Topic: The European Debt Crisis Visualized (Read 3334 times)

This actual economy (as I always thought) is only a tease, and I think the situation will never change  maybe only with a real "revolution" : |A forcible overthrow of a government or social order, in favour of a new system|.

If this deal has been done, but none of the money gets released very soon, that seems to me that Greece is still bankrupt as it has a cash flow crisis that the conditions and timing on the release of money mean they cannot meet before bills become due.

It looks like Varoufakis is already giving up and doing stuff that they said they wouldn't do..

The Europe Crisis will not end expect they let greece crisis . Also they should take care about
The king of spain he's   

" It's not a surprise that putting them off is easier than facing them head-on."  - This pretty much sums it up. Greece wants to spend and borrow, and yet fails to even listen about paying it back.
Doesnt surprise me the EU heads are having a hard time comprehending such an idiotic behaviour.

cheers

Greece is such a beautiful place. It's such a shame that it has been oblitared due back economical policies and corruption.

"Minutes ago, eurozone finance ministers announced that they've agreed to give Greece four months of breathing room in which to get its financial house in order. In that time, Greece will either work out a debt restructuring with its creditors or create a fully-functioning economy capable of managing the developed world's second highest ratio of government debt-to-GDP."

Source : http://www.marketoracle.co.uk/Article49525.html

What do you think guys, Can the Greece go  "back" as it was before or not?

Europe has been paying a lot for Greece so far.

This is not true.  You are confusing money amount and money flows.  If the amount of money is constant, it is a conservative system in which a conservation law holds, and all fluxes balance.

Wealth is not the amount of money, but the utility that takes the opposite flow to the money flow.

If you have a cow, and I have 20 chicken, and you value my chicken more than your cow, and I value your cow more than my chicken, then we could exchange those, and both gain in utility.  We could apply barter, or we could use money, or we could use debt.

If we use money, I first buy your cow, and with that money you buy my chicken.  Money has flown, money is constant in amount, and we both won in utility (just as with a barter exchange).

The complex web of money flows does exactly the same.

Interest is nothing else but another money flow, of which both parties find an increase in utility by doing so.

If I borrow money to buy a house NOW, and I pay you back the money, with interest, then the only thing that happens is that there is a certain money flow from me to you (the interest) of which the utility for me is that I have my house NOW and not 20 years from now, which is to me much more useful than to have to live 20 years in a cardboard box while saving for my house.  That money flow (the interest to you) is provided for by me working for an employer, who gives me a salary (another money flow) because he thinks that my working is more useful for him than the salary he provides me, and I'm happy with that salary because my time is worth less for me than the money I receive.  My boss and I, we both win in utility.  A part of that money flow to me goes into paying the interest to you, of which I also agreed that paying that interest is less costly to me than not having my house right now.
So we all win with these flows.  If you use your money flow from me (the interest) to be a customer of my boss, and you pay my boss for some of the products he makes, the circle is closed, all money flows are conservative (that is, they respect a conservation law), and they are opposite to a service and goods flow that by itself is the result of a double increase in utility.

No money creation is necessary.

This is assuming that the private entities are not customers of private entities.  That you don't buy any bread, and that the butcher is not using your services as a plumber, and as if all economic initiative came from public works.  Nothing is less true.  Public works and public spending are, most of the time, largely useless activities to make rich those people who don't produce much useful stuff (state agents, or companies working on state funding).  I'm not saying they are 100% useless.  Often they do have 10% utility or so.  

You see, the state spending is akin of the state using money to employ people who dig holes in the ground in the morning, and who employ other people who refill these holes in the afternoon.  That's a lot of economic activity.  A lot of people "work" a lot.  They are tired when they go home.  They have been digging a lot.  Their hands are sour.  They have a back ache.  If you would tell them that they are lazy, they would be - rightly - feel insulted.  
The company that provides "digging service" and the company that provides "hole filling service" to the state can bill the state large bills.  They employ a lot of people.  They are important in the country's economy.

But they produce zilch value.  The economic output of all that digging and hole filling is zero.

But the state has to provide these companies (richly) with means, so that these people can buy bread, houses, meat, vegetables, send their kids to school....

So the state has to take that somewhere, from people who bake bread, grow vegetables, teach kids, build houses, to give it to the hole diggers and the hole fillers, and more so to the CEO of the companies employed to dig holes and to fill holes.

And yes, sometimes a hole dug in the ground can be useful.  That is then the reason used to justify the huge amount of resources that go to the hole digger companies.

Yeah, the state is stimulating the economy that way :-)

No matter what it will not work out. Those not in debt will not be obliged to pay for those in debt and those in debt will not listen to the terms of condition.

Defecit spending is how money moves into the private sector.

Because the govt can print money it's their responsibility to spend it to keep the economy moving along

Visualize a building in the process of being demolished, thats Greece.

From micro point of view, it is very natural to think that if everyone's net expense is less than their net income, they will get richer and richer and pay back the debt eventually

From macro point of view, in today's money based society, it is impossible. If the total amount of money at any given time frame is constant, one man's profit is always another one's loss, the net result of the whole nation will be zero (In fact negative, due to frictions in transactions and interests)

In order to let everyone to have a positive result, money available in society must keep increasing. Those money enter society in form of loans, either private, commercial or government loan. So, without loan, no new money, thus no net positive result for the whole economy

Under a gold standard, new money enter the society in forms of freshly mined gold, and it is not created by loan, so no loan is required to increase the money supply. When everyone want to make more money, they just need to dig out some more gold. However in today's system, if everyone want to make some money, they have to take out loans, it is those who take out loans enabled others to make money

Bill gate's global goverment and global centralized e-currency will save us.

Most Eurozone countries debt to GDP (with the exceptions of Greece and Italy) was manageable and even going down before Fannie Mae, Freddie Mac, NINJA loans, synthetic CDO's etc but with the aid of smoke and mirrors this is forgotten.

They will inject one trillion into the zone of euro , But i can say that they real hate bitcoin maybe its a punishment 

global scenario = increase debt of all levels = financial RESET (FMi idea) = WAR comes (like in Argentine).



goto 1929.

It's not just Europe that's a problem.  there needs to be worldwide economic oversight in order to stop price gouging and to ensure appropriate values.   New world order!!

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dinofelis

Gold, more properly, has been used as a "Store of Value" for thousands of years.  It serves that role better than anything else!

The other two properties that most thinkers about money assign to "money" are a "Medium of Exchange" (easy to spend) and a "Unit of Account" (keeping track of what all your assets are worth).

Gold is now clumsy to use as "money".  Currency, fiat currency, will be with us for a long time.

*   *   *

picolo

10-4!  

+ 1!

Yes, fiat currency allows a multitude of sins that will not be easy to undo.  The huge debts everywhere are there because the banksters are taking advantage of huge deficit spending (by governments) that we voters allow them...

It's partly our fault too.  There is plenty of blame to go around.

Don't like that?  Buy gold!

The fiat currency helps them lie and have deficits.

This is not true.  The whole world has essentially been having a single currency (gold) for millennia.  
The problem is not the currency.  The problem is the deficit spending.  Using a local currency can "help" when you made a mess with your books by devaluating (inflating) it, and as such, screw your creditors, and lower your actual prices without saying so.
If you need a local currency, to be able to cheat on your creditors, and lower your prices, then it simply means that your balances are not in check.

States got used to be able to cheat their way out of their creditors by inflating their currency, and that is not possible anymore with a sound money or a multi-nation currency such as the Euro.

The Euro is not entirely sound money, but it is way closer to it than any of the former European currencies (except maybe the Deutch Mark).  If Europe would have switched to gold or silver, it would even have been worse for those second-hand car salesman states in the south that can only do business by cheating with the books.

Bitcoin would even be worse.  States aren't used any more to get their books in order, which is enforced upon them with sound money, and with the Euro to a certain extend.

Agreed. Removing a dozen currencies for one master currency can only end in a fiasco, just like uniting different nations under one agenda can only end in disaster and chaos, we decide which end of the chaos

they shouldn't have entered, but now they should stay?

The Euro needs to have a political power in place or they need not to be so political about everything. Greece should not have entered in the EU and should not exit.

agreed, what i meant was, it should have been kept as a "currency" that is pegged to local european currencies as opposed to replacing them. its incredible how they think one entity can control inflation / interest rates  "autonomous" economic areas with completely different economic profiles and requirements, but somehow "even" things out.

The funny thing is that most of any fiat currency is in fact digital, yet centralized by all banks and central banks Most $/£/€ does in fact only exist on the exclusive bank blockchain Fractional Reserve banking at it's finest!

...

redsn0w

I am not a programmer nor an expert in Bitcoin, so you're asking the wrong guy...    Just a happy user trying to learn more every day.

The technology DOES seem to be very promising however.  Especially if the core developers find a way to allow (hashed) data to "ride along" with BTC transactions without bloating the blockchain, there are various companies working on this idea (factom.org for example).

the euro should have been kept a digital currency between banks like in 1999. greece will be out of the euro by year end and The Netherlands will probably issue a Gilder alongside Euro in the next 4-5 years.

No multi economic area have had a single currency succeed for more than 25 years - ever

Could bitcoin be a solution to these problems? What do you think about it ( I mean also as technology and not only a currency).

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The series of debt problems seems to be the greatest menace to the world's economy now.

There is plenty of blame to go around:

-- Banksters who hijacked huge sums of money, and have done so for years.
-- Governments all over the world spending more than they take in, yet "we" keep electing them.
-- Household and corporate debt have grown massively as well.

There seem to be no solutions that are acceptable to TPTB or even to the citizens.

This may end very poorly...

So there isn't a real solution for the actual problem here in Europe, well done "democracy" !

Indeed, the problem is not the money unit, but rather the deficit spending of states.

In fact, a state should not even need to borrow money.  If a state were to balance its fiscal income with its spending, there wouldn't be any problem.  The culprit is neo-Keynesian deficit spending.  Not money. 

If you spend today what will be confiscated tomorrow, based upon the bet that there will be more tomorrow than today, and that it will be more bearable to do confiscate stuff that may be there tomorrow, rather than today (which is the basic idea behind deficit spending), then even a 5-year-old sees that this will end in tears.

It is outrageous that states have been behaving like this.

USA debt, Japan debt, Europe debt have been made with the people, children and even unborn as collateral.

They wanted the cake's money and eat it too.

Have seen this debate since 2011, there is no solution, borrow more is the only way out, and followed by a total default eventually

Greek is just the one to blame, remove Greek, some other country will become the one to blame. With debt based money issuing, there is no way to get a positive return for all the countries in EU as a whole, means they must borrow more and more to finance their debt, without Greek's debt spending, where does Germany's income coming from?

The Euro itself is not the culprit.  In fact, the Euro is much closer to a sound money doctrine than any other fiat currency is.  It is not totally sound money, in the sense that a pre-set CPI inflation of 2% target is set for the ECB, but for the rest, it is sound money, that is independent of any "monetary policy", and just issues an amount of money that is supposed to reach blindly the target.

What is the culprit, is that states cannot handle sound money.  States have, since ages, been used to take seigniorage.  What happens with the Euro is that they can't anymore, and that is why STATES go broke under the Euro.  Just as states went broke under gold too.

If states are put in a situation where they cannot tamper with money for seigniorage, they go broke.

That's what's happening in the Euro zone.  The Euro is one of the best-designed fiat currencies ever (that still makes it a fiat currency that has all the problems of fiat, but amongst the fiat currencies, the Euro is definitely the best).  But states can't handle sound money.

With the Euro (as was the case with gold), states are an economic agent as any other concerning their monetary balances.  If they try to cheat on their balances, it will show in the end - contrary to when they can change the money supply.

Now, what do we have to do ?

Kill the Euro, and have states tamper again with money ?  Or have states get their balances right, as any economic agent ?

This is the video :



https://www.youtube.com/watch?v=C8xAXJx9WJ8


What do you think?