EU Elections

[Kavvy]

The French and Greeks are having elections today! I haven't been following to intently, but would love to hear what members here feel the effect of these elections could have on Canada.

It is my understanding the french new guy "Francois Hollande" would bring back the nation to more of a social welfare states, while Sarkozy is more for cutting social programs. To my understanding, Sarkozy "cutting" of programs would still seems very far left economically by Canadian standards

If anyone has any comments, please post, as I have not followed this election carefully.

http://www.cnn.com/2012/05/06/world/...html?hpt=hp_t1

Also,

The Greeks are having an election, and if you listen to CNN doom and gloom, if it goes the wrong way, the Greeks may cause some hits to the current EU economic status quo... if it can be called that.

http://www.cnn.com/2012/05/06/world/...html?hpt=hp_t3



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[Azure]

At some point they will have to cut spending of some kind to fix their deficit/debt problem.

A common issue throughout the world it seems, and one that everyone loves to bury their head in the sand over, because for some reason people think the government should bankrupt themselves giving out welfare to people.

[Kavvy]

Globe and mail seems to think the elections may hurt our markets on Monday

http://www.theglobeandmail.com/repor...rticle2421939/

[FurnaceFace]

Sarkozy kind of made his bed. He became a very unlikable leader as he was a bit of an ass. He also led at a time when Europe markets were falling apart and as such, along with many other EU Leaders, have taken the fall for the economic situation.

Sarkozy also ended up somewhat stuck having to shift to a harder RW stance to win back voters who had voted for Le Pen. She never ended up endorsing him in the second round of election which hurt him. I think, assuming he does lose, he will lose more because of his arrogant personality and because Europe in general are unhappy with their current leaders.

[Slava]

The Greeks voted for further left and further right parties, basically anti-austerity votes. Brilliant. Charlie Munger hit the nail on the head when he said yesterday that people want fiscal prudence, but not quite yet.

[Kavvy]

Originally Posted by Slava

The Greeks voted for further left and further right parties, basically anti-austerity votes. Brilliant. Charlie Munger hit the nail on the head when he said yesterday that people want fiscal prudence, but not quite yet.

I know there is the argument that Greek austerity is bad for the long term world economy because it cripples Greece in a long term form.... but ignoring that, would you say anti-austerity parties are bad for Canada in the short term?

[CaptainCrunch]

Originally Posted by Kavy

I know there is the argument that Greek austerity is bad for the long term world economy because it cripples Greece in a long term form.... but ignoring that, would you say anti-austerity parties are bad for Canada in the short term?

I would argue that because of the situation that the Greek's are in that anti-austerity parties for the Greek are also bad for Greece's long term economic survival.

They will ultimately lose their economic autonomy if they suddenly demand that other countries write off their debt or support them with continual buyouts, they will also drain EU resources if they don't continue to make cuts to their bloated civil service, cut back on a pension system that they can't afford and address their poor tax revenue system.

In a sense I believe that they will become like pre WW2 Germany in that a loaf of bread will cost millions of dollars and nobody will be working.

Its going to get increasingly tough for them to attract any kind of foreign investment if there's no chance of them ever paying it back.

The Greek people are being very short sited by not supporting the cuts and they're going to pass a ever increasing crappy economic situation onto their next generation.

One thing is clear, at the last call by the WMF for extra help Canada basically stated that they aren't going to help Europe out unless they stick to Austerity measures.

The one plus is that at some point we'll be able to buy Greek assets for pennies on the dollar.

[CaptainCrunch]

Originally Posted by Kavy

Globe and mail seems to think the elections may hurt our markets on Monday

http://www.theglobeandmail.com/repor...rticle2421939/

Global markets will drop if anti-austerity governments or minority or coalition based governments are elected in Greece.

The Canadian Government is doing the smart thing by looking to increase and put a greater emphasis on markets outside of Europe and outside of North America.

There's no point in giving favorable trade status to broke countries that are probably going to default on debts accumulated.


I would almost have to think that if an anti-austerity government hits Greece that the EU and specifically Germany will say F this and push for Greece being firewalled from the EU or thrown out all together.

Germany and the EU can't afford to keep throwing money at Greece.

[Jacks]

Greece is a mess right now. The people upset with wage, pension and service cuts certainly aren't going to like it when the bailout money stops flowing and they are forced into default. I hope Greece and France don't push the world economy back into chaos.

[Azure]

I'm not sure what they expect. I don't necessarily agree with everything Iceland did(Thor would know what I mean), but you can't ignore the fact that they went from literally the worst hit country, or one of the worst, to pretty good growth and are most certainly back on their feet again.

That being said, I think Greece is in a worse position, but sadly they cannot seem to accept that they HAVE to cut, cut, cut almost everything to get back to normal again.

[Flames Fan, Ph.D.]

deleted / never mind.

[CaptainCrunch]

Originally Posted by Flames Fan, Ph.D.

Yup, austerity is working well for the UK, Ireland, Greece, etc...

Bout just as well as generations of stupid spending and bloating pension programs.

They've had austerity in place for less then 5 years, they spent like morons for much longer.

Without outside help they don't have the money to support the programs, so they don't have much choice but to cut, because that well of money coming from outside is going to dry up in a hurry if the wrong governments get elected.

[chemgear]

It's a vicious cycle. Cut to get budgets back on track because you have been overspending for years and people won't bail you out if you keep overspending. But when you cut you drive people out of the country, destabilize the government and you slow/get negative growth. That then reduces what you get in revenue so you have no hope to get enough money to pay back the bailout terms and you fall further behind.

It'll be very interesting to watch these next few years. At some point, I can see the German government doing a lot of navel gazing as these countries keep missing their targets - Merkel has a good majority so far but I recall it getting more and more strained as this spiral continues.

[CaptainCrunch]

Originally Posted by chemgear

It's a vicious cycle. Cut to get budgets back on track because you have been overspending for years and people won't bail you out if you keep overspending. But when you cut you drive people out of the country, destabilize the government and you slow/get negative growth. That then reduces what you get in revenue so you have no hope to get enough money to pay back the bailout terms and you fall further behind.

It'll be very interesting to watch these next few years. At some point, I can see the German government doing a lot of navel gazing as these countries keep missing their targets - Merkel has a good majority so far but I recall it getting more and more strained as this spiral continues.

I would agree, but at some point the governments in Greece need to simply tell people that your going to pay taxes, the retirement age has to go up and you need to contribute more to the pension plan, and that the government can no longer be a employment service.

If they keep ignoring those three problems it doesn't matter short term of long term Greece will be boned.

This is the one point where any Greek government has to be strong enough to do what's best for the country and not what's best for this generations voters.

You can't dig yourself out of a hole by digging deeper, and you can't continue to beg for money from other companies without becoming a slave to those other countries and losing their national identity.

Plus there's no way that Germany will keep funding Greece if they don't make these changes and without Germany's help those pay checks to their civil servants are going to bounce.

[chemgear]

^ Oh yeah, I don't disagree. Regardless of what they do, it's gonna hurt and people are going to whine. For years they've just kicked the can down the road. Even the last few years has been similiar - the cuts really aren't big enough financially to turn it around (very quickly) and yet people are so upset already.

Long term they're boned in any case. Unless of course they can somehow convince other countries to fork over money to pay for their high standard of living that they can't afford themselves.

Obviously not comparable, but I find it interesting to watch the deleveraging process and how it might relate to households here and in Europe.

[Jacks]

If they lose the bailout money then what are the options?

Does Greece leave the EU, go back to the drachma and start printing money like no tomorrow?

[afc wimbledon]

Greece's big problem is it didn't really have an economy before it joined the EU and it doesn't have one now to fall back on, the country was barely a part of the second world, borrowed its way into the first and is now about to drop back into the third without anything or anyone being able to stop it, with or without default or austerity.

[CaptainCrunch]

Originally Posted by Jacks

If they lose the bailout money then what are the options?

Does Greece leave the EU, go back to the drachma and start printing money like no tomorrow?

I would guess that if the bailout doesn't happen checks start bouncing and Greece goes up in Flames. Then they default on all of their debts and become a country that can't borrow money at all.

So yeah they would have to probably go back to their own currency, which would be similar to Germany pre WW2 where they printed so much money that their money was valueless both internationally and domestic.

All of their international obligation would collapse, which would cause a huge shudder through the international economy.

Greece can either go through controlled austerity now, or uncontrolled depression level austerity later that's beyond their control.

Because their government is their largest employer and they don't really have much in the way of an economy there The government would be forced to gut their civil service, Unemployment would hit incredibly high levels, I would be you would see a third of their workforce hit the streets. Because they would have no funding options, the pensions would collapse, and their social welfare system would collapse.

Would they become the European version of North Korea in terms of conditions? Possibly in terms of the poorness of the nation and the ensuing low per capita pay rate.

Personally if they do default, the EU should just send in troops to topple the government and seize valuable assets and install a government that will be a so called national salvation government.

If things do get bad, is a coup that far out of the question?

[Thor]

Originally Posted by Azure

I'm not sure what they expect. I don't necessarily agree with everything Iceland did(Thor would know what I mean), but you can't ignore the fact that they went from literally the worst hit country, or one of the worst, to pretty good growth and are most certainly back on their feet again.

That being said, I think Greece is in a worse position, but sadly they cannot seem to accept that they HAVE to cut, cut, cut almost everything to get back to normal again.

Our size has a big factor in that, a tiny nation of 300,000 is in a unique position to do something different.

Sadly there are still politicians and business interests trying to get us to join the EU, especially since our currency is under monetary controls, and there is a fear when the currency goes out of that we will see the krone go even further down.

Its a scary proposition, also why the opposition party here, our version of fiscal conservatives (far left by US standards) want us to seriously consider adopting the Canadian dollar.

[Jacks]

Originally Posted by CaptainCrunch

Personally if they do default, the EU should just send in troops to topple the government and seize valuable assets and install a government that will be a so called national salvation government.

Somehow I doubt that would go over well. They do appear to be screwed though.