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GEREXIT...?!

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GEREXIT...?!

Old 15th Jul 2015, 21:36
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GEREXIT...?!

It's probably about time Germany finally quits the "Eurozone" and goes back to their beloved Deutchmark. Maybe even leaves the EU altogether. At least Germany should set up her own "DMzone" perhaps with a few of the northern European countries who might even sign-up initially. And then perhaps eventually organise a split-up of the current EU into at least 2 (or even more parts) so as to satisfy even the UK's desires for greater liberty).

Have you heard about "NIIP" (NET INTERNATIONAL INVESTMENT POSITION)? It's worth taking a look at what "NIIP" consists of, and the implications of "NIIP" under the current circumstances of the EU.

You'll see that the 19 EU countries which comprise the current EUROzone together had a (2014) and combined negative NIIP of EUR 1,285 billions (ie. €1.285 trillion). That compares with Germany, which alone had a positive NIIP of EUR 1,056 billions (ie. €1.056 trillion). That means that without Germany, the NIIP of the other 18 EUROzone countries is in fact a combined negative EUR 2,341 billions (ie. €2.341 trillion).

I'm not suggesting that Germany holds all or even the majority of the outstanding debts of other EURO zone members, or even all 28 EU member countries. Far from it. But using NIIP, it's clear that Germany is an extremely important (by a very long chalk) creditor to the EU.

The EU countries generally, but especially the EUROzone, has become Germany's defacto "sovereign wealth fund" today. Germany possesses so much "financial clout" today that the EU is no more, no less than what the British Empire once was to the UK. I'm being entirely serious. Germany does behave better than the average empire-builder, but then she has to. Even France in 2015 is no match for the imperatives of Germany's "sovereign wealth fund". Whatever "European dream" ever laid behind the original idea of the current EU, Germany has little interest in "closer political union", as that would imply "transfers of wealth" and not "loans or finance" to be repaid as are currently arranged so as to protect Germany's assets at almost any cost (to Germany's debtors).

I believe that the current Greece debt crisis has finally exposed just what the current EU represents today, and in whose interests it is really run for. I think there would be many who might like to consider the idea of an "EUROZONE without Germany" (or even just comprised of France, Italy, Spain, Portugal, Greece, maybe Belgium also, together with a few others), despite the inevitable rough ride which is to be expected from the financial markets. On the other hand, it would still be a relatively important "grouping", and certainly much more "homogenous", with more common interests, economic priorities and policies. Which the financial markets might well consider as offering the better "longer-term" prospect compared to a German-centric one.

Just my 2 cents worth...
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Old 15th Jul 2015, 22:03
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ricardian, this thread is not about Greece! There are at least another 2 threads currently running on the specific subject of Greece!

Repeat: GEREXIT...?!

PS. And I hope others who contribute here do a little more than simply "copy and paste"...
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Old 15th Jul 2015, 22:22
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I think there would be many who might like to consider the idea of an "EUROZONE without Germany" (or even just comprised of France, Italy, Spain, Portugal, Greece, maybe Belgium also, together with a few others), despite the inevitable rough ride which is to be expected from the financial markets.
So the idea is to group all the economically unviable states into one currency zone and let the strong economies run in their own? That would be indeed a very rough ride for all concerned.

Now, there are of course some within germany who in fact favor something like that, however from the german perspective it sounds rather like "throw the weak countries outta the euro and keep only the northern countries in there". That is of course shortsighted, as the predominantly export oriented industry in germany loves a weak currency which helps them to sell even more abroad.

So in fact your proposed GEREXIT is rather a broadened GREXIT including the rest of the PIGS states and other weak economies like france.
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Old 15th Jul 2015, 22:37
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So in fact your proposed GEREXIT is rather a broadened GREXIT including the rest of the PIGS states and other weak economies like france.
Not at all. Very far from it Denti. I'm saying that Germany should be invited and/or encouraged to leave the EUROzone (along with any others who might wish to perhaps establish a new "DMzone".

Since when did all 27 EU members (+ Germany) or even just 18 EUROzone countries (+ Germany) become Germany's bitches...?!
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Old 16th Jul 2015, 00:47
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So the idea is to group all the economically unviable states into one currency zone and let the strong economies run in their own? That would be indeed a very rough ride for all concerned.
So like the macroscopic version of sticking all your poor people and undesirables in one place. Commonly called slum areas, been tried.

I like the method we have over here, spread them out. Yea its a bummer when some move in down the road and the crime rate goes up, but its better than concentrating them.

Spreading the pain is a good thing, it averages out over time, having the rich countries in with the poor is a good thing long term, but every one has to do their bit, both rich and poor. Its not a multi decadal thing, its multi century.

The Germans have as up to this point successfully reintegrated the east into their society. Frankly them leaving would be a disaster.
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Old 16th Jul 2015, 08:12
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Well, but there must be a reason why several countries are 'weak'?
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Old 16th Jul 2015, 08:26
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Not at all. Very far from it Denti. I'm saying that Germany should be invited and/or encouraged to leave the EUROzone (along with any others who might wish to perhaps establish a new "DMzone".
This seems to be in disagreement with your previous post:

an "EUROZONE without Germany" (or even just comprised of France, Italy, Spain, Portugal, Greece, maybe Belgium also, together with a few others
In effect a group of economically weak states in a common currency zone, whichever name they choose for that and germany and like minded economically strong states in another currency zone with another random name. The name of the currency is irrelevant though, the fact remains that you propose a group of soft currency states and another one of hard currency states. Which might have some merits, as it makes things like devaluation as needed easier. In effect it would mean a new southern europe "lira" which will continuously devalue its currency to keep the states afloat and another group of countries that has to work hard to produce even cheaper/better so they can sell well with a hard currency.

It won't solve the underlying problem of productivity and economic strength though. And in the case of greece of a failed state, which it effectively is. But then, i wouldn't expect them to be in that new soft currency group either, as they wouldn't have the money to bail them out at all.

Interestingly enough, the germans in general do not love the euro very much. They see it as a concession to france that was forced upon them in the process of re-unification. Something which has raised the cost of living very much. Over the years they have learned to live with it, but not love it. Even today many people convert prices into DM before making a buy/don't buy decision.

I'm not aware though that any state has become germany's "bitch". But then, i do not know what that it requires to get that weird label. If some want to see themselves as that, there is nothing to be said against it. But then, they were not forced to become that in the first place.
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