dominos falling?? What if???
Real Estate Investor · the villages, FL · Member since 2008 · 5k+ posts · 3k+ votes
Ok- subject is euros. Greece and Portugal are kinda messed up. Now, Germany and France are threatening to depart the euro. IF this were to happen, is euro dead? Are we(the U.S.) going to loan (read- give away) money to prop up the euro? Is that a better idea than to help prop up some of our own states that are failing? Is there enuff $$$ to go around? Just curious about where we continue coming up with all the money? I guess we need to buy some more printing presses. Rich
Speculators are not the problem. "Cutting the ground from under speculators" is a feeble and pointless attempt by weak politicians to distract voters from the reality. The reality is Germany is going to have to pony up a bail out for German banks, just like the US did for US banks. The situation is almost identical to the US financial crisis, only the details differ. In the US case, it was an influx of cheap money into the housing market. The resulting mortgages were packaged and sold. When their true value became apparent, various big insurance companies, brokerage companies and banks discovered they had a lot less money than they thought they had, and had to be bailed out by the Feds. In Europe's case, it was cheap loans to your weaker economies: Greece, Spain, Portugal, Ireland, and Italy. Like US home buyers, they borrowed all they could. Like US home buyers, they're now discovering they really can't pay back all the money the borrowed. Like the US situation, it is ultimately some very large institutions that bought this debt (CMOs etc for the US situation, government bonds for the European situation.)
Greek citizens are rightfully upset they're going to have to feel the pain of their government's extravagance. That's a lot like US citizens who are paying their mortgages being upset with having the banks bailed out and people who bought houses they really couldn't afford getting bailed out. Only the targets of the ire are different. Also like the US, though, the citizens of the countries where credit was suddenly cheap did receive the benefits. Both direct, if you were the one doing the borrowing, and indirect as a result of the economic growth generated by all this cheap money.
Unlike the US, there is no central European authority to deal with the situation. Individual country governments must take action. Every country has their own agenda. There is no equivalent of the US federal government nor the US Treasury. So, there's nobody to cram the nasty medicine down their throats. The European governments have dithered as this situation has unfolded, and continue to dither. This is going to be the financial crisis Part Two, and may be just as nasty. A Greek default on at least some of its bonds seems entirely plausible, with the corresponding pain to German, French and other countries big banks. A breakup of the Euro also seems possible, though I'd say there will be a lot of effort to stop that. If Greece had their own currency now, and their bonds were denominated in that currency, they would simply devalue their currency, reducing the value of their bonds and making them easier to pay back. Without that option, the likelihood of a default is, IMHO, increased.
Rich,
Euro is safe,
Europe cut the ground from under speculators feet now. So I see no problem in future, only it must be global on each stock exchange.
By 12am tomorrow any hedge fond must declare all purposes and naked sales are prohibited then.
-Uwe
p.s: we did first step, hope the US follow us :).
Speculators are not the problem. "Cutting the ground from under speculators" is a feeble and pointless attempt by weak politicians to distract voters from the reality. The reality is Germany is going to have to pony up a bail out for German banks, just like the US did for US banks. The situation is almost identical to the US financial crisis, only the details differ. In the US case, it was an influx of cheap money into the housing market. The resulting mortgages were packaged and sold. When their true value became apparent, various big insurance companies, brokerage companies and banks discovered they had a lot less money than they thought they had, and had to be bailed out by the Feds. In Europe's case, it was cheap loans to your weaker economies: Greece, Spain, Portugal, Ireland, and Italy. Like US home buyers, they borrowed all they could. Like US home buyers, they're now discovering they really can't pay back all the money the borrowed. Like the US situation, it is ultimately some very large institutions that bought this debt (CMOs etc for the US situation, government bonds for the European situation.)
Greek citizens are rightfully upset they're going to have to feel the pain of their government's extravagance. That's a lot like US citizens who are paying their mortgages being upset with having the banks bailed out and people who bought houses they really couldn't afford getting bailed out. Only the targets of the ire are different. Also like the US, though, the citizens of the countries where credit was suddenly cheap did receive the benefits. Both direct, if you were the one doing the borrowing, and indirect as a result of the economic growth generated by all this cheap money.
Unlike the US, there is no central European authority to deal with the situation. Individual country governments must take action. Every country has their own agenda. There is no equivalent of the US federal government nor the US Treasury. So, there's nobody to cram the nasty medicine down their throats. The European governments have dithered as this situation has unfolded, and continue to dither. This is going to be the financial crisis Part Two, and may be just as nasty. A Greek default on at least some of its bonds seems entirely plausible, with the corresponding pain to German, French and other countries big banks. A breakup of the Euro also seems possible, though I'd say there will be a lot of effort to stop that. If Greece had their own currency now, and their bonds were denominated in that currency, they would simply devalue their currency, reducing the value of their bonds and making them easier to pay back. Without that option, the likelihood of a default is, IMHO, increased.
Europe tried to create a currency to compete with the dollars. Their assumption was that since the US is a union of states, Europe can do the same being one economic union. Big difference!
Although the US is a consortium of different states, with different economic strengths, we are all Americans with the same basic aspirations despite the differences opinions of how to achieve it.
A person who lives in Los Angeles California can get a job in Austin, TX and would assimilate in no time.
Europe is far from being homogenous. Each state is actually a different country. For a Greek person to move to Germany for a job is a much bigger deal than for that American who moved from CA to TX.
The European countries are individual countries and any attempt to unite them economically would bound to fail.
Another issue is the decline of the free market. I would recommend reading this book "The End of the Free Market" by Ian Bremmer
http://eurasia.foreignpolicy.com/posts/2010/05/18/the_end_of_the_free_market
It basically lay down the fact that the western economies are outsmart by the new economies who don't play by the free market rules. Primarily the emerging markets (China, India, etc). Those countries control the value of their currency, control their market and subsidize whatever they want to. Those market are completely controlled by governments.
Is the U.S going to provide bailout funds to Europe? Rich
AND- if cal was a country, it would be the 6th largest spanish speaking country in the world....Rich
And if Cal were a country, it would be the 59th largest in the world in terms of area...
This is a fun game! :)
Interesting game, but it does illustrate a key difference between the United States of America and the European Union. The US does have a functional and strong (too strong, many would say) federal government. I'd say the states interests and opinions are as diverse as the EU member countries. You only have to look at the new AZ law and the pot dispenaries that have popped up on every corner here to see that. But the feds do have the power to make a decision and take action. There is no equivalent in the EU. The individual leaders of the countries have to debate and come to some agreement. That makes for a very sluggish decision making process. One way to fix that would be to create the "United States of Europe". My money's on abandoning the euro before that happens.
California had two of the biggest exporting industries in the country - Silicone Valley & Hollywood.
Silicone valley still producing ideas but no product (They all went west...)
Hollywood is battling Canada, New Zealand and Eastern Europe. Why? Tax incentives! Canada offers 27% tax refund to foreign productions (It used to be 25%). New Zealand as well and eastern Europe just plays it plain cheap.
Recently other states joined the competition Michigan, Iowa and Georgia offer also 25% and that is why Canada raised it to 27%.
True story. Iowa recently cancelled all tax incentives programs for film productions after several producers and directors bought luxury cars and use the incentives to not pay sales taxes for them....
California only now started offering tax incentive but at a rate that is not even close to other states or countries. (I think it's around 20%)
That really hurts the economical growth here. There are still shows being produced here (Mainly Television) but the feature films for the most part - are gone.
Eddie- I believe we've ALREADY aided in the bailout. I was just tic. I'm sure we'll send more soon. We have unlimited funds, remember?
JScott- great comparison.
economy- cal currently 10th- could go up or down. That would be interesting, imo
spanish speaking- this will also change, especially if dems continue to have open border policy. Could become 5th soon, or 7th, imo.
and then there is 59th in area. Unless an earthquake eliminates a sizeable portion of CA, it probably is going to remain, pretty much 59th. Not very interesting, imo, but thanks for playing. Rich
Despite all that I would still put my money on California (If I could afford it...) and Florida (which I'm contemplating. Already own a piece of land there... :wink: )
Those two sunshine states proved to be a sure thing in the past and they will come back sooner than many others... (Are you listening AZ & NV?)
JScott- here is how it is related. Countries in europe are falling like dominos. Cal is how many BILLION in debt? You don't think the debt will continue to grow as CA becomes even more of a spanish state? If you don't see the correlation in costs escalating as the illegal immigrants come across, you've never lived in CA, AZ or TX as I have. That is hoew it compares.
Eddie- I made a grundle of $$ in ca. I'm still not sold on it. The libs and freeloaders(I'm generalizing here for JScott) will continue to keep ca screwed up. I am becoming more bullish on FL and may even start cutting loose with some funds here. Want to join forces?? I'm looking to get active in the foreclosure market as I did in TX over an 18 month period. Rich, headed to Vegas in morning.
One more item on my ex state of CA. The city of San Francisco just posted a proposition TODAY that if passed, will give ILLEGAL immigrants the right to vote. This should REALLY hep the state. Gee, I wonder what happens if this passes? Little by little the rules and laws are muddied. Rich.
That reminds me the idiots of the city of Santa Monica back in the 80's. They decided to open the public parks to the homeless people and passed an ordinance that prohibit anyone to kick them out. They've been regretting that decision for the past two decades....
More of a "spanish state?"
Seriously?
Spain is a "spanish state" and their economy is much stronger than ours these days...using that reasoning, perhaps being a "spanish state" would be a good thing...
Or do you mean a state with increased rate of illegal immigration?
If that's what you're asking, no, I don't. The immigrants in CA are contributing immensely to the state's GDP, and I don't see how that contribution is being outweighed by their contribution to the debt?
Perhaps you can provide some data to support your statement? Without data, yours is just an unsubstantiated opinion...
Where is the data that indicates how much immigrants are contributing to GDP? Where is the data that indicates how much immigrants are contributing to the state's debt?
Without this data, your assumption is meaningless (as is mine, but I recognize it).
Again, the immigrants also contribute to GDP, which is much harder to quantify than taxes and insurance costs, but is just as important (actually, I'd say it was more important). Until I see numbers that indicate one way or the other whether they take more than they give or give more than they take, it's just conjecture.
Regardless, it has nothing to do with the topic of this thread, so I don't know why we're discussing it...
While this is the off-topic forum, we try to keep on topic, don't we? As Jason said, it seems that this entire discussion (which I was excited about) has gone completely off course.
Can we bring it back on track or is this a total wash?
I'll try to bring it back. The thread was on euros , problems in Europe and the domino effect. I consider the U.S. as a sort of european conglomerate., except states compared to countries. My contention is we're much more diverse in the U.S. than europe. Alaska compared to new york? You may select your own comparisons.
There are many reasons europe and the euro are in trouble, just as there are many reasons the U.S. and the dollar are in trouble. Germany, France etc don't get excited about bailing out the weak countries . I can assure you, the stronger states in the U.S, would feel the same way. That is my comparison. Europe seems to be a forerunner to our future problems.
If the illegal immigrants were bringing more to the table than they are taking, I really doubt AZ and 11 other states wouldn't be attempting to enforce the laws already on the books. Maybe, they just want to be mean and unfair. AZ has thrown around the number of 4 billion they need to pay for the items Eddie brought up and others not mentioned like education, incarceration etc.
I'm sure someone can find the actual #'s out there, but until someone shows how great the illegal immigrants help is, I'll side with those mean old state legislatures that are trying to keep their states out of the red.
I've seen it up close and personal in TX and AZ over the last 8 years. I see the kids walking across the border for our FREE education just because they were born here. Buses, teachers, schools and teachers are provided and not one single cent is paid by the parents. When these kids grow up, get a job, legally, they send a large % of their income back across the border. That is their right, but, that also takes U.S. money out of play here in the U.S. That is a disadvantage to our economy. Rich
Josh- I tried to get it back on subject. There are some that just want to continue going off on irrelevant stuff. Feel free to shut it down anytime. It isn't worth the trouble. Rich
OK. I'll take a shot at bringing the issue back. US immigration issues dwarf compare to the European immigration ones.
In the seventies and eighties Germany, suffering from holocaust conscious issues along with the need for cheap labour, allowed influx of workers from Turkey to enter the country. Over the years, the problem grew with a stream of illegal immigrants flooding Europe mainly from north and central Africa.
In the matter of fact, Europe not only facing economical crisis, but identity crisis as well.
Here in America we do share differences and yes, Alaska and NY are far apart culturally as they are geographically, but America is still a country rooted in the idea of immigration. If there is one central identity in this country, it is the fact that most of us are either immigrants or our ancestors were immigrants (With exception of the native Americans and blacks, of course).
Throughout the history of the country, there was always economical gaps between states, but that have never impaired the country.
Europe is a completely deferent story. culturally and economically.