not replacing national bonds for everything else. It would also demonstrate that some EU members are not seeking to benefit from the misfortune of others by charging the high interest rates associated with some previous alleged "bail-out" funds. Italy wouldn't be able to refinance its 135% of GDP debt pile using Corona bonds, but at least any additional borrowing necessitated by the pandemic would be at the lowest possible rate available, currently around 0%.

I do not pretend to fully understand the issues around "helicopter money" and the ECB simply printing huge amounts of cash and giving it to member states or its citizens at a time of crisis. Certainly the traditional fear of it generating inflation hardly seems to be  "le problème du jour". It could be a short term solution, and certainly be preferable to mass poverty or default, but we do not know where the limits of such a policy lie.

Ultimately, a stable monetary union requires a stable political Union and at least a degree of fiscal union which can replace the other stabilisers of differential currency and interest rates that a monetary union removes. If the current management of the pandemic teaches us anything, we are a long way off that in the EU at the moment. Health care is still primarily a national, and often a regional competency. Perhaps one way of progressing a fiscal union is to expand the role, budget and scope of the EU in public healthcare, pandemic preparedness and management, and pharmaceutical and medtech research, development and procurement. Viruses don't respect boundaries, and neither should our health care systems.

Nothing undermines a political union more than having some of its citizens die for want of medical care freely available elsewhere. It is the most basic of human and civic rights and the minimum any political union should provide. It would probably require a new EU treaty to expand EU competencies in this regard, but at least then the Covid-19 pandemic would have provided some legacy for the survivors and bereaved.

Don't be influenced by the Fake News Lame media Frank. Listen to Dr. Trump ... it's not a virus but a blemish that can be chlorinated. It's really a Chinese virus traveling the Silk Route into Europe, Middle East, Africa and now threatens the New World. We'll have none of it ...

Pompeo says China "caused an enormous amount of pain, loss of life," and "Chinese Communist Party will pay a price"

Rubio Joins Perdue and Colleagues Warning Against China's Debt-trap Diplomacy Amid Covid-19 Pandemic

Global Warming - distance between America and Europe is steadily increasing.

by Oui on Sun Apr 26th, 2020 at 12:37:27 PM EST
The 'Chinese Virus' Spread Along the New Silk Road | Foreign Policy |

Global Warming - distance between America and Europe is steadily increasing.

by Oui on Sun Apr 26th, 2020 at 12:40:22 PM EST
[ Parent ]
Too bad the USA has burned and abandoned the virtues that distinguished us from totalitarian governments such as in China. Claiming those virtues that once distinguished the USA from the Soviet Union and the People's Republic of China now sounds hollow, especially from the mouth of Trump. Now it more resembles a tin pot Banana Republic Dictator talking back to a gangster totalitarian dictator. A farce.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sat May 9th, 2020 at 06:16:15 PM EST
[ Parent ]
I started with a smile 😊 ... then realized it's damn serious and getting worse by the day ... a Dutch saying: a smile as a farmer with a toothache. 😠

Global Warming - distance between America and Europe is steadily increasing.
by Oui on Sat May 9th, 2020 at 07:30:32 PM EST
[ Parent ]
The United States have been in denial since 9/11 at least; four years ago, with you know who, they moved to anger. They are still a long way from acceptance.
by Bernard on Sun Apr 26th, 2020 at 05:10:38 PM EST
[ Parent ]
From the linked foreign policy article.

A sustainable grand strategy must also rest on a shared worldview among key political constituencies. If each new government enters office with a radically different understanding of global challenges and opportunities, no strategy will last long. Each new government will tear up its predecessor's policies, shredding the very idea of a grand strategy. Containment endured because every U.S. president from Harry Truman to Ronald Reagan largely adhered to its underlying vision of global affairs. Bill Clinton, George W. Bush, and Barack Obama all embraced variations on liberal internationalism.

Such a consensus no longer exists. Over the last half century, across the West, there has been rising skepticism of the virtues, and even the reality, of nations--of "imagined communities," in the words of the political scientist Benedict Anderson, each unified by a shared narrative. That skepticism arose from a good place: a growing awareness that dominant narratives can be repressive, that they often reflect the interests and experiences of the powerful and silence the voices of communities on the margins. Beginning in the early 1970s, in the Vietnam War's dying days, multiculturalism began to hold sway, at least in the United States. More than just a strategy to manage diversity in a fair and inclusive way, the concept was grounded in mounting doubt that societies should be rooted in some common identity.

In common with much such "political" or "international relations" analysis, it underestimates the influence of global corporations and the impact of Trump's "government by tweet". US foreign policy is now not only no longer consistent from one administration to the next, it changes from one Trump tweet to the next. One minute he negotiations a FTA, the next he tears it up. One minute he praises Chinese leaders, the next he excoriates them. The current Trumpian tactic of blaming China for the Covid-19 pandemic will have profound long term effects even if Trump thinks he can get away with blaming them one minute and working with them the next.

The current global world order is not subjugated by the 24 hr. US news cycle, or Trumps mood swings from one tweet to the next. What is the point of making concessions to achieve an FTA if Trump is liable to tear it up next week? Nobody can be bothered to negotiate with his regime any more. Some, like the EU are just keeping the head down in the hope of keeping out of damaging cross-fire, but the realty is that the EU no longer sees the US as an ally, and is busy crafting alternative relationships and supply chains wherever possible.

Pompeo can stomp around the globe offending local sensitivities as much as he likes. The reality is no one cares any more, unless they are in the direct pay of the Trump administration or are supinely trying to build that relationship, as the pathetic BoJo regime is trying to do. Every time Trump tweets an insult, he is ceding more power and control. We are seeing the dying acts of a global superpower, not anything likely to MAKE AMERICA GREAT AGAIN, even for the billionaire class who fund his campaigns.

Index of Frank's Diaries

by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Sun Apr 26th, 2020 at 06:08:54 PM EST
[ Parent ]
Won't get there either.  We'll just stay in a denial/anger loop until we spin into the ground.
by rifek on Sat May 9th, 2020 at 03:09:40 PM EST
[ Parent ]
I'm tired of the Reich Wing having all the conspiracy fun.  I say I've found one, and it's HUUUGE!  Back when Trump tweeted about "covfefe", he had just been briefed on a new military coronavirus bioweapon and the plan to deploy it in China, but President Short-Attention-Span couldn't remember the actual name of the virus.  All of the scrambling "explanations" by White House staff were just efforts to cover up this massive security breach.  PROVE ME WRONG!  And remember, I'm wearing my conspiracy hat, so facts don't count.
by rifek on Sat May 9th, 2020 at 03:50:23 PM EST
[ Parent ]
HA! (ET should add emojis to the arsenal of responses.)

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sun May 10th, 2020 at 11:34:43 PM EST
[ Parent ]
We have that helpful macro:
by Bernard on Mon May 11th, 2020 at 08:30:56 PM EST
[ Parent ]
It should be tinfoil.
by rifek on Sun May 17th, 2020 at 01:01:39 PM EST
[ Parent ]
Perhaps Trump thought the 'covfefe' virus was spread through coffee.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sun May 10th, 2020 at 11:36:59 PM EST
[ Parent ]
I have heard that Mutti has announced that post-virus stimulus will be the agenda for the German EU presidency of the second semester.

Focus will apparently be on the notion of universal EU healthcare (gee, I campaigned on that during last year's EU election -- did she?), and also of the necessity for the EU of having its own Financial resources (transaction tax, for a start) and on EU members aligning corporate tax rates.

Sadly, I think we must be grateful that she's still in control. There is nobody else in Europe who can change their mind, let alone change other people's.

It is rightly acknowledged that people of faith have no monopoly of virtue - Queen Elizabeth II

by eurogreen on Tue Apr 28th, 2020 at 02:43:42 PM EST
It is sadly the lot of progressive parties to have their best ideas and policies stolen by conservative parties once they realise there is no alternative...

Index of Frank's Diaries
by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Wed May 6th, 2020 at 05:47:03 PM EST
[ Parent ]

by generic on Tue Apr 28th, 2020 at 06:54:53 PM EST
Most of the European countries and major urban areas shown in the graph, seem to be past a "death peak" by now.

Except for England & Wales (and London) where the rate is still climbing; Belgium is still climbing, albeit with a reduced rate and The Netherlands seems to be plateauing.

by Bernard on Wed Apr 29th, 2020 at 05:52:38 PM EST
[ Parent ]
"Ultimately, a stable monetary union requires a stable political Union and at least a degree of fiscal union"

Seems to me that it is also essential to have freedom of movement of workers. One nice thing about the US is that there is absolutely no limitation on moving from one place to another. If you don't like Mississippi, move to NYC. If you don't like NYC, move to North Dakota.

Lots of people won't move because of family issues or fear, but lots of others pick up their bags and relocate at the drop of a hat. Mississippi Delta to Chicago being one obvious example.

NYC to California is another.

by asdf on Tue Apr 28th, 2020 at 10:21:11 PM EST
Well. we have travel restrictions now. The entire constitution has been thrown out by fiat of Governors.
by StillInTheWilderness on Tue Apr 28th, 2020 at 10:53:01 PM EST
[ Parent ]
Leprechaun economics by Paul Krugman

I knew there was an issue with Apple and the Green Jersey, never really got the major shock effect. 🍀🍂🍄

Global Warming - distance between America and Europe is steadily increasing.

by Oui on Thu Apr 30th, 2020 at 07:03:49 AM EST
Face masks, a simple explainer:

by Bernard on Sun May 3rd, 2020 at 04:06:51 PM EST
by Oui on Sun May 3rd, 2020 at 04:56:05 PM EST
[ Parent ]
"Then again, there is no way a small economy like Ireland could now borrow at near 0% if we had our own currency."

Not true. A government with a sovereign fiat currency can always set the lower bound of interest rate on the bonds it sells through the actions of its treasury and central banks. Granted the larger the economy of a country the more this is true. This is because the country can always create the money to pay interest or to redeem the bonds - however much this might offend the sensibilities of the more conservative.

Also, such a government can always purchase any good or service for sale in its state. Provided this ability is not used frivolously it will not produce inflation. It is only necessary that value be received for such purchases. This could, for instance, include housing projects financed by the state.

Sadly, these abilities are not available to the members of the EuroZone. But German courts have just declared war on the rest of the Eurozone.

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

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Wed May 6th, 2020 at 04:24:59 AM EST
The EuroZone would work so much better without Germany.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Wed May 6th, 2020 at 04:25:47 AM EST
[ Parent ]
So why was I paying 14% interest on my mortgage in the 1980's? Why was the state paying exorbitant interest on its borrowings in foreign currencies when the (relative) value of those currencies was going up due to Punt devaluation?

It's quite different if you are the controller of the World's reserve currency - you can more or less do whatever you want. But a small economy, dependent on foreign investment and with large scale foreign borrowings subject to wild exchange rate swings and v. high interest rates is in a very different position.

You can print lots of money and "the markets" just devalue your currency by the corresponding amount. In practice any medium sized hedge fund can game the system and make huge profits at your expense. There is a reason why Ireland was so keen on ditching the Punt.

Index of Frank's Diaries

by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Wed May 6th, 2020 at 06:23:25 PM EST
[ Parent ]
I am unable to comment on the situation in Ireland prior to the formation of the EuroZone because of ignorance. I do concede that a currency with small international weight is more vulnerable to manipulation via the FX markets.

If you enjoy the benefits of a sovereign fiat currency it is unwise to borrow in another currency, especially one in which you are NOT paid. We see this happen over and over. You open yourself to currency risk when you do so. Also, to  benefit from a sovereign fiat currency the country's monetary policy has to be run in ways that take advantage of those benefits. The tendency in the Anglo world has been to instead just pretend we are still on the gold standard.

Another big disadvantage of the Euro, especially for small countries, is that while there is one currency that all members USE, each country that is a member is responsible for their own banks and supervision. There is a bank that is responsible for managing the Euro, the ECB, but it is forbidden, at the insistence of Germany, to perform the primary task for which central banks exist - to protect the payment system. Instead, individual governments are responsible for the banks in their territories. But the governments cannot create Euros, so they cannot assure against default.

And then, if I recall correctly some of your posts from around 2008 and thereafter, there was more than the taint of corruption in some of the dealings between the Fianna Fail government and the banks and between Irish banks and foreign banks, especially German banks. So, when the crunch came the Irish state and its taxpayers DID in fact have to make good the losses of German banks - losses those banks were in the best position to have foreseen. Heaven forbid that German taxpayers should have to make good the losses incurred by German banks in foreign nations.

It is for outrages such as this that I cannot but see the EuroZone as anything but a giant control fraud run on behalf of Germany by the ECB and the EC.

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

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Thu May 7th, 2020 at 02:11:10 AM EST
[ Parent ]
In fairness German, Danish, UK and other foreign banks did make big losses on their investments in Irish subsidiaries - chiefly those based in the IFSC - Irish financial services centre.

What was unconscionable was that the Irish Government, against much advice, chose to guarantee the bond holders in Irish banks in order to shore them up and thinking it was a relatively risk free guarantee that would never be called in. Some of the Irish banks - chiefly the Anglo-Irish Bank were also quite fraudulent in the way that they hid the true extent of their liabilities and continued trading while insolvent.

Had this been just a guarantee for Senior bondholders, a case might have been made there was some long term national interest being served, but the government extended the guarantee to junior bond-holders - who get a higher rate of return in in return for taking on a higher level of risk and who had no entitlement, and perhaps not even an expectation of getting such a guarantee.

Some reforms have been introduced since. There is now greater EZ level of supervision and responsibility for larger banks and the idea of taxpayers bailing out private banks has been "discredited". €60 Billion too late for Ireland I'm afraid... But at least Ireland now has a very high credit rating and an ability to source low cost finance on international markets.

Index of Frank's Diaries

by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Thu May 7th, 2020 at 10:37:12 AM EST
[ Parent ]
"Then again, there is no way a small economy like Ireland could now borrow at near 0% if we had our own currency."

You can do so today because the ECB has set the interest rate near zero. Most large countries have done likewise. There is presently such a dearth of borrowers that most small countries could likely find investors willing to lend cheaply and denominate the loan in the local currency - provided there were reasonable prospects for repayment. They would simply buy instruments on the FX market to insure against currency fluctuations, which would add to the cost of the loan.

If you had your own currency you could also set the rate low unless you  were compelled by internal or balance of trade issues to attract foreign investment. But the purchases that a government with a sovereign fiat currency can make in its domestic economy ARE constrained by the availability of those resources in that country, be those resources labor or materials. So, if there is a shortage of lumber due  to deforestation, build with brick, stone or any import material that is available cheaply, provided you have exports the world wants.

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

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Thu May 7th, 2020 at 02:30:46 AM EST
[ Parent ]
I found this on an MMT site. It is by a retired English Civil Engineer named Tom Griffiths:

A recent phone-in comment by LBC Radio's economics correspondent set me thinking, as it led to the usual nonsense over equating Govt. spending with 'debt'. There were phrases like "UK Govt is paying the salaries of 60% of Brits- even another month will bankrupt us" etc. I thought of a useful parallel which went on immensely longer, and yet the promised bankruptcy never arose.

Shortly after the declaration of war in 1939, Britain ramped itself up into practically the most single-focused economy ever seen in the modern world. Within 2 years, 6 million Brits were paid directly by HMG in the armed forces alone. That is, at least 25% of the adult population. On top of which, a huge percentage of the UK economy was switched to exclusively war materials output. Domestic car, bus and truck manufacturing stopped completely. As did train manufacture. Dockyards concentrated on war vessels or freighters which often had a very short life.

This continued until early 1946: in other words the UK Govt closed huge swathes of private industry, and more or less directly employed over half the UK population for 5 years uninterrupted. Practically nothing of the 'traditional' industries worked for anything other than Government money, apart from farms, food industry, shops and a token amount of clothing and domestic items manufacture. For 5 whole years.

According to the 'household budget' idiots, this would have left us with a decimated economy, a crushing mountain of 'debt' equal to 5 years or more of GDP, and plunged us into a deep and savage depression.

Instead, the only visible debts were a combination of the real ones: the $6.5bn dollars owed to Canada and the USA for provision of food, oil and war materials, and the sum total of war bond redemption costs in £Sterling. The Dollar debts began repayment in 1950, and the total apparent visible debt was only about a third of what the 'household' model would have predicted, i.e. about 2-2.5x GDP

The whole 5-year complete takeover by Govt didn't lead to much inflation, due to rationing and price controls.

As troops were demobilised in a planned way, because the infrastructure of the economy was still in place, although rather battered, output simply started again. Not quite as simple as turning on a tap, but not far off. The promised depression never occurred, probably helped by the stimulus of having to rebuild lots of things, and re-supply our old markets which had been turned off by the almost 100% cessation of international trade.

So the answer to the pessimists is: we weathered a similar international hiatus which involved the Govt paying almost everyone, for a full 5 years once, and bounced back. That is (with this current lockdown scheduled to probably last 4 months) an almost exact parallel economic hit, but 15 times greater in magnitude. And with more deaths along the way (approx 400,000)

With neo-liberal economic doctrine neither the UK nor the USA could have successfully fought Germany in WW II. War mobilization would have been paralyzed by fear of debt, which is a totally bogus issue in an intelligently run nation with its own fiat currency.

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

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Mon May 11th, 2020 at 01:20:09 PM EST
[ Parent ]
And in the years immediately following the war (with c. 250% debt/GNP ratio) the UK was able to build up the NHS and public housing for all - something which was considered Corbynite looney left policy at the last election in a country with less than 100% debt GDP ratio and many times richer.  Of course the Gini index has been rising ever since... why give health & housing to the poor when the rich can keep all the wealth to themselves...

Index of Frank's Diaries
by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Mon May 11th, 2020 at 06:14:08 PM EST
[ Parent ]
The fact that Germany is now in the same pile of shit as the rest of us offers a glimmer of hope

... Thank you Mr Varoufakis... And "Irish economist David McWilliams" also speaks sense...
Glimmers of despair also :

DM: When I was born in Ireland, the country was very poor. And then it became quite wealthy, on the back of the European project, on the back of Europe's position in the global supply chain, and with a tax policy that attracted lots and lots of capital. My sense is this model might be gone, and this style of globalisation along with it. I fear that the period when you could travel, engage, move - we might have reached the end of that open period. People will say: "This virus came from the cosmopolitan world, from the world of international movement." Whether it's right or not, we might begin to blame people. We know that the Black Death resulted in ferocious antisemitism in Europe. People asked: "Who can we blame for this?" And so they blamed the one community that was already in isolation in the ghetto.

It is rightly acknowledged that people of faith have no monopoly of virtue - Queen Elizabeth II
by eurogreen on Wed May 6th, 2020 at 03:52:14 PM EST
Will the coronavirus crisis finally spell the end of cash payments in Germany? - DW
Germany may have gotten rid of its kaiser long ago, but the country still has a king: cash. An outlier among rich countries, Germans are famously shy about paying with cards, let alone swiping a smartphone at the checkout line. German shops and restaurants are equally famous for not wanting to accept card payments.

But now with social distancing rules and the fear of spreading COVID-19, signs are popping up in restaurants and shops asking customers to pay electronically -- if possible with a contactless card -- to avoid close contact while exchanging cash.

Add to this the people ordering and paying online for household items and take-away food during coronavirus lockdowns and a revolution is underway. Germans, it seems, may finally be pushed into the age of electronic payments whether they want it or not. Soon cash may no longer be king.

by Bernard on Thu May 7th, 2020 at 08:15:15 PM EST
[ Parent ]
I never understood that German attitude. My kids almost never carry cash. They even use phone apps to split restaurant bills between them. I have some in reserve but there are fewer and fewer situations where you need cash in Ireland nowadays.

Index of Frank's Diaries
by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Sat May 9th, 2020 at 09:02:00 AM EST
[ Parent ]
The Bundesbank, Social Democracy and the Era of the `Great Inflation', 1970-1978

Furthermore, the chapter goes on to note the extent to which the 1970s were littered with monetary anniversaries. It argues that these occasions, coupled with the economic crises at hand, served as moments of reflection that allowed the Bundesbank to bolster its reputation and reinforce the parameters through which West Germans interpreted the monetary past.

Lessons from the past: THRIFT

Stories of the children of the Great Depression: What I learned from my parents

Global Warming - distance between America and Europe is steadily increasing.

by Oui on Sat May 9th, 2020 at 09:30:20 AM EST
[ Parent ]
A personal reminder in the aftermath of military overspending on the Vietnam War ...

Traveled to West-Germany for my honeymoon in August 1973. Always careful with cash, so went to American Express here in The Hague and bought travelers cheques in US dollars ... as I arrived on my destination, in first weekend the Nixon decision shaved 15% off my dollar value. 😄

Lesson learned! 😉

Devaluation US dollar

Global Warming - distance between America and Europe is steadily increasing.

by Oui on Sat May 9th, 2020 at 09:48:08 AM EST
[ Parent ]
Long time ago ... was indeed 1971  ... bought our house in `73 ... still very happy living there. 😊
... and 1973 was the oil embargo and a Sunday with no road traffic. gasoline was distributed in warlike logistics.

Global Warming - distance between America and Europe is steadily increasing.
by Oui on Sat May 9th, 2020 at 01:10:37 PM EST
[ Parent ]
It's almost as if paying by contactless card is too easy. People might use it too often and spend too much.

Having to make sure you have enough cash with you, counting it out carefully, making sure you get the right change in return is part of the ceremony of cash. You are physically handing over some hard earned dosh and reminded of how long it took you to earn it.

Whereas if it takes place in a virtual world where cash flows in and out of your account there is no moral checkpoint at the point of purchase - do I really need this? Everything becomes simply a matter of cash flow, and provided you aren't going heavily into arrears there is no problem. No putting aside a few notes in a mattress for a rainy day.

And besides, the taxman gets to see everything.

Cash also feeds into the conservative myth that money is a real thing, in and of itself, and not merely an arbitrary unit of exchange. Having a big wad of it defines who you are, makes back-handers easier, and assists in the negotiation process. (Don't show them your €50 notes if you only want to spend €20!).

Protestant thrift means putting  your €50 note on the collection plate where everyone can see it. Otherwise, what's the point?

Index of Frank's Diaries

by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Sat May 9th, 2020 at 05:56:06 PM EST
[ Parent ]
Damn ... so true Frank .. left me with a big smile 😄

Just like my German counterpart ... I do/did 95% by cash out of the wallet 🎭 when it's nearly empty, somehow I spend less 😉

Global Warming - distance between America and Europe is steadily increasing.

by Oui on Sat May 9th, 2020 at 07:36:04 PM EST
[ Parent ]
Score one for the Irish:

The Irish are sending relief to Native Americans, inspired by a donation from a tribe during the Great Famine

 (CNN)People in Ireland inspired by an act of generosity committed more than 170 years ago are paying it forward.
In 1847, the Choctaw people collected $170 to send to people in Ireland who were starving during the potato famine.
The struggles experienced by the Irish were familiar to the tribal nation: Just 16 years earlier, the Choctaw people had embarked on the Trail of Tears and lost thousands of their own to starvation and disease.

Now, donations are pouring in from people across Ireland for a GoFundMe campaign set up to support the Navajo Nation and Hopi reservation during the coronavirus pandemic.
"From Ireland, 170 years later, the favour is returned!" a message from one donor reads. "To our Native American brothers and sisters in your moment of hardship."

Bond remains strong between Choctaw and Irish - Choctaw Nation

The Choctaw Nation and the people of Ireland have a long and storied history. Although separated by thousands of miles, these two nations are forever entwined because of a small act of kindness nearly two centuries ago.

In March of 1847, a group of Choctaw people met to raise money for the starving poor in Ireland. The Choctaw people had received word about the dire situation of the Great Potato Famine and simply could not stand by and not help. The Choctaws pooled together $170 which was sent first to the Memphis Irish Relief Committee, then to the General Irish Relief Committee of the City of New York. The $170 would be worth around $5,000 in today's economy.

During the Great Potato Famine, more than a million people died in Ireland when their potato crops were decimated. Another two million left the country when the potato crops failed in successive years. Potatoes served as a primary food source for almost half the population but primarily the rural poor. The gift from the Choctaw Nation directly impacted the survival of many in Ireland.

The Choctaw Nation's gift was recognized as extraordinary even at that time. The chairman of the New York committee specifically mentioned it in reports to the Central Relief Committee in Ireland.

The gift to the Irish people was significant, considering the Choctaw people had recently been forced to walk the Trail of Tears between 1831 and 1833.

by Bernard on Wed May 6th, 2020 at 06:46:45 PM EST
The Choctaw gift was pretty amazing at the time, given they too were poverty stricken and probably didn't have a great experience of Irish immigrants to America, insofar as they came into contact with them.

Index of Frank's Diaries
by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Thu May 7th, 2020 at 12:10:06 PM EST
[ Parent ]
The Irish made a quite favorable impression on Mexico at that time. Patricios fought on the Mexican side during the US-Mexican War - Catholics vs Protestants.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sat May 9th, 2020 at 06:35:06 PM EST
[ Parent ]
Ireland's generosity to Navajo Nation's coronavirus fund `beyond amazing,' says its AG
Irish people's generoisty in helping Native Americans fight one of the worst coronavirus outbreaks in the United States has been described as "beyond amazing" by the Navajo Nation's attorneny general.

Hundreds of thousands of dollars poured in to the Navajo & Hopi Families Covid-19 Relief Fund since it began to go viral in Ireland, helping it burst through its target of $1.5 million (€1.3 million) last week.

The list of donors to the GoFundMe page is dominated by Irish surnames, and many donors left comments to say they were giving in remembrance of Native American aid to Ireland during the Great Hunger.

In 1847, members of the Choctaw tribe raised $170 in famine relief for Ireland, a huge sum for a time when they had very little, as it came after they had been driven from their land in the devastating so-called Trail of Tears.

The nation's attorney general Doreen McPaul who has Irish grandfathers, told RTÉ's Morning Ireland on Tuesday that it was "just really heart-warming" when she learned of the many donations from Irish people. "It made me want to follow up more," she said.|

Index of Frank's Diaries
by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Tue May 12th, 2020 at 09:38:21 AM EST
[ Parent ]
I've said it for some time, and I think current events are proving it out: The EU was never intended to be a real union but rather was cooked up to give the BRD a comparatively soft landing for political reunification and economic reorganization, and when it served its purpose, Germany would pull the plug.  If the EU were meant for the long haul, it would at the least have real sovereign authority making the Euro a real sovereign currency (I know there are a number here who insist the EU is sovereign and the Euro is a sovereign currency.  Ahem.  First, who possesses the militaries, the EU or the members?  Second, if the Supreme Court of California ruled that the Federal government's distributing tax money from California to Mississippi was illegal, the Federal government's and the markets' response would be, "That's adorable, now why don't you run along and play," not the kerfuffle caused by the recent German court decision.).

While it looks like Berlin is still some way off from pulling the plug, die Karlsruher Kardinaele have now waltzed in with their decision on ECB activity and appear determined to push the pace.  And what then?  What was inevitable from the start.  Let's face it, there was only so long this could run on before the French figured out they were one of the marks and not part of the con and get pissed off in ways only the French can.  And does it matter given that Germany seems to be on its usual course of snatching defeat from the jaws of victory?  Internal divisions are worsening, DB is a train wreck full of dumpster fires, and the government is determined to pursue a hard money policy (not just a neoliberal austerity policy, which is bad enough) that has historically proved disastrous, such as the rolling and endless recession in the US the entire last quarter of the nineteenth century.  What does a football team do if its goalie doesn't even know which side of the net to stand on?  It gets a new goalie.  Or it gives up.

by rifek on Sat May 9th, 2020 at 04:50:43 PM EST
A quick solution: Dexit. Without Germany the Euro-Zone and the ECB could be functional entities. Once that was shown to be the case Germany would be clamoring to get back in. When out, who could afford their exports when denominated in Deutchmarks?

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sat May 9th, 2020 at 06:32:25 PM EST
[ Parent ]
I don't think the Karlruhe Kardinales caused too much of a stir. Everybody knows the ECB is subject to EU and not German law, and so long as the ECJ goes along with it, the ECB can ignore Germany.

Yes, the Germans can throw their toys out of the pram or even get out of the pram altogether. They might be surprised how few would be bothered by that and follow them - Holland? Finland?

Meanwhile the ECB could become a real central bank and the other members could discuss steps towards greater fiscal union. Lots of things are possible when the requirement for unanimity is removed.

A multi-speed EU may be just what the doctor ordered...

Index of Frank's Diaries

by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Sat May 9th, 2020 at 10:40:55 PM EST
[ Parent ]
Having Germany leaving the Euro and reintroducing the Deutschmark was the initial program of AfD.
by Bernard on Sun May 10th, 2020 at 08:43:57 AM EST
[ Parent ]

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