The future of the Euro and EU.

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Originally Posted by Valve Bounce

This is so true. Talk here is that it could affect Australia's economy. I think the only guy to end up not suffering any economic fallout is China.

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I don't see how China can remain unaffected either. They're facing their own little credit bubble and their property market is overheating. They need a collapse of their export markets like a hole in the head.

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Originally Posted by chuck34

It is not fair. I would not advocate for anyone to be forced into such a thing. Quite the opposite in fact I am arguing against forced retirement funds and for individual responsibility in the matter. I am sorry if I was not clear on that point.

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In Australia there is a compulsory 9% of people's wages paid into Superannuation Funds. What it's meant is a tremendous source of capital has been created (about A$ 1 trillion), but there has also been an equally tremendous opportunity to cream off 1% of that in Fund Management fees.

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Originally Posted by Malbec

I don't see how China can remain unaffected either.

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China has so big domestic market that is in many ways undeveloped they just have to sell the stuff there that did go to export, so the effect will be quite small.

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Originally Posted by Tomi

China has so big domestic market that is in many ways undeveloped they just have to sell the stuff there that did go to export, so the effect will be quite small.

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Thats my point though, their own economy is overheating with both credit and property bubbles developing. When the bubble bursts China's domestic market will suffer.

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Originally Posted by Malbec

Thats my point though, their own economy is overheating with both credit and property bubbles developing. When the bubble bursts China's domestic market will suffer.

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The China Bubble is already bursting. China is just putting band-aids on everything but they will not hold for long.

The real country at risk in the EU is France. Their banks are exposed up to their necks in Greek, Italian, Spanish and Portuguese paper. They can survive a Greek crash but if Italy goes...........The Dollar & Swiss Franc will look real good and Gold will hit $2,400.00

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Originally Posted by Malbec

Thats my point though, their own economy is overheating with both credit and property bubbles developing. When the bubble bursts China's domestic market will suffer.

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I dont think it will to overheat much, their BNP growt has been big even they let it go down 50% its still huge compaired to everywhere else, one thing they could do is to stop borrowing money to broke countries, that would force the countries to look for other ways to balance their economy, for instance printing more money is not a solution, its just a way to move serious problems a little further to the future.

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Originally Posted by Tomi

I dont think it will to overheat much, their BNP growt has been big even they let it go down 50% its still huge compaired to everywhere else,

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China needs its current growth rate to carry on, it can't tolerate a drop in growth. A drop in growth means mass employment and an increase in unrest. Even during the boom days there were large strikes and riots that the official government tried to suppress outside knowledge of. The Chinese government is terrified of the effects of increased unrest which is why they've focused on huge economic growth to prevent this from happening for the last two/three decades.

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Originally Posted by Tomi

one thing they could do is to stop borrowing money to broke countries, that would force the countries to look for other ways to balance their economy, for instance printing more money is not a solution, its just a way to move serious problems a little further to the future.

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China is not a benevolent lender that is merely happy to earn a bit of interest on the money it lends out. Nor is it stupid.

Those countries that borrow from China in this time of need and I'm talking bailout money not selling them bonds, does so at their peril. The Chinese will extract their pound of flesh in terms of concessions and political favours. It is for a good reason that the EU until this current problem had a policy in place that no individual member would ask the Chinese (specifically and noone else) for bailout money.

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Originally Posted by Rollo

There used to be a thing called the Latin Monetary Union from about 1865 until the mid 1920s. The currencies although different were supposed to be pegged against each other but even then various countries debased their currencies, Greece was booted out of it in 1908 and the French ignored most of the regulations behind it.
That should have told us that the idea of a common currency was fraught with danger.

Basically I think that the EU generally was created to try to stop European countries from hacking each other to pieces the way that they'd done for centuries previous. A common currency I suppose is a noble idea, but was always doomed to fail wasn't it?
Really I think that the only proper common currency was the system of Denarii and Aurii across the Roman Empire but even that didn't work properly.

Maybe the only other time that a common currency worked was in 1486 under the reign of Richard the Fourth when the egg replaced the worm as the lowest form of currency.

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The common currency really came about because the spectacular collapse of the USSR. It was a very natural step to re-unite West and East Germany but in doing so it created a behemoth nation with 30% of Europe's output.

With a unified Germany being much larger than the UK, France or Italy it raised fears of disturbed politcal balance in favour of Germany. The best way to to address this balance was thought to be a big increase in the forces tying the EU together. The Euro was the result of this.

Crisis averted.
Problem solved

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Originally Posted by DexDexter

I don't think anyone really cares about the Greeks,that's not the reason measures are being taken. They're trying to protect other countries and basically the whole world economy from a serious downturn.

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Is that such a bad thing? The world has been living beyond its means, governed by a few greedy people. Maybe its time for a change?