i can understand germany's problem, they are in a dpression and need to get things going, france on the other side could make the 3% if they wanted, but if germany can do it france can do it too .... can't understand noone is acting more than they do

Economists saw this coming from a mile away. Members of the eurozone unified their central banking systems under the ECB with little economic coordination. It should come as no surprise that Ireland's economy is quite different from Spain's or Greece's. Seriously, it was basically, "cross your fingers" and "let's see if this ECB thing works."

We have the same thing in the US. Our states have different economies, but there is only one central bank - the "Fed." But the difference is that we have a single national economy, not a patchwork of different national economies. A common language allows people to move to easily move to areas with better employment, and the differences between state economies are far smaller than the differences between national economies in Europe.

The Growth and Stability Pact is the main reason that Great Britain should stay out of the euro. Joining the eurozone means that the Bank of England will lose the freedom to do what France and Germany are currently doing.

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I am puzzled as to why the rest of Europe isn't fuming at what these nations have done to the rules crafted by them for European Growth.

I think the smaller nations in Europe are fuming, because they know they'd never get away with what France and Germany did. The problem is, what the hell are they going to do about it? I feel sorry for the nations that signed on to the big swindle.

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FLUSHED THE JOHNS!

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Originally posted by imokruok Economists saw this coming from a mile away.

http://www.tranceaddict.com/forums/...ghlight=Deficit

Cough ...... Cough

Haha...very good.

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FLUSHED THE JOHNS!

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Originally posted by occrider http://www.tranceaddict.com/forums/...ghlight=Deficit Cough ...... Cough

hehehehe, but i'm not really sure if i can agree with you here. of course it would be easier for germany to recover their economy if they had the monetary policys to fully rely on. But in the long run i'm not sure if monetary policys is the right thing for solving a country like germany's problems. it would have been easy for the politicians to just devalue the mark, and in that way solve the countries problems, for then. but without that possibility the politicians must do something about the real problem, it will be harder and take more time, but i think that's the way to go in the long run.

also it is not that true about different regions, for example i know that there is less difference between all european country's economies, than there is within the swedish economy.

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Originally posted by St_Andrew hehehehe, but i'm not really sure if i can agree with you here. of course it would be easier for germany to recover their economy if they had the monetary policys to fully rely on. But in the long run i'm not sure if monetary policys is the right thing for solving a country like germany's problems. it would have been easy for the politicians to just devalue the mark, and in that way solve the countries problems, for then. but without that possibility the politicians must do something about the real problem, it will be harder and take more time, but i think that's the way to go in the long run.

Most of the time there IS no problem. Economies boom and bust cyclically to the business cycle. The whole concept of monetary policy and fiscal policy is to reduce the amount of time spent in recession. Monetary policy could quite easily help Germany out. Deflation is relatively low in Germany and the value of Euro is high. They could quite easily lower interest rates in order to stimulate business development in an effort to aid the economy without fears of inflation. However it cannot because it has ceded control over interest rates to the ECB. Furthermore they cannot manipulate the M1 money supply (or whatever the German version is). And lastly their ability to use fiscal policies are limited with the deficit caps. Of course I suppose they could simply violate that policy like they're doing right now ...

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also it is not that true about different regions, for example i know that there is less difference between all european country's economies, than there is within the swedish economy.

That's not true. I know half a year ago, France's economy was structurally sound and it would have been detrimental to them for the ECB to cut rates while the German economy was flirting with recession and would have benifited from a rate cut. And like I stated before, inflation is not the same for every EU country, and therefore one monetary policy may have a positive effect on a few while hurting others. For example, Ireland has high inflation at approximately 4.7% while Germany has low inflation at 1.1% and the Eurozone rate is at 2.1%. Each of these countries have far varying growth figures and therefore they are undergoing different ailments which calls for specific monetary or fiscal policies.

http://www.eubusiness.com/afp/04010...4.cg6ajvid/view

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Originally posted by occrider Most of the time there IS no problem. Economies boom and bust cyclically to the business cycle. The whole concept of monetary policy and fiscal policy is to reduce the amount of time spent in recession. Monetary policy could quite easily help Germany out. Deflation is relatively low in Germany and the value of Euro is high. They could quite easily lower interest rates in order to stimulate business development in an effort to aid the economy without fears of inflation. However it cannot because it has ceded control over interest rates to the ECB. Furthermore they cannot manipulate the M1 money supply (or whatever the German version is). And lastly their ability to use fiscal policies are limited with the deficit caps. Of course I suppose they could simply violate that policy like they're doing right now ...

true, most of the times there is no other problem but a normal down in the economy. i'm not very into germany's problems but they seem to have more problems than just the usual ones, and they really got to deal with them now to get things going again. again i am taking my own country as an example, during the late '70 and '80s we had a lot of economic problems, our lazy politicians simply solved that by a couple of devaluations, so the economy was really blooming in the '80s, but in reality we had big problems. when most of the world started to have problems with its economy in the beginning of the '90s, sweden's economy nearly collapsed. we hadn't dealt with the problems but now, they were more serious than ever. after that we did a lot of reforms and such and the economy has been really steady during the later parts of the '90s.

but of course during normal circumstances monetary policys are a good way of helping a country out. also under normal circumstances most economies in europe grows _about_ the same.

perhaps it would be better if ECB had a big budget to put into countries that needed economic stimulation, but that simple wouldn't work yet.for example the france would NEVER agree that anyone else (germany) got loads of money for stimulation meanwhile they didn't get anything...

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That's not true. I know half a year ago, France's economy was structurally sound and it would have been detrimental to them for the ECB to cut rates while the German economy was flirting with recession and would have benifited from a rate cut. And like I stated before, inflation is not the same for every EU country, and therefore one monetary policy may have a positive effect on a few while hurting others. For example, Ireland has high inflation at approximately 4.7% while Germany has low inflation at 1.1% and the Eurozone rate is at 2.1%. Each of these countries have far varying growth figures and therefore they are undergoing different ailments which calls for specific monetary or fiscal policies. http://www.eubusiness.com/afp/04010...4.cg6ajvid/view

yeah true, but who says that everything is the same even within a country? for example perhaps paris has a economical growth of 7% meanwhile Lyon has a economical growth of 1.5%, same goes with inflation, you simply cannot satisfy everyones needs if you do not have a currency for every single little area... so the loss of monetary policies are not that important if you see to the benefits of a single currency unit. and during time goes, the EMU countries economys will grow together more and more.

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Originally posted by St_Andrew yeah true, but who says that everything is the same even within a country? for example perhaps paris has a economical growth of 7% meanwhile Lyon has a economical growth of 1.5%, same goes with inflation, you simply cannot satisfy everyones needs if you do not have a currency for every single little area... so the loss of monetary policies are not that important if you see to the benefits of a single currency unit. and during time goes, the EMU countries economys will grow together more and more.

True, and that's why the national government has the ability to intercede in poorer regions if need be to provide loans or whatnot in order to encourage recovery. That's exactly what Arnold is attempting to do in California for example. Additionally, although growth may be different in between regions of a country, inflation remains constant all throughout. This is not the case in the EU. Ultimately US monetary policy is designed to help the US in aggregate, not specific regions. The EU is slightly (well actually significantly) more complex as a result of varying unemployment rates, inflation rates, and growth. So who should the ECB cater its policies towards? If it caters its monetary policies towards the EU in aggregate, all of its policies will be for the benefit of the two largest economies, France and Germany, and potentially hurt the smaller ones ... or say the scandanavian region. If it maintains the status quo in which most countries are doing fine except for Germany, what happens when the German economy goes into deep recession and drags teh EU down with it? Yes the idea is that as time goes on, the countries will become far more integrated, however, my question is whether they are integrated enough at this point for the single currency eurozone to be successful (or as effective as it might be without it).