EU Voting - Slovakia No ??

TheStone

So, Slovakia have voted no to the ESFS. (I guess this is Greece bailout 2?, not 3, which is even bigger).

I totally understand why they would say no. They worked hard to honestly meet the entry requirements and they work a lot longer and get paid a lot less than Greece.

Why, within the EU, if someone votes the 'wrong' way, do they insist on just voting again until the 'right' answer is achieved? This happened with the Lisbon Treaty too.

I'm not against the EU (but never expected or wanted it to be this big/powerful), but where is the democracy?

rick_chasey

In short, because practical necessity demands they say yes.

They f*ck the process, they f*ck the global economy.

TheStone

Rick Chasey wrote:

In short, because practical necessity demands they say yes.

But you can't say the same about the Lisbon Treaty. That was more "we want power, give us power" ... "no" ... "try again"..... "no" ...... "rrrr" .... "yes"

Rick Chasey wrote:

They f*ck the process, they f*ck the global economy.

There are other options, but none of them are nice. Splitting from the euro and defaulting is probably their best bet. Won't be good for the German/French/UK banks, but that's not really Greece's or Slovakia's problem right now.

rick_chasey

Also, in fairness to the EU, the Slovak government did collapse as a result of the vote.

Splitting from the Euro and defaulting will lurch the global economy deep into recession.

It'd be utter carnage.

rick_chasey

TheStone wrote:

Rick Chasey wrote:

In short, because practical necessity demands they say yes.

But you can't say the same about the Lisbon Treaty. That was more "we want power, give us power" ... "no" ... "try again"..... "no" ...... "rrrr" .... "yes"

.

Again, in fairness to the EU, had the original plan to get a proper formalised constitution etc, there'd have been less problems further down the line when sh!t went wrong - i.e. now.

The Eurozone has two options in the medium to long term. Further political, monetary, and economic union, and so keeping the Euro afloat, including overarching rules on the what national treasuries can do, as well as stuff around Eurobond issuance etc.

Ooor.

Cut up the Eurozone in its current form, which would create A LOT of pain globally for quite a while.

It'd be Lehman x10.

OffTheBackAdam

Because they've sussed the way things work in the EU.
Behind the scenes, they'll be some wheeler-dealing going off. A nice bribe of EU money will be promised to Slovakia, a few juicy jobs will come their way on the payroll, then they'll happily vote yes.
There is no democracy in the EU, we have no say in any of its policies.
http://eureferendum.blogspot.com/2004/0 ... -week.html
http://eureferendum.blogspot.com/2004/0 ... -week.html

rick_chasey

OffTheBackAdam wrote:

Because they've sussed the way things work in the EU.
Behind the scenes, they'll be some wheeler-dealing going off. A nice bribe of EU money will be promised to Slovakia, a few juicy jobs will come their way on the payroll, then they'll happily vote yes.
There is no democracy in the EU, we have no say in any of its policies.
http://eureferendum.blogspot.com/2004/0 ... -week.html
http://eureferendum.blogspot.com/2004/0 ... -week.html

if the EFSF doesn't get ratified, we're all in a pile of sh!t.

This is certainly the time where centre-right Eurosceptics are proven right.

This is certainly NOT the time to just ditch it by the wayside. The problems foreseen by the Eurosceptics have been played out so far, but now we're in the mess, the EU needs to follow through to sort the mess out, since anything else would be the closest we could realistically get to economic Armageddon.

TheStone

Rick Chasey wrote:

if the EFSF doesn't get ratified, we're all in a pile of sh!t.

I don't see what it solves? We're taking the debt from one country and giving it to the people of other countries (most of which, are already in trouble).

There also seems to be this misplaced belief that it's all just a confidence problem. If we can kick the can down the road long enough, people will eventually want more debt and more spending, whereas in reality the global depression is inevitable as a consequence of the 10 year debt boom (private/govt/corp). There's no way out of it. Everything that's gone on in the last 3 years has been a delaying tactic, that at the same time has switched the inevitable pain from those that caused the problems and benefited from the boom to those that did not.

rick_chasey

TheStone wrote:

Rick Chasey wrote:

if the EFSF doesn't get ratified, we're all in a pile of sh!t.

I don't see what it solves? We're taking the debt from one country and giving it to the people of other countries (most of which, are already in trouble).

There also seems to be this misplaced belief that it's all just a confidence problem. If we can kick the can down the road long enough, people will eventually want more debt and more spending, whereas in reality the global depression is inevitable as a consequence of the 10 year debt boom (private/govt/corp). There's no way out of it. Everything that's gone on in the last 3 years has been a delaying tactic, that at the same time has switched the inevitable pain from those that caused the problems and benefited from the boom to those that did not.

It's going to take a long time whatever happens.

If you let Greece default, not only to a fair number of large investment banks get properly hit, and I mean a full broadside, but investors and other banks, out of fear of their own exposure not just to Greece but contagion too, will shrink away and hold their money back.

That will, in short, create a massive liquidity crisis and another credit cruch. Given how exposed Dexia was (which was considered safe) to a lack of liquidity, you can imagine the carnage it will cause in the financial sector.

If you want people to keep their bank accounts and keep taking cash out of the wall, some kind of bail out would probably be necessary, which would be difficult.

Nation credit ratings would drop plenty further in the light of high negative growth, so borrowing would become more expensive. Combine that with a huge drop in confidence to an already recession bound economy (globally), you'd create a huge recession, which in turn, would exacerbate all I have just described.

It'd be genuinely 10x worse than Lehman if Greece defaults.


The EFSF will prevent that scenario, in theory. The idea is, we slowly but surely stabilise everything and gradually wind everything down, the debt, the spending etc, gently enough that it stops the above happening but also allows for a little growth, if possible.

It will take a long time to do that, perhaps a decade, but it would take just as long, and be much more damaging, if you do the 1st option.

daviesee

OffTheBackAdam wrote:

Because they've sussed the way things work in the EU.
Behind the scenes, they'll be some wheeler-dealing going off. A nice bribe of EU money will be promised to Slovakia, a few juicy jobs will come their way on the payroll, then they'll happily vote yes.

^^^^^^ THIS ^^^^^^

TheStone

Rick Chasey wrote:

It's going to take a long time whatever happens.
...........
It'd be genuinely 10x worse than Lehman if Greece defaults.

The route we're going down could take a couple of decades to unwind. We're protecting one generation (across the West) at the expense of another. Or we could take the hit now. It will be bad, really bad, but possibly within a couple of years we can almost start again.

I disagree on the Lehman thing. The Greece debt is not that large. Most of the banks have already written down 50% plus, so why don't they default? You can pick-up a 1 year Greek bond for around 100% yield, so the market has priced in a huge chance of default.

neiltb

From what I have read, nobody really knows what will happen whatever they do, they have put the options on the wall and picked what they think will be the least worst option. That least worst option is the same least worst option they have been trying for 3 years.

Where has it got us? A questionable recovery but teetering awful close to back into recession. The banks got to offload all their bad decisions on to the taxpayer and sit on their piles of money so no lesson learned there.

We created a situation of spending more than we had and are solving it by throwing more money at the problem (but by having the guys on the street borrow it for you).

Delaying the inevitable does not stop the inevitable from happening.

Maybe it's time to try the next to last least worst option?

TheStone

It's hard to say what default will mean for Greece. I think the last two big defaults were Russia and Argentina. Neither were nice.

Does Iceland count as default or did they just refuse to transfer the bank debt to the tax payers?

It will mean losses for the banks, but is that such a bad thing? How they managed to pay bonuses since '07 is incredible. This could at least slow that down.

rick_chasey

TheStone wrote:

Rick Chasey wrote:

It's going to take a long time whatever happens.
...........
It'd be genuinely 10x worse than Lehman if Greece defaults.

The route we're going down could take a couple of decades to unwind. We're protecting one generation (across the West) at the expense of another. Or we could take the hit now. It will be bad, really bad, but possibly within a couple of years we can almost start again.

I disagree on the Lehman thing. The Greece debt is not that large. Most of the banks have already written down 50% plus, so why don't they default? You can pick-up a 1 year Greek bond for around 100% yield, so the market has priced in a huge chance of default.

I don't think it would bounce back after two years of pain. It didn't in '08 and it won't do now.

Greece defaulting f*cks the Euro. You'll get contagion, and the Euro would collapse, at least in it's current form. That'd be ENORMOUS pain. Seriously massive. Worse that the '30s globally.

It's just not worth it for the principle.

The baby boomers have already f*cked it for their children already, which is why we're in this situation now. It's too late to be concerned about the next generation. We need to make the best of a bad situation.

Neither scenario is good.

10 years of stagnant growth is socially and economically more preferable than a supercharged recession.

OffTheBackAdam

TheStone wrote:

It will mean losses for the banks, but is that such a bad thing? .

Depends where your pension funds are invested.

Gazzaputt

IMO I say f*ck it and start again.

The next day will dawn and life will go on.

ooermissus

Gazzaputt wrote:

IMO I say f*ck it and start again.

The next day will dawn and life will go on.

It's not entirely clear modern societies have a reboot button.

TheStone

Rick Chasey wrote:

I don't think it would bounce back after two years of pain. It didn't in '08 and it won't do now.

Greece defaulting f*cks the Euro. You'll get contagion, and the Euro would collapse, at least in it's current form. That'd be ENORMOUS pain. Seriously massive. Worse that the '30s globally.

It didn't bounce back in '08 because we didn't let it fall far enough. With the boom we had, we're due a depression much worse than the '30s. All that's happened so far is we've shifted the bad debt from the banks to the govts. Now the govts are starting to fall.

Each year we let this nonsense go on, the worse the eventual crash will be.

rick_chasey

TheStone wrote:

Rick Chasey wrote:

I don't think it would bounce back after two years of pain. It didn't in '08 and it won't do now.

Greece defaulting f*cks the Euro. You'll get contagion, and the Euro would collapse, at least in it's current form. That'd be ENORMOUS pain. Seriously massive. Worse that the '30s globally.

It didn't bounce back in '08 because we didn't let it fall far enough. With the boom we had, we're due a depression much worse than the '30s. All that's happened so far is we've shifted the bad debt from the banks to the govts. Now the govts are starting to fall.

Each year we let this nonsense go on, the worse the eventual crash will be.

This is the crash. It makes sense, socially, to do it gradually.

This isn't like Eastern European 'shock therapy'. It won't work like that.

Big hard recessions cause enormous problems socially. It creates political problems, social problems, and other economic problems. As I said before, it's better to keep it stable and slow, than try a hard crash and hope for a rebound.

I don't believe each crash has a floor figure it *must* hit before a proper recovery can occur.