PowerSwitch Main Page
PowerSwitch
The UK's Peak Oil Discussion Forum & Community
 
 FAQFAQ   SearchSearch   MemberlistMemberlist   UsergroupsUsergroups   RegisterRegister 
 ProfileProfile   Log in to check your private messagesLog in to check your private messages   Log inLog in 

Founders of the Euro contemplating its death

 
Post new topic   Reply to topic    PowerSwitch Forum Index -> Government and Society
View previous topic :: View next topic  
Author Message
kenneal - lagger
Site Admin


Joined: 20 Sep 2006
Posts: 11207
Location: Newbury, Berkshire

PostPosted: Tue Jan 08, 2019 5:21 pm    Post subject: Founders of the Euro contemplating its death Reply with quote

Here's a comment on the Euro and the EU from the City of London via Capital and Conflict.

The answer to the demise of the Euro? Further union and membership of the euro for all to ensure proper control!! Nutters, all of them!!!

Quote:
"Europe’s monetary priests begin to renounce their religion

A “suicide pact”. That’s what the famous Australian economist Steve Keen called the euro in a recent interview. And his views are catching on. But not where you’d expect.

Back in 2011, Jacques Delors told the Telegraph, “Everyone must examine their consciences.” About what? Here’s how the not-very-eurosceptic Guardian newspaper summarised the comments:

One of the architects of the euro, Jacques Delors, has said the eurozone was flawed from the start and that efforts to tackle its problems have been "too little, too late".

Delors, the former president of the European commission, said errors made when the euro was created had made the current economic crisis inevitable.


Seven years later, some of the euro’s other architects have managed to follow Delors’ advice. They’ve examined their consciences. And found them troubled by the euro.

According to the European Central Bank’s (ECB) Twitter account, its president Mario Draghi said this:

I think the euro has been a success. Has everyone participated to this success? We have to ask why not. I would like candid, close introspection that could inspire future action on completing the monetary union.


Now it’s perfectly obvious why the euro has harmed some and benefited others. That’s what plenty of economists predicted would happen. I explain it in my book How the Euro Dies.

But isn’t it interesting that a common currency can be judged a success when it doesn’t benefit everyone? And isn’t it interesting that the answer to failure is more of the same. Completing the monetary union after you acknowledge it failed, just as its critics expected, seems like an odd argument.

This is so obvious that even the euro’s most dedicated backers are shuffling one foot out the door. Their apologies, excuses, denials and buck passing have already begun. Nobody wants the blame when the electorate asks who was dumb enough to create the euro.

Otmar Issing, the founding chief economist of the ECB, called the euro a “house of cards” in 2016. He claimed to have been against the euro all along, but he “had to accept this political decision to create a monetary union and to abandon national currencies”. He was just doing his job, as appointed. Which is sometimes called the Nuremberg excuse.

The ECB itself is now a risk, said its former chief economist Jurgen Stark. He’s worried that the ECB has no powder left for fight a crisis, which is a crisis trigger in and of itself, as I explain in Zero Hour Alert. Markets rely on central bank bailouts. A European crisis without a central bank bailout would be several times worse than Lehman Brothers – the only comparable example where a bailout wasn’t forthcoming.

The former chair of the Federal Reserve is also worried. Alan Greenspan said the following in a closed-door meeting:

I’m very worried. Mario Draghi, whom I know and he’s a very good guy, is just talking like we’ll do whatever is required. Well at some point somebody’s going to say, “I don’t want to accept euros.”


This is disgusting.

Don’t get me wrong. These high priests of monetary policy are right to point out the flaws of the euro. And hearing about how the euro developed from those who made it happen is fascinating.

But if these people think they can escape the blame for the consequences of creating the euro, they’ll have to try harder. It was the complicity of economists elbowing for jobs at the ECB that drowned out the warnings of their colleagues.

Most extraordinary of all, economists were willing to believe promises from politicians that they’d adhere to things like the Stability Pact and the no-bailout clause. Nincompoops.

Now the economists blame the failure of the euro on the lack of adherence to the rules…

The economists who created the euro have realised they’ve created a monster. They’re trying to save their reputation by blaming its failure on someone else or claiming they were against it all along…

The euro bait and switch
If the euro was so obviously a bad idea, how did it come into being? Roger Bootle laid out the sequence of events nicely in the Telegraph yesterday.

First they told us the euro would be good for us:

Although the primary motive for forming the euro was political, before its formation, key European leaders trumpeted the supposed economic benefits of the single currency. They believed that it would bring significant gains through a reduction of transactions costs and uncertainty, the deepening of financial markets and the imposition of good economic governance.


Once economists debunked that argument by pointing out just how dangerous it is to share the same currency, exchange rate and monetary policy, the story changed:

It was widely believed that sharing a common money, with all its implications for interest rates, fiscal policy and umpteen other things, would be both an expression of European unity and a major force for cementing it.


In other words, even if sharing a currency is a bad idea, it’s a good idea politically. Because sharing is caring. And being lumped together into one system is just what Europe needs. Why? To avoid a war, which was traditionally motivated by trying to unify Europe under one system…

Everyone from Napoleon to Hitler had the same monetary plan. Now the EU does.

Unfortunately, trying to unify Europe through a shared currency triggered the opposite reaction. Much like all efforts to unify Europe do. And in precisely the ways predicted by eurosceptics. There was divergence instead of convergence and economic crises eventually struck.

Those have created severe political unrest. Otmar Issing explained how this came about in his interview with the publication Central Banking:

There was no speed-up of convergence after 1999 – rather, the opposite. From day one, quite a number of countries started working in the wrong direction. […]

Quite a few countries – including Ireland, Italy and Greece – behaved as though they could still devalue their currencies. Of course, there is a problem if wages rise by more than productivity.

Jean-Claude Trichet, ECB president from 2003–11, repeatedly expressed the dangers of such developments to the Eurogroup. But the politicians didn't listen – and they certainly ignored the advice. So the problem accumulated over time, and only stopped because of the crisis.


Yes, blame those politicians for the fact that economists assumed they’d follow the rules in their economic models…

Once the divergences exploded into the financial crisis of 2008, and the European sovereign debt crisis, the europhiles just changed their tune, continues Bootle:

Once it subsequently became clear that the economy of the eurozone was experiencing considerable difficulties, it was common for European political leaders to claim that, as a political project, it had always been recognised that the formation of the euro would bring serious economic costs.

They argued that these had to be borne in order to achieve the political objective. Indeed, some went further and claimed that without the euro the whole EU edifice might collapse. The implication was that although things might seem pretty grim in a number of eurozone members, this was a necessary price to pay.


The trouble is, the euro is turning very expensive indeed. Constant crises, recessions and banking debacles lead to unemployment and unrest. Which leads to some interesting politics in those countries which have the euro.

With the euro’s creators publishing their apologies, excuses, denials and buck passing already, there can’t be much time for the euro to run.

Especially given the plan to resolve all this…

What’s that definition of insanity again?
What completely mystifies me now is the solution which the europhiles propose. Actually, they don’t propose it, they just presume it.

To dreamers of a United States of Europe, the problem with a common currency is not the common currency, but the lack of a common everything else. If Europe were only more integrated, the currency would work.

According to an excellent speech by Yanis Varoufakis at the Oxford Union, that might’ve been the plan all along. The euro would lead to a financial crisis which forces Europe to decide: either integrate or fail. Given the decision-making powers are concentrated at the European Union, what do you think they’ll decide…?

The trouble is, the nation state isn’t gone yet. And even at the EU level, people do get some say in the affairs of Europe every now and then. They will soon, triggering the very crisis economists anticipated. Are you anticipating it?

Given the choice between a nation state and the EU, I don’t think the typical voter has quite made the switch to the EU. They’ll need plenty of fear stuffed down their throats to go along with that.

Varoufakis is happy to oblige. He told his Oxford Union audience that a return to a Europe of nation states would be catastrophic. “The alternative to a united Europe is a dystopia”.

Why? Because currencies would fluctuate. The Deutschmark would surge and the southern currencies would plunge, says Varoufakis. “Is this a Europe we want to live in?”

Yep, it is, in my opinion.

Well, I don’t want that to happen personally. I like the euro. Because it’s convenient for foreign travellers like me.

But here’s the thing. Those currency adjustments are corrections. They’re resolutions. They fix the imbalances that a currency union creates. They allow a return to growth. So if I was stuck in the EU, it’s precisely what I’d want.

That’s why Britain and Italy left the European Exchange Rate Mechanism (ERM). That’s why countries have left European and other monetary unions the many times they’ve been tried.

A Europe without a common currency would be about as dystopic as the UK is now. With economic growth seven and a half times the EU’s levels, unemployment at multi decade lows and a lack of populist extremist parties…

A Europe which must be held together by ever more integration against the will of its people is the rA “suicide pact”. That’s what the famous Australian economist Steve Keen called the euro in a recent interview. And his views are catching on. But not where you’d expect.

Back in 2011, Jacques Delors told the Telegraph, “Everyone must examine their consciences.” About what? Here’s how the not-very-eurosceptic Guardian newspaper summarised the comments:

One of the architects of the euro, Jacques Delors, has said the eurozone was flawed from the start and that efforts to tackle its problems have been "too little, too late".

Delors, the former president of the European commission, said errors made when the euro was created had made the current economic crisis inevitable.


Seven years later, some of the euro’s other architects have managed to follow Delors’ advice. They’ve examined their consciences. And found them troubled by the euro.

According to the European Central Bank’s (ECB) Twitter account, its president Mario Draghi said this:

I think the euro has been a success. Has everyone participated to this success? We have to ask why not. I would like candid, close introspection that could inspire future action on completing the monetary union.


Now it’s perfectly obvious why the euro has harmed some and benefited others. That’s what plenty of economists predicted would happen. I explain it in my book How the Euro Dies.

But isn’t it interesting that a common currency can be judged a success when it doesn’t benefit everyone? And isn’t it interesting that the answer to failure is more of the same. Completing the monetary union after you acknowledge it failed, just as its critics expected, seems like an odd argument.

This is so obvious that even the euro’s most dedicated backers are shuffling one foot out the door. Their apologies, excuses, denials and buck passing have already begun. Nobody wants the blame when the electorate asks who was dumb enough to create the euro.

Otmar Issing, the founding chief economist of the ECB, called the euro a “house of cards” in 2016. He claimed to have been against the euro all along, but he “had to accept this political decision to create a monetary union and to abandon national currencies”. He was just doing his job, as appointed. Which is sometimes called the Nuremberg excuse.

The ECB itself is now a risk, said its former chief economist Jurgen Stark. He’s worried that the ECB has no powder left for fight a crisis, which is a crisis trigger in and of itself, as I explain in Zero Hour Alert. Markets rely on central bank bailouts. A European crisis without a central bank bailout would be several times worse than Lehman Brothers – the only comparable example where a bailout wasn’t forthcoming.

The former chair of the Federal Reserve is also worried. Alan Greenspan said the following in a closed-door meeting:

I’m very worried. Mario Draghi, whom I know and he’s a very good guy, is just talking like we’ll do whatever is required. Well at some point somebody’s going to say, “I don’t want to accept euros.”


This is disgusting.

Don’t get me wrong. These high priests of monetary policy are right to point out the flaws of the euro. And hearing about how the euro developed from those who made it happen is fascinating.

But if these people think they can escape the blame for the consequences of creating the euro, they’ll have to try harder. It was the complicity of economists elbowing for jobs at the ECB that drowned out the warnings of their colleagues.

Most extraordinary of all, economists were willing to believe promises from politicians that they’d adhere to things like the Stability Pact and the no-bailout clause. Nincompoops.

Now the economists blame the failure of the euro on the lack of adherence to the rules…

The economists who created the euro have realised they’ve created a monster. They’re trying to save their reputation by blaming its failure on someone else or claiming they were against it all along…

You may be interested in
The Panic of 2019

How much money would you be at risk of losing if your bank went under today?

According to one of my top analysts, there’s a key weakness in the banking system that’s coming under huge pressure right now…

And in 2019, he thinks it could devastate savers and investors.

Watch this to find out why – before it’s too late.

The euro bait and switch
If the euro was so obviously a bad idea, how did it come into being? Roger Bootle laid out the sequence of events nicely in the Telegraph yesterday.

First they told us the euro would be good for us:

Although the primary motive for forming the euro was political, before its formation, key European leaders trumpeted the supposed economic benefits of the single currency. They believed that it would bring significant gains through a reduction of transactions costs and uncertainty, the deepening of financial markets and the imposition of good economic governance.


Once economists debunked that argument by pointing out just how dangerous it is to share the same currency, exchange rate and monetary policy, the story changed:

It was widely believed that sharing a common money, with all its implications for interest rates, fiscal policy and umpteen other things, would be both an expression of European unity and a major force for cementing it.


In other words, even if sharing a currency is a bad idea, it’s a good idea politically. Because sharing is caring. And being lumped together into one system is just what Europe needs. Why? To avoid a war, which was traditionally motivated by trying to unify Europe under one system…

Everyone from Napoleon to Hitler had the same monetary plan. Now the EU does.

Unfortunately, trying to unify Europe through a shared currency triggered the opposite reaction. Much like all efforts to unify Europe do. And in precisely the ways predicted by eurosceptics. There was divergence instead of convergence and economic crises eventually struck.

Those have created severe political unrest. Otmar Issing explained how this came about in his interview with the publication Central Banking:

There was no speed-up of convergence after 1999 – rather, the opposite. From day one, quite a number of countries started working in the wrong direction. […]

Quite a few countries – including Ireland, Italy and Greece – behaved as though they could still devalue their currencies. Of course, there is a problem if wages rise by more than productivity.

Jean-Claude Trichet, ECB president from 2003–11, repeatedly expressed the dangers of such developments to the Eurogroup. But the politicians didn't listen – and they certainly ignored the advice. So the problem accumulated over time, and only stopped because of the crisis.


Yes, blame those politicians for the fact that economists assumed they’d follow the rules in their economic models…

Once the divergences exploded into the financial crisis of 2008, and the European sovereign debt crisis, the europhiles just changed their tune, continues Bootle:

Once it subsequently became clear that the economy of the eurozone was experiencing considerable difficulties, it was common for European political leaders to claim that, as a political project, it had always been recognised that the formation of the euro would bring serious economic costs.

They argued that these had to be borne in order to achieve the political objective. Indeed, some went further and claimed that without the euro the whole EU edifice might collapse. The implication was that although things might seem pretty grim in a number of eurozone members, this was a necessary price to pay.


The trouble is, the euro is turning very expensive indeed. Constant crises, recessions and banking debacles lead to unemployment and unrest. Which leads to some interesting politics in those countries which have the euro.

With the euro’s creators publishing their apologies, excuses, denials and buck passing already, there can’t be much time for the euro to run.

Especially given the plan to resolve all this…

What’s that definition of insanity again?
What completely mystifies me now is the solution which the europhiles propose. Actually, they don’t propose it, they just presume it.

To dreamers of a United States of Europe, the problem with a common currency is not the common currency, but the lack of a common everything else. If Europe were only more integrated, the currency would work.

According to an excellent speech by Yanis Varoufakis at the Oxford Union, that might’ve been the plan all along. The euro would lead to a financial crisis which forces Europe to decide: either integrate or fail. Given the decision-making powers are concentrated at the European Union, what do you think they’ll decide…?

The trouble is, the nation state isn’t gone yet. And even at the EU level, people do get some say in the affairs of Europe every now and then. They will soon, triggering the very crisis economists anticipated. Are you anticipating it?

Given the choice between a nation state and the EU, I don’t think the typical voter has quite made the switch to the EU. They’ll need plenty of fear stuffed down their throats to go along with that.

Varoufakis is happy to oblige. He told his Oxford Union audience that a return to a Europe of nation states would be catastrophic. “The alternative to a united Europe is a dystopia”.

Why? Because currencies would fluctuate. The Deutschmark would surge and the southern currencies would plunge, says Varoufakis. “Is this a Europe we want to live in?”

Yep, it is, in my opinion.

Well, I don’t want that to happen personally. I like the euro. Because it’s convenient for foreign travellers like me.

But here’s the thing. Those currency adjustments are corrections. They’re resolutions. They fix the imbalances that a currency union creates. They allow a return to growth. So if I was stuck in the EU, it’s precisely what I’d want.

That’s why Britain and Italy left the European Exchange Rate Mechanism (ERM). That’s why countries have left European and other monetary unions the many times they’ve been tried.

A Europe without a common currency would be about as dystopic as the UK is now. With economic growth seven and a half times the EU’s levels, unemployment at multi decade lows and a lack of populist extremist parties…

A Europe which must be held together by ever more integration against the will of its people is the real dystopia. A place where only one direction is allowed and it is arbitrarily labelled progress, even when it’s so obviously bad that even the ECB president admits it.

The good news is, the eurozone’s suffering may be coming to an end. When someone like Otmar Issing is willing to criticise his life’s work as a house of cards, and even the current ECB president acknowledges some countries didn’t even benefit from the euro, you know it’s in deep trouble.

If only Britain wasn’t Europe’s financial centre – the one domino guaranteed to fall in the coming financial crisis.eal dystopia. A place where only one direction is allowed and it is arbitrarily labelled progress, even when it’s so obviously bad that even the ECB president admits it.

The good news is, the eurozone’s suffering may be coming to an end. When someone like Otmar Issing is willing to criticise his life’s work as a house of cards, and even the current ECB president acknowledges some countries didn’t even benefit from the euro, you know it’s in deep trouble.

If only Britain wasn’t Europe’s financial centre – the one domino guaranteed to fall in the coming financial crisis."

_________________
Action is the antidote to despair - Joan Baez
Back to top
View user's profile Send private message Send e-mail Visit poster's website
BritDownUnder



Joined: 21 Sep 2011
Posts: 567
Location: Hunter Valley, NSW, Australia

PostPosted: Wed Jan 09, 2019 6:06 am    Post subject: Reply with quote

I once read a book of maps of the first world war. Not very interesting you may think.
However after reading all the usual maps of the Western Front and other fronts there was a map of the plans Germany had for Europe if they had WON the First World War. They envisaged a Customs union and single currency that covered all of Western Europe and Central Europe. Some people may ask "Who really won?".
_________________
G'Day cobber!
Back to top
View user's profile Send private message
raspberry-blower



Joined: 14 Mar 2009
Posts: 1803

PostPosted: Wed Jan 09, 2019 10:30 am    Post subject: Reply with quote

Naked Capitalism: The Euro at 20: An Enduring Success but a Fundamental Failure

Quote:
So the euro will stumble forward. No one will be happy with its operation. Equally, no one will leave. Progress will be minimal, since there is no appetite for the political union needed to support fundamental reforms.

As a result, the euro remains vulnerable to another crisis. The next crisis could heighten the perceived urgency of fundamental reforms and lead Europe’s citizens to accept the modicum of political integration needed to implement them. So reformed and restructured, the euro would operate better.

Or the next crisis could empower anti-elite, nationalist, anti-EU – that is to say populist – politicians, making it impossible to implement even the modest reforms agreed in 2018.

In which case the euro will function even less smoothly.

Only one thing is certain. History doesn’t run in reverse. For better or worse – and both arguments can be made – the euro is here to stay.

_________________
A common mistake that people make when trying to design something completely foolproof is to underestimate the ingenuity of complete fools - Douglas Adams.
Back to top
View user's profile Send private message
kenneal - lagger
Site Admin


Joined: 20 Sep 2006
Posts: 11207
Location: Newbury, Berkshire

PostPosted: Wed Jan 09, 2019 3:38 pm    Post subject: Reply with quote

raspberry-blower wrote:
Naked Capitalism: The Euro at 20: An Enduring Success but a Fundamental Failure

.....................the euro is here to stay.


Or until it drags Europe down to such a level that the populous revolts. And the populous of the continent is far more revolting than we are. Wink
_________________
Action is the antidote to despair - Joan Baez
Back to top
View user's profile Send private message Send e-mail Visit poster's website
raspberry-blower



Joined: 14 Mar 2009
Posts: 1803

PostPosted: Mon Jan 14, 2019 8:49 pm    Post subject: Reply with quote

An interesting essay: Charles Hugh Smith The Decline and Fall of the European Union

Charles Hugh Smith wrote:
The EU has finally reached the endgame of the Neocolonial-Financialization Model. There are no more markets to exploit with financialization, no more assets to strip, and the serfs (a.k.a. yellow vests) of the core are tiring of being stripmined in service of the EU kleptocracy.

At this point, the financial Aristocracy has an unsolvable dilemma: writing off defaulted debt also writes off assets and income streams, for every debt is the core's asset and income stream. When all those phantom assets are recognized as worthless, the system implodes.

This exhaustion of the neocolonial-neofeudal model was inevitable and as a result, so too is the decline and fall of the European integration/exploitation project

_________________
A common mistake that people make when trying to design something completely foolproof is to underestimate the ingenuity of complete fools - Douglas Adams.
Back to top
View user's profile Send private message
BritDownUnder



Joined: 21 Sep 2011
Posts: 567
Location: Hunter Valley, NSW, Australia

PostPosted: Mon Jan 14, 2019 10:46 pm    Post subject: Reply with quote

Let's not forget that the UK taxpayer has also been strip-mined to feed the same EU bureaucracy for the last 40 years. I understand under the May 'best deal in town' the UK will continue to pay this to be outside of the EU. Great job!
_________________
G'Day cobber!
Back to top
View user's profile Send private message
vtsnowedin



Joined: 07 Jan 2011
Posts: 5240
Location: New England ,Chelsea Vermont

PostPosted: Tue Jan 15, 2019 1:23 am    Post subject: Reply with quote

BritDownUnder wrote:
"Who really won?".

That remains to be seen.
Back to top
View user's profile Send private message
RenewableCandy



Joined: 12 Sep 2007
Posts: 12654
Location: York

PostPosted: Tue Jan 15, 2019 11:29 pm    Post subject: Reply with quote

raspberry-blower wrote:
An interesting essay: Charles Hugh Smith The Decline and Fall of the European Union

Charles Hugh Smith wrote:
The EU has finally reached the endgame of the Neocolonial-Financialization Model. There are no more markets to exploit with financialization, no more assets to strip, and the serfs (a.k.a. yellow vests) of the core are tiring of being stripmined in service of the EU kleptocracy.

At this point, the financial Aristocracy has an unsolvable dilemma: writing off defaulted debt also writes off assets and income streams, for every debt is the core's asset and income stream. When all those phantom assets are recognized as worthless, the system implodes.

This exhaustion of the neocolonial-neofeudal model was inevitable and as a result, so too is the decline and fall of the European integration/exploitation project

This is not a problem unique to the EuroZone.
The only reason it's shown up there first is the obvious overlaying of different local legal/fiscal systems within 1 monetary system. The more generous among the local systems (Greece, Italy, with generous - some would say over-generous - pensions) will run up against the wall first.
But in all places, debt overtakes ability to pay unless the economy can grow forever.
_________________
Soyez réaliste. Demandez l'impossible.
Stories
The Price of Time
Back to top
View user's profile Send private message
vtsnowedin



Joined: 07 Jan 2011
Posts: 5240
Location: New England ,Chelsea Vermont

PostPosted: Wed Jan 16, 2019 1:12 am    Post subject: Reply with quote

RenewableCandy wrote:

But in all places, debt overtakes ability to pay unless the economy can grow forever.

I don't subscribe to this line of thought. Unless the population is growing there is no reason why doing the same amount of business that made you a profit last year will not make you the same amount of profit this year.
Borrowed money to expand a business is a fraction of the total invested each year and while those debts have to be repaid others will carry on using their equity in their plant and equipment without incurring any new debt.
Back to top
View user's profile Send private message
Little John



Joined: 08 Mar 2008
Posts: 6868
Location: UK

PostPosted: Wed Jan 16, 2019 7:30 am    Post subject: Reply with quote

The next major world economic crisis is just around the corner. For the EU, this will likely co-occur with Italy going tits up. When that happens, the EU is in mortal danger of imminent collapse. A lack of UK membership of the EU and its 39 billion net contributions per year will be the final straw. Though, in my view, that will only affect the timing of the collapse of the EU. Not, the fact of its occurrence.

And, of course, there will be dire consequences for the UK as and when the EU collapses. But, when that happens, it is better to be on the outside dealing with the over-spill than on the inside up to our necks in it.
Back to top
View user's profile Send private message Send e-mail Yahoo Messenger
kenneal - lagger
Site Admin


Joined: 20 Sep 2006
Posts: 11207
Location: Newbury, Berkshire

PostPosted: Wed Jan 16, 2019 6:00 pm    Post subject: Reply with quote

I fully agree Steve.

VT, most businesses run, at least, on an overdraught which has to be paid off with interest and most have loans of some sort. Many businesses have start up loans and/or shareholders so grwoth is required to pay off that. Most take overs are carried out with borrowed money.

The prognosis is not good.
_________________
Action is the antidote to despair - Joan Baez
Back to top
View user's profile Send private message Send e-mail Visit poster's website
vtsnowedin



Joined: 07 Jan 2011
Posts: 5240
Location: New England ,Chelsea Vermont

PostPosted: Wed Jan 16, 2019 7:34 pm    Post subject: Reply with quote

kenneal - lagger wrote:
I fully agree Steve.

VT, most businesses run, at least, on an overdraught which has to be paid off with interest and most have loans of some sort. Many businesses have start up loans and/or shareholders so grwoth is required to pay off that. Most take overs are carried out with borrowed money.

The prognosis is not good.
I'd want to look into the source of your figures. The word most being the problem one. Many USA business are flush with cash and are gobbling up competitors with it. Many others do have loans on large pieces of equipment and plant but have sufficient equity in same to cover it.
The tendency to pay out profits to stockholders does fight against keeping enough cash for future operating expenses but let the cost of borrowed money rise and human behavior in that regard will change.
And again if you don't have a growing population increasing demand I see no reason growth in the economy is necessary. And yes I know that goes against every economist's preaching but I have always been struck by how fuzzy and simplistic their math and therefore their conclusions are.
Back to top
View user's profile Send private message
Display posts from previous:   
Post new topic   Reply to topic    PowerSwitch Forum Index -> Government and Society All times are GMT + 1 Hour
Page 1 of 1

 
Jump to:  
You cannot post new topics in this forum
You cannot reply to topics in this forum
You cannot edit your posts in this forum
You cannot delete your posts in this forum
You cannot vote in polls in this forum


Powered by phpBB © 2001, 2005 phpBB Group