Why is Socialist Europe Bankrupt? (Hint: Its not Low Taxes or Military Spending)

quote didn't work, gotosleepamerica90.

Dude too many words.

 

Yea, the EU has failed miserably, which is why they will either break up or fully adapt to an United States monetary system. And what are you smoking? Where are you getting this "deregulate the market" nonsense.

 

So I guess banks are in existence to risk their money for free then?

I guess having to pay back money you borrowed is evil now.

Default is nothing less than theft of borrowed money.

 

The storm that was the spark that caused the economic issues came as a result of the banks themselves apparently believing exactly that! They could risk their money on hugely risky mortgages, and it didn't matter because they could sell those risks on to someone else, so there wasn't any risk to themselves, so that they could lend their money to anyone without risk, and believing that to be 'normal' and 'acceptable' to such an extent that they all ended up creating, selling and buying bad debts that would never get payed off that the whole system fell apart.

It's not 'evil' to have to pay back money that you borrowed, of course, but neither is it sensible to lend money to people who will never be able to pay it back because you somehow don't think you are risking your money by doing so! If that hadn't happened, those countries that got into massive debt by having to bail out failing banks that were 'too big to fail' wouldn't have got into that massive debt, and the world economy wouldn't have got into the state that it is at now.

 

....so they had a 2% surplus w/50% Debt/GDP?

Really.....

http://blogs.marketwatch.com/thetell/2012/09/27/spain-budget-2013-analysts-not-that-impressed/

Social spending: 64% of the budget will be directed to social spending.

Consuming 64% of the budget....but not causing any (D)ebt or (D)eficit in the fantasyland you reside in......
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Banks can afford to give loans to poor homeowners, this was possible then and its possible today even with the recession. They are not risking money when they make loans with high interest rates, they are making money when they do this. In Socialist Europe this is a banned practice, because it causes hardships on the poor.

So the evil is when Banks balance their sheets on giving poor homeowners high interest loans, that they will never be able to pay back. That is the sin of greed, and what caused them to topple, and need the government to print money to make their balance sheets equal again.

So when Democrats are in power, they issue policies as seen in Socialist Europe where the banks give the poor no interest rate loans as they are doing now, and not profit with high interest rate loans any longer. The socialist countries that are bankrupt don't practice real socialism, that is why they are in dire situations.

 

Banks don't make money making loans to people who don't pay those loans back. So no banks wouldn't purposely give loans to poor people who couldn't pay them back unless the Government made them do it. You don't make money unless they pay that loan back. Even a simpleton could see that.

 

short answer for the simple ones.

Because capitalism got a hold of them and those socialist did not know how much capitalist can screw them over.

 

Right because capitalism involves bloated all controlling Liberal Nanny State Governments spending themselves into Bankruptcy and beyond.....

.......Good call short bus.
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They shouldn't make loans to people who couldnt pay them back at all, but they did, and in vast quantities because they underestimated the risks significantly, and thought that they could sell those risks on to other people anyway (and were all buyiing and selling the risks to each other without appreciating how big the risks actually were), and believed that they could make money by charging high interest rates that offset the risks of some people not paying (which they didn't, of course). That was the problem that got the US and Europe into this whole current economic mess.

Of course, there was certainly a fault of government involved, and the US government in particular (although they weren't unique in terms of lack of sensible regulation, of course), in failing to regulate the banking system enough to ensure that that didn't happen, and in encouraging banks to give mortgages generally to increase US home ownership levels, but the government certainly didn't force the banks to do what they did to the extent that they did - they just failed to regulate them sufficiently to stop them. Lots of people thought they could get rich on sub-prime mortgages in the USA, and some of them did - meanwhile the whole flawed system collapsed, and caused alot of people alot of hardship all over the world (and as has already been said, those countries which relied too heavily on the financial sector in their economy, like the UK and Ireland, and those who already had financial management issues, like Greece, Spain, Italy and Portugal, suffered disproportionately, and their governments have to take their share of the reponsibility for that).

 

Govenment never made to the banks to loan to people that could not pay. However the greed and corruption of the banks were so great, that they gave loans without checking if they could not pay.

Also, the problem of Spain is that we received a policies of really low interests coming from the Europe Union, that policies would help to Germany to grow, but were really harmful for Spain. Spain during that period what did not need were so low interests, in Spain people could get money almost freely(in sense of free beer), and imagine the situation. That has been the problem.

But I repeat you, there is no relation with any kind of socialism. And plus in Spain. The only socialist thing that you can find in Spain is a small town called Marinaleda, that is the only socialist place that you can find in Spain. And there is almost no unemployment.

 

So redlining never existed....and it was all the fault of the banks, not the GSE that was green lighting all the underwriting for the bad loans....mmmkay.

A Government that consumes over 50% of a country's economic output.....yeah no relation to Socialism at all......
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Not once in all this do you mention the carrot-stick strategy that Congress used to manipulate banks to make these loans. Congress guaranteed that the loans would be backed up and threatened to oppose mergers of any bank that didn't have a minimum number of subprime loans on their books. Civil rights lawyers, including one that Barack Obama was working for, sued banks that didn't offer these loans and banks faced adverse actions by other means as well. To not mention this is to completely misconstrue the biggest factors that caused the meltdown. You further go on to claim that government DIDN'T force banks which is absolute crap. It's absolutely shameless how you Democrats have absolved yourself of the very train wreck that you were the conductor of.

 

Actually, I said this:

I certainly did mean by that 'manipulate banks to make these loans' - they interfered directly in a way that they should never have done. They actually didn't force them exactly, but they certainly did encourage them heavily - no argument there. Governments should regulate to ensure that the financial services market works properly and that companies within it behave responsibly (and honestly!), but not interfere directly within the market itself to manipulate it for their own political purposes.

I'm neither a 'Democrat' nor an American, but the way, so I don't have a horse in that particular race, other than the almighty mess that was caused by the various failures of US governments and that has afflicted many other parts of the world, including my own (although other governments, including my own at the time, were by no means innocent of any wrongdoing, certainly in the serious under-regulation of financial services, and the ignoring of the general issues of excessive and unsustainable levels of personal debt that were being warned about as early as 2003, and the potential catastrophy that might (and did) occur as a result of it).

 

The Democrats who enticed the private business men to give loans to the poor were certainly not "manipulators" with bad intentions. They wanted the banks to give loans lawfully, and were not forcing them to steal but accept a loss in profits.

The banks decided to steal instead of take a loss in profits, so Democrats are not to blame for the world bankruptcy, it was solely the Republican leadership of unregulated capitalism.

Socialist measures to help the poor shouldn't be confused with theft, the theft occurred primarily on the capitalism or free market (free to fail) side of this deal. So when the market is free, it is free to fail and that is what caused socialist Europe to fail, as it funds a lot of its welfare from its reliance on the American market.

However, if American profits were secure and regulated in a proper market, neither side would have went into bankruptcy.

 

That's complete nonsense, obviously - Europe does not fund welfare by gambling on, or relying on, the US market at all. What caused the failure in Europe was a combination of failures of private banks that had gambled on the US housing market and lost, but were 'too big to fail' so had to be bailed out by their governments, and the knock-on effects of the US crisis in causing a global economic slowdown/meltdown that was caused by the collapse of the financial sector, meaning that countries already in debt (and especially those with serious ongoing structural deficit issues) could no longer afford to pay those debts as they had previously expected to be able to do on the pre-crisis projections of their economic growth. That combined particularly with the effect on some countries of having a common curreny and economic rules set for the interest of countries other than their own, hence the problem in places like Greece (which had lied blatantly about the health of its own economic situation and fiddled the figures to get into the Euro in the first place, as well as neglecting to mention issues like their tax collection system being essentially disfunctional, and is now paying the price for that).

The US sub-prime mortgage problem is what started the domino effect, and successive US governments need to take their share of the blame for that (along with the private companies and individuals who contributed to the problem, of course), but they weren't the ones who stacked all of the particular dominoes in line to fall over, and those dominoes aren't there because governments somehow relied directly on the US or its markets in some way to 'fund their welfare'. The global economy is obviously interlinked in all kinds of complicated ways, and many of the companies involved with the initial crisis were multi-national ones based in different countries anyway, so the effect of the US crisis rapidly went beyond the borders of the US. However, to suggest that other countries were somehow actually funding their welfare directly from the US and its markets is just not true, of course.

 

Sorry I don't have the time to read the entire thread, so my aplogies if this has been pointed out repetedly:

All of Europe is hardly in trouble. The nations that are in trouble is the UPIGS. USA, Portugal, Italy, Greece and Spain. Countries like the Nordics, Germany, Austria etc seem to be doing quite well. The nations that are in trouble followed much the same strategy: Badly regulated banking, loan fattened budgets, real estate bubbles, low minimum wages and weak social safety nets.

The PIGS aren't printing the worlds reserve currecy, and so got hit harder and sooner is all.

 

I'm sorry but you're wrong. Every country that idiotically signed on to the Euro is in trouble. Any economist with a strong aptitude in math could predict that unifying currency is a benefit when times are good, but when economies tank, everyone else is brought down with them. It's why Germany wants out.

And none of the Euro-dunces will be able to blame the United States for their stupid error.

 

Would beg to differ, Europe relies more on the United States than vice-versa. All of those entitlements and welfare that Europeans enjoy come from the American businesses that provide jobs in Europe like Macdonalds for instance..That is how half of them work to support the other half, who are net recipients of the state. In the US, 47 percent of Americans are dependent on government, and are paid for the same way, but since the population is great the generosity does not reflect as Europe does.

Now not saying that Europe can't be self sufficient without the United States, but our capitalism is what sponsors Europe's socialism. We provide trade at our expense, to build Europe, that mean's while we benefit from the trading with Europe they have the better deal.

For instance without United States trade, Europe cannot profit enough to pay for half of its welfare expenditures. And that is what caused Europe to go into bankruptcy, they look for investments in the United States of America to make money for their own respective countries, but this time it did not work out so well for the ones who could not sustain their own balance sheets.

Now UK is one of those countries who was hit hard in recession because it mismanaged its balance sheet, but not as bad as Ireland, Greece, etc...However the good news is socialism hasn't been proven to be a failure as socialist states like Germany, Norway, Sweden they are doing well to weather the storm.

 

I hardly know where to begin with a post that puts forward such a ludicrous group of deep misunderstandings and total nonsense.

US-based multi-national corporations are not doing business in Europe 'provide trade at our expense, to build Europe', they are doing business in Europe to make profits, which they do. European-based multi-national corporations are in US markets for the same reason. That is because the economic system within the EU is capitalism, just like it is in the USA, so everyone can do business and make profits in the marketplace on both sides of the Atlantic. Europe does not have a 'socialist' economic system at all - it has a capitalist economic system, and the governments do not have ownership of, or control over, the private companies any more than they do in the USA.

Europe does have various kinds of 'welfare' systems in different countries, paid for from taxes on the profits/income/expenditure/etc. of companies and individuals operating in the capitalist system in exactly the same way as the USA. Europe does not have 'a better deal' because those multi-national trading companies need to employ people in order to do their business, any more than the USA has a 'better deal' when European companies employ people to do business in the USA (if anything, it's possibly quite the opposite, since the profits in such corporations obviously tend inevitably to gravitate towards 'head office'). Multi-national companies doing business in different areas are no different from local companies doing business in those areas - they exist to make profits, they employ people locally to operate their business, they do business as they see fit, and they pay taxes on their profits (theoretically, although there are some issues with certain multi-national companies dodging their tax bills in various, supposedly legal but perhaps somewhat dubious, ways at the moment, obviously) - they aren't in it out of some kind of 'social duty'.

European companies were not making 'investments in the United States of America to make money for their own respective countries', they were private companies investing for their own profit. They weren't somehow directed by their governments to invest to 'support the socialist system', because their governments do not have that power over those companies - they are private companies operating within a capitalist system, able to invest wherever they think there is profit to be made in the world (and EU-based multi-national banks invest all over the world, not just in the USA), and free to use their profits to pay their shareholders, make their investments, and so on, just like private corporations in the US. European countries didn't go bankrupt because they invested in the USA 'to make money for their own respective countries' and those investments failed - some countries incurred sudden huge debts because they had to bail out private banks that were on the verge of collapse to prevent an even more disastrous economic situation (and to protect the money of millions of innocent savers), and everyone then suffered the consequences when the credit crunch and global recession happened (in the case of countries with already dodgy balance sheets and ongoing structural defecits that had been allowed to develop based on favourable economic projections, especially those within a common currency that wasn't being operated favourably totheir situation, that recession impacted seriously impacted on their ability to keep up their repayments).

Are MacDonalds in business in ther USA just to support the US welfare system? Of course not - that is nonsense. Are they there just to provide jobs to support welfare in the US? Nope. They are in business to make a profit - in order to do so they have to comply with laws and pay taxes, of course, and they have to employ people to get the job done (and those people also have to pay their taxes), but the reason they exist is to make a profit. That's capitalism - the economic system that governs business and markets just the same in the USA and Europe. The essential business model, and reason for doing business, is no different for such companies in Europe to the way it is the USA. They don't suddenly decide to do business in Europe as some kind of charitable donation to help poor Europeans or something - they do it purely to make money for themselves.

 

This demonstrates a significant misunderstanding of how the United States leads the world economically, especially the economy of Europe.

After the United States helped Europe settle their differences during World War 2, America was the only country left in the world with a functional free market economy, and it had the moral duty of helping the Europeans rebuild their countries economically as it does today. Then and now this corner of the world is still the only place where laissez-faire capitalism prevails.

Europe is comprised of nations that are 'trade dependent economies', and that is how they pay for their generous welfare expenditures for their citizens.

The United States however can afford to be protectionist because we have the freest market in the world, which allows us to be independent of the rest of the world. However, it is not necessary because we trade to build the rest of the world including Europe not to primarily support our own economies. Now profits are being made, but Capitalism is when the rich help the poor and they both get something out of it. The socialist Europeans their welfare state utopia, and the United States continues to be the richest in the world from capitalism, a win-win for both sides of the pond.

Now I may concede that our trade helps to pay for our welfare expenditures presently, but it is not necessary as outlined above.

Here is a citation link:

World still dependent on US economy

So to conclude, how does all this relate to socialist Europe going bankrupt? Well now that the United States isn't contributing as much to pay for the welfare of Europe, because it has its own financial trouble from the economic downturn, Europe is now realizing they will have to pay their own bills for their own welfare expenditures.

That means the dreaded word ' Austerity '. And that is why Europe is in trouble now, because the wealthy Europeans don't want to pay for the poor Europeans, they were passing that expense off on the United States to save them, with easy investments in the housing market etc..but that is the free market, a market free to fail and Europe is socialist and can't accept that.

However as a supporter of socialism, the northern Europeans are doing fine like Sweden, Norway, so it is not something to criticize as an ideology, as it has its merits.

 

I can say quite safely that no socialist country hasn't eventually used capitalistic market system to allocate goods and services.

 

Agreed, governments in Socialist European countries do influence their private enterprises to act a certain way, though it is not direct as in Communist states where its stated in the rule of law.

Indirectly however for example, they influence their businesses to invest in the United States with incentives like lower tax rates, because their interests are paying for their peoples welfare to get votes for those politicians. Now if those socialist countries have profitable businesses investing in the United States, that is more money that the politicians can tax for welfare expenditures like universal health care, retirement, unemployment, food stamps etc...

Macdonald's pays for American's welfare under Democratic socialist leadership, but not on the Republican leadership which has a more capitalist leadership model, where private enterprises keep all their money and there is less redistribution of wealth.