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Technical recession. Recession nonetheless. The ECB has a real problem with asymmetry. Can't cut rates just for Germany. At the same time there's high inflation

Technical recession. Recession nonetheless. The ECB has a real problem with asymmetry. Can't cut rates just for Germany. At the same time there's high inflation in Austria, Slovenia and the Baltics.

ChuckNorris89 3y ago
>The ECB has a real problem with asymmetry. Can't cut rates just for Germany. It's as if a single currency and a single central bank for 25 different economies with different levels of debt, doesn't really work that well in every situation. > At the same time there's high inflation in Austria Inflation in Austria is now mostly due to greedflation. If you cross the border into Germany the same goods are suddenly cheaper.
- pier25 3y ago
  Doesn't the US do the same with states instead of countries?
  - deleted 3y ago
    [deleted]
  - alenrozac 3y ago
    Not really. US is in a better position for a federal-wide monetary union. Labor mobility is a key component, and it is easier when you don't have different languages and cultures.
  - mcv 3y ago
    To what extent does each state run its own economy? The EU does not have centralised taxes or a centralised economic policy, but it does have a single currency. It's possible a single currency also requires more centralised financial/economic policies.
    - galangalalgol 3y ago
      State economies do differ dramatically though, and monetary policy can indeed affect them in opposite ways at least for a while. And state revenues are almost entirely collected by the state aren't they? There are funds for interstates and railroads, and schools, but often schools are primarily funded at the city level by property taxes.
    - laratied 3y ago
      There is really just the US economy. We would not say that Pennsylvania is in recession but New York is not. The major difference between states is tax rates. Labor, transacting, anything else economically is practically transparent and frictionless.
      - ChuckNorris89 3y ago
        >The major difference between states is tax rates. Also tax spending. For example there's no central EU funded military but each member budgets it differently, just like how there's no New York military and Pennsylvania military.
  - yieldcrv 3y ago
    Top level EU has no capability of being a fiscal union, only a partial monetary union. This has limitations and reduces how analogous it can be to the US' and its member states.
- rhaway84773 3y ago
  True, but every system has flaws. For the most part the Euro and ECB has been a benefit for every country in it. Even a country like Greece. As bad as the single currency was for Greece, outside the EU and Eurozone, Greece could very likely have been closer to Venezuela with even fewer resource wealth to benefit from.
  - yyyk 3y ago
    >True, but every system has flaws. For the most part the Euro and ECB has been a benefit for every country in it. Except Italy alas.
  - johngladtj 3y ago
    Other way around. The euro has been a net loss for all but 2 countries
    - epups 3y ago
      Then why are a lot of countries trying to get in it? Why didn't Greece go out when it had the chance?
  - mantas 3y ago
    Was it really a benefit? The only benefit is belief that Germany won't let euro fail and will bailout anybody no matter how shitty situation is. On the other side, this prevents fixing root causes. Why fix anything and make people angry if you can ride the wave, hope for the best and in worst case someone will bail you out? That's why we have this massive inflation. No real value is created, yet everybody is flush with the money. Pandemic was just a perfect excuse for BS that is brewing since at least 08 crisis.
    - ChuckNorris89 3y ago
      >That's why we have this massive inflation. No real value is created, yet everybody is flush with the money. Indeed. Most of EU's economic growth since the 2008 crash was just printing money and propping up assets. A bunch of wealthy boomers buying expensive houses from one another does not mean actual economic prosperity. We just printed our way into prosperity but Covid supply chain disruptions, the energy shortage, and the Ukraine conflict exposed the EU emperor had no clothes.
- dmm 3y ago
  A monetary union without a fiscal union doesn't really make sense, imo. The US (mostly) works because states run balanced budgets(if you ignore underfunded pensions) and the federal govt corrects trade imbalances by taking money from some states and sending it to others. Economists in the EU must have understood this and if I had to guess they assumed a fiscal union would develop at some point?
  - logifail 3y ago
    > A monetary union without a fiscal union doesn't really make sense [..] Economists in the EU must have understood this [..] They almost certainly did, there are two other groups who may not have done - European politicians ... and European voters. Although it's more likely that politicians did understand it, but were reluctant to talk about, at least in front of the voters.
- blensor 3y ago
  Austria is always lagging behind Germany. I'd say about 6-12 months. So I have no worry that Austria will go down to roughly the same level as in Germany. Gas prices have already dropped to a level where it is slowly getting in the range of pre-covid
mytailorisrich 3y ago
There's high inflation in Germany as well. A recession helps controlling inflation...
u320 3y ago
They wouldn't cut rates anyway, with inflation at 7.2%.
- 0zemp2c 3y ago
  stagflation...its in Germany, coming to the US...there is only one way out: we get poorer
  - edgyquant 3y ago
    The US is not getting poorer nor is inflation still out of control
    - mistrial9 3y ago
      this is called "hopium" one-liner.. look at the demographics.. twelve billionaires and 2.6 million adults having trouble paying monthly bills in my US West coastal area. Asset bubbles notably residential housing. capital-flight..
      - politician 3y ago
        There is a trend that some people lean heavily on government intervention to solve their problems, rather than exercising personal initiative. This dependence can exacerbate issues in densely populated regions, where high living costs, limited housing, and food security concerns are rampant, despite surprisingly low out-migration rates. However, alternatives are readily available. Inland areas beyond the coastlines offer affordable living and plentiful housing.
        slater 3y ago
        > There is a trend that some people lean heavily on government intervention to solve their problems But enough about government subsidies given to Elon!
        mistrial9 3y ago

Technical recession. Recession nonetheless. The ECB has a real problem with asymmetry. Can't cut rates just for Germany. At the same time there's high inflation in Austria, Slovenia and the Baltics.

ChuckNorris89 3y ago

>The ECB has a real problem with asymmetry. Can't cut rates just for Germany. It's as if a single currency and a single central bank for 25 different economies with different levels of debt, doesn't really work that well in every situation. > At the same time there's high inflation in Austria Inflation in Austria is now mostly due to greedflation. If you cross the border into Germany the same goods are suddenly cheaper.

pier25 3y ago
Doesn't the US do the same with states instead of countries?
- deleted 3y ago
  [deleted]
- alenrozac 3y ago
  Not really. US is in a better position for a federal-wide monetary union. Labor mobility is a key component, and it is easier when you don't have different languages and cultures.
- mcv 3y ago
  To what extent does each state run its own economy? The EU does not have centralised taxes or a centralised economic policy, but it does have a single currency. It's possible a single currency also requires more centralised financial/economic policies.
  - galangalalgol 3y ago
    State economies do differ dramatically though, and monetary policy can indeed affect them in opposite ways at least for a while. And state revenues are almost entirely collected by the state aren't they? There are funds for interstates and railroads, and schools, but often schools are primarily funded at the city level by property taxes.
  - laratied 3y ago
    There is really just the US economy. We would not say that Pennsylvania is in recession but New York is not. The major difference between states is tax rates. Labor, transacting, anything else economically is practically transparent and frictionless.
    - ChuckNorris89 3y ago
      >The major difference between states is tax rates. Also tax spending. For example there's no central EU funded military but each member budgets it differently, just like how there's no New York military and Pennsylvania military.
- yieldcrv 3y ago
  Top level EU has no capability of being a fiscal union, only a partial monetary union. This has limitations and reduces how analogous it can be to the US' and its member states.
rhaway84773 3y ago
True, but every system has flaws. For the most part the Euro and ECB has been a benefit for every country in it. Even a country like Greece. As bad as the single currency was for Greece, outside the EU and Eurozone, Greece could very likely have been closer to Venezuela with even fewer resource wealth to benefit from.
- yyyk 3y ago
  >True, but every system has flaws. For the most part the Euro and ECB has been a benefit for every country in it. Except Italy alas.
- johngladtj 3y ago
  Other way around. The euro has been a net loss for all but 2 countries
  - epups 3y ago
    Then why are a lot of countries trying to get in it? Why didn't Greece go out when it had the chance?
- mantas 3y ago
  Was it really a benefit? The only benefit is belief that Germany won't let euro fail and will bailout anybody no matter how shitty situation is. On the other side, this prevents fixing root causes. Why fix anything and make people angry if you can ride the wave, hope for the best and in worst case someone will bail you out? That's why we have this massive inflation. No real value is created, yet everybody is flush with the money. Pandemic was just a perfect excuse for BS that is brewing since at least 08 crisis.
  - ChuckNorris89 3y ago
    >That's why we have this massive inflation. No real value is created, yet everybody is flush with the money. Indeed. Most of EU's economic growth since the 2008 crash was just printing money and propping up assets. A bunch of wealthy boomers buying expensive houses from one another does not mean actual economic prosperity. We just printed our way into prosperity but Covid supply chain disruptions, the energy shortage, and the Ukraine conflict exposed the EU emperor had no clothes.
dmm 3y ago
A monetary union without a fiscal union doesn't really make sense, imo. The US (mostly) works because states run balanced budgets(if you ignore underfunded pensions) and the federal govt corrects trade imbalances by taking money from some states and sending it to others. Economists in the EU must have understood this and if I had to guess they assumed a fiscal union would develop at some point?
- logifail 3y ago
  > A monetary union without a fiscal union doesn't really make sense [..] Economists in the EU must have understood this [..] They almost certainly did, there are two other groups who may not have done - European politicians ... and European voters. Although it's more likely that politicians did understand it, but were reluctant to talk about, at least in front of the voters.
blensor 3y ago
Austria is always lagging behind Germany. I'd say about 6-12 months. So I have no worry that Austria will go down to roughly the same level as in Germany. Gas prices have already dropped to a level where it is slowly getting in the range of pre-covid

mytailorisrich 3y ago

There's high inflation in Germany as well. A recession helps controlling inflation...

u320 3y ago

They wouldn't cut rates anyway, with inflation at 7.2%.

0zemp2c 3y ago
stagflation...its in Germany, coming to the US...there is only one way out: we get poorer
- edgyquant 3y ago
  The US is not getting poorer nor is inflation still out of control
  - mistrial9 3y ago
    this is called "hopium" one-liner.. look at the demographics.. twelve billionaires and 2.6 million adults having trouble paying monthly bills in my US West coastal area. Asset bubbles notably residential housing. capital-flight..
    - politician 3y ago
      There is a trend that some people lean heavily on government intervention to solve their problems, rather than exercising personal initiative. This dependence can exacerbate issues in densely populated regions, where high living costs, limited housing, and food security concerns are rampant, despite surprisingly low out-migration rates. However, alternatives are readily available. Inland areas beyond the coastlines offer affordable living and plentiful housing.
      - slater 3y ago
        > There is a trend that some people lean heavily on government intervention to solve their problems But enough about government subsidies given to Elon!
      - mistrial9 3y ago