Eurozone Economy Stagnant........

[Westdene Seagull]

How strange, all those pro-EU / Euro people who predicted our imminent doom if we didn't join the Euro. Now the same people predict our imminent doom if we leave the EU.

Hands up who's daft enough to believe them this time ?

 

[melias shoes]

Staying low, saving Base+ mortgage payers a fortune

And the savers........?

 

[Bry Nylon]

Staying low, saving Base+ mortgage payers a fortune

The issue in the Eurozone is stagflation. The absence of any meaningful inflation in the economy means consumers have no real incentive to spend on anything other than essentials when the likelihood is that the product will be the same price or even cheaper (in real terms) next month or the month after that. So interest rates in the Eurozone need to start rising, and very soon.

Similarly, in the UK interest rates have been at an historic low of 0.5% for 5 years. The BoE committee will raise them soon - probably by 0.25% to begin with - to take a bit of heat out the economy being generated by the increase in housing activity. The latest figures I saw suggested every 0.25% rate rise represented about £250 p.a on the average mortgage?
The only unknown in the equation is the election due in May 2015. Will the Treasury be brave enough to increase lending rates in the months leading up to an election?

 

[Beach Hut]

Will the Treasury be brave enough to increase lending rates in the months leading up to an election?

They need to as inflation will plummet shortly

 

[Prince Monolulu]

The issue in the Eurozone is stagflation. The absence of any meaningful inflation in the economy means consumers have no real incentive to spend on anything other than essentials when the likelihood is that the product will be the same price or even cheaper (in real terms) next month or the month after that. So interest rates in the Eurozone need to start rising, and very soon.

Similarly, in the UK interest rates have been at an historic low of 0.5% for 5 years. The BoE committee will raise them soon - probably by 0.25% to begin with - to take a bit of heat out the economy being generated by the increase in housing activity. The latest figures I saw suggested every 0.25% rate rise represented about £250 p.a on the average mortgage?
The only unknown in the equation is the election due in May 2015. Will the Treasury be brave enough to increase lending rates in the months leading up to an election?

Indeed, however for the past few years we have constantly heard 'rates MUST go up soon' and each quarter where this simply does not happen has proved to be financially beneficial. Whilst not over burdened by any means, our savings in share based investments have generally done pretty well and we have saved significantly mortgage-wise for many years with the good interest rates. Whilst I feel for savers, the 80s proved a boom time for that area and so the cyclical nature of savings/investment against borrowing is self evident once more.
I shall continue to enjoy things while they last, and reconsider as and when they change.
I honestly sympathise with investors, yet I feel that growth time will be coming soon.
Who knows what's around the corner? If any of us knew, we'd be cleaning up on equity based investments/currencies/government issues.

 

[Bry Nylon]

Indeed, however for the past few years we have constantly heard 'rates MUST go up soon' and each quarter where this simply does not happen has proved to be financially beneficial. Whilst not over burdened by any means, our savings in share based investments have generally done pretty well and we have saved significantly mortgage-wise for many years with the good interest rates. Whilst I feel for savers, the 80s proved a boom time for that area and so the cyclical nature of savings/investment against borrowing is self evident once more.
I shall continue to enjoy things while they last, and reconsider as and when they change.
I honestly sympathise with investors, yet I feel that growth time will be coming soon.
Who knows what's around the corner? If any of us knew, we'd be cleaning up on equity based investments/currencies/government issues.

I believe you are right in every sense, although the indicators I have seen suggest that the growth in the UK GDP has been generated by new people joining the workforce, rather than an increase in demand for the products and services produced by those of us already in it. Essentially this is why although there has been good levels of sustained growth recently none of us are feeling any richer as wages simply haven't grown at the same rate. However as we approach what is soon to be about as near full employment as you can get, lending rates will start to rise just to ensure the economy doesn't start to overcook with people overstretching themselves again.

Like you say - if we knew the future we wouldn't be on NSC at 7.30 on a Thursday evening. I'd be in my Lear jet en route for Long Island. Ah well.

 

[Beach Hut]

I believe you are right in every sense, although the indicators I have seen suggest that the growth in the UK GDP has been generated by new people joining the workforce, rather than an increase in demand for the products and services produced by those of us already in it. Essentially this is why although there has been good levels of sustained growth recently none of us are feeling any richer as wages simply haven't grown at the same rate. However as we approach what is soon to be about as near full employment as you can get, lending rates will start to rise just to ensure the economy doesn't start to overcook with people overstretching themselves again.

Like you say - if we knew the future we wouldn't be on NSC at 7.30 on a Thursday evening. I'd be in my Lear jet en route for Long Island. Ah well.

As the workforce increases and the out of work decrease it will be the employers market where stagnant wages will be history as companies will not have the control the have had for the last 5 years or so.

The only issue with that is global companies like mine will then off-shore even more.

 

[Ernest]

You'll all have EBOLA next week so it won't MATTER

 

[Bry Nylon]

You'll all have EBOLA next week so it won't MATTER

Is he an attacking left back?

 

[Herr Tubthumper]

Two thick hardbacks out this week saying Germany is heading for oblivion

Two? and they're both thick? It must be curtains then.

 

[melias shoes]

Two? and they're both thick? It must be curtains then.

Time to come home?

 

[Herr Tubthumper]

Time to come home?

You're right, I can't compete with two thick books.

 

[cunning fergus]

Economic union via the Euro currency has been a disaster for the powerhouse economies of Europe that joined. If Germany could liberate itself from the Euro and revert to its own currency it would be flying.

I think it's only been a disaster in last few years, Germany has benefitted massively from the euro through its exports to other EU states alone.

Now these other states are feeling the pinch following shameful profligacy it's no surprise that there is a lag on the German economy.

The good news for Germany is that the euro is weak as a consequence of the basket case economies, (a position the Germans are quite happy with) so their exports remain competitive, however that is a limited positive given the prevailing difficulties in the other euro economies not forgetting the pain that is starting to bite with sanctions on Russia.

Whether the German people will wear the continual transfer of their wealth to the basket cases, and growing disenchantment with the EU are other problems down the road.........the problem is currently economic, when it goes political then it really will go loco.

 

[Herr Tubthumper]

I think it's only been a disaster in last few years, Germany has benefitted massively from the euro through its exports to other EU states alone.

Now these other states are feeling the pinch following shameful profligacy it's no surprise that there is a lag on the German economy.

The good news for Germany is that the euro is weak as a consequence of the basket case economies, (a position the Germans are quite happy with) so their exports remain competitive, however that is a limited positive given the prevailing difficulties in the other euro economies not forgetting the pain that is starting to bite with sanctions on Russia.

Whether the German people will wear the continual transfer of their wealth to the basket cases, and growing disenchantment with the EU are other problems down the road.........the problem is currently economic, when it goes political then it really will go loco.

Are they? This idea is far from new. And the nation had a chance to reject the country's current direction only last year.....but even more voted for Merkel and the current situation at the election. It will take a lot more than "two thick books" and a contraction in output to make me think the country or the EU is collapsing. I have heard all of this many times before yet the EU is still here and Germany is still doing alright. And the main thing is, and this is what I like about Germany, when things do take a down turn they have a rethink and always come back a lot stronger. This is the sign of true strength in my opinion. Not turning inwards and tearing yourself apart like some other countries do. As Gary Lineker said "never write off the Germans." I promise you I'll still be here in 10 years time flying my EU flag; if not you can throw the two thick books at me.

 

[Mo Gosfield]

Is he an attacking left back?

Tony Ebola....got to be one out there somewhere.

 

[Buzzer]

Are they? This idea is far from new. And the nation had a chance to reject the country's current direction only last year.....but even more voted for Merkel and the current situation at the election. It will take a lot more than "two thick books" and a contraction in output to make me think the country or the EU is collapsing. I have heard all of this many times before yet the EU is still here and Germany is still doing alright. And the main thing is, and this is what I like about Germany, when things do take a down turn they have a rethink and always come back a lot stronger. This is the sign of true strength in my opinion. Not turning inwards and tearing yourself apart like some other countries do. As Gary Lineker said "never write off the Germans." I promise you I'll still be here in 10 years time flying my EU flag; if not you can throw the two thick books at me.

I think you underestimate the strength of anti-German resentment amongst the basket-case economies. Understandable, living in your German bubble believing that Germany is the good guy here, bailing out all the other Euro nations. I can assure you, Germany did very well out of those economies before the rug was pulled from under the feet.

Take Greece for instance. Germany were well aware that Greece had not met the criteria necessary for adoption of the Euro but were actually complicit in fudging the entry rules so that the Greeks could enjoy all the benefits of having their interest rates set by Frankfurt and Paris. I say benefits - I mean being forced to buy German imports that they didn't want and didn't need.Over a 10 year period Greece sourced 25% of its arms from Germany (Germany's biggest market by far in Europe). This included 3 billion euros for submarines that didn't work and were unfit for purpose and that Greece simply didn't need to buy. In the words of Dimitris Papadimoulis, a senior left-wing Greek MP "...That's three times the amount Athens was asked to make in additional pension cuts to secure its latest EU aid package."

And don't think the French didn't have their fingers in the pot. 10% of its arms sales goes to Greece. Between 2002 and 2006 Greece was the fourth biggest importer of conventional weapons. You have to ask what the rationale was for Germany and France selling all these arms to a small stable EU country who also happen to be a long-standing member of NATO. Extremism is rife in Greece now as a direct result of this huge mistake in joining the Euro. Europe is a more unstable place as a direct consequence of mismanagement that borders on the fraudulent. Germany and France need to take a long hard look at their own complicity in this. Within the rest of the EU, anti-German resentment is at an all-time high. If the EU collapses it will be because German arrogance refuses to see beyond their own self-interest. I hesitate to throw that accusation at you but I feel the need to quote your comment above:

It will take a lot more than "two thick books" and a contraction in output to make me think the country or the EU is collapsing. I have heard all of this many times before yet the EU is still here and Germany is still doing alright.

I think that quote right there sums up everything that is wrong with German attitudes to the EU and the Euro. What is good for Germany is good for the whole of the EU and if Germany is doing alright then the EU is doing alright.

By the way, I believe one of those books is called the "Germany Illusion". I'm sure you read about it when Gwylan and I discussed it on here a week or two back. It's just under 300 pages long and looks like required reading for anyone who thinks that a very bad downturn in the German economy could not nor would not happen. It is happening and it's going to get worse. It's main thrust seems to be that Germans are living under a dangerous illusion that Germany will somehow just carry on as it has. Who'd have thunk that, eh?

 

[Herr Tubthumper]

I think you underestimate the strength of anti-German resentment amongst the basket-case economies. Understandable, living in your German bubble believing that Germany is the good guy here, bailing out all the other Euro nations. I can assure you, Germany did very well out of those economies before the rug was pulled from under the feet.

Take Greece for instance. Germany were well aware that Greece had not met the criteria necessary for adoption of the Euro but were actually complicit in fudging the entry rules so that the Greeks could enjoy all the benefits of having their interest rates set by Frankfurt and Paris. I say benefits - I mean being forced to buy German imports that they didn't want and didn't need.Over a 10 year period Greece sourced 25% of its arms from Germany (Germany's biggest market by far in Europe). This included 3 billion euros for submarines that didn't work and were unfit for purpose and that Greece simply didn't need to buy. In the words of Dimitris Papadimoulis, a senior left-wing Greek MP "...That's three times the amount Athens was asked to make in additional pension cuts to secure its latest EU aid package."

And don't think the French didn't have their fingers in the pot. 10% of its arms sales goes to Greece. Between 2002 and 2006 Greece was the fourth biggest importer of conventional weapons. You have to ask what the rationale was for Germany and France selling all these arms to a small stable EU country who also happen to be a long-standing member of NATO. Extremism is rife in Greece now as a direct result of this huge mistake in joining the Euro. Europe is a more unstable place as a direct consequence of mismanagement that borders on the fraudulent. Germany and France need to take a long hard look at their own complicity in this. Within the rest of the EU, anti-German resentment is at an all-time high. If the EU collapses it will be because German arrogance refuses to see beyond their own self-interest. I hesitate to throw that accusation at you but I feel the need to quote your comment above:



I think that quote right there sums up everything that is wrong with German attitudes to the EU and the Euro. What is good for Germany is good for the whole of the EU and if Germany is doing alright then the EU is doing alright.

By the way, I believe one of those books is called the "Germany Illusion". I'm sure you read about it when Gwylan and I discussed it on here a week or two back. It's just under 300 pages long and looks like required reading for anyone who thinks that a very bad downturn in the German economy could not nor would not happen. It is happening and it's going to get worse. It's main thrust seems to be that Germans are living under a dangerous illusion that Germany will somehow just carry on as it has. Who'd have thunk that, eh?

We have had this discussion before. I don't really have the energy to go over it again. You think "it will get worse" and maybe it will. But if it does get worse I think the Germans will find a way through it. I won't convince you, and you will have a tough time convincing me of your belief. Let's just wait and see eh? If I'm back home in 5 years feeling fooled by the illusion you can maybe buy me a pint of English ale and wish me well?

 

[Buzzer]

....Let's just wait and see eh?

Is this going to be your approach to all your political pet topics from hereon in or just regarding the downturn in the German economy?

 

[Herr Tubthumper]

Is this going to be your approach to all your political pet topics from hereon in or just regarding the downturn in the German economy?

Yes, I think it will be my approach to topics I have discussed twice already with the same person.

 

[Buzzer]

Yes, I think it will be my approach to topics I have discussed twice already with the same person.

*makes note to bounce this thread when you reply to threads about trains, Ed Miliband, Europe, England football team.....