Portugal's prime minister quits over debt vote defeat
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23 Mar 2011, 22:31
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http://www.ft.com/cms/s/0/5ad197fe-5592-11e0-a00c-00144feab49a.html
Another nation which will most likely soon need EU's rescue package, just like Greece and Ireland. I know at least Finland will eagerly help a fellow nation in their deepest crisis just like we have done so far. :) Thanks
Katainen.
Another nation which will most likely soon need EU's rescue package, just like Greece and Ireland. I know at least Finland will eagerly help a fellow nation in their deepest crisis just like we have done so far. :) Thanks
Katainen.
funny storyyy
Aslong as Portugal doesn't default on its debt or if there isn't a restructuring of its debt Finland won't lose 1 penny. Well, they'll even earn money from it.
Investors buying up bunds from Portugal need re-assurance that they'll get their money back. Of course the risk of not getting your money back is much higher for Portugal or Greece then it is for Finland or Germany (because they have more healthy finances and other economic variables like better competitivity, positive trae balance, etc...). Germany's yields (on 10 years) are at 2,8% while Portugal has 7,8%. If Germany has 100 billion euro debt it has to pay each year 2,8 billion interest at its investors while Portugal has to pay 7,8 billion euro. A negative spiral for a country already in a position that is not competitive. Because of this high rate they have to pay, the yields rise even higher because of the higher risk etc...
A lot of countries who would have to pay such a high interest rate would be in a lot of trouble. The USA has 14 trillion$ debt. They pay around 3% interest on that every year. Imagine if they had the same interest rate as Greece eg. 10% they would be completely bankrupt (which basically would mean they would have to use their quantitative easing method).
The only thing those countries pay is the interest on that debt (which is a fraction of the debt). Over time that debt will inflate away. 100 Years ago 1 million$ debt was a lot, now it's peanuts. That's why it's not bad to have a certain level of debt, it will inflate away over time anyway and become a lot less worth and at the same time you can invest in X, Y or Z.
Just if you are interest; Finlands debt lock: http://velkakello.fi/
I would personally leave EU, there isn't anything we(Finland) get from EU what we can't get elsewhere.
You seem clever guy and seems like you study this subject, could you tell me what probably happens to Finland and its economy if we leave EU.
I doubt 20k euro is correct. Deficit of Finland is around 2% of GDP which means around 3.5 billion. So debt will rise from 70 bn to 73,5 bn which is around 5 700 euro a min. Are you sure that's a correct graph? Anyway, if prices of consumer goods and wages increase by 2% and there's an economic growth of 2% and debt rise by 2% aswell, in nominal terms the debt increases from 70 bn to 71,4 bn but in relative terms nothing changes so watch out with scaremongering numbers. For Finland it's really no big deal at all, on contrary, it's in a very good position.
About the EU, it's close to impossible to leave the EU. Yes in the treaty it's written that a member state can leave but in practice it won't happen. The council of Europe and the European parliament would need to approve that (majority needed) which is highly unlikely.
About the money Finland pays to the EU, most of that you get directly or indirectly back. And if you know that Finland only paid 750m euro net over a period between 1995 and 2007 (source: http://www.hs.fi/english/article/Finland+among+smallest+net+contributors+in+EU/1135246248120), that's absolutly peanuts. You forget that if your outside of the EU, you need to pay a certain amount of money in order to have access to the huge EU market, like Switzerland and Norway have to do. For Finland I guess that would be between 500m and a billion euro a year. And like I said before, the euro gives stability which means that yields for EU countries decrease => intrest payments decrease. If you would see what Finland paid in interestpayments before it joined the EU and after it (incalculating inflation) would be a big difference.
And being part of the EU means being in a strong position to sign favourable trading deals with other big trading players. You can be certain, if Finland would need to sign a trading agreement with the US that the would squeeze every penny from you. The US has the better position of having a huge market which Finland doesn't have, etc... Not to forget all the other stuff the EU states cooperate on like migration, environment, energy, etc... Too much to explain it all but leaving the EU is not worth it.
I don't know how much EU really did help Finland since there was a economic crisis going on those years and that why that graph showed so high numbers. Like always after the crisis Finlands debts decreased.
At least you get something good from markets with that money, EU doesn't really give us a shit. Just limits what we can do with their stupid directives and gathers money from us.
Plus to that:
It is Portugals own mistake, since their opposition didn't accept that saving plan, looks like they did this on purpose.
Also when we started using euro, they said everyithing will be cheaper but everything went almost half as expensive than before.
In the '70's and begin '80's inflation was between 4/6 up to 14%. In the end '80's and begin '90's it was around 4/6%. Since the ECB was created in '98 it's on average 2%. Inflation (eg. price stability) is the most important policy of the ECB. It's one of the success stories of the EU/Euro, price stability. It has more to do with commoities getting more expensive on the (world) market. Mostly cause by the upcoming BRIC countries who get more wealthy and demand more resources.
I don't really understand what you mean here. If your Finland would be _outside_ the EU it woul need to pay between 500million euro and a billion euro in order to have acces to the huge EU market. Surely it's better to be inside so you don't have to face all these barriers and pay such a big amount of money every year. Also if your inside you have a say in making all these rules and regulations, if your outside like Switzerland & Norway you don't yet they have to accept the majority of EU law in order to trade with the EU. Don't forget EU law becomes the norm in lots of countries outside Europe aswell, they have to follow it in order to be allowed to trade with us, a huge market of 500 million. We are setting the norm of laws in lots of sectors, without the EU we would need to accept whatever the USA or China dictates.
And don't base yourself on what you read in the media (esp. UK tabloids). Totally twisted and untrue. Articles like EU decides how the shape of a banana is, is totally bullshit and twisted so much to make it an anti-EU article (most UK tabloids are anti-EU). Don't base your opinion on EU regulation based on these non-stories from anti-EU papers.
About the money Finland pays each year to the EU, read my last reply to snip0 below.
Same thing happened to every product, every price increased.
Any proof here? It just sounds weird that you have to follow laws of a institution to make it able to trade with it.
And yes, there was a directive about cucumbers shape but nowadays it is overruled.
I was generally talking about directives that makes life so harder, directives that we wouldn't have without EU.
http://en.wikipedia.org/wiki/European_Economic_Area
Switzerland voted down being in the single market but they _had_ to set up bilateral agreements because they were surrouned by countries in the single market. In today's age it's impossible to be wealthy and isolated at the same time. Now Switzerland is getting it very tough because they have the advantages of the single market but don't have the disadvantages (which is unacceptable really). This will change in the coming years. Switzerland WILL have to accept most of EU law or financial/economic consequences will follow. They will only have 1 choice but to follow if they don't wanna stay isolated. So what's the advantage of being outside the EU if your a small country surrounded by EU states?? There barely is.
About being ruled by the EU, remember that a finnish left wing politican has much more in common with a german left wing politician then it has with a finnish right wing politician. Nationality has nothing to do in politicis, it's about what you stand for, your opinion, your ideas. Every member can use their presence in the EU to press certain legislative forward In the European Commission each member state has 1 commissioner and so has the same power as Germany. If Malta use their veto on a certain directive, it won't be accepted. That's how much power a small country has.
Some rules are stupid yes but a lot of rules are/were very useful to harmonize things over Europe. Each country having a different standard is just stupid. Some countries use different gauges in the rail system, now there is a directive to harmonize that, just like so many other things. These kind of things are necessary. Don't forget that a big part of EU law has to do with trading deals with other nations, this is only on european level and doesn't interfere with national law. Most of the EU law co-exists next to national law, on a european level, and doesn't interfere with it.
Just because you read some 'stupid' EU laws in the papers doesn't mean you have to be against EU law. Mostly that's published by tabloids like The Sun or The Daily Mail, they are anti-EU. Surely you don't trust anti-EU papers who talk about EU law? Those articles are totally twisted in such a way to make it sound like EU law is stupid, unnecessary and making our lives hard. The opposite thing is true. With some laws you don't agree, sure, but that is the same as with national law, some things you like, others not so much. It doesn't mean we have to abolish the EU for that, we have to shape it in a way which is good for us.
And about being ruled by EU. Germany, France, Italy and UK have together 333 delegates in European parliament. Other countries have 285 delegates together. Finland has 14. So this "Big 4" have over 50% of whole Parliaments delegates. So they decide what we do, when we do and why we do. It is big boys game, countries like Finland don't really matter there.
European Commission is independent and they have to act which is best for the EU, not for the country. Example Finnish Commissioners isn't allowed to think what is best for the Finland, even if it would ruin our country totally, they have to think only about EU and its best. It has to ensure that the law will be implemented. And if it doesn't Commission can take it to the Court of Justice.
The Council of the European Union has to ratify the laws that European Parliament have already accepted. They divide the power of deciding with European Parliament. And as usual, every country has given votes depending on their population. "Big 4" each have 29 votes, Finland has 7. The laws concerning about really important things, they have to be accepted by concerted majority and only in these things countries have veto-right. This section is also dominated by big countries.
Plus, countries like Finland or Germany act like an intermediary, nothing more, nothing less. They don't actually lose anything, even better, they earn money on the difference of interest rates between Finland and Portugal.
Instead of a country like Portugal going to the market to borrow X billion euro, Germany or Finland will do it in their place because those countries can borrow at a much lower rate. In exchange for this favour (because it adds risk to Finland/Germany) they have to pay 2% extra 'punishment' interest on that debt to Portugal.
For Portugal this makes financial sense. Instead of borrowing from the markets, they borrow -via intermediary Finland - at a lower rate. This means the public finances of Portugal will improve so certainly they will be able to pay this. If not, it adds up to the government debt. Over time that debt will become more and more worthless thanks to inflation.
You dominate EU with other big countries.
But I agree, EU sucks
But I don't see the point in paying ridiculously large sums for Eastern and Southern European countries which are unable to follow any rules of economy. Countries like Greece and Portugal are almost encouraged to cheat the other member states into helping them out of the drain.
Already the introduction of the € was a blatant mistake.
And I can assure I don't stand alone with that opinion in Germany. There are quite a few living in an ivory tower though.
If there was a need to introduce an union this should've consisted of BeNeLux, Austria, Denmark, Sweden, Finland, UK, France, Germany and maybe Ireland, Iceland or Norway, had they wanted to take part.
But only an economic union, a joint foreign policy is fine but with full inner sovereignty because I approve neither of economic, with regards to the Eastern and Southern European states, nor a cultural leveling.
Read my above posts.
Germany only acts as an intermediary. Portugal can't borrow directly from the markets because the intrest rate is too high (due to the financial crisis, uncompetitivy and other bad economic variables) so Germany and other EU countries do it in Portugal's place because they can borrow at a much lower rate. In exchange for this favour, Germany demands 2% 'punishment' interest on that debt. Basically, the debt is still on Portugal's name but Germany is the intermediary and earns a few % of that debt on it for the risk they take.
So Germany doesn't 'really' pay for countries like Greece or Ireland or Spain, they act only as an intermediairy on the markets. The cliché that Germany pays for those countries is completely untrue.
Besides, the biggest burden will still be for those countries, you can be sure of that.
But generally it's a fact that countries like Netherlands, UK, France, Germany etc contribute vast amounts of money to the monetary pool of the EU which is mainly used to build up poor Southern European and former Eastern bloc nations and I honestly don't see a point in that.
Don't forget, most of the money a country pays, it will get back directly or indirectly (through investments or whatever). The EU budget makes sure the investments are indeed relatively more in southern & eastern countries but that's also because they need it more and need to catch up. Still, the rich countries get on average 2/3rd of the money they pay back, either direclty or indirectly. Countries who are not part of the EU (like norway & switzerland) need to pay between 500m and 1,5 billion euro if only to be part of the big EU market. For a big country like Germany (with a big economy) that would be much more. Germany depends mostly on its exports towards other EU member states so I guess it's in the advantage of Germany to stay in it. Don't forget those new countries in Eastern Europe grow faster, the investments will improve their economy and so their wealth which will in turn lead to bigger exports from Germany towards Eastern Europe.
We (Western Europe) are not much with poor countries around us. It's better to improve their economies which will in the long term be in our advantage.
It's strange they hold it out so long. The limit for Greece & Ireland to stop borrowing from the market were yields of 7%, Portugal's yields are at 7,6% already. Time to stop being stubborn, accept EU/IMF intervieniance and borrow at a lower rate from the EU fund.