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Post by Sir John on Mar 7, 2013 20:26:08 GMT -5
"Let's say I have an annual budget of 1 mio €, of which 600 000 € are coming from credits (debt-rate 60%) and 400 000 € from my own revenues. Let's say I pay 6 % credit-rates (36 000 €) and have to repay that year 15 % of my credit (90 000€). This leaves me 874 000 € to spend."
If you, or anyone, or any country, has a budget where you must borrow 60% of your expenditure, you are going to be totally bankrupt in about 3 years or so.
Your repayments obligations would very soon outstrip your total income.
No sane person would lend you a dollar, and you would need an understanding Central bank Governor to print what you need.
....and that is the way it is!
SJ
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Post by mcnoch on Mar 7, 2013 20:37:44 GMT -5
you would be surprised how many countries and big companies live by this standard. I don't say that it is good, but that is what banks were selling and doing around the globe in the recent 30 years.
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Post by Sir John on Mar 7, 2013 22:58:40 GMT -5
I know about the countries, but any company in Australia like that would be 'Trading while insolvent', and the Directors would be sent to gaol (jail) as an offense against the Companies Act.
Again, NO lender not insane, would entertain an application for a loan from ANY company in such dire straits.
AND. like many countries in the EU, such a financial situation would be far beyond hope. For example, Spain, Italy, Greece. Portugal and soon FRANCE!
And where France goes, can Germany be far behind? Especially as her banks are sitting on vast BAD DEBTS to the duds in the EU.
SJ
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Post by mcnoch on Mar 8, 2013 0:14:50 GMT -5
I fully agree that is was insane to give Spain, Greek and Ireland so much cheap credit. Northern Italy is a very important and powerfull economical region so more thrust and credits were justified. But still, under Belusconi Italy was spending money like mad. He was/is a very successfull manager, but we wanted the ultimate power of being the president of Italy and to secure his power-base in the people he was fullfilling all their dreams, just to get re-elected.
German banks have used extensivly the tool of a bad bank to push out all dangerous credits. If there is a danger for Germany, it is the so called target-saldi, used by the ECB to distribute money between the countries. Via this saldi the other countries are owning Germany about 700 billion €.
The German economy has a completly structure than France. We still have an industry-base of 24 %, most other countries in western Europe around 8-12 % and more then 50% of our employees are working for small to medium companies, which are extremly flexible in their production. If they no longer can sell their existing products in the used quantity in France, they reduce the production and focus maybe on products for Asian markets.
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Post by Sir John on Mar 8, 2013 0:20:23 GMT -5
I think you and I are more or less on the same wave length.
The danger for Germany is all her dud loans to EU members. If those loans go bad, as they most certainly will in due course, the German Banks are toast. The German manufacturing sector will not save her.
All that will save her, and the EU, is if the ECB throws out the rule book, and PRINTS!
This they WILL do! They have no other choice.
SJ
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Post by Deleted on Mar 8, 2013 12:40:18 GMT -5
Germany will rule Europe without firing a shot .
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Post by Sir John on Mar 8, 2013 22:17:25 GMT -5
The countries of the EU are now all in the same boat, and that boat is sinking. Not only at one end of it with Germany at the high end, and the PIFIGS at the low end.
Which is why the ECB etc will NEVER allow that boat to sink. It would be an admission of failure of the whole idea.
SJ
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Post by Deleted on Mar 8, 2013 22:54:31 GMT -5
The Empire and France will declare war on Germany and rescue the euro .
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Post by Sir John on Mar 8, 2013 23:05:49 GMT -5
Then they can fight to the "last American".
Hang on.........
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Post by Swampy on Mar 10, 2013 11:07:22 GMT -5
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Post by mcnoch on Mar 10, 2013 12:31:41 GMT -5
This is a bit too much over-simplified. The car-makers got billions from public funds to build new factiores and x-tausends of jobs for the next decades. So they have some more obligations to observe then just their business numbers. And about 50% of the workers in this area are buddy-leased workers, gone in a day.
But the biggest issue is that the car-makers in the past had been so nervous in loosing their high-qualified workers that they offered them very long notice periods (for both sides), these periods of up to 2 years are far beyond any legal requirements here, that was a management decision of the car makers.
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Post by Sir John on Mar 10, 2013 13:11:38 GMT -5
"And about 50% of the workers in this area are buddy-leased workers, gone in a day."
Does that mean that 50% of German car workers can be laid off with a days notice, and 50% must get 2 years notice?
If the EU economy falls in a hole, and car buyers stop buying, that the German car industry can reduce its workforce by 50% overnight, and try and continue if maybe 75% of their sales have disappeared?
I see bankruptcy ahead in that case.
SJ
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Post by Deleted on Mar 10, 2013 16:40:26 GMT -5
The Empire has come up with a solution , make all Europeans subjects of the Crown then put them all on the dole .
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Post by Sir John on Mar 10, 2013 16:44:49 GMT -5
"The car-makers got billions from public funds to build new factiores and x-tausends of jobs for the next decades"
Were these payments grants or loans?
SJ
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Post by mcnoch on Mar 10, 2013 19:37:15 GMT -5
Does that mean that 50% of German car workers can be laid off with a days notice, and 50% must get 2 years notice? No, not all but a number still have such contracts. The rest has a mix between six weeks and six months. In general the longer notice periods were introduced by the car makers to avoid that people are leaving easily. If you have to scale down your work-force but want/need to keep your staff to be available as soon the run up starts again, we have special tools were the employees work only reduced or not at all and are paid a reduced wage by public hand and the company. As the public hand would else have to pay unemployment benefits, it is a win-win-win situation for all three. Germany used this extensively during the crisis. Everyone is happy with the tool, especially the companies, as they don't want to lose their highly-trained staff. The German industry workforce is not the usual untrained laborer, but people making up to 50 €/hour and companies often have invested x00 000 € into the training, all the staff low- or untrained people can do was offshored. Were these payments grants or loans? Subventions here are a mix of both, you get the money to reach a target and if you reach it the money is yours. If you fail, you face the risk to have to return the money completely or parts of it, depending of how much you fell short of reaching the target and why. Management decisions to transfer work elsewhere to save money is a 100% refund-reason. So you better are pretty sure that you can and want reach your target before you ask for public subventions.
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