Euro Crisis 3/3

Dirk Müller on the Euro crisis (DE, English subtitles) Talkshow "maybrit illner", ZDF-tv, April 26, 2012 The 3 videos are embedded in my blog article: "Greece Still in Need of Grease" at http://www.TheMoneySyndrome.org/ 3 Business Management vs Macroeconomy / Betriebswirtschaft vs Volkswirtschaft Maybrit: Despite the 1 Billion support for banks one doesn't get the feeling of the crisis being curtailed, but exacerbated. What can be done, if one sees the governments and nations, who actually wanted to protect against this crisis, now being caught in a much deeper crisis. What does Herr Müller say? Dirk: He is perfectly right, the problems exist in these countries. We have already mentioned one basic problem with the currencies and we don't have to go through that once more. But there is still a problem with indebtedness, which in my view is accounted for too little. We always talk about the indebtedness of the state, but that's a short-sighted view. The state consists of more than just government budgets. We also have to look at other participants in the state. The debts of citizens, the industry, the banks and the state together make the total of indebtedness. This is really exciting, because what is the benefit of a government that is not indebted, while the citizens have to service the debts of all other participants and cannot pay taxes anymore. The citizen doesn't care where debts emerge in the system. They pay interest for their own loans anyway, those of the state via taxes and those of the industry over the counter, because interest is calculated into the prices of products. I have figures at hand, maybe your's are more precise, which show an interesting development for instance in Germany. In the fifties last century an average German household contributed 10% of his income to interest claims in the whole system. In the seventies this share amounted to 20% and today it's over 40% of an average income which services the indebtedness on private, public and industrial planes. Of course this money cannot be spent for consumption and investment and is missing there and that is why economic growth slows down more and more until the normal citizens cannot shoulder the burden any longer. Conclusion: we have to look at the total indebtedness in the system. Then, Germany's indebtedness does not amount to 80% compared to the GDP but to around 280%. But that's even low: Spain groans under a burden of 370% and that's not the top yet, where the UK and Japan are with a total indebtedness of 500% each. And there comes an interesting question: if the British stand at an indebtedness of 500% to the GDP and the Spanish at 360-380%, why do rating agencies give a triple A to the British, the best rating possible, and why do they harp on about Spain? If you ask them, you would get an interesting answer: because the British don't have the Euro, they can any time devaluate their currency and solve the problem by starting the printing press. The Spanish are not allowed to do that.