Apologies, I got carried away... wall of text incoming.

@RedSky

I agree, monetary policy at low rates has very little to offer in terms of economic stimulus. Then again, the focus almost solely on monetary policy is part of the problem. Fiscal policy can have a massive impact, both directly (government purchases of goods and services) and indirectly (increase in automatic stabilizers). But for that you either need to be in control of your central bank, so that you can engage in Overt Monetary Financing ("printing" money). Or you need the blessing of the private banks, which is particularly true for a Vollgeld system.

The budget is the core of a parliamentary democracy, and to be at the whim of the folks at Deutsche Bank, HSBC or Credit Suisse -- no, thank you very much. We saw how that played out in Greece.

Anyway, the central bank can do miraculous things: if it provides funds to the democratically elected body in charge of the budget, aka parliament/the government. Trying to "motivate" the private banks to stock up on cheap reserves to stimulate lending is just a sign of ideology.

The great Michal Kalecki, in his essay The Political Aspects of Full Employment, summarized the general issue of government spending quite clearly. The industrial leaders stand in opposition to government spending aimed at full employment for three distinct reasons: a) dislike of government interference in the problem of employment as such; b) dislike of the direction of government spending (public investment and subsidizing consumption); c) dislike of the social and political changes resulting from the maintenance of full employment.

I'd say control over your currency is too great a tool to leave it in the hands of unelected managers. Clement Attlee knew very well why he had to nationalize the Bank of England in '46.

Back to the issue of inflation, I'd like to make two points. First, how big a role should inflation really play when talking policy. Second, what's the influence of a central bank on inflation.

Where does it come from, this focus on inflation. People usually talk about government spending when discussing inflation. Private spending is rarely brought up, even though it can be just as inflationary. So let's ignore private spending for a moment and talk purely government spending: should a deficit/surplus not be judged primarily by how well it helps us achieve our macroeconomic goals? Or more clearly, why should we sacrifice full employment or our general welfare on the altar of inflation? Yes, that's over the top. But so is the angst of inflation.

I'd say let's stick with Abba Lerner's concept of functional finance and judge deficits/surpluses purely by how well they help us achieve our macroeconomic goals. Besides, the US has run massive deficits during the GFC, so much in fact, that a great number of monetarists saw hyperinflation just around the corner. Still waiting for it. Same for Japan. Massive deficits... and deflation.

As long as spending, both private and government, doesn't push the economy beyond its limits (full employment, real resources, production capacity), out-of-control inflation just doesn't materialize. Plus, suppressing inflation is actually one thing central banks can do quite well. Unlike causing inflation, which both Japan and the EU are showcases off. Draghi can dance naked on the table, monetary policy (QE, mainly) won't push inflation upwards.

Which brings me to the second point: what's inflation, what's the cause of inflation, how can central banks manipulate it.

CPI is often used as a measure of inflation, but I prefer the GDP deflator. CPI doesn't account for externalities that you cannot influence, whatever you do. Prime case: the price of oil. Monetary policy of the Bank of Sweden has no influence on the price of oil. The GDP inflator, however, accounts for every economic activity within your currency zone -- much more useful.

General theory says, this measure of inflation goes up when demand surpasses supply. And vice versa. The primary factor of demand is domestic purchasing power, therefore wages. If you suppress wages, you suppress inflation. If you push wages, you push inflation. More specifically, you can see a direct correlation between unit labour costs and the GDP deflator in every country at any time. Here's a general graph for multiple countries, and the St. Louis FED provides a beauty for the US.

That's why it's easy for central banks to combat inflation, but almost impossible to fight deflation.

Italy:
Renzi is creating the conditons for a new bubble? Through deficit spending on... what? Unless they start building highways in the middle of nowhere like they did in Spain, I don't see any form of bubble coming out of deficit spending in Italy. The country's been in a major recession for quite some time now, with no light at the end of the tunnel and a massive shortfall in private spending. But meaningful deficit spending requires Renzi to tell Germany and the Eurogroup to pound sand -- not sure his balls have descended far enough for that just yet.

Referendum in Switzerland:
"Vollgeld". That's the German term for what the initiators of this referendum are aiming for: 100% reserve banking. It's monetarism in disguise, and they are adament to not be called monetarists. But that's what it is. Pure old-fashioned monetarism. Even if you don't give a jar of cold piss about all these fancy economic terms and theories, let me ask you this: the currency you use is quite an important part of all your daily life, isn't it? So why would anyone in his or her right mind remove it entirely from democratic control (even constitutionally)?
If you want to get into the economic nightmares of it, here are a few bullet points:
- no Overt Monetary Financing (printing money for deficit spending) means no lender of last resort and complete dependence on the market, S&P can tell you to fuck off and die as they did with PIIGS
- notion that the "right amount of money in circulation" will enable the market to keep itself in balance -- as if that ever worked
- notion that a bunch of technocrats can empirically determine this very amount in regular intervalls
- central bank is supposed to maintain price stability, nothing else -- single mandate, works beautifully for the ECB, at least if you like 25% unemployment
- concept is founded in the notion that the financial economy is the source of (almost) all problems of the "real" economy, thereby completely ignoring the fact that decades of wage suppression have simply killed widescale purchasing power of the masses, aka demand

Visegrad nations:
From a German perspective, they are walking on thin ice as it is. The conflict with Russia never had much support of the public to begin with, but even the establishment is becoming more divided on this issue. Given the authoritarian policies put in place in Poland recently and the utter refusal to take in their share of refugees, support might fade even more. If the Visegrad governments then decide to push for further conflict with Russia, Brussels and Berlin might tell them, very discreetly, to pipe the fuck down.

Turkey:
Wildcard. He mentioned how they will mess with Syria, the Kurds and Russia, but forgot to mention the conflict between Turkey and the EU. As of now, it seems as if Brussels is ready to pay Ankara in hard cash if they keep refugees away from Greece. Very similar to the deal with Morocco vis-a-vis the Spanish enclave. As long as they die out of sight, all is good for Brussels.

I would add France as a point of interest:
They recently announced that the state of emergency will be extended until ISIS is beaten. In other words, it'll be permanent, just like the Patriot Act in the US. A lof of attention has been given to the authoritarian shift of politics in Poland, all the while ignoring the equally disturbing shift in France. Those emergency measures basically suspend the rule of law in favour of a covert police state. Add the economic situation (abysmal), the Socialist President who avoids socialist policies, and the still ongoing rise of Front National... well, you get the picture.

Regarding the EU, I'll say this: between the refugee crisis (border controls, domestic problems, etc) and the economic crisis, they finally managed to convince me that this whole thing might come apart at the seams after all. Not this year, though, even if the Brits decide to distance themselves from this rotten creation.

http://www.theguardian.com/healthcare-network/views-from-the-nhs-frontline/2016/jan/05/doctor-suicide-hospital-nhs?

With that in mind, remember that the Bank of England can start Overt Monetary Financing (aka print money) at the stroke of a pen and thereby allow the Department of Health to increase staff levels to whatever it takes to provide the desired quality of service. There are plenty of underutilised or even unused resources, human most of all -- meaning unemployed people.

The current situation is the result of political decisions, not an economic neccessity. No excuses. For the damage they inflict on the people and the environment, they should have to spent the next decade digging peat with a spade, 18 hours a day.

The article linked above mentions Röpke and Eucken as champions of free market capitalism, so to speak. Ironically, Bernie Sanders is quite in line with many of Walter Eucken's core ideas. For instance, Eucken declared legal responsibility to be an absolute necessity for competition within a market economy. Meaning that under Eucken's notion of capitalism, US prisons would be filled to the brim with white collar criminals from Wall Street and just about every multinational corporation, including Volkswagen.

Ludwig Erhard, credited by many to be the main figure behind the German "Wirtschaftswunder" (nothing wonderous about it), postulated real wage growth in line with productivity and target inflation as an imperative for a working social market economy. Again, very much in line with Bernie Sanders. Maybe even to the left of Sanders. A 5% increase in productivity and a target inflation of 2% requires a wage increase of 7%, otherwise your economy will starve itself of the demand it requires to absorb its increased production. You can steal it from foreign countries, like Germany's been doing for more than a decade now, but that kind of parasitic behaviour is generally frowned upon. Minimum wage in the US according to Erhard would be what now, $25-$30? So much for Sanders' $15...

Sennholz further mentions the CDU as a counterweight to the SPD. Well, the CDU's "Ahlener Programm" in 1947 declared that both marxism and capitalism failed the German people. In fact, it put significant blame for Germany's descent into fascism at the feet of the capitalistic system and called for a complete restart with focus NOT on the pursuit of profit and power, but the well-being of the people. They called for socialism with Christian responsibility, later watered down and known as social market economy or Rhine capitalism.

As for the economic policies conducted by the occupation forces: German industry, and large corporations in particular, were shackled for the role they played during the war. If you work tens of thousands of slaves to their death, you lose your right to... well, anything. If they had stripped IG Farben, Krupp and the likes down to the very bone, nobody could have complained. No economic liberties for the suppliers behind a genocide.

Next in line, the comparison with Germany's European neighbours. Sennholz wrote that piece in '55, so you can't really blame him for it. Italy had more growth from '58 onwards, France had more growth than its devastated neighbour from '62 onwards. The third Axis power, Japan, had significantly more growth from '58 onwards.

Why did some European and Asian countries grew much more rapidly than the US? Fair Deal? Nope, Bretton-Woods. Semi-fixed exchange rates caused the Deutsche Mark and the Yen to be ridiculously undervalued compared to the Dollar, thus increasing German and Japanese competitiveness at the cost of the US. Stable trade relations created by the semi-fixed exchange rates plus the highly expansive monetary policy in the US – that's what boosted Germany's economy most of all. Sort of like China over the last two decades, except we were needed as a bulwark against the evil, evil Commies, so the US kept going full throttle.

Our glorious policians tried the same policies (Adenauer/Erhard) in East Germany after reunification, even though global conditions were vastly different, and the result is the mess we now have over there. The entire industry was burned to the ground when they set the exchange rate too high, thus completely destroying what little competitiveness remained. Two trillion DM later, still no improvement. A job well done, truly.

Anyway, if anything, Bernie Sanders' program is closer to post-war German social market economic principles than to the East-German bastard of socialism, state capitalism and planned economy imposed by an autocratic system. However, even that messed up system produced significantly less poverty, both in quality and quantity, than the current US corporatocracy. No homelessness, no starvation, proper healthcare for everyone – reality in the German Democratic Republic (East Germany). And despite the fact that they were used as cheap labour for western corporations, no less. My first Ikea shelf was produced by our oppressed brothers and sisters in the East. The Wall "protected" the West from cheap labour while letting goods pass right through – splendid membrane, that one.

PS: Since that article was written in '55, I have to mention one of my city's most famous citizens: Otto Brenner. He was elected head of the IG Metal, this country's most influential trade union, in 1956 after having shared the office since 1952. The policies he fought for, and pushed through, during his 16 years in charge of the union are very much in line with what Sanders is campaigning for.

Yeah, but in the U.S. that would be a manslaughter charge. No, the kid wouldn't have meant to kill him. Yeah, the other guy started it. But he didn't have to punch the dude. He could have broken it up by pushing the guy away or physically putting himself between the attacker and the victim.

Even if the manslaughter charges didn't stick, it would almost certainly go to a civil case of the dead kid's parents suing the kid who intervened and I have no doubt they would win.

Not saying it's right, but that is the reality of the U.S. legal system. It IS dangerous to promote the message that sometimes violence is okay to teens. Things turned out okay this time because no one got permanently injured or killed. Doesn't mean the dice are always gonna roll that way though.

EDIT: To clarify my last point, what I mean is that even if someone who deserves to die gets killed, there's a high likelihood there will be serious consequences for the person who killed them. If not a prison sentence, then probably monetary damages in a lawsuit, and if not that then years spent paying lawyers to fight said charges/lawsuit.

In my non-expert opinion the only way to really help Greece at this point is to release a significant amout of debt and set the interest of the rest to zero. (Instead of trying to keep on profiting on their misfortune)

And I fear a Grexit will inevitably lead to the worst case scenario for both Greece and the EU, hyperinflation in an european country.

Edit:
After having read some more stuff about Greece and monetary shell games aka economics I've come to the conclusion that zero interest debt would not actually help. Interest for goverment bonds has been declining worldwide over the last decades, yet government debt has increased proportionally.
Why is that? Well, if you, as a politician, can borrow more money for the same amount of effective interest to fulfill your election promises in order to stay in office for as long as possible then why the hell not? Some day you won't be in office anymore and the higher government debt isn't your problem anymore.
So in the end, lower interest rates may not be 'helpful' for the greek government to balance their budget.

8:18 – "Germany is very financially responsible".

The clip makes a few good points, twists others and omits some central issues. But I want to comment on the quote above most of all, because it forms the basis for all kinds of arguments and recommendations.

The claim that Germany is financially responsible stems from what has been paraded around domestically as the "schwarze Null" (black zero), meaning a balanced budget. Given how focused most economic debates are around the national debt or the current budget deficit, it shouldn't come as a surprise that not running a deficit evokes positive responses in the public. If there has ever been an easy sell, politically, it's this.

However, it's not that simple.

For instance, the sectoral balance rule dictates, by pure accounting identity, that the sum of public balance, private balance and external balance is 0 at all times. In case of Germany, this means that the balanced public budget (no surplus, just a fat zero) requires a current account surplus of the same size as private savings – or an accumulation of private debt. For someone to run a surplus, someone else has to run a deficit. In this case, foreign economies have to run a deficit vis-á-vis Germany, so that neither the German government nor the German private sector have to run a deficit.

The composition of each sector is another topic entirely, but the point remains: no surplus in Germany without a deficit in the periphery. If everyone is to be like Germany, Klingons have to run the respective deficit.

My question: is it financially responsible to depend on other economies' deficits to keep your own house in order? Is it responsible to engage in this kind of behaviour after having locked yourself into a monetary union with less competitive economies who have no way of defending themselves through currency devaluation?

Second point: capital accounts and current accounts are two sides of the same coin. If Germany runs a current account surplus of X%, it also runs a capital account deficit of X%. Doesn't explain anything, but it's the same for the countries at the other side of these trade imbalances. Spain's current account deficit with Germany meant a capital inflow of the same size.

Let's look at EuroStat's dataset for current accounts. Germany had run a minor current account deficit during the late '90s and a small surplus up to 2003. From then on, it went up, up, up. Given the size of Germany's economy within Europe, that jump from 2% to 7.5% is enormous. Pre-GFC, the majority of this surplus went to... yap, PIIGS. Their deficits multiplied.

Subsequently, capital of equals size flowed into these countries, looking for investments. No nation, none, can absorb this amount of capital without it resulting in a massive misallocation, be it stock bubbles, housing bubbles, highways to nowhere or lavish consumption. Michael Pettis wrote a magnificent account (Syriza and the French indemnity of 1871-73) of this and explains how Germany handled a similar inflow of capital after the Franco-Prussian war: it crashed their economy.

As Pettis correctly points out, the question of causality remains. Was the capital flow a pull or a push?

The dataset linked above says it all happened at just about the same time, in all countries. It also happened at the same time as Germany's parliament signed of on "Agenda 2010", which is the cause of massive wage suppression in Germany. Germany intentionally lowered its unit labour costs and undercut the agreed upon inflation target (2%). German employees and retirees were forced to live below their means, so the export sector could gain competitiveness against all the other nations, including those in the same currency union. Beggar-thy-neighbour on steroids.

Greece overshot the inflation target. They lived beyond their means. But due to their size, it's economically negligable. France stayed on point the entire time, has higher productivity than Germany and still gets defamed as the lame duck of Europe. Yet Germany, after more than a decade of financial warfare against its fellow members of the EU/EZ, is hailed as the beacon of financial responsibility.

Mercantilism always comes at the cost of others. And the EU is living proof.

Yanis Varoufakis ‏@yanisvaroufakis 6h6 hours ago

Capital controls within a monetary union are a contradiction in terms. The Greek government opposes the very concept.
--------------------------

19:01
TSIPRAS ANNOUNCES CAPITAL CONTROLS AND BANK HOLIDAY
--------------------------

Again, https://www.youtube.com/watch?v=pDWzGm1W0WY&feature=youtu.be&t=8s

The head honcho of the Bank of Greece is hardcore conservative, and the move was anticipated, but the communication again... wtf indeed.

One word...bribes.*

*(They call them settlements, but when one pays a huge monetary 'settlement' in order to not be prosecuted, that's kind of the definition of the word 'bribe'.)

That's what's left on the table, isn't it? I'd divide the exit option into orderly and disorderly, but the core of it remains the same.

Yet we have to keep in mind, Syriza was elected on a program diametrically opposed to the troika demands. And an EZ exit is equally far outside its mandate. Not to mention that a significant portion of Syriza is made up of former PASOK supporters, who would need a whole lot of convincing to vote for an EZ exit.

A referendum sounds decent enough, but they should have a strategy in place for the post-EZ time. Merely getting rid of the Euro won't get them out of the shit. In fact, I'd argue that a clear strategy is an absolute neccessity to even get a "favorable" outcome from any referendum. The public needs to have a clear picture of what awaits them behind any choice they might be presented with.

For starters, they should be perfectly clear about what it would take to get the Greek economy started again. Greece has very little to offer at this time, so every effort must be made to improve the domestic market. Plans for rebuilding its productive base should be worked out prior to any referendum. Industrial policy spanning at least 5-10 years would be needed.

Question is: can a non-EZ Greece muster up enough political capital to run the vast fiscal programs required to pull the economy out of the shitter? Or would they be stuck with a recessionary focus on balanced budgets, just like the rest of us?

In any case, within the constraints of a monetary union with neo-mercantilist Germany, Greece will not get the fiscal expansion it needs and will remain a shithole, just shy of a failed state.

GeorgeHammock,
is this http://videosift.com/video/Where-to-buy-FFXIV-Gil-safely-and-fast
your video on youtube, or are you somehow affiliated with the company? Linking to your own video/company is not allowed on Videosift, as per the rules listed at http://videosift.com/faq#terms

Please do not self link.

While you may see this site as a great way to promote a project you are working on or promoting, it would be bad for our content if everyone just put up videos of them and their friends doing random things. If you are associated with a project you think is truly amazing and must be shared, please contact us. We'll take a look at it and if we also think it's great too, we'll post it for you. If you attempt to post it yourself, your video and account will be deleted. Hey, it's harsh, but it's harsh love.

What exactly consitutes a self link?

If your post is not a Sponsored Video (the only allowed way to promote your own content) and any of the following is true about a particular video you are considering submitting, it is a self link, with NO exceptions for any member:


◾The video is associated with your account on the video host (i.e., you uploaded it to YouTube, Vimeo, etc.).
◾You played any role, no matter how large or small, in any aspect of the production of the video.
◾You are in any way responsible for or involved in marketing, promoting, or any other manner of proliferating the video.
◾You could receive any form of compensation (monetary or otherwise) as a result of the submission or subsequent views.
◾You are somehow represented in the content of the video (whether photographically, artistically, audibly, or metaphorically) without the approval of a site administrator.

If you self link, regardless of your logic or explanation, you are violating the posting guidelines. There are no exceptions for any reason, whatsoever.

Howdy,
Welcome to the sift.
I have a question for you....are you affiliated with the company or video you posted?
http://videosift.com/video/Back-packs-for-travel-video-shoots
It seems an odd video to post if you aren't marketing this item, and that is expressly forbidden on Videosift....as explained in the terms and conditions (link at bottom of any page).... if this is not a self link, you might actually post that in a comment on the video so others don't just assume it is and ban you...that does happen here.

Rule below-
Please do not self link.
While you may see this site as a great way to promote a project you are working on or promoting, it would be bad for our content if everyone just put up videos of them and their friends doing random things. If you are associated with a project you think is truly amazing and must be shared, please contact us. We'll take a look at it and if we also think it's great too, we'll post it for you. If you attempt to post it yourself, your video and account will be deleted. Hey, it's harsh, but it's harsh love.

What exactly consitutes a self link?

If your post is not a Sponsored Video (the only allowed way to promote your own content) and any of the following is true about a particular video you are considering submitting, it is a self link, with NO exceptions for any member:


◾The video is associated with your account on the video host (i.e., you uploaded it to YouTube, Vimeo, etc.).
◾You played any role, no matter how large or small, in any aspect of the production of the video.
◾You are in any way responsible for or involved in marketing, promoting, or any other manner of proliferating the video.
◾You could receive any form of compensation (monetary or otherwise) as a result of the submission or subsequent views.
◾You are somehow represented in the content of the video (whether photographically, artistically, audibly, or metaphorically) without the approval of a site administrator.


If you self link, regardless of your logic or explanation, you are violating the posting guidelines. There are no exceptions for any reason, whatsoever.

Finally, submitting a video that is considered spam falls within our definition of a self-link. If you create an account solely to post a video for whatever reason, but do not actually participate in VideoSift in any other way before or after, you may be considered a spammer/self-promoter and your account is subject to banning.

Exempt from our self-link definition is an embed that is supplied to another member's post when fixing a Dead Pool video or adding a *backup embed (see star powers). Bear in mind that this exemption does not apply to your own posts.

International Monetary Fund?

@RedSky

The need to be kept afloat by European funds is pretty high on the list of things Syriza is keen to do away with. Varoufakis was clear on this pretty early on, at least 2009 as far as I know. They treated it as a problem of liquidity instead of a problem of insolvency, and therefore any funds funnelled into Greece were basically disappearing down a black hole. They are bleeding cash left, right and center, and the continuous flow of credit from Europe doesn't help a bit in its current form.

As of now, they can't pay shit. Any additional credit has to be used to pay back interest on previous credit. Their meagre primary surplus is less than their interest payments. With that in mind, some of the ideas floating around sound rather intriguing, especially given the horrendous failure all the previous agreements have produced. These ideas include: cap interest payment (1.5% of primary surplus), use the rest for investment or humanitarian relief; no payments on debt below 3% growth, 50% of agreed upon payments at 3-6% growth, full payments at 6+% growth.

Yet even those ideas are purely theoretical, because there is no growth in Greece. The celebrated growth in Q3 2014 of 0.7% might very well be a fluke, as Bill Mitchell described here (prices falling faster than incomes). For Greece to be able to have any meaningful growth, they'd require not just a complete reconstruction of its institutions (structural reforms), but also massive investment.

And there's where it breaks down again, since you rightfully pointed out that the Germans in particular won't spend a dime on Greece, especially not with investment in Germany in equally dire shape (shortfall of about a trillion € since 2000).


Which brings me to another point: Germany vs France.

Productivity in both countries was en par in 1999, and productivity in France in 2014 was only slightly below German numbers. "Living within your means" is a very popular phrase in the current discussion, which basically means living in accordance with your productivity.

Subsequently, there should be a similar development of unit labour costs within a monetary union, with growth targets set by the central bank. In our case, that would be just below 2%. Like I've previously said, Greece lived beyond its means in this regard, and significantly so.

But what about France and Germany? The black line marks the target, blue is France, red is Germany. That's beggar-thy-neighbour. That's gaining competetiveness at the cost of your fellow Euro pals. That's suppressing domestic demand in order to push exports.

German reforms killed its domestic market (retail sales stagnant since early '90s) and created an aggregate trade surplus to the tune of 2 trillion Euros. That's 2 trillion Euros of deficit in other countries. And we're looking at an additional 200-210 billion Euros this year. If running trade deficits is bad, so is running trade surpluses.

Ironically, there's even been legislation in Germany since 1967, instructing the government to balance its books in matters of trade (and other areas). They've been in violation of it for 15 years.

With this in mind, everytime a German politician calls for the other countries to run trade surpluses just like Germany, I get furious. Some of them, on the European level, even have the audacity to say that everyone should run trade surpluses, and all it takes to get there is massive wage cuts. That's open lunacy and a failure of basic math. No surplus without deficits, no savings without debt.

And while we're at it, it's not the savings rate in Germany that bothers me. It's the moral superiority that is being ascribed to running surpluses in every way imaginable. Every part of society is expected to have a positive savings rate, because debt is bad. Well, if everyone's saving and nobody's accruing the corresponding debt, you get the current situation where there is no investment whatsoever, a gargantuan shortfall in demand given the national productivity, and a cool 200 billion Euros of debt a year that foreign actors have to rake up so that Germany can have its massive growth of 0.5-1.5% annually.

Finding borrowers for all that cash is getting more difficult by the day. The ECB's QE is basically one big search for new borrowers, since everyone either doesn't want to borrow or cannot borrow anymore.

If Germany wanted to help the Eurozone, they'd start by increasing their ULC vis-á-vis the rest of the countries. Competitiveness should be regulated through the foreign exchange rate, not this parasitic race to the bottom within the zone. Ten years of 4% increase in wages, annually. That ought to be a start.

Additionally, allow the ECB to fund the European Investment Bank directly, instead of this black hole of QE.

Or go one step further and seriously consider Varoufakis' ideas, including the old Keynesian concept of a global surplus recycling mechanism.

But all that is pure fantasy. I don't think a majority of Germans would support either of these measures, not with the overwhelming fear of inflation this society has. Add the continuous demonisation of debt and you get a guarantee that very few countries might be compatible to be in a longtime monetary union with Germany.

@radx

I think the problem with say a 20 year time frame for Greece, is that same lack of trust and political inability to essentially prop up these governments with cash, year on year, for a period of that kind of time frame. I don't see Merkel being able to support this and not get pushed out of government. Functionally money has a time value so in essence, a long time frame is just more money. Rumour is Merkel is considering extending time frames on Greek loans (because most people don't understand that last point) but that will only come with a greater commitment to reform.

As far as collective punishment, it's more an issue that none of the other EU countries are responsible. I wouldn't characterise anything as being forced upon Greece, although I'm sure many feel that way. If they were to leave and reject aid they would be far worse though. The majority of Greece rightly wants to stay in. The Syriza win was about 'dignity' and basically getting better terms. But they won't get it because it would lead to parties in Portugal/Spain emerging and demanding the same thing. Morality doesn't really come in to it, I'm just looking at what's likely and/or possible.

As you mentioned, Germany went through its own period of austerity. It certainly constrained wage growth (which contributed to making its exports particularly competitive and put it in a good position to weather a downturn in the eurozone, when it can export to foreign markets) but I don't believe its inflation rate was vastly off. It was 1-2%, not vastly different to France for example. Either way politically, I don't see the German people being willing to pay these countries out of their troubles in effect.

I certainly agree though that eurozone rules were broken before the euro crisis, e.g. both Germany & France ran budget deficits in excess of agreed terms. Really it came down to the structural weakness of the eurozone's design. You can't have a monetary union (shared currency and central bank policy) without a fiscal union. What they had at best were fiscal guidelines and those weren't followed.

I don't see the eurozone collapsing though. Parties that want to leave are generally still fringe parties (excluding in the UK but it is the least integrated). France doesn't need bailouts, it just lacks growth (due to lack of the reforms Germany went through). The ECB's QE and the loose banking union for bailing out banks that they've developed will mean if Greece collapses these is unlikely to be any serious bank collapses or Lehman moments (or so the theory goes).

I don't really agree at the end with your characterization of a high German savings rate being culpability for inflating bubbles. That fault falls on the lack of domestic bank regulation within the respective countries, the lack of regulation to curb bad lending. In the same way I wouldn't blame China's saving rate for encouraging sub-prime US loans. Cash/liquidity is globally mobile and fungible. It's the responsible of the borrowers and their regulators to ensure they don't dig themselves into a hole. The lenders already stand to lose their investment if the loan goes bad.