I think it is that sustaining trade imbalances through capital flows will eventually lead to harm done to both countries. The one importing the capital will be carrying more and more debt to the point that eventually cuts have to be made and the country exporting the debt will have to take losses on their investments.


Meanwhile the problem will likely be blamed on things like social programs which are present in both nations and is a largely immaterial issue to the crisis.


Even debt by the government is a different issue when capital flows are balanced versus when they are not.

 

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Whenever libtards spend more money than they are making, they call it an "investment".

Very few social programs are an investment. Many of the ones that are are bad investments.

 

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What a stupid post. The investment in question is mostly into government debt. From the investor's standpoint it has been used to not only invest in government bonds but also as a way to increase consumption in areas your country plans to export to.

 

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The Eurozone crisis is from the government spending wayyy more than they take in. They call that spending an "investment".

It's not. It's just unjustified consumption.

 

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Proof that Paulsie is wrong: Sweden, Norway, Finland, Germany, Denmark etc etc

Like everything else if a state is governed right it will be successful, what social programs do is that they keep the lowest rung of society from hitting rock bottom, rock bottom creates nothing but crime and social problems which makes it harder for the individuals on that rung to rise above.

More proof; Most of Sweden was impoverished some hundred years ago, considered one of the poorest countries in Europe until what Paulsie says are "Libtards" was voted into power.

The same Libtard planning and Libtard regulation kept much of the harm of the last economic brouhaha to a minimum.

Paulsie is a blind idealist, Social Democracy is however always taking the best from capitalism and socialism and forming a functioning society built upon hard labour, solidarity with the poor and a pragmatic stance on capitalism.

 

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Germany has similar government debt levels and social programs.


Your position is stupid and factually wrong.

 

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What a shocker!

 

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I think the lesson is the danger of denominating your debt in a currency controlled by a foreign bank. This always ends badly.


Additionally the danger of creating a monetary union between areas that have big social seperations. Workers moving from Ohio to Texas is much more likely than workers moving from Germany to Spain or vice versa. If you are working in one big coordinated economy, workers need to be able to move around. Those capital flows would have had different results if lots of Germans had responded to exploding wages and low unemployment in Spain by moving there.


These are probably not the lessons that will be taken away from this event...but they should be.

I thought the lesson of the Eurozone is that joining Germany doesn't make you a member of the master race?

 

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There is no doubt that the lack of different currencies changes the equation in terms of how the economy can respond to the changes but I think Greece is still up crap creek without a paddle.

 

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