Brian,
I told you not to listen to Bankers!! The debt was created by Bankers, both Commercial and Central. Repayment of debt created by cheap money can only be repaid by cheap money - any increase in the cost of money will only encourage default. The need to loan more money to countries faced with increased cost of money results in the debt is increased not reduced. Any increase in interest rates will then only reward the Banks short-term and punish everyone else for the banks mistakes. So far all the Banks have learned is that if they get it terribly wrong the public purse will bail them out. Those Banks bailed out by public money are now to be sold - toxic loan free - at discount prices to outside investors - in some other country.
You appear to be stuck in the economic groove that punishing the populace to improve the market for business is preferable to solving the actual long-term problem. More or less every country in the world borrowed more money than it was prepared to lend itself as part of spreading the risk - good old business school thinking - so now instead of one country sinking under its own debt it is in danger of taking everyone else down with it. Derivatives were the major - unregulated - way of exporting non-government debt - manifoldly larger than the combined government debt of the world - a large part of that was created bailing out the Banks. Derivatives are fundamentally Commodities based on the value of the underlying product - housing, debt, etc - nobody envisaged their future value imploding and if it did the risk could be theoretically swapped or insured out of existence. What a load of bollocks! When the music stops someone is holding the parcel and the music has most certainly stopped only to find everyone is holding a parcel - and they are all too afraid to tell anyone what is in it (a humongous economic turd) - so they look to government and the tax payer to give them enough money so they don't have to tell them how big the turd is. Unfortunately there actually isn't enough money around to make it go away. And this is the system you want to perpetuate? What benefit accrues from your cheaper loans if the country you sell to is bankrupt? Not so much Quantum Mechanics as a simple chemistry experiment that fails to react. While the uncertainty principle won't allow measuremant of where it is and how fast it is going at the same time - we know both of those things about the economy - very rapidly down the tube.
While the old rules laid down by the IMF and World Bank still dominate economic thinking - squeeze the cash out of the population (except the rich) and ownership of the assets out of the country - we are on a global hiding to nothing. Germany's industrial strength is based on the new EU members in the East surviving on money that Germany is lending to them. Similar to the US - China revolving debt. The UK manufacturing sector is double fuck-all compared to even 30 years ago. As to it being buoyant - ask the unemployed. If capitalism can't get its mind around the fact that the present iteration has failed it'll only get worse. Blind self-interest and the adherence to economic shibboleths won't create a market for a bar of soap if the consumer is too impoverished to spend.
As to the issue of the Euro - it is the existence of the Euro itself. Britain, Australia and Canada can do what they like with their currencies, interest rates, assorted monetary policies and economies in general as they are tied to no external mandatory measure - not so within the Euro group. Domestic economic sleight of hand such as the Barnett formula faces insurmountable obstacles if introduced between contrasting nation states. The good old days of Empire and the ability to impose and maintain the CFA and Sterling are long gone. The short-lived US fiscal hegemony over the world has resulted in their artificially cheap money driving both itself and its fellow liberal capitalist democracies into penury. All on the advice of free-market economists and Central Bankers that think like you. Germany, if it is smart, will take a dive back into the Deutch Mark and drag along the other better run EU and non-EU european countries (which excludes the UK) into a new fiscal union and let the rest wallow in a Euro supported by France.
I told you not to listen to Bankers!! The debt was created by Bankers, both Commercial and Central. Repayment of debt created by cheap money can only be repaid by cheap money - any increase in the cost of money will only encourage default. The need to loan more money to countries faced with increased cost of money results in the debt is increased not reduced. Any increase in interest rates will then only reward the Banks short-term and punish everyone else for the banks mistakes. So far all the Banks have learned is that if they get it terribly wrong the public purse will bail them out. Those Banks bailed out by public money are now to be sold - toxic loan free - at discount prices to outside investors - in some other country.
You appear to be stuck in the economic groove that punishing the populace to improve the market for business is preferable to solving the actual long-term problem. More or less every country in the world borrowed more money than it was prepared to lend itself as part of spreading the risk - good old business school thinking - so now instead of one country sinking under its own debt it is in danger of taking everyone else down with it. Derivatives were the major - unregulated - way of exporting non-government debt - manifoldly larger than the combined government debt of the world - a large part of that was created bailing out the Banks. Derivatives are fundamentally Commodities based on the value of the underlying product - housing, debt, etc - nobody envisaged their future value imploding and if it did the risk could be theoretically swapped or insured out of existence. What a load of bollocks! When the music stops someone is holding the parcel and the music has most certainly stopped only to find everyone is holding a parcel - and they are all too afraid to tell anyone what is in it (a humongous economic turd) - so they look to government and the tax payer to give them enough money so they don't have to tell them how big the turd is. Unfortunately there actually isn't enough money around to make it go away. And this is the system you want to perpetuate? What benefit accrues from your cheaper loans if the country you sell to is bankrupt? Not so much Quantum Mechanics as a simple chemistry experiment that fails to react. While the uncertainty principle won't allow measuremant of where it is and how fast it is going at the same time - we know both of those things about the economy - very rapidly down the tube.
While the old rules laid down by the IMF and World Bank still dominate economic thinking - squeeze the cash out of the population (except the rich) and ownership of the assets out of the country - we are on a global hiding to nothing. Germany's industrial strength is based on the new EU members in the East surviving on money that Germany is lending to them. Similar to the US - China revolving debt. The UK manufacturing sector is double fuck-all compared to even 30 years ago. As to it being buoyant - ask the unemployed. If capitalism can't get its mind around the fact that the present iteration has failed it'll only get worse. Blind self-interest and the adherence to economic shibboleths won't create a market for a bar of soap if the consumer is too impoverished to spend.
As to the issue of the Euro - it is the existence of the Euro itself. Britain, Australia and Canada can do what they like with their currencies, interest rates, assorted monetary policies and economies in general as they are tied to no external mandatory measure - not so within the Euro group. Domestic economic sleight of hand such as the Barnett formula faces insurmountable obstacles if introduced between contrasting nation states. The good old days of Empire and the ability to impose and maintain the CFA and Sterling are long gone. The short-lived US fiscal hegemony over the world has resulted in their artificially cheap money driving both itself and its fellow liberal capitalist democracies into penury. All on the advice of free-market economists and Central Bankers that think like you. Germany, if it is smart, will take a dive back into the Deutch Mark and drag along the other better run EU and non-EU european countries (which excludes the UK) into a new fiscal union and let the rest wallow in a Euro supported by France.
Bear in mind that financial regulation was introduced after a depression and removed before this one. Squeeze the electorate hard enough and they'll change the system once the present guys they deem responsible for the pain get thrown out. The free-market song sounds out-of-tune. Next time you have lunch with a banker ask him what the size of his bank's total exposure to all forms of Derivatives is and don't accept his estimate of exposure only to possibly toxic ones - they are all toxic given there is no market for them.
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