The PIIGS still fly

[thriftyandboringinohio]

Re: The PIIGS still fly

Jerome Powell’s unusual quest at the Fed: define what’s “normal” for the US

https://qz.com/1234746/fed-chair-jer...he-us-economy/




Welcome to the hot seat. (Reuters/Yuri Gripas)
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[shiny!]

Re: The PIIGS still fly

Great questions.
Perhaps we should view Germany's contributions to the EU as a kind of vendor financing, keeping their customers alive.

jk's questions always get to the point of the matter. Thanks, jk!

[thriftyandboringinohio]

Re: The PIIGS still fly

part of my interest in that post was the reference to grg's long expressed opinion that if any country would leave the euro, and COULD leave the euro successfully, it was germany. otoh, given that german exports are ~44% of their gdp, how would they handle what would likely be a soaring currency relative to their current pricing in euros? any speculations?

Great questions.
Perhaps we should view Germany's contributions to the EU as a kind of vendor financing, keeping their customers alive.

[jk]

Re: The PIIGS still fly

part of my interest in that post was the reference to grg's long expressed opinion that if any country would leave the euro, and COULD leave the euro successfully, it was germany. otoh, given that german exports are ~44% of their gdp, how would they handle what would likely be a soaring currency relative to their current pricing in euros? any speculations?

[dcarrigg]

Re: The PIIGS still fly

That's my recollection too.
We were working large grid-connected generator rebuilds, and many hydroelectric plants are owned by state and municipal entities, making us a government contractor.

It was mostly government workers. And it set a terrible example. Lots of other states followed in the "furlough while still working" footsteps, but no other state made scrip for their employees. The result was a 5%-20% de facto pay cut. Millions of people who earned $50k on paper if you google them for 2010 or 2009 only actually took home $40k. Price of progress, I suppose...

[globaleconomicollaps]

Re: The PIIGS still fly

Thansk GRG55, I had forgotten about those California IOU chits. I think there were mandatory furloughs too.
At the time I was doing some business there on large electrcial generators, and we worried about not getting paid.
In every case we were paid on time. We kept bidding jobs there depite the IOU threat.

Have you seen this?
https://www.nakedcapitalism.com/2017...xperiment.html

[thriftyandboringinohio]

Re: The PIIGS still fly

My recollection is this was comparatively short lived, and none were intended to go into circulation as a "parallel currency". I also think most recipients were California Government workers and contractors doing government projects? But the underlying motivations seem virtually identical if memory serves correctly. ..

That's my recollection too.
We were working large grid-connected generator rebuilds, and many hydroelectric plants are owned by state and municipal entities, making us a government contractor.

[Chris Coles]

Re: The PIIGS still fly

My recollection is this was comparatively short lived, and none were intended to go into circulation as a "parallel currency". I also think most recipients were California Government workers and contractors doing government projects? But the underlying motivations seem virtually identical if memory serves correctly.

After a long history of invading each other militarily, it seems Europe has replaced that with economic raiding. My Polish father-in-law, who survived WWII, used to say the formation of the EU would prevent another European war. Sometimes I wonder if the antipathy towards the EU shown by Britain over the decades is partly from the fact that, unlike the continent, that nation's last foreign invasion was in 1066.

You need to take account of the number of times we Brits went to their rescue; try reading The years of Victory or the Medieval Foundation (indeed, almost anything), by Arthur Bryant. https://www.abebooks.co.uk/servlet/S...&tn=&kn=&isbn=

[GRG55]

Re: The PIIGS still fly

Thansk GRG55, I had forgotten about those California IOU chits. I think there were mandatory furloughs too.
At the time I was doing some business there on large electrcial generators, and we worried about not getting paid.
In every case we were paid on time. We kept bidding jobs there depite the IOU threat.

My recollection is this was comparatively short lived, and none were intended to go into circulation as a "parallel currency". I also think most recipients were California Government workers and contractors doing government projects? But the underlying motivations seem virtually identical if memory serves correctly.

After a long history of invading each other militarily, it seems Europe has replaced that with economic raiding. My Polish father-in-law, who survived WWII, used to say the formation of the EU would prevent another European war. Sometimes I wonder if the antipathy towards the EU shown by Britain over the decades is partly from the fact that, unlike the continent, that nation's last foreign invasion was in 1066.

[thriftyandboringinohio]

Re: The PIIGS still fly

Thank you for posting jk.

Two reactions:
1. Hmmmm. Imagine that. :-)
2. Isn't this parallel scrip somewhat analogous to the I-Owe-You scrip California was issuing in mid-2009?

Thansk GRG55, I had forgotten about those California IOU chits. I think there were mandatory furloughs too.
At the time I was doing some business there on large electrcial generators, and we worried about not getting paid.
In every case we were paid on time. We kept bidding jobs there depite the IOU threat.

[Chris Coles]

Re: The PIIGS still fly

from ambrose evans-pritchard in the telegraph, re the italian election resuts

The eurosceptic ultras in the Lega already think the next downturn will precipitate a solvency crisis in Italy. They are preparing contingency options to ensure that the country can defend itself and will not fall into the clutches of the eurozone bail-out police.

Almost unnoticed by markets, they inserted plans for a parallel currency into the manifesto of the conservative bloc, which is claiming the right to govern as the biggest of the official coalition groupings with 37pc of the vote. It is to be a perpetual treasury note (BOT) used to pay off €70bn in state arrears to Italian companies and citizens, and would be set in motion quickly.

Ex-premier Silvio Berlusconi – the last elected leader of Italy, before four stitch-ups – has long flirted with such an idea to create liquidity and overcome the credit crunch for small Italian companies. It is modelled on the military currency introduced by allied forces after the liberation of Sicily in 1943, and known to Italians as the AM-Lira.

.............

“Everybody now knows that there will have to be a negotiated orderly dismantling of the euro,” said Lega senator Alberto Bagnai, the eminence grise of the Italian eurosceptic movement. A new struggle is already underway to shape and control the post-euro dispensation.

The EU has handled Italy extremely badly – just as it is now handling Britain badly – and it will not like the consequences.

Perhaps of equal interest is that my own proposals to create 30 million new jobs in Europe under my rules for The Capital Spillway Trust, presented to Ignazio Visco the Governor of the Bank of Italy, resulted in his writing to me to say; "the issues you raise are of paramount importance". I have also twice met Yanis Varoufakis and appreciate the points he has raised over the past few years. Now add that the final point about their bad attitude, certainly to us here in the UK; which we can be certain applies equally to Italy, is simply making such bad feelings, all bets must be off.

[GRG55]

Re: The PIIGS still fly

from ambrose evans-pritchard in the telegraph, re the italian election resuts

...But that is the point. Italian economists pushing this plan want to create circumstances in which Germany chooses to leave the euro in disgust. That is the "cleanest" way to break up the system and prevent a devaluation spiral for the weaker states...

Thank you for posting jk.

Two reactions:
1. Hmmmm. Imagine that. :-)
2. Isn't this parallel scrip somewhat analogous to the I-Owe-You scrip California was issuing in mid-2009?

[thriftyandboringinohio]

Re: The PIIGS still fly

Thank jk, fascinating.

[jk]

Re: The PIIGS still fly

from ambrose evans-pritchard in the telegraph, re the italian election resuts

The eurosceptic ultras in the Lega already think the next downturn will precipitate a solvency crisis in Italy. They are preparing contingency options to ensure that the country can defend itself and will not fall into the clutches of the eurozone bail-out police.

Almost unnoticed by markets, they inserted plans for a parallel currency into the manifesto of the conservative bloc, which is claiming the right to govern as the biggest of the official coalition groupings with 37pc of the vote. It is to be a perpetual treasury note (BOT) used to pay off €70bn in state arrears to Italian companies and citizens, and would be set in motion quickly.

Ex-premier Silvio Berlusconi – the last elected leader of Italy, before four stitch-ups – has long flirted with such an idea to create liquidity and overcome the credit crunch for small Italian companies. It is modelled on the military currency introduced by allied forces after the liberation of Sicily in 1943, and known to Italians as the AM-Lira.

The banknotes were prepared by the Washington Bureau of Engraving and Printing and fixed at an inflationary exchange rate of 100 lire to the dollar. The hybrid paper marched up the peninsular with the troops and served as the lubricant of economic recovery, circulating across Italy until 1951.

Greece’s Yanis Varoufakis wanted to the launch such a parallel scrip when the ECB cut off liquidity support for Greek private banks (arguably illegally) and brought the financial system to its knees. He was overruled by the Syriza war cabinet, who knew it would lead ineluctably to the drachma.

Claudio Borghi, the Lega’s economics chief and the architect of Italy’s plan, states openly that the scheme will evolve over time into a secondary currency under Italian sovereign control, confident that there is nothing that the EU can do about it. “We are not Greece: we are a much bigger country, and we are net contributors to the EU budget, so how is Brussels going to stop us?” he told me. If it leads to the lira, so be it.

Such a plan would subvert the ECB’s control over the money supply and would destroy German and Dutch political consent for the euro project. Northern states would see parallels with the Latin Monetary Union in the 19th century, undermined by the Vatican’s debasement of silver coinage, and then by Italian use of a loophole to print paper money.

But that is the point. Italian economists pushing this plan want to create circumstances in which Germany chooses to leave the euro in disgust. That is the "cleanest" way to break up the system and prevent a devaluation spiral for the weaker states. Euro debt contracts could then be upheld.

“Everybody now knows that there will have to be a negotiated orderly dismantling of the euro,” said Lega senator Alberto Bagnai, the eminence grise of the Italian eurosceptic movement. A new struggle is already underway to shape and control the post-euro dispensation.

The EU has handled Italy extremely badly – just as it is now handling Britain badly – and it will not like the consequences.

[GRG55]

Re: The PIIGS still fly

Hi GRG. Sorry, I obviously missed this post. No, we spent time in Toronto...too big, Quebec City...too small and Montreal...just right. We're headed back to Montreal for 6-8 weeks this coming summer as my youngest is taking an intensive at McGill and hoping to get accepted for university study after high school.

Montreal would be a pretty cool place to be a student. The most international and, imo, cosmopolitan of all of Canada's cities.