"China's July exports rose just 1% from a year earlier, adding to a downbeat set of monthly data that has boosted expectations of fresh government action to shore up the economy".... No surprises here - the US, UK and EU economies are broken, austerity on the majority is being imposed by the hypocritical rich - by the Republicans in the US, the Tories in the UK and the right in the EU, to allow minority greed to continue: Romney pays half the tax of any ordinary American, Cameron's father actually made his millions setting up tax havens.
China has built a trade empire on exports, they have little internal market, half of their population earn less than $9,000 a year.
Along with the EU, US and UK they will stagnate for a decade, and that's IF they can get over their own financial bubble that has been brewing for years.Austerity for the majority paying for minority greed - which is what we have in the UK, US and EU is utter hypocrisy. "Currently we have spent approx. 150 billion more this year than we get in tax despite taxes being increased on everyone."
Lies lies and more lies there. The Rich squirrel away in the UK £100 billion a year to tax havens, but apparently the majority are at fault for not paying enough taxes. ... "...the left always think the "rich" should pay but the "rich" do pay and the mega rich can decide where to live so if you want to take millions off them they just move to a country that does not."
Simple : Make a rule that if you trade in the UK for example, then you pay tax in the UK. And block all tax haven access.
"So much as the left would love to ignore the need to live within your means and go on a debt fuelled spending spree they can't." Well, more extant hypocrisy here from the Right - the Right are the ones who spent all the majorities money in their massive bank ponzi schemes, bankrupting us all. It's the right and their neo-Con economics, massively enriching the rich and making everyone else poorer over the last 35 years that are busted and useless for purpose.
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In the first seven years of the Euro's existence, Euro membership brought peripheral countries' yields down and encouraged borrowing. That in turn encouraged cross-border investment in the Euro area, as French, German, Spanish and Italian Banks bought one another's and peripheral sovereign debt.
What the ECB did by buying Italian and Spanish debt was to partially reverse this process. The ECB reduced cross-border investment by, for example, lending a trillion Euros in LTRO, which enabled Spanish Banks to buy thirty percent of Spanish sovereign debt from foreign investors. This moved Spanish debt back out of the core and back into Spain's own Banking sector.
In effect the ECB has been trying to unwind a network of borrower-lender relationships spanning the Euro-area, and replacing it with a hub and spoke system where the ECB becomes the central lender and the peripheral countries are the borrowers.
This actually makes an enormous amount of sense, because in a crisis it is much easier for the ECB to deal with peripheral countries on a case by case basis, rather than having to deal with the insolvency of core country Banks in the event of a messy and unpredictable series of peripheral defaults.
I am surprised that Luc Coene said what he did, because he is a Central Banker himself, and so must know the reasons for what's going on.
"But reform is the central issue here."
No, reform is not the central issue, because reform is infeasible, and cannot possibly take effect in time.
The peripheral countries have problems that they cannot solve in any plausible time-frame, which is why the ECB is acting as it is.
The peripheral countries have a huge handicap in the form of loss of unit labour cost, which is a loss of competitiveness, and that is why their current account deficits are getting worse.
If they try to fix this with so-called austerity, all they achieve is a contraction of their GDP, a rise in unemployment, and a consequent loss in tax revenue, taking them back to where they began.
That in turn means that there is no forseeable year in which their debt levels stabilise, hence their gradual exclusion from the credit markets,
What is just as bad is that ten years ago, the peripheral countries were attractive destinations for investment capital from the core but as the Euro has become increasingly over-priced for them, even their assets are no longer attractively priced, leading to a flight of investment capital.
This means that the ECB has to have a contingency plan for at least partial Euro break-up, and this is what I described above. The ECB is run by professionals. They think in terms of managing the currency in a technical sense, not in terms of who's naughty and nice.
Some people come at the Euro problem from the perspective that if you have a problem, there must be a solution. What they forget is that you can paint yourself into a corner from which there is no orderly exit, and this is what the Euro-area seems to have done.
In there was a clever answer to the Euro crisis, we'd have seen it before now. Now it's time to prepare for really ugly answers.
"The peripheral countries have a huge handicap in the form of loss of unit labour cost, which is a loss of competitiveness, and that is why their current account deficits are getting worse."
The Portuguese current account deficit declined from 10% to 2% of GDP in recent years. So, what you say doesn't apply to one country at least.
This illustrates the dangers of generalizing based on the usual categories (peripheral, PIIGS, etc).
Ah Belgium, the fake country that didn't even need a government for a year because it is now almost completely subsidized by European taxpayers . They've done obscenely well out of the 'projekt' and now wish to pull up the ladder behind them. This is why the EU will never be taken seriously, with pygmies like this calling the shots.
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