EU Politics: I miss Renaults(don't make fun of me)

The Something Awful Forums > Discussion > Debate & Discussion > EU Politics: I miss Renaults(don't make fun of me)

Haramstufe Rot: Jun 24, 2016

Dawncloack posted:

Also, all of this would have been avoided if the EU had a legal department or some economic experts that would have raised the alarm. What a pity it didn't! [/Sarcasm]]

EU doesn't have economic experts tho
In Germany especially, economists have very little influence. I recently talked to Merkels' economic chief advisor LH R�ller. Apparently it is very frustrating work, especially compared to countries who actually listen to their economic advisors (aka the USA).
So next time you see some idiot German minister overriding the monopoly comission's decision because *votes*, leading to the resignation of the comission's head, or when the German EU-centered economic policy doesn't seem to make sense except in light of *votes*, let me give you a hint. It's not because the economic advisors anywhere.

TheDeadlyShoe posted:

There is little downside of getting locked out from financial markets if you have to borrow to cover your existing debt obligations.

The situation of not being able to import anything when you have to import all essentials is a very different situation. Even with how lovely it is currently, it can get much worse.

YF-23 posted:

That's like trying to say that any country that has ever taken a loan isn't a functioning nation on its own.

The point is that Greece has functioned before 1990 in a sense that it was a poor country, even compared to now. Let's remind ourselves that the Greece GDP, in a crisis, in a lovely situation now, is still MORE THAN TWICE THAT OF 1990 and before. And let us remind ourselves that Greece paid higher interest rate on debt than it does now, debt which at times pre 1990 was also substantial.

Of course some is due to technology and bla bla, but the mainstay of a Grexit Greece will not be technology sector or any production that substantially changed post 1990. It will be tourism, and agriculture and depending on the political climate perhaps large scale industry production but conditional to things being lovely enough such that wages are really effing low (aka pre 1990). And then, all the innovative stuff you'll want including essentials will have to be important for impossibly high rates.

So if you are considering an alternative to now and it's gonna be "let's go back to pre 1990", then please also consider that you'll probably literally have half of everything you have now in monetary value and a lot less variety and high-tech goods.

Haramstufe Rot fucked around with this message at 10:54 on Jul 13, 2016

# ? Jul 13, 2016 10:49

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# ? May 22, 2024 18:48

Arglebargle III: Feb 21, 2006

Lagotto posted:

What articles are you reading? I agree the situation is a clusterfuck, but your description of passed events are beyond inaccurate, they lack any factual basis.

http://www.frbsf.org/economic-research/publications/economic-letter/2008/november/long-term-bond-yields-euro/#2

What planet are you living on that EU bond convergence never happened? The promise was implicit, but I will have to go find the source for a political agreement on bonds.

# ? Jul 13, 2016 13:04

Lagotto: Nov 22, 2010

Arglebargle III posted:

http://www.frbsf.org/economic-research/publications/economic-letter/2008/november/long-term-bond-yields-euro/#2

What planet are you living on that EU bond convergence never happened? The promise was implicit, but I will have to go find the source for a political agreement on bonds.

Please do, since your link on the convergence criteria does not support your statement at all, more like the other way around, e.g. yields should include the risk differential.

quote:

What is surprising is how little premium the market seems to have attached to these bonds for differences in liquidity and default risk, and how strong the comovement was even before monetary union was implemented

Nobody is disputing that the markets did start to consider them the same risk. That is nowhere near the same as that being a set policy by the EMU. That is not even a policy the EMU can set, and if you know anything about EU politics you would know that Germany would never guarantee the risks on Italian bonds.

Edit. Here Ill repost this from the Lisbon treaty.

quote:

Article 125

The Union shall not be liable for or assume the commitments of central governments, regional, local or other public authorities, other bodies governed by public law, or public undertakings of any Member State, without prejudice to mutual financial guarantees for the joint execution of a specific project. A Member State shall not be liable for or assume the commitments of central governments, regional, local or other public authorities, other bodies governed by public law, or public undertakings of another Member State, without prejudice to mutual financial guarantees for the joint execution of a specific project.

Lagotto fucked around with this message at 13:25 on Jul 13, 2016

# ? Jul 13, 2016 13:14

GaussianCopula: Jun 5, 2011; Jews fleeing the Holocaust are not in any way comparable to North Africans, who don't flee genocide but want to enjoy the social welfare systems of Northern Europe.

Reuters reporting on a related study (http://www.reuters.com/article/us-eurozone-debt-banks-ecb-idUSKCN0ZT1EB)

quote:

Stressed euro zone governments swayed domestic banks to buy their bonds when the debt crisis was at its height, using "moral suasion" to counter surging borrowing costs, a research paper published by the ECB showed on Wednesday.

Regulators and supervisors including the European Central Bank are trying to break a 'doom loop' of debt interdependence between lenders and their governments, in part by making it less attractive for banks to hold sovereign bonds.

Domestic banks have traditionally been buyers of a significant proportion of the debt issued by governments in the currency bloc.

But the study of the purchasing patterns of 60 banks in Greece, Ireland, Italy, Portugal and Spain between 2010-12 showed that, in months when their governments needed to issue or roll over a large amount of paper, they were even more likely than usual to buy than their foreign peers.

"Our estimates thus strongly and consistently suggest that collusion between banks and sovereigns (or 'moral suasion') took place during the sovereign debt crisis," authors Steven Ongena, Alexander Popov and Neeltje Van Horen wrote in the study.

They said the effect was strongest for state-owned banks and, in particular, those that had low holdings of sovereign bonds to start with - indicating governments strategically picked the banks they chose to influence.

The authors say such purchases can have a beneficial impact in helping stabilize markets at a time of stress, while also reinforcing a "deadly embrace" that heightens risks to the financial system.

# ? Jul 13, 2016 14:08

dogboy: Jul 21, 2009; hurr; Grimey Drawer

Boner Slaem posted:

In Germany especially, economists have very little influence. I recently talked to Merkels' economic chief advisor LH R�ller. Apparently it is very frustrating work, especially compared to countries who actually listen to their economic advisors (aka the USA).

Just wanted to chime in and remind everyone that the whole mess started with the US housing market collapsing and setting everything via mortgages/CDOs on fire. Goldman Sachs also played a central role in selling those "financial products" to Greece which in the end made the whole house of cards collapse for them.

http://www.spiegel.de/international/europe/greek-debt-crisis-how-goldman-sachs-helped-greece-to-mask-its-true-debt-a-676634.html

"Around 2002 in particular, various investment banks offered complex financial products with which governments could push part of their liabilities into the future," one insider recalled, adding that Mediterranean countries had snapped up such products. Greece's debt managers agreed a huge deal with the savvy bankers of US investment bank Goldman Sachs at the start of 2002.

This credit disguised as a swap didn't show up in the Greek debt statistics. Eurostat's reporting rules don't comprehensively record transactions involving financial derivatives. "The Maastricht rules can be circumvented quite legally through swaps," says a German derivatives dealer.

Yeah great experts there, we definitely need more of those.

# ? Jul 13, 2016 20:38

Pluskut Tukker: May 20, 2012

dogboy posted:

Just wanted to chime in and remind everyone that the whole mess started with the US housing market collapsing and setting everything via mortgages/CDOs on fire. Goldman Sachs also played a central role in selling those "financial products" to Greece which in the end made the whole house of cards collapse for them.

http://www.spiegel.de/international/europe/greek-debt-crisis-how-goldman-sachs-helped-greece-to-mask-its-true-debt-a-676634.html

"Around 2002 in particular, various investment banks offered complex financial products with which governments could push part of their liabilities into the future," one insider recalled, adding that Mediterranean countries had snapped up such products. Greece's debt managers agreed a huge deal with the savvy bankers of US investment bank Goldman Sachs at the start of 2002.

This credit disguised as a swap didn't show up in the Greek debt statistics. Eurostat's reporting rules don't comprehensively record transactions involving financial derivatives. "The Maastricht rules can be circumvented quite legally through swaps," says a German derivatives dealer.

Yeah great experts there, we definitely need more of those.

The Goldman deal was not responsible for Greece collapsing (also, it didn't involve mortgages or CDOs, and after 2005 the deal was transferred to a Greek bank, so Goldman wasn't even involved anymore) ). It did help Greece gain euro entry, since it helped Greece meet the Maastricht convergence criteria by bringing the Eurostat-defined debt down by 2-3% of GDP in 2001 ( I guess you could argue, IMO with some justification, that the roots of the destruction lay in letting Greece join the euro in the first place, but since it was explicitly the goal of the then Greek government to do so as soon as possible, I don't see why the blame for that should be shifted elsewhere) . However, according to the the details discussed here and here, the size of the Goldman deals was minimal in relation to the total debt - Greece kept some 5 billion euro in debt off the books, Goldman ran away with a cool 600 million euro in profits, but the first bailout in 2010 involved Greece receiving 110 billion euro in loans. In other words, the numbers don't add up.

The trouble really began as a result of the worldwide recession that broke out in 2008 as a result of the financial crisis, and picked up speed in 2009 when the new Greek government publicly restated the previous government's deficit projections from 4.5% to 12.7% of GDP, but that was all a result of those earlier projections being built on their own lies and manipulations, not those of Goldman. Whom I really don't want to defend (you can after all fill whole books with Goldman Sachs assholery), but I believe it's important to separate fact from fiction. The fact is Greece was ill-served by joining the euro, because it created a huge economic bubble that papered over structural economic and political weaknesses and probably ended up making them worse. That bubble was punctured by the 2008-9 financial crisis, and everything afterwards has been an attempt to pick up the pieces in the most misguided and destructive possible way by pretty much everyone involved.

# ? Jul 13, 2016 22:15

dogboy: Jul 21, 2009; hurr; Grimey Drawer

Pluskut Tukker posted:

The Goldman deal was not responsible for Greece collapsing (also, it didn't involve mortgages or CDOs, and after 2005 the deal was transferred to a Greek bank, so Goldman wasn't even involved anymore) ). It did help Greece gain euro entry, since it helped Greece meet the Maastricht convergence criteria by bringing the Eurostat-defined debt down by 2-3% of GDP in 2001 ( I guess you could argue, IMO with some justification, that the roots of the destruction lay in letting Greece join the euro in the first place, but since it was explicitly the goal of the then Greek government to do so as soon as possible, I don't see why the blame for that should be shifted elsewhere) . However, according to the the details discussed here and here, the size of the Goldman deals was minimal in relation to the total debt - Greece kept some 5 billion euro in debt off the books, Goldman ran away with a cool 600 million euro in profits, but the first bailout in 2010 involved Greece receiving 110 billion euro in loans. In other words, the numbers don't add up.

The trouble really began as a result of the worldwide recession that broke out in 2008 as a result of the financial crisis, and picked up speed in 2009 when the new Greek government publicly restated the previous government's deficit projections from 4.5% to 12.7% of GDP, but that was all a result of those earlier projections being built on their own lies and manipulations, not those of Goldman. Whom I really don't want to defend (you can after all fill whole books with Goldman Sachs assholery), but I believe it's important to separate fact from fiction. The fact is Greece was ill-served by joining the euro, because it created a huge economic bubble that papered over structural economic and political weaknesses and probably ended up making them worse. That bubble was punctured by the 2008-9 financial crisis, and everything afterwards has been an attempt to pick up the pieces in the most misguided and destructive possible way by pretty much everyone involved.

Greece gambled high and hosed up and Goldman played a huge role in it in various functions. In the big picture Greece was just a little speck in the corner though. But all that is not my point.

It was just a reminder that, no, neither Greece nor anyone in the EU caused the 2008/2009 crisis but rather quoted US experts that helped creating the Collaterized Debt Obligations & friends and helped spread them around through GS, JPMC, Lehman and so on. Then went on to rake in obscene amounts of cash that somehow vanished and when the whole thing went *poof* the taxpayers had to pay. (I won't deny here either that the big EU banks hopped on that train, too)

I think the worst foul play was also sourcing most of them in the US housing market in unbelievable ways which then collapsed and started the crisis.

Just for sake of completeness, here the quote again:

Boner Slaem posted:

EU doesn't have economic experts tho
In Germany especially, economists have very little influence. I recently talked to Merkels' economic chief advisor LH R�ller. Apparently it is very frustrating work, especially compared to countries who actually listen to their economic advisors (aka the USA).

With my point beeing: We need anything BUT more of those kind of US experts. (Or expand that at your leisure to experts working for the financial industry. Also revolving doors etc.)

# ? Jul 13, 2016 23:22

TheDeadlyShoe: Feb 14, 2014

you seem to be conflating distrust of explicitly self interested finance wizards from the well known Vampire Squid corporation with distrust of anyone with economics expertise whatsoever

# ? Jul 14, 2016 00:03

His Divine Shadow: Aug 7, 2000; I'm not a fascist. I'm a priest. Fascists dress up in black and tell people what to do.

dogboy posted:

Yeah great experts there, we definitely need more of those.

We need more if we want a bigger bonfire.

# ? Jul 14, 2016 04:39

His Divine Shadow: Aug 7, 2000; I'm not a fascist. I'm a priest. Fascists dress up in black and tell people what to do.

Finished the austerity book, a great eye-opener, recommend it to anyone. I liked this bit from the end, which is conjecture, but a happy conjecture:

quote:

The End of Banking

The story of the crisis reconstructed in chapters 2 and 3 can, and perhaps should, be seen in a bigger
context. At the end of the Bretton Woods era, when the United States finally went off gold in 1971,
states around the world had to adjust to what Eric Helleiner has called �the reemergence of global
finance.�3 Floating exchange rates, deregulation, disintermediation, and the rest, which made finance
the most profitable sector of the American and British economies by the 2000s, was the new order of
things. But what was it all really based upon? After all, finance is most properly thought of as a part of
the information system of the economy: linking borrowers and lenders while sitting in the middle
collecting a fee. It�s not an industry in the traditional sense, and it certainly should not have been
producing 40 percent of corporate profits in the United States on the eve of the crisis�so why was it
able to do just that?

Global finance made so much hay, not through efficient markets but by riding up and down three
interlinked giant global asset bubbles using huge amounts of leverage. The first bubble began in US
equities in 1987 and ran, with a dip in the dot-com era, until 2007. It was the longest equity bull
market in history, and it spread out from the United States to boost stock markets all over the world.
The smart cash that was being made in those equity markets looked around for a hedge and found real
estate, which began its own global bubble phase in 1997 and ran until the crisis hit in 2006. The final
bubble occurred in commodities, which rose sharply in 2005 and 2006, long before anyone had heard
the words �quantitative easing,� and which burst quickly since these were comparatively tiny markets,
too small to sustain such volumes of liquidity all hunting either safety or yield. The popping of these
interlinked bubbles combined with losses in the subprime sector of the mortgage derivatives market to
trigger the current crisis. A picture again is useful. In figure 7.1 we see these three asset bubbles (Dow
Jones Stocks, S&P�s Case-Schiller Index of Housing, and gold/oil prices) scaled against time.
We can clearly see the bust beginning in housing in 2006 hitting stocks and then commodities.
What we see since then are stocks rising due to central bank liquidity programs providing asset
insurance for purchases of underwater equities. Commodities have also rallied as investors
increasingly piled into them in an effort to find positive yield in a zero interest-rate environment. Real
estate has yet to recover.

Now, take away liquidity support and the hunt for yield and there�s a problem going forward. You
can only generate bubbles of this magnitude if there are assets that are either undervalued, or are at
least perceived to be undervalued, and that can serve as fuel for the bubble. US equities had been flat
for a generation back in the early 1980s. US housing was cheap and patterns of demand were
changing. Commodities used to be a niche market. Finance changed all that, pumping and dumping
these asset classes and taking profits along the way for twenty-five years. It was a great run while it
lasted, but now, after the bust, could it be over?

Sovereigns are stretched, and eventually liquidity support and zero rates will come to an end on
what will be a much weaker underlying economy. Equities will decline in value, commodities too, as
global demand weakens, and housing, outside a few markets, is not going to be increasing in value at 7
to 10 percent a year anytime soon. But deprived of fuel for the asset cycle, all those wonderful paper
assets that can be based off these booms�commodity ETFs, interest rate swaps, CDOs and CDSs�to
name but a few�will cease to be the great money machine that they have been to date. Having
pumped and dumped every asset class on the planet, finance may have exhausted its own growth
model. The banks� business model for the past twenty-five years may be dying. If so, saving it in the
bust is merely, and most expensively, prolonging the agony. Anticipating John Quiggin�s Zombie
Economics, we may have endured austerity to bring back the nearly dead.

Is there any evidence for this bold conjecture? A bit. Banks everywhere are delevering, which will
reduce lending, hitting growth and thus the volume of business that they conduct. Bank equity prices
and market capitalization have fallen drastically over the past two years. Revenues by asset class are
falling. Underwriting has shrunk and trading is not what it used to be.4 Fixed costs are increasing
while bonuses are shrinking and the sector as a whole is getting smaller.5 Meanwhile, what growth
there is seems to be on the retail rather than the investment banking side.6 But retail depends more
directly on the real economy, which is shrinking because of austerity. In sum, we may have
impoverished a few million people to save an industry of dubious social utility that is now on its last
legs. This is a discomfiting thought that strongly suggests that we really should not have bailed them
after all. And there�s another reason for thinking this way, independent of this: it�s called Dublin.

# ? Jul 14, 2016 04:56

LemonDrizzle: Mar 28, 2012; neoliberal shithead

On a vaguely related note, here's a good article on Renzi's woes and the problems of the Italian banking system: http://www.politico.eu/article/europes-and-matteo-renzis-italian-problem/

quote:

Time is not Renzi�s friend. By July 29, EU banking regulators are widely expected to say that Monte dei Paschi di Siena (MPS), the world�s oldest bank, will need an emergency infusion of capital. That decision will sound the starting gun on a rescue package not just for MPS but for the entire Italian banking sector.
Renzi�s immediate dilemma is clear: He must convince Brussels and skeptical member countries, led by Germany, to let Italy inject money into a banking sector in dire need of repair.
But he needs to do so without triggering EU rules that would penalize retail investors, many of them individual savers who may not have realized that the bonds they were buying were at risk of suddenly becoming worthless.
Wiping out the thousands of households that bought bonds in Italy�s banks would be tantamount to political suicide in the country�s charged social climate.

It�s a very tight needle to thread for a man who styles himself as il rottamatore � the demolition man � of Italian politics. And righting a banking sector saddled by more than �360 billion in bad loans and decades of mismanagement is not even the biggest of Renzi�s challenges. In the fall, Italians will go to the polls in a referendum on constitutional reform that could provide Italy with its own �Brexit moment.�
If the new regime is voted down, Renzi has pledged to go � as David Cameron did after he lost the Brexit vote. As with the former British prime minister, Renzi�s problem is in large part one of his own making. Last year, when he was riding high in the polls, Renzi promised he would step down if his reforms weren�t made into law. In doing so, he ensured that the vote would become a referendum not only on his reforms, but on his government.
Should Renzi step down, the transfer of power is unlikely to go as smoothly as it has in the U.K. His departure would almost certainly trigger political instability and early elections.
A strong showing by the populist 5Star Movement would throw Italian politics into chaos and upend its relationship with the EU. 5Star won the local elections in Rome and Turin in June and is currently ahead in national polls. �It�s one thing to have a British problem,� says a senior banker. �It�s another thing to have a British and an Italian problem.�

Paradoxically, the all-or-nothing nature of the situation is Renzi�s best hope of convincing his European interlocutors to bend the rules and allow a bailout that doesn�t affect small savers. Enrico Letta, who preceded Renzi as prime minister and now heads the Delors Institute, a Paris-based think tank, describes this act of political jiu-jitsu thus: In this troubled period for the EU, �Europe can afford everything apart from worst case scenarios becoming real.�

So far, the noises coming from the European Commission�s Directorate-General on Competition, where Italian and Commission officials are arguing over the application of the EU�s state aid rules, have been positive if inconclusive. In theory, the EU regulation � in this case, the Bank Recovery and Resolution Directive (BRRD) � is fairly rigid: State funds to help banks can only be deployed after shareholders and bondholders bear the pain. To be precise, up to 8 percent of a bank�s liabilities has to be wiped out before any taxpayers� funds reach its coffers, a procedure known to financial nerds as a �bail-in.�
What makes that process so politically toxic is that an ill-fated sales campaign by banks means that the affected bonds, and similar financial products, now account for about 10 percent of all the financial holdings of retail investors, according to the Bank of Italy�s latest estimate. Indeed, some 46 percent of the debt that would be written off in a bail-in is held by Italian families, according to Giuseppe Lusignani, deputy chairman of Prometeia, a consultancy specializing in the banking sector.
These mom-and-pop bondholders include small-scale savers like Roberta Gaini, a mother of two from the town of Vitolini, not far from Florence, who lost �60,000 when Banca Etruria, a much smaller bank, was rescued under a similar scheme. Gaini�s mother and sister lost another �40,000. �The day after the bail-in, I went to the branch and asked for updates,� she says. �The director printed off my bank statement, and that�s when I learned all my assets had been written off.�

To get any sort of deal, Renzi will have to get the approval, or the benign neglect, of its frenemy Germany. The two countries have been working together on thorny issues such as the migration crisis and the future of the EU after Brexit. But they have also locked horns repeatedly in the past few months, including a bitter fight over a pan-European banking deposit scheme.

Wolfgang Sch�uble, the tough-minded German finance minister, has advocated taking a similarly intransigent stance on the Italian rescue, as has Jeroen Dijsselbloem, his Dutch counterpart who heads the Eurogroup of eurozone finance ministers. Renzi has made matters worse by often pointing out to the domestic gallery his unusually tough stance against the EU�s most powerful country.
For Germany, the main lesson of the eurozone debt crisis � which began in Greece in late 2009 and nearly led the common currency area to unravel � is that members of the bloc must be forced to respect its rules. When Greece was up against the ropes, German Chancellor Angela Merkel could have lifted some of the European pressure to help the country�s center-right remain in power and keep the leftists at bay. But she didn�t. And after years of uncertainty, that tough strategy broke the will of the leftist government and delivered most of what Germany wanted.
The bail-in requirements were central to Merkel�s efforts to sell the eurozone bailouts to skeptical German taxpayers. Which is why she can�t simply look the other way as Italy provides the system�s first test case.

I didn't realise the Italian banks had been flogging their own bonds to retail investors as a way of getting better returns than could be had through a savings account. No wonder bail-in would be so completely politically toxic.

# ? Jul 20, 2016 07:13

Dawncloack: Nov 26, 2007; ECKS DEE!; Nap Ghost

Will this help the Deutsche Bank's derivatives collapse?

# ? Jul 20, 2016 08:39

Honest Thief: Jan 11, 2009

I didn't realize these bondholders were comprised by a lot small businesses, is this what Blyth meant when talking about Italians mistrust of the government and having one of the biggest bond markets in Europe?

# ? Jul 20, 2016 11:34

hump day bitches!: Apr 3, 2011

LemonDrizzle posted:

On a vaguely related note, here's a good article on Renzi's woes and the problems of the Italian banking system: http://www.politico.eu/article/europes-and-matteo-renzis-italian-problem/

I didn't realise the Italian banks had been flogging their own bonds to retail investors as a way of getting better returns than could be had through a savings account. No wonder bail-in would be so completely politically toxic.

Who designed a bailout mechanism that penalizes retail investors and what was the reasoning behind it because holy gently caress a lot of people in the middle class are going to be loving burned.

# ? Jul 20, 2016 15:05

Riso: Oct 11, 2008; by merry exmarx

Lamadrid posted:

Who designed a bailout mechanism that penalizes retail investors and what was the reasoning behind it because holy gently caress a lot of people in the middle class are going to be loving burned.

Someone who wants to insulate all the big money guys from the fallout.

# ? Jul 20, 2016 15:26

LemonDrizzle: Mar 28, 2012; neoliberal shithead

Lamadrid posted:

Who designed a bailout mechanism that penalizes retail investors and what was the reasoning behind it because holy gently caress a lot of people in the middle class are going to be loving burned.

Nobody - the bail-in (note, not bailout; the difference is important here!) process hits the failed bank's bondholders, i.e. the people and institutions that lent the bank money. It was designed as a reaction to the failings of the previous ad hoc bailout approach, where failing banks were rescued by the state using taxpayers' money. The idea of bail-in is that before any taxpayer funds are used to rescue a bank, its investors should be forced to chip in. What this means in practice is that anyone who bought the bank's bonds sees their investment wiped out. Usually, the people who buy banks' bonds are sophisticated high net worth/institutional investors such as pension funds, who are generally expected to understand what they're getting themselves into and what the risks are. The oddity here is that Italian banks took the unusual step of aggressively selling their own bonds to retail investors as alternatives to low-yielding savings accounts, without quite bothering to explain that whereas funds in savings accounts are protected by deposit insurance, bonds are not.

Riso posted:

Someone who wants to insulate all the big money guys from the fallout.

Quite the opposite - as above, the intention of the European bail-in regulations is to ensure that the big guys get their investments wiped out before the state/taxpayer has to start coughing up.

# ? Jul 20, 2016 15:35

GaussianCopula: Jun 5, 2011; Jews fleeing the Holocaust are not in any way comparable to North Africans, who don't flee genocide but want to enjoy the social welfare systems of Northern Europe.

I don't think that those people who wanted higher returns on their savings and thereby accepted higher risks should be bailed out just because Renzi's political life depends on it. Just like the people who bought Lehman Brothers papers they were greedy and did not bother to research the products they bought thoroughly enough. If they get bailed out it just provides more incentive for banks to sell high risk products to their retail customers. But I guess it's cool to socialize the losses if the losers are your voters...

# ? Jul 20, 2016 16:34

Cat Mattress: Jul 14, 2012; by Cyrano4747

I'm sure Renzi could design something where the bail-in procedures spares small bondholders, or gets a floor level below which the investment wouldn't be wiped. For example if you've got �60K in bank bonds, then maybe if the floor is set at �50K then you'd only lose �10K; but someone who had �600K would lose �550K. (Completely arbitrary values, obviously. Finding the right level is a job for Renzi's staff.)

You can come up with systems that would allow to diminish the impact on the smallest bondholders without dropping the bail-in rule altogether. Don't tell me Renzi is too dumb to come up with such ideas.

# ? Jul 20, 2016 17:21

GaussianCopula: Jun 5, 2011; Jews fleeing the Holocaust are not in any way comparable to North Africans, who don't flee genocide but want to enjoy the social welfare systems of Northern Europe.

Cat Mattress posted:

I'm sure Renzi could design something where the bail-in procedures spares small bondholders, or gets a floor level below which the investment wouldn't be wiped. For example if you've got �60K in bank bonds, then maybe if the floor is set at �50K then you'd only lose �10K; but someone who had �600K would lose �550K. (Completely arbitrary values, obviously. Finding the right level is a job for Renzi's staff.)

You can come up with systems that would allow to diminish the impact on the smallest bondholders without dropping the bail-in rule altogether. Don't tell me Renzi is too dumb to come up with such ideas.

Those ideas are most likely illegal because the bank is not allowed to discriminate between debt of the same seniority held by different creditors, if such rules were not part of the contracts in the first place.

# ? Jul 20, 2016 17:35

LemonDrizzle: Mar 28, 2012; neoliberal shithead

Cat Mattress posted:

I'm sure Renzi could design something where the bail-in procedures spares small bondholders, or gets a floor level below which the investment wouldn't be wiped. For example if you've got �60K in bank bonds, then maybe if the floor is set at �50K then you'd only lose �10K; but someone who had �600K would lose �550K. (Completely arbitrary values, obviously. Finding the right level is a job for Renzi's staff.)

You can come up with systems that would allow to diminish the impact on the smallest bondholders without dropping the bail-in rule altogether. Don't tell me Renzi is too dumb to come up with such ideas.

It's extremely easy to come up with systems like that; it's extremely difficult to come up with systems like that which do not violate the EU-wide bail-in rules, which pretty much require all bank creditors to be treated in the same way (and shown no mercy).

# ? Jul 20, 2016 17:35

Cat Mattress: Jul 14, 2012; by Cyrano4747

They'd be all treated the same way, they'd all get to keep 50K (or whatever value) of their bonds' value and lose the rest. No difference in treatment.

# ? Jul 20, 2016 18:42

doverhog: May 31, 2013; Defender of democracy and human rights 🇺🇦

Lamadrid posted:

Who designed a bailout mechanism that penalizes retail investors and what was the reasoning behind it because holy gently caress a lot of people in the middle class are going to be loving burned.

As others said, the question rather is who decided it was a good idea to sell bonds of this kind to retail investors.

# ? Jul 20, 2016 20:00

Randler: Jan 3, 2013; ACER ET VEHEMENS BONAVIS

If you have 50k in bank bonds, you're not really the kind of guy that I think of when talking about "Small time investments that need to be protected".

# ? Jul 20, 2016 20:04

Dawncloack: Nov 26, 2007; ECKS DEE!; Nap Ghost

^^^^ British and Italian press are telling me that a significant part of that is Italian middle class people who put their savings in those bonds.

doverhog posted:

As others said, the question rather is who decided it was a good idea to sell bonds of this kind to retail investors.

Happened in Spain before. Lots of banks sold this "ultra safe mega AAAA+++++ " bonds to lots of individuals, without explaining they might lose all, and right before the real state bubble popped to boot. Spanish courts even ruled that a illiterate woman knew enough of what she was getting into to not have her money returned.

# ? Jul 20, 2016 20:08

Einbauschrank: Nov 5, 2009

Dawncloack posted:

^^^^ British and Italian press are telling me that a significant part of that is Italian middle class people who put their savings in those bonds.

Happened in Spain before. Lots of banks sold this "ultra safe mega AAAA+++++ " bonds to lots of individuals, without explaining they might lose all, and right before the real state bubble popped to boot. Spanish courts even ruled that a illiterate woman knew enough of what she was getting into to not have her money returned.

Wow. So in Spain it's possible to have money and be illiterate. Guess I did something wrong.

# ? Jul 20, 2016 21:34

Pochoclo: Feb 4, 2008; No...; Clapping Larry

You guys seem to be forgetting even people with very low income can be thrifty and save up money over decades. Even a thousand euro a year for 50 years can amount to 50k you know.

# ? Jul 20, 2016 21:44

Gort: Aug 18, 2003; Good day what ho cup of tea

Pochoclo posted:

You guys seem to be forgetting even people with very low income can be thrifty and save up money over decades. Even a thousand euro a year for 50 years can amount to 50k you know.

Yeah, but unless you can show that there's a significant number of those people it could just as easily be thrifty grandma being used as an economic human shield for the super-rich.

# ? Jul 20, 2016 22:00

MiddleOne: Feb 17, 2011

Randler posted:

If you have 50k in bank bonds, you're not really the kind of guy that I think of when talking about "Small time investments that need to be protected".

That could be literally anyone living above the poverty line non-diversified pension after a lifetime of accumulated savings.

# ? Jul 20, 2016 22:20

LemonDrizzle: Mar 28, 2012; neoliberal shithead

Randler posted:

If you have 50k in bank bonds, you're not really the kind of guy that I think of when talking about "Small time investments that need to be protected".

�50k is well below the maximum amount protectable under all deposit protection schemes in the developed world that I'm aware of, which seems like a pretty good benchmark for 'small time investment' to me (and to forestall the inevitable "they're bonds, not deposits" - yes, but in this case the consumers were sold the bonds as alternatives to protected savings accounts).

Cat Mattress posted:

They'd be all treated the same way, they'd all get to keep 50K (or whatever value) of their bonds' value and lose the rest. No difference in treatment.

This would still violate the BRRD.

also, oh dear: http://www.telegraph.co.uk/business/2016/07/11/banks-predict-italy-will-fudge-a-new-bailout/

quote:

Bank of America estimates that 14.6pc of Italian household wealth is tied up in bank bonds � amounting to �235.6bn � and so bailing them in to recapitalise the banks, as EU rules demand, would be very painful.

Chances are that the Italians will find a way to fudge it, but that'll make uncle Wolfie very angry.

# ? Jul 20, 2016 22:28

Cat Mattress: Jul 14, 2012; by Cyrano4747

LemonDrizzle posted:

Chances are that the Italians will find a way to fudge it, but that'll make uncle Wolfie very angry.

A worthwhile goal.

# ? Jul 20, 2016 23:21

A Buttery Pastry: Sep 4, 2011; Delicious and Informative!

Why doesn't Italy just liquidate those pensioners, since they're economically unproductive and have shown themselves to be entirely irresponsible? This will save hardworking tax payers a lot of trouble, restore market confidence, and serve as an object lesson for the rest of the EU.

# ? Jul 21, 2016 06:08

Libluini: May 18, 2012; I gravitated towards the Greens, eventually even joining the party itself.

The Linke is a party I grudgingly accept exists, but I've learned enough about DDR-history I can't bring myself to trust a party that was once the SED, a party leading the corrupt state apparatus ...; Grimey Drawer

A Buttery Pastry posted:

Why doesn't Italy just liquidate those pensioners, since they're economically unproductive and have shown themselves to be entirely irresponsible? This will save hardworking tax payers a lot of trouble, restore market confidence, and serve as an object lesson for the rest of the EU.

The only way to get immediately ejected from the EU is re-introducing the death penalty.

So even if I take your joke post seriously, it wouldn't work.

# ? Jul 21, 2016 06:15

A Buttery Pastry: Sep 4, 2011; Delicious and Informative!

Libluini posted:

The only way to get immediately ejected from the EU is re-introducing the death penalty.

So even if I take your joke post seriously, it wouldn't work.

Just another case of the EU hampering member states from making necessary sacrifices.

# ? Jul 21, 2016 06:21

His Divine Shadow: Aug 7, 2000; I'm not a fascist. I'm a priest. Fascists dress up in black and tell people what to do.

Libluini posted:

The only way to get immediately ejected from the EU is re-introducing the death penalty.

So even if I take your joke post seriously, it wouldn't work.

What if you just put them into camps, force them to work on a calorie restricted diet, eventually they should die on their own, no death penalty return needed.

# ? Jul 21, 2016 07:29

throw to first DAMN IT: Apr 10, 2007; This whole thread has been raging at the people who don't want Saracen invasion to their homes

Perhaps you too should be more accepting of their cultures

His Divine Shadow posted:

What if you just put them into camps, force them to work on a calorie restricted diet, eventually they should die on their own, no death penalty return needed.

Bad idea, calorie restricted diet has been shown to just increase lifespan of rats. They would just continue to be drain on the state. Real solution is to give senior discount on booze, cigarettes and fattening foods.

# ? Jul 21, 2016 08:05

Cat Mattress: Jul 14, 2012; by Cyrano4747

Libluini posted:

The only way to get immediately ejected from the EU is re-introducing the death penalty.

So even if I take your joke post seriously, it wouldn't work.

Ah, but the death penalty is a matter of justice. This wouldn't be penalty for a crime, this would be something else.

Simple measure to achieve the same result: abrogate healthcare and social security for non-employees, in the name of Holy Austerity. Just let all the seniors die from easily preventable illnesses, and be enthusiastically applauded and called a model to follow for the rest of Europe at the same time, with EU commissioners crying tears of joy before the noble and righteous cuts done in social spending.

# ? Jul 21, 2016 10:55

Mans: Sep 14, 2011; by Jeffrey of YOSPOS

Libluini posted:

The only way to get immediately ejected from the EU is re-introducing the death penalty.

So even if I take your joke post seriously, it wouldn't work.

The EU is a bastion of human rights and as such introducing the death penalty would be a crime against humanity.

As such, it's much more humane to increase medicine prices by 300% and reap the benefits.

# ? Jul 21, 2016 23:38

Riso: Oct 11, 2008; by merry exmarx

Mans posted:

The EU is a bastion of human rights and as such introducing the death penalty would be a crime against humanity.

As such, it's much more humane to increase medicine prices by 300% and reap the benefits.

Pharmacy pricing in the EU works something like this: They negotiate a deal in Germany first, because there's no price controls.
After that, France swoops in and demands a 40% price cut for their own market.

# ? Jul 22, 2016 08:09

GABA ghoul: Oct 29, 2011

Cat Mattress posted:

Ah, but the death penalty is a matter of justice. This wouldn't be penalty for a crime, this would be something else.

Simple measure to achieve the same result: abrogate healthcare and social security for non-employees, in the name of Holy Austerity. Just let all the seniors die from easily preventable illnesses, and be enthusiastically applauded and called a model to follow for the rest of Europe at the same time, with EU commissioners crying tears of joy before the noble and righteous cuts done in social spending.

I hate to tell this to you but old people are gonna be in the majority very soon. They always vote and they get up earlier then anyone else. If we don't do anything now, we young people will be enslaved by them sooner or later. We have to strike first, while we still can, while there are still enough left of us.

# ? Jul 22, 2016 09:39

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# ? May 22, 2024 18:48

suck my woke dick: Oct 10, 2012; I CANNOT EJACULATE WITHOUT SEEING NATIVE AMERICANS BRUTALISED!

Put this cum-loving slave on ignore immediately!

waitwhatno posted:

I hate to tell this to you but old people are gonna be in the majority very soon. They always vote and they get up earlier then anyone else. If we don't do anything now, we young people will be enslaved by them sooner or later. We have to strike first, while we still can, while there are still enough left of us.

Or wait 20 years till all the olds have died of heart disease and falling down stairs.

# ? Jul 22, 2016 16:21

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