The Concept of Ownership

[Patrick]

Originally Posted by Arragonis

and the welfare system in the UK could do with some reform.

Yeah, I saw a video of a guy who couldn't wait to get his "dole" check so he could buy some drugs and shoot up. That's all he did.

[dcb]

if only they would learn, the government can buy the drugs in large quantities and distribute them directly and save a ton of money.

[Arragonis]

Originally Posted by Patrick

I thought some of these were in the EU.

They are, but if they default it doesn't mean the UK, Germany or France will.

The issue is the exposure of German and French banks to the debts of Spain, Greece, Portugal etc. What those countries should be allowed to do is to leave the euro, default, devalue and recover.

But if they do German banks would probably survive ok. French ones would need government support to prevent them failing, which would then put the French AAA rating at risk and push up their borrowing rates - tipping them towards the edge.

Once the French (or Italians) go the Euro fails and Germany knows this, but they also need/want UK money to prevent this happening which UK politicians know the voters here don't want to send - why should we pay more taxes so that Greeks can continue to avoid paying theirs, or so that Spain can build more brand new, empty motorways whilst ours are crumbling and over capacity, or so that they can continue to pay public sector workers for 13 months a year and we are laying them off.

Originally Posted by Patrick

Yeah, I saw a video of a guy who couldn't wait to get his "dole" check so he could buy some drugs and shoot up. That's all he did.

They don't even need to do that. They just go to the chemist with their NHS supplied prescription and get a dose of Methodone instead for free.

Unfortunately when we closed a lot of manufacturing in the 80s the then government (Thatcher just in case you thought she was good) wanted people off the unemployment stats, so they encouraged a lot of them to take up sickness benefits. And their kids got into the same habits and have never worked.

Why bother if you can get housing and food paid for, leaving the surplus for satelite TV, XBOXs, booze and fags.

At the same time I've only ever claimed a benefit for 2 weeks when I was genuinely unemployed, paid tax and worked all my like other than that since leaving education and am now faced with paying for my son to have private education because his state provided one is inadequate.

And uk.gov still want me to pay for Greece. Two words, the second one is "off".

[jamesqf]

Originally Posted by slowmover

Fully 64% of Americans cannot come up with cash for a $1000 emergency.

But I think you'll have to admit that a lot of that is a result of choices they've made, basically to spend every cent of each paycheck they got as it was earned, and put more stuff on the credit cards.

Home ownership will always be more expensive than renting.

Why would you think that? My experience as been just the opposite: I spend less on mortgage, taxes, & insurance on my place - which though not a McMansion, sits on an acre in a fairly upscale area - than I would to rent a good 2-bedroom apartment. If we're looking at like-kind property, the landlord who rents it to you has to pay the same mortgage, taxes, & insurance (and insurance is probably higher) as an owner-occupied house, plus he has to be making some profit somewhere.

[jamesqf]

Originally Posted by Arragonis

The issue is the exposure of German and French banks to the debts of Spain, Greece, Portugal etc. What those countries should be allowed to do is to leave the euro, default, devalue and recover.

I admit I'm pretty confused about that. If a country left the Euro, wouldn't it face pretty stiff expenses to start printing its own currency, and converting all the accounting - everything from prices in stores on up - to the new currency?

Even apart from this expense, how would it help them recover?

[Frank Lee]

Originally Posted by jamesqf

But I think you'll have to admit that a lot of that is a result of choices they've made, basically to spend every cent of each paycheck they got as it was earned, and put more stuff on the credit cards.

As an American, I wants my instant gratification and I wants it now!!!

Why would you think that? My experience as been just the opposite: I spend less on mortgage, taxes, & insurance on my place - which though not a McMansion, sits on an acre in a fairly upscale area - than I would to rent a good 2-bedroom apartment. If we're looking at like-kind property, the landlord who rents it to you has to pay the same mortgage, taxes, & insurance (and insurance is probably higher) as an owner-occupied house, plus he has to be making some profit somewhere.

Kinda depends on how long you plan on being in one spot but yeah if you're going to stay put a while home "ownership" might get one less profit taking scoundrel outta your wallet.

[gone-ot]

...remember when the "...coin-of-the-realm..." was unique to each country?

...Uni-money = Uni CRASH when some(any?)body has problems.

[Arragonis]

Originally Posted by jamesqf

I admit I'm pretty confused about that. If a country left the Euro, wouldn't it face pretty stiff expenses to start printing its own currency, and converting all the accounting - everything from prices in stores on up - to the new currency?

All of the countries in the Euro had to switch notes and coins to join it, and all print / produce their own - the Euros you get in Spain have different "people" on them from the ones you get in France or Ireland.

The amount produced is controlled by the ECB - the European Central Bank.

Originally Posted by jamesqf

Even apart from this expense, how would it help them recover?

The problem is that there are a number of economies here which are moving at different speeds and in different directions. They all have to finance spending and debt on the international markets, like the US, and all have different ideas on how to best manage their finances. In some countries - Greece, Italy and Spain - tax "non-paying" is endemic so they have to borrow more, and are a higher risk of default so they are facing high interest rates for finance - and are "failing" because of this.

At the same time economies with low growth like the UK (mostly financial services) have cut back on spending - so markets know we will pay. Germany is growing due to their (sensible) concentration on manufacturing - so markets know they will pay. France has avoided issues with banks and is focussing on infrastructure - which is why their trains are about as good as the ones in Japan - but this is public spending so markets think they will pay but charge a little more for the risk.

The Enigma here is Italy - it uses the Euro, it exports as much as Germany, it has manufacturing and also has excellent technology - yet the government there cannot control spending so all of that is wasted. So they are also in trouble.

The problem is that all of these countries moving in different directions at different speeds are tied together because they all use the same currency. If they were seperate the ones with more risk and lower growth could devalue, or have a slower growth in value, of their currency.

Think back to the past - before WW2 a UK pound Sterling was worth about $20, after WW2 (and we had to borrow from the US to finance it - what, you though all those weapons supplies you sent were free ?) was $10, by 1970 (after 3 wasted decades) it is was $3, and by 1990 it was $2 if we were doing good and LBJ was not standing behind uk.gov's international credit. I'm not complaining about this, it notes our decline in economic superpowerism vs the US growth and was unavoidable - the French Franc had the same issue, as did the Mark.

If you set countries like Greece free to have their own currency then they can devalue and they can compete on price with the rest of us as before, the same for Spain, and to some extent Italy. Their currencies can grow or decline respective to their economic growth or otherwise, setting each country free.

Worked example - Ford setup their factory in Spain (in Valencia) long before Spain was part of the EU and when anything exported from Spain to the EU attracted import duties. It was still cheaper for them to do so and the workers in that factory were paid well compared to the locals and contributed to the local economy. It was a win-win on both sides.

EDIT - Apologies for length of post - annoyance at southern European government shortcomings.

[Arragonis]

Originally Posted by jamesqf

...I spend less on mortgage, taxes, & insurance on my place - which though not a McMansion, sits on an acre in a fairly upscale area - ...

Me too and I moved where I am for the schools for A-junior.

Except I am now estimating how much it would be for A-junior to have a private education (~$16K a year) because the local "state" ones are, well, rubbish.

[jamesqf]

Originally Posted by Arragonis

If you set countries like Greece free to have their own currency then they can devalue and they can compete on price with the rest of us...

Got to admit I don't really understand most of that. (Guess I should've stuck to quantum mechanics :-)) Devaluing as a way of escaping debt seems just a sneaky way to declare bankruptcy without actually calling it that: "Yeah, we're just going to pay ten cents on the dollar of what we owe you, but you're going to get just as many of our shiny new devalued pesos, so it's ok."

As for devaluation letting them compete on price, wouldn't any sensible person just raise the price as measured in new, devalued money so as to receive the same value?