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fcharton -> RE: Participating in History (OT) (10/6/2011 8:46:49 AM)
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Greeting from France,
Opposition to the EU is not new, it is growing here, but the mainstream parties, who all support the EU and Euro, are still very dominant. It has to be said that resentment against the EU is often caused by our own governments, who love to claim successes at theirs, and blame failures on Europe.
I don't think the euro can disappear anytime soon, and I believe Germany will do its utmost to support it. If we have the DM, and Franc, and Lira back, the DM will rise while other currencies drop. This means a less competitive Germany (export wise) and smaller markets for her industry (the eurozone countries are her main trading partners, the euro protects her against competitive devaluations, and various EU laws allow for a very open market), and therefore less funding for her debt and social system (in Germany, like in France, social security is mostly funded by taxes on the workforce: if the economy goes fine, you can fund lots of benefits, when it gets bad you're in trouble, since you can't fund the benefits at the time you'd need them most...).
We, the people of the big euro countries love to rant about having to pay for the greeks or irish, but conveniently forget the nice market the eurozone is providing us... (somehow, the rant about the Greek reminds me the rants about East Germans just after reunification).
As for Dexia, it has very little to do with the PIGS. Its French component used to be a state controlled bank that lended to administrations (cities, townships, etc.). Over the last 30 years, local administrations saw their responsibilities and budgets increase, and funded some of this increase through borrowing. Since the common wisdom was that administrations, like states, could not default, they lended very unwisely (and sometimes used very creative interest rate formulae). And all the "good debt" they owned made the merging of the french outfit and its Belgian counterpart (which formed Dexia) a very rosy prospect. Well... until everyone panicked and decided that admins could default, and all this good debt suddenly became toxic. Dexia is a subprime-like crisis.
I think the idea that the current crisis is an european affair is deeply mistaken. To me, there is only one crisis, that results from the policy, followed by all Western states since WWII, of investing people's retirement money on the financial markets. This created lots of "free money", which sometimes fed investment, often created bubbles, and tended to be used, in Ponzi-like fashion, to finance lavish social systems.
But now, the first generations concerned by this system (aka babyboomers) are retiring, and wanting their money back, with the interests and all that.
The first shock was funded by the states, which went broke in the process, and now more people are arriving, and wanting their money back, and the states are broke, and developped and emergent states all hope this money can be used to fund their recovery and their growth... (and, as usual, some banks in the private sector are taking advantage of the situation to try to get their bad debt funded by the states)
The US was hit harder by the first crisis, now it is Europe, but the underlying problem is global, and has not been resolved.
Francois
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